GMR Infra

Since a very long time, a new airport has not been started in India. We constantly crib about the lack of infrastructure facilities in the country and in these circumstances; it is indeed big news about the swanky new airport getting all set for commercial operations in India.

The launch date of Bangalore airport, as we all know, has been delayed and now we hear that, even while Mrs. Sonia Gandhi was unveiling the new world class airport at Hyderabad, news came in that the launch of its commercial operations might get delayed and it might not take off as per the “earlier than scheduled” target.

Now, we at premiuminvestments.in have been very gung-ho about GMR Infra and that very fact that it was the company responsible for developing the airports in Hyderabad and Delhi made it one of our top most recommendations. And now, with the markets falling everyday, coupled with the news of the delay in the launch of the commercial operations of Hyderabad airport, investors are asking whether it is time to re-rate our stand on GMR Infra.

Well, we would now like to go on record to say that we still very strongly believe that GMR infra continues to hold tremendous potential and this delay in the launch date of the airport is just a minor glitch. The issues over the delay is happening are not very major, they all are small blips, which will soon get erased out.

The delay in the Hyderabad airport is on account of “operational reasons”. Now this includes, poor connection between the new airport and the Hyderabad city, fleet of buses to shuttle employees between the airport and the city not yet at full strength, presence of a big drain at about 105 feet from the airport.

Another issue is that the airline operators have also asked for some more time to fully shift their operations from the old to the new airport. There is major worry over the increase in the ground handling charges and the imposition of the new central infrastructure fees, which is expected to hit the very purpose of the Budget airlines to offer tickets at low costs. Surely, it is going to increase the cost of traveling from Hyderabad and Bangalore airports but then, just as there is always this major resistance to any cost increase or imposition of new tolls or taxes, which eventually does get passed and people get used to paying, this too shall soon pass.

We feel all these glitches are not ones which will jeopardise the entire airport, simply because we cannot afford to do so. These issues are all workable and as GMR has said, these are “operational issues” which were not in control of GMR.

So we once again reiterate that we maintain our long term bullishness in GMR Infra and there is no way in which we think the stock requires any kind of re-rating or downgrading from the present levels. The prospects of the company continues to remain strong and with the company soon expected to bid for the development of an East European airport also, the company is no longer just an Indian company, it is soon morphing into a truly global “airport” company.

Investors who have purchased GMR Infra, are advised to stay invested. In today’s general market conditions, almost all the stocks are falling across the board. This is a good long term stock.

By SP Tulsian

Intraday Calls for 17th March

Market may open with negative bias but some recovery expected in mid-session.


Today's Intraday Picks:

GMDC LTD.
PNB
MTNL
DLF
Ansal Infra
For Levels and Targets download the file by Click Here


Good Luck

STOCK IDEAS

Manugraph India Ltd. (Code: 505324) (Rs.84.95) is India's largest manufacturer of web offset and sheet fed offset printing presses. With a whopping 70% market share, its printing presses are present in almost all major publication houses. In India, it has worldwide presence from Latin America to Europe and from the Middle East to China. Last year, it acquired Dauphin Graphic Machines Inc, the No. 1 company in the USA in the four page segment for US $19.20 million. With this acquisition it has become the world’s largest single width printing press manufacturing company. Accordingly, the US subsidiary has started outsourcing the component parts from India and even marketing Manugraph machines in North America. But due to the economic slowdown in USA, the response was not as good as anticipated earlier. Still on the back
of robust domestic demand, it is expected to end FY08 with sales of Rs.400 cr. and PAT of Rs.50 cr. on a standalone basis.
This translates into EPS of Rs.16 on its current equity of Rs.6.08 cr. with a face value of Rs.2. The scrip has been beaten down mercilessly from its recent high of Rs.205 in November 2007 and offers an excellent opportunity to buy. Also, its agreement of business co-operation for marketing with MAN Roland of Germany is under negotiation.
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Lokesh Machines Ltd. (Code: 532740) (Rs.64.10) is engaged in the design, development and manufacture of custom built special purpose machines and general purpose CNC (computerised numerical controls) machines along with their components. Presently, it derives 70% revenue from the machining division whereas the balance 30% comes from its auto components division. The company caters primarily to customers in the auto OEM, auto ancillaries and general engineering space. Hence it supplies mainly to Tata Motors, Bajaj Auto, Force Motors, Cummins, Bharat Forge, Kirloskar Oil Engines, Everest Kanto Cylinders etc. with separate dedicated facilities for M&M and Ashok Leyland. Of late, it has also forayed into overseas markets with good orders. On the back of an encouraging performance for the first three quarters of FY08, it is estimated to register sales of Rs.105 cr. with net profit of Rs.13 cr. for FY08. This works out to an EPS of Rs.11 on its equity of Rs.11.80 cr. Considering its IPO price of Rs.140 in Arpil 2006 and 52-week high/low as Rs.168/60, it’s a screaming buy.
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Being the market leader in High Tension XLPE power cables, Torrent Cables Ltd. (Code: 504096) (Rs.217) manufactures XLPE insulated cables in the voltage range of 1.1KV to 132 KV, Low-Tension (LT) power cables up to 1.1KV and High- Tension (HT) power cables up to 11KV. It also produces EHV, TRS flexible cables, welding cables, lift cables, colliery cables and specialty cables in the form of fire resistant low smoke cables (FRLS), railway-signalling cables, mining and trailing cables. It has a very exhaustive customer base spread over State Electricity Boards (SEBs), Utilities, EPC Contractors, government/semi-government companies, private companies, dealer network, consultants and many more. Apart from the SEBs, its clientele includes biggies like Tata Power, L&T, BHEL, ABB, Siemens, Alstom, Jindal, Reliance, Essar, Suzlon, NTPC, Railways, Powergrid, SAIL, Torrent Power etc. The rural electrification plans, APDRP programmes and government’s aim to achieve power for all by 2012 has resulted in increased demand for power related products like cables. Hence, for FY08, the company is estimated to clock a turnover of Rs.225 cr. with net profit of Rs.30 cr. i.e. EPS of Rs.40 on its small equity of Rs.7.50 cr. With a 52-week high/low of Rs.440/143, it’s a screaming buy as it can
easily appreciate 50% within a year.
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Patels Airtemp (India) Ltd. (Code: 517417) (Rs.57.50) is engaged in the manufacture and sale of an extensive range of heat exchangers such as shell & tube type, finned tube type and air cooled heat exchangers, pressure vessels, air-conditioning and refrigeration like power, refineries, fertilizers, cement, petrochemicals, pharmaceuticals, textiles and the chemical industries. For future growth, the company is concentrating more on high value added engineering products and has even got its product the coveted ASME `U' Stamp authorization. For the December 2007 quarter, the company’s net sales declined by 15% to Rs.10.50 cr. due to delay in dispatches but net profit shot up to Rs.1.40 cr. on lower depreciation cost. Hence it is expected to register a topline of Rs.50 cr. and profit of Rs.5 cr. for FY08. This will lead to an EPS of Rs.10 on its current equity of Rs.5 cr. Technically, the scrip seems to have bottomed out and can shoot up 50% in 6-9 months.

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Pratibha Industries (Rs.311.15) has received the Certificate of Registration for its quality management system – API Specification Q1 for 'Design and Manufacture of Line Pipe'. With this registration, the company's SAW Pipe Manufacturing Unit is now fully geared to manufacture pipes for supply to the oil & gas segment. This approval is in line with our expectations. Investors are advised to stay invested for good long-term targets.

English Indian Clay (Rs.1739.25) - Shareholders to get four shares for every 19 shares of Bharat Starch Product Ltd. held on 20th February 2008. The stock is trading after this demerger, it is yet to become ex-right. Book part profits at Rs.1900 level.

J P Associates (Rs.236.25) has value unlocking potential with regard to JP Power Ventures, awarding land to Jaypee Infratech and potential value from the Ganga-Balia Expressway, which would act as triggers. Stay invested or add on dips.

Punj Llyod’s (Rs.329.55) strong order position and Investments in PSL and Ramprastha JV could add significant value. Stock looks attractive at current rate.

MTNL’s (Rs.100.20) book value is Rs.185 and dividend is 40%. Stock looks attractive at Rs.100 level.

Balmer Lawrie (Rs.366.95) has a strong book value of Rs.165 with expected EPS is Rs.50/52 while last dividend was Rs.135%. It is a good stock to add in small quantities on dips.

Revathi Equipments (Rs.919.20) is looking for more acquisitions, if informed sources are to be believed. It is also developing small real estate in partnership in Mumbai. With coal prices shooting up, coal mining equipment manufacturers are likely to see better times ahead. Investors are advised to stay invested or add on dips around Rs.800 level. There are also indications, as per unconfirmed sources, that few MNC companies have shown interest in the company for taking a stake.

Mather & Platt Pumps (Rs.149.40) will benefit by the fast growing pump markets in Asia and Eastern Europe where a lot of activity is taking place in waste-water treatment, municipal water supply and construction. The company will have access to both through Wilo's strong presence in Europe and its Korean and Chinese operations. Long-term investors will benefit. Stay invested.

Ranbaxy (Rs.464.10) - Strong reports are pouring in. Stay invested.

Ashiana Hsg. (Rs.97) - Profit projections and long-term story is intact. Due to change in sentiment, stock price has come down in line with the trend. Stay invested.

Valuation of IFCI (Rs.49.85) is attractive at Rs.49 level. Investors can add with a long-term view.

Natural Capsules BSE Code: 524654 Last close: Rs.23.90
Natural Capsules Ltd. was established in the year 1993 at Bangalore. The company has a well-equipped modern manufacturing plant to manufacture hard gelatin capsules shells, hard cellulose capsule shells and pharmaceutical dosage in capsules. It has an equity of just Rs.4.28 cr., promoters hold 42.48% stake and the company paid 10% dividend last year. In January 2008, its share price had touched Rs.49.75 level but it is now available at Rs.24. The company posted an EPS of Rs.4.30 for the first nine months of FY08 which may touch Rs.6 for the full year. Against the estimated EPS, the stock is trading at a P/E ratio of just 4. The company will be allotting warrant and shares to promoters and promoter group at Rs.30. Buy with stop loss of Rs.19.50 for a medium-term target of Rs.28-30. Thereafter, stock will go up to Rs.35 and later to Rs.49 in the long run.
Source: Internet

Investment Idea: GMDC

Gujarat Mineral Development Corporation Ltd. (GMDC) is a Gujarat State government undertaking engaged in the business of lignite, bauxite and fluorspar mining as also power generation units based on Lignite.

The company has been posting improved financial performance quarter on quarter of FY 08. For FY 07, the total income was at Rs.610 crores with EBITDA of Rs.310 crores, PBT of Rs.157 crores and PAT of Rs.105 crores, resulting in an EPS of Rs.6.60 (face value Rs.2).

For 9 months ending 31-12-07, the total income of the company was Rs.700 crores with EBITDA of Rs.419 crores, PBT of Rs.270 crores and PAT of Rs.200 crores, giving an EPS of Rs.12.60 for 9 month. Hence, FY 08, is likely to have topline in excess of Rs.1,000 crores with PAT of close to Rs.300 crores, giving an EPS of close to Rs.19 on face value of Rs.2 per share.

The present equity of the company is Rs.31.80 crores with face value of Rs.2 per share. The board of the company proposed 1 : 1 bonus shares in last week of January 08 and share is presently ruling at Rs.308 cum bonus.

This translates into a market capitalization of close to Rs.5,000 crores for the company, which is quite low compared to rich reserves of lignite held at its various mines. Even total borrowing of less than Rs.800 crores is largely for net current assets which makes it virtually a debt free company.

The shareholding pattern of the company as at 31-12-07 is 74% with the promoters being the Govt. of Gujarat, 12% by Mutual Funds, Banks and Financial Institutions and 14% by Public with about 47,000 shareholders.

The company presently producing about 80 lakh MT of lignite at its three mines. New mines have been developed at the various locations at Surat to cater to South Gujarat where estimated annual production would be 10 lakh MT. 10 lakh MT of lignite production at Amod near Bharuch would fully contribute in FY 09. 30 lakh tonne of lignite production is estimated from Bhavnagar mines to cater to Saurashtra region and Central Gujarat. So, in FY 09, the production of lignite shall get increased by about 40%.

The company also has 250 MW power plant in operation based on lignite.

Lignite referred to as Brown Gold, is an alternative for coal which is in great demand, as natural resources are becoming scarce all over the world. FY 09 the company may see a topline of Rs.1,500 with PAT of Rs.600 crores which would result in an EPS of Rs.38, on pre-bonus equity. This results into a PE multiple of just 8 times for the stock, which is very cheap for any mining company.

The share which is now ruling at Rs.308, would go ex-bonus by the end of April at Rs.155. The stock at this rate is quite cheap, which can give a conservative return of close to 50% per annum over the next two years.A safe and excellent bet at Rs.308 levels on cum-bonus basis.

Source: sptulsian.com

Investment Idea: Alembic Pharma

More than 100 year’s old, it is an integrated pharmaceutical company, recognized more popularly as the “Glycodin” company. It has over 90 brands covering antibiotics, antibacterials, cardiovasculars, cough/cold and antihistamines.

For the third quarter ended 31st December 2007, YoY, the net sales was up 40% at Rs.260.62 crore. Of this domestic sales comprised of Rs.173.63 crore and exports were at Rs.91.63 crore. Total expenditure rose by almost 50%. What is noteworthy is that the company spends substantially on R&D. Its R&D bill rose from Rs.6.80 crore last Q3 to Rs.11.20 crore in the current Q3. Its interest bill burgeoned by a whopping 176% at Rs.8.38 crore. Due to this, its PBT actually took a beating; it fell 19% at Rs.19.87 crore.

But then came its knight in the shinning armour! It sold off its surplus land and earned a decent one-time gain of Rs.22.55 crore. And thanks to the land deal, the company managed to show a bumper net profit, which was up 1.67 times at Rs.42.02 crore, which otherwise would have been down by over 20%. There is no doubt that the company needs to work on getting its overall expenditure down or else, there wont be too much surplus land left every time, to bail it out.

The company is now utilizing Rs.29.17 crore from share premium account and Rs.102.58 crore from its general reserve account, against debit to Profit and Loss Account of the balances in the Intangible Assets Account of the company to the tune of Rs.176.83 crore after making due adjustment for Deferred Tax. The effect of the same will now appear in the annual accounts for the year ending on March 31, 2008. This intangible asset mainly represents amount paid for acquiring 24 brands pf non-oncology formulation business of Dabur Pharma.

The company has acquired the API manufacturing facility of Nirayu, located on the outskirts of Vadodara, for a consideration of Rs.17.50 crore and will be used by the company to increase its API business and regulatory filings. It is a USFDA approvable facility. USFDA also successfully inspected the company’s formulation facility at Panvel.

The company is very sound and hopefully, the reduction in the excise duty announced in the Budget 2008-09 would benefit the company to post better results in the coming months. Currently quoted at Rs.46, stay invested.

Source: sptulsian.com

Markets Today

Buying in battered pivotals triggered solid rally on the bourses in late trade, with market closing near highest point of the day. However, the market breadth, indicating the overall health of the market remained negative. 24 shares from the 30-member Sensex pack advanced.
Most Asian markets, which opened before Indian market, were trading lower. European markets, which opened after Indian market, were in green.
As per provisional closing, the 30-share BSE Sensex surged 441.07 points or 2.87% at 15,792.42. The Sensex settled at the highest level of the day. Sensex had slipped 26 points at days low of 15,331.35 in early trade.
The broader based S&P CNX Nifty advanced 133.10 points or 2.88% at 4,756.70 As per provisional closing.
The Sensex declined 4943.36 points or 24.35% in calendar 2008 (till yesterday, 13 March 2008).
Driven by the higher prices of food items and manufactured products, annual inflation rate based on the wholesale price index increased to 5.11% for the week ended 1 March 2008 as against 5.02% in the previous week. Inflation rate stood at 6.51% for the corresponding week in the previous year.
Finance minister (FM), P Chidambaram today said he expects the economy to maintain growth levels of above 8.5% in the coming years. FM also said in parliament that the present volatility in the local stock market reflected worldwide phenomena.
Despite the rally, the market breadth remained negative: On BSE 1,473 shares declined as compared to 1202 that advanced. 62 shares remained unchanged.
The BSE Mid-Cap index was up 1.02% to 6,596.23 and the BSE Small-Cap index rose 0.20% to 8,091.46, as per provisional closing,. Both these indices underperformed the Sensex.
The total turnover amounted to Rs 5880 crore as compared to Rs 4924 crore by 15:45 IST on BSE.
Indias leading private sector power utility company in terms of sales, Reliance Energy galloped 13.01% to Rs 1353 on 12.35 lakh shares. It was the top gainer from Sensex pack. The stock is the worst performing Sensex stock, declining 47.47% in calendar 2008 (till yesterday 13 March 2008).
Real estate shares staged a comeback after recent plunge. Indias largest real estate developer DLF jumped 8.15% to Rs 656.20 on huge volumes of 28.83 lakh shares. The stock replaced GlaxoSmithkline Pharma in the S&P CNX Nifty index from today. The BSE Realty index declined 44.33% in calendar 2008 (till yesterday, 13 March 2008).
Indias largest private sector company in terms of market capitalisation and oil refiner Reliance Industries rose 4.40% to Rs 2340.20 on 11.84 lakh shares. It moved in a range of Rs 2225 and Rs 2316.60 so far during the day. The stock is down 21.27% in the calendar year 2008 (till yesterday 13 March 2008).
IT pivotals advanced on fresh buying. Satyam Computer Services (up 4.61% to Rs 380.85), Infosys Technologies (up 2.74% to Rs 1370), TCS (up 3.76% to Rs 807.85), and Wipro (up 0.93% to Rs 368.40), logged gains.
Frontline banking shares gained despite the latest data showing a surge in inflation. ICICI Bank (up 4.30% to Rs 873.95), HDFC Bank (up 1.23% to Rs 1,312.25) and State Bank of India (up 0.78% to Rs 1,709) edged higher.
Hindalco (up 4.78% to Rs 182), NTPC (up 4.35% to Rs 194.80), and Larsen & Toubro (up 4.10% to Rs 2920), gained from Sensex pack.
Jaiprakash Associates soared 7.80% to Rs 236. The stock replaced Bajaj Auto in the BSE 30-share Sensex pack from today.
Bajaj Holdings & Investment settled at Rs 775 in highly volatile trade after its auto and the financial services businesses were spun off effective today, 14 March 2008. As per the restructuring, Bajaj Holdings, earlier known as Bajaj Auto, has 30% in Bajaj Auto and Bajaj Finserv, both to be listed separately in due course. The stock hit a high and low of Rs 1143.80 and Rs 720 respectively.
Bharti Airtel, the countrys top listed cellular services provider lost 3.26% to Rs 753 on 6.31 lakh shares. It was the top loser from Sensex pack.
Auto stocks were subdued. Mahindra & Mahindra (down 2.57% to Rs 644) and Maruti Suzuki India (down 0.32% to Rs 837.10) slipped on profit booking.
Reliance Natural Resouces was the top traded counter on BSE with turnover of Rs 305.11 crore followed by Reliance Petroleum (Rs 274.47 crore), Reliance Industries (Rs 271.37 crore), GSS America Infotech (Rs 223.33 crore), and Bajaj Holdings & Investment (Rs 197.02 crore), in that order.
The next trigger for the market would come from the figures of advance tax payment by corporates for the fourth installment, which falls due on 15 March 2008.
Another major trigger for the market is outcome of the US Federal Reserve meeting on 18 March 2008 to review interest rates. A cut in interest rate, as expected by the street may provide some support to the markets. Fed Chairman Ben Bernanke had signaled a readiness to cut interest rates again to prevent further damage to the weak US economy, even as he took note of rising inflation risks.
European markets were higher. Key benchmark indices from United Kingdom (up 0.45% to 5,718.20), France (up 0.43% to 4,650.25), and Germany (up 0.67% to 6,543.90), gained.
Most Asian markets were trading lower. Hong Kong's Hang Seng (down 0.29% at 22,237.11), Japan's Nikkei (down 1.54% at 12,244.48), Seoul Composite (down 0.95% at 1,600.26), Taiwan Weighted (down 0.60% at 8,161.39) and Shanghai Composite (down 0.22% at 3,962.67) edged lower after early rise.
However Singapores Straits Times index rose 1.19% at 2,839.01
US markets reversed early losses on Thursday, 13 March 2008, as S&P predicted an end to subprime mortgage writedowns. The early fall came after lower than expected retail sales and reports that another hedge fund may collapse. The Dow Jones industrail average gained 35 points to 12,145. The Nasdaq rose 19 points at 2.263; while the S&P 500 gained 6 points to 1,315.
Back home, a major setback was witnessed on the bourses as share prices fell almost across the board on Thursday 13 March 2008. The 30-share BSE Sensex slumped 770.63 points or 4.78% at 15,357.35, its lowest level since early September 2007. The broader based S&P CNX Nifty was down 242.40 points or 5.10% at 4,623.60 on that day
As per provisional data, foreign institutional investors (FIIs) sold shares worth Rs 108.50 crore on Thursday, 13 March 2008. Domestic institutional investors (DIIs) were net buyers of shares worth Rs 56.44 crore on that day.
FIIs were net buyers of Rs 242.82 crore in the futures & options segment on Thursday, 13 March 2008. They were net sellers of index futures to the tune of Rs 85.43 crore and bought index options worth Rs 85.82 crore. They were net buyers of stock futures to the tune of Rs 238.73 crore and bought stock options worth Rs 3.70 crore.
US crude for April delivery fell 58 cents to $109.75 today, 14 March 2008 a barrel after hitting a record of $111. London Brent crude for April dropped 54 cents to $107
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Market Whispers

A big broking house is known to be liquidating its position in Sterlite Industries. The stock could see some turbulent times and may soften from present levels of Rs.755.

JSW Steel is expected to see a sharp spurt from the current price of Rs.900, backed by positive news that it is to commission its Vijaynagar plant, ahead of schedule. Share could touch four digit mark soon.

Kirloskar Brothers is a good buy at the current rate of Rs.285, it has corrected substantially and is now perched at an attractive level.

A well-known mutual fund is accumulating Powergrid, especially in the wake of the current price fall at Rs.90.

Educomp may bounce back from the present level of Rs.3,250 by Rs.200.

DLF will see a sharp spurt from the current levels as punters are taking this opportunity of the dip in the price to shore up their holdings. Share may soon cross Rs.670 mark.

Ranbaxy is being tipped as one of the best bets in this volatile market, at Rs.460 levels.