Stock Idea: BHEL

A Navratna PSU, this is one of the best jewels in the crown. The company has done well for itself in Q1FY10. The company, on a YoY showed a growth of 23% at Rs 5,800 crore. Net profit jumped by over 22% at Rs 471 crore. But when one looks at the company on a sequential basis, it is evident that the company has suffered. It net sales, on a QoQ was down 48% but it managed to stem down a steeper fall in the net profit , which was down by just 4%. This was possible only because the company cut its tax provision by 67% at Rs.248.08 crore as against Rs.747.06 crore in Q4FY09. The company did not make provisions for fringe benefit tax, which is consequent to the abolition of fringe benefit tax in the Budget for the fiscal 2009-10.

At the end of Q4FY09, the company was sitting on inventory worth Rs.172.19 crore and this has been reduced to Rs.30.05 crore in Q1FY10. Like most of the PSU's, employee cost is a huge outgo for BHEL. At the end of 30th June 2009, it stood at Rs.1113.68 crore, up from Rs.895.30 crore in Q1FY09. Wage revision has surely eaten up quite a chunk of the income but hopefully by the end of Q2, it would have finished with all the provisioning.
In current Q1, 100% of the orders to the company came only from the private sector. The elections and the code of conduct prevented any Govt orders. But now that the elections are over, BHEL expects major chunk of order to come in from the Govt and we could see huge orders coming in Q2. Infact the company is go gungho about the orders that its has raised its previously given guidance of Rs.50,000 crore worth of orders to Rs. 55,000 crore during the current financial year. The company has an outstanding order book position of about Rs 124000 crore at the end of Q1.
Order book was never a problem with BHEL. The problem was too much order which led to inability to execute them. Infact BHEL was one of the reasons why the power sector missed its targets last fiscal. To rectify the situation, BHEL is expanding its capacity which is expected to go stream by 2011. Also given the priority which the power sector today has in our country, BHEL will only stand to gain. The company is also expecting six new orders for power equipment with a capacity to generate 600 Mw any time now. Power sector will thus light up BHEL. Stay invested.
Source: www.premiuminvestments.in (S P Tulsian)

Intraday Trading Calls for 24th July

Stock Market India may open positive and remains flat with high volatility for today.

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

SCRIP NAME	TRIGGER	PRICE	TARGET 1	TARGET 2
IDFC	Buy Above	131.55	136.10	142.00
	Sell Below	129.40	125.45	121.00
CAIRN INDIA	Buy Above	239.65	244.60	250.00
	Sell Below	237.15	232.55	227.00
JP ASSOCIATES	Buy Above	230.75	235.15	241.00
	Sell Below	227.50	223.15	218.00
SELAN EXPLO	Buy Above	192.25	198.15	205.00
	Sell Below	189.60	184.20	178.00
HDIL	Buy Above	253.25	259.15	268.00
	Sell Below	249.40	242.65	235.00
GSPL (532702)	Buy Above	63.65	66.50	70.00
	Sell Below	62.35	59.55	57.00
IRB INFRA	Buy Above	182.55	188.10	195.00
	Sell Below	180.10	175.45	170.00

Buy GTL Infra (532775) CMP Rs. 36/- Very Short Term Target Rs. 45-48/-.

GOOD LUCK

Intraday Trading Calls for 23rd July

Stock Market India may open positive and remains positive with high volatility for today.

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

SCRIP NAME	TRIGGER	PRICE	TARGET 1	TARGET 2
SAIL	Buy Above	167.60	171.55	176.00
	Sell Below	165.05	161.75	158.00
MOSER BAER	Buy Above	82.25	85.55	89.00
	Sell Below	80.35	77.45	74.00
JP ASSOCIATES	Buy Above	220.20	226.45	232.00
	Sell Below	217.35	212.45	205.00
SELAN EXPLO	Buy Above	190.75	197.60	205.00
	Sell Below	187.60	183.15	178.00
IDEA	Buy Above	75.60	79.65	84.00
	Sell Below	73.35	70.15	66.00
WELSPUN GUJARAT	Buy Above	201.60	208.45	215.00
	Sell Below	198.40	192.45	186.00
IRB INFRA	Buy Above	182.55	188.10	195.00
	Sell Below	180.10	175.45	170.00

GOOD LUCK

Stock Idea: Shree Renuka Sugars

Shree Renuka Sugars is a fully-integrated sugar company, besides sugar, power generation and ethanol are also additional sources of revenue. If Q2FY09 had been disappointing, the company more than made up for it in Q3FY09, declaring a bumper set of results. The company had not really taken full advantage of the bullish cycle in Q2FY09 but on hindsight that has proven to be prudent as the bull run only got better in Q3FY09 and it made full use of it this time around.

Sequentially, its net profit more than doubled from Rs.33.20 crore to Rs.78.10 crore. This really does not come as a surprise as in Q2FY09, the company was sitting on inventory of Rs.336 crore and this itself would have helped add on to the company's earnings quite substantially and we could see more gains getting on in Q4FY09 also. Moreover, given the current spike in sugar prices, the company did well by offloading the inventory, making full good use of these high prices.

The topline of the company rose by an unbelievable 108% at Rs.893.50 crore. In the sugar sector, the company managed to earn an EBIT of Rs.86.30 crore (Rs.20.60 crore in Q2FY09) on a sales of Rs.585.10 crore (Rs.86.30 crore) and this was its biggest earner. Cogeneration contributed Rs.80.10 crore (Rs.86.90 crore) to the topline and EBIT of Rs.20.30 crore (Rs.38 crore), indicating an overall fall. Revenue earned from ethanol was almost flat at Rs.37.80 crore (Rs.37.90 crore) but realisations fell as EBIT was at Rs.9 crore as against Rs.12.90 crore earned in Q2FY09.

The company is expanding its refining capacity at Karnataka to 2,000 tonne per day from 1,000 tonne per day. It is also raising refining capacity in Karnataka by 1,000 tonnes per day. Both plants are expected to be commissioned by December 09'. Once both these units go on stream, company's sugar refining capacity will increase to 6,000 tonne per day, which includes the 2,000 tonne per day port-based sugar refinery at Haldia, West Bengal, and the 4,000 tonne per day refining capacity at three of its integrated sugar mills in Karnataka.

It also recently raised Rs.506 crore via QIP issue and this increased the equity capital of the company from Rs.28 crore to Rs.31.70 crore and reserves has swollen to Rs.502.30 crore.

The shortfall in sugar production is a well known fact now and prices are already up to around Rs.26 per kg in the retail sector. With festival season around the corner and despite the Govt getting imports to keep a check on the prices, we can expect realisations of sugar companies to go up further.

Source: www.premiuminvestments.in (S P Tulsian)

Intraday Trading Calls for 22nd July

Stock Market India may open positive and remains positive with high volatility for today.

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

SCRIP NAME	TRIGGER	PRICE	TARGET 1	TARGET 2
IDFC	Buy Above	141.20	145.25	150.00
	Sell Below	139.40	135.45	131.00
SUN TV	Buy Above	245.25	251.65	258.00
	Sell Below	241.35	236.05	230.00
TATA STEEL	Buy Above	415.35	425.05	440.00
	Sell Below	406.40	395.60	380.00
SELAN EXPLO	Buy Above	193.50	200.15	210.00
	Sell Below	190.10	185.35	180.00
HIND OIL EXPLO	Buy Above	135.60	140.10	145.00
	Sell Below	133.20	129.45	125.00
ADLABS	Buy Above	345.75	355.25	368.00
	Sell Below	338.15	330.45	320.00
CUMMINS INDIA	Buy Above	265.20	272.45	280.00
	Sell Below	261.10	255.30	250.00

GOOD LUCK

Intraday Trading Calls for 21st July

Stock Market India may open positive but some profit booking can be seen at mid session. A flat closing expected today.

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

SCRIP NAME	TRIGGER	PRICE	TARGET 1	TARGET 2
IDFC	Buy Above	142.80	147.25	152.00
	Sell Below	141.15	137.35	132.00
3I INFOTECH	Buy Above	78.65	81.55	85.00
	Sell Below	77.35	75.15	72.00
CAIRN INDIA	Buy Above	247.65	252.45	258.00
	Sell Below	244.35	239.45	235.00
SELAN EXPLO	Buy Above	187.60	192.55	198.00
	Sell Below	184.60	180.25	176.00
HIND OIL EXPLO	Buy Above	126.75	131.25	135.00
	Sell Below	124.35	120.45	116.00
WELSPUN GUJARAT	Buy Above	197.60	205.35	212.00
	Sell Below	195.15	189.45	182.00
VIDEOCON INDUSTRIES	Buy Above	175.20	180.45	185.00
	Sell Below	173.40	168.55	164.00

GOOD LUCK

Stock Idea: Rain Commodities

Rain Commodities (Rs. 142.00) (Code : 500339)

Andhra based Rain group is headed by Mr N Jagan Mohan Reddy having interests in cement and CPC. Earlier, the group had 2 listed entities-Rain Commodities, the holding company for the 1.5mn tonne cement business, and Rain Calcining(RCL),comprising 0.6mn tonnes of CPC capacity. Post a scheme of arrangement, RCL was merged with RCom by way of a share swap, wherein 2 shares of RCom were issued for every 7 shaers of RCL. Main features: A. Transfer of cementbusiness from Rain Industries to RCom B. Amalgamation of RCL with RCom C. Transfer of CPC and power business from RCom to Rain Industries (100% subsidiary of RCom) Thus cement asset is now held under RCom-the holding company. CPC asset is held under Rain Industries. Group, thru 100% subsidiaries of Rain Industries and RCom USA, has acquired 100% stake in the Texas based 1.9mn tonne CII Carbon, CII Carbon, until acquisition, was 2nd largest producer of CPC in the world. Post acquisition, RCOM is the largest CPC producer in the world with a capacity of 2.49 mn tonnes. Company is further erxpanding its CPC capacity by 0.6 mn tonnes by early 2010.

1. Expansion of cement capacities to 3.16mn tonnes has already been completed in previous quarter. Pithead mines at both units with reserves sufficient to carry out operations for next 70 years at expanded capacity. Potential to add 4 million TPA of cement capacity at existing locations at capital cost of USD 50/MT.

2. CII Carbon LLC : A. Has 48 years of experience and track record in industry leadership B. Production facilities across N America-Louisiana (4), Mississippi1), W Virginia(1), Illinois(1) C. Access to waterways-Mississippi river terminal, Calcasieu river terminal and Ohio river terminal D 62.5% Sales made to international customer having strong relationship with all Global Aluminium majors E. 95% Sales pursuant to multi-year contracts (quantity fixed but not price) F. 77% Raw materials procured fom suppliers having relationship of over 10 years

3. CPC-Changing Business Model :- A. Limited supply (or no increase in supply) of Anode Grade GPC B. No new CPC capacities are announced or expected C. Consolidation in the industry 4. Rain now enjoys 13% share of Global CPC capacity and 22% market share of Western World production 5. Unmatched access to GPC suppliers and CPC customers across the globe Slowdown in aluminium industry : In last 12 months, aluminium prices have crashed. It has led to correction in prices of CPC also. However GPC prices have also corrected sharply and Rain still commands comfortable profit margins. Recently, Company has signed agreement with Karnataka Power to get Fly Ash which will enable it to enhance production of blended cement.

VALUATIONS : Stock is trading at :- 1. 2.42 x CY08 EPS 2. 2.48 xCY09E EPS Such valuation are very compelling considering the following; A. Company has emerged the largest prodcuer of CPC in the world. B. Big entry barriers due to limited availability of GPC. C. Metal Industry is likely to rebound in 2010. Once it happens CPC producers may report sharp jump in profits. Recently, promoters had converted their warrants into equity @ Rs 200 per share. In 2007, share price had gone upto Rs. 300/-. However, share price crashed due to aggressive selling by some FIIs although Citi group has increased stake in the company. Reliance Mutual and UTI also hold significant stake in Rain. We feel that current valuations do not fully capture potential of the company. Even if scrip had P.E. Ratio of 5, share price should be Rs. 285/-. However, in current market conditions such a sharp rise in share price may not be possible. We put our price target of Rs. 210/- in 6 months. Investors can also hold this scrip for 3 years in which case appreciation can be 200%.
Source: Internet (SmartInvestment) Hemant K. Gupta (Mumbai)