Stock Idea: McNally Bharat

A leading Engineering Companies in India, providing Turnkey solutions, having constructed over 250 plants on turnkey basis, touched a new low on 16th September 08’ at Rs.102. Then yesterday came the news of the company having secured an order worth Rs.87.12 crore from Damodar Valley Corporation. This helped lift up the stock price but just a tad bit at Rs.109.
For the first quarter ended 30th June 2008, the numbers indicate a pressure on the margins. YoY, OPM has slipped from 8.47% to 7.53% and NPM slipped from 3.94% to 3.09%. The higher operating expenses took its toll, which was mainly on account of rising cement and steel prices. QoQ, the fall has been more precipitous as the company’s actually showed a dip of 36% and net profit dipped 42% at Rs.4.07 crore. The company’s current equity is Rs 31.09 crore and face value per share is Rs 10.
In July 08’, it bagged an order worth Rs 246 crore from Vedanta Alumina. And in June 08’, it got another order from Mundra Port and Special Economic Zone for supply of four rail mounted bucket wheels, worth Rs.47.30 crore.
It is setting up a new plant in West Bengal for which it has been allotted the 25 acres of land required. The new plant will provide support in executing turnkey projects of various companies like IISCOs, Durgapur plant and Bokaro plant of SAIL. It also recently acquired 68.28 per cent of Sayaji Iron and Engineering Company, as part of its plans to boost its equipment business, and is on the lookout for further acquisitions. The company was approved as a supply partner by France based Solios Corporation and it hopes to evolve itself into a global sourcing hub for European metal majors
McNally Bharat has a good order book and in the current uncertain times, such brick and mortar companies are a better bet. Stay invested.

Intraday Trading Calls for 18th September

Indian Stock Market may open gap down but recovery expected from lower levels.

Today's Intraday Trading Calls / Stock Tips: (BUY AT LOWER LEVELS WITH STRICT STOP LOSS)

BANK OF BARODA

BANK OF INDIA

INDIAN BANK

CAIRN INDIA

RPL

GUJARAT NRE COKE

GOOD LUCK

Intraday Trading Calls for 17th September

Indian Stock Market may open Positive and remains in small range throughout the day today. A good positive closing exptected today.
Today's Stock Tips/Intraday Trading Calls (Keep Appropriate Stop Loss for Each Trade):

GTC INDUSTRIES (112)

IOB (100)

BANK OF BARODA (316)
CAIRN INDIA (198)
RPL (148)

RPOWER (160)

Good Luck.

Stock Idea: Solar Explosives

Solar Explosives (SEL) is a Nagpur-based manufacturer of industrial explosives, which are mainly used for mining and infrastructure projects. SEL, which is the market leader in India, is likely to benefit from growth in the country's mining sector and several new infrastructure projects. In light of SEL's expansion plans and forward integration into the coal mining business, long-term investors can consider this stock.

BUSINESS: Established in 1996 with a capacity of 6,000 tonnes cartridge explosives, SEL has become one of the leaders in the domestic explosives industry and a major exporter. Its current capacity stands at 80,000 tonnes cartridge explosives, 94,450 tonnes bulk explosives and 140 million detonators. SEL controls nearly 20% of India's explosives market, currently valued at $400 million. The company has successfully commissioned 12 bulk plants at various locations supported by one plant each for manufacturing cartridges, detonators and detonator components. It has a bulk explosives plant in the vicinity of every subsidiary company of Coal India, as well as in Singareni Collieries. The company has now started operations with Tata Steel in Jharkhand. Last year, SEL acquired 74% stake in Navbharat Coalfields, which owns a mining lease on a coal block in Chhattisgarh with reserves of 36 million tonnes (mt). Recently, it obtained permission to pick up 24% stake in a joint venture with Chhattisgarh Mineral Development Corporation (CMDC) for development, mining and marketing of coal with estimated reserves of 80 mt at Shankarpur in Chhattisgarh. The commercial operations at these mining projects are expected to start in FY10.

GROWTH DRIVERS: India's mining and infrastructure industries are growing rapidly and the pace of growth is not likely to slacken in the near future. To meet the power generation targets set in the 11th Five-Year Plan, India will need huge amounts of additional coal. This will increase the country's coal output to 684 mt per annum (mtpa) from around 450 mtpa currently. The Planning Commission estimates that 17,000 megawatts (mw) hydel power capacity will come up in the 11th Plan period, which will involve heavy excavation work, adding to the demand for explosives. During the same period, the domestic production of steel is expected to increase from around 55 mt currently to 80 mt. The same applies to most other metals and minerals. These initiatives will boost the demand for explosives, which is likely to grow at around 10% every year for the next 4-5 years. SEL has already expanded its capacities in India to cater to the growing domestic market and it also exports its products. It is now spending around Rs 23 crore to set up a bulk explosives plant in Nigeria to be commissioned by March '09, supported by another plant in Africa by June '09. These plants will cater to the African demand for explosives, which are currently imported at high prices. This will enable the company to earn higher margins.

FINANCIALS : SEL's sales have grown at a cumulative annual rate (CAGR) of 51.7% over the past five years to reach Rs 281 crore in FY08. Its PBDIT grew 61.2% to Rs 71 crore, while net profit expanded at an even higher pace of 64.2% to reach Rs 36 crore during the same period. The company's return on capital employed (RoCE) improved to 22% in the year ended March '08 after averaging around 16% in the past five years. SEL's current debt-equity ratio is comfortably placed at 0.6 with no long-term debt. Since SEL is in a growth phase, it is a low dividendpaying company. Although it has consistently paid dividends in the past five years, the dividend payout has remained below 15% of its net profit. Considering the dividend for FY08, SEL's dividend yield works out to around 0.7%.

VALUATIONS: At the current market price of Rs 409, the scrip trades at 18 times its profit for the past 12 months. Going forward, we expect the company to report a profit of Rs 50 crore in FY09 and Rs 72 crore in FY10. Thus, the current price is 14.2 times its estimated FY09 earnings and 9.8 times its estimated FY10 earnings. Among its competitors, Keltech Energies and Premier Explosives, which are smaller companies, are trading at P/E multiples of around 7.5 each. Gulf Oil, which is trading at a P/E of around 16.5, and has an explosives business comparable to that of SEL, derives over 65% of its turnover from lubricants and other businesses. Although SEL appears to be fairly valued at present, its leadership position, expansion plans and entry into coal mining justify the same. The company is likely to generate healthy returns for longterm investors.

Source: http://economictimes.indiatimes.com/articleshow/3483742.cms

Intraday Trading Calls for 16th September

Indian Stock Market may open gap down as all global markets trading very lower. But small bounce back expected from lower levels.

Today's Stock Tips/Intraday Trading Calls:

Buy at lower levels (4-5% from previous close) for recovery gains with strict Stop loss:

GTC INDUSTRIES (110)

YES BANK (127)

BANK OF BARODA (302)

HPCL (240)

GMDC (157)

Good Luck.

Intraday Trading Calls for 15th September.

Stock Market India may open positively and remains positive for the day today.

Today's Intraday Trading Calls / Stock Tips (Keep Appropriate Stop Loss for each trade):

PRAJ INDUSTRIES (165)
Buy Above 166.45 Target 170.15, 174.00
Sell Below 163.50 Target 160.25, 156.00
CIPLA (227)
Buy Above 228.65 Target 231.50, 235.00
Sell Below 225.40 Target 222.25, 218.00
GMDC (169)
Buy Above 170.70 Target 175.30, 180.00
Sell Below 167.30 Target 164.25, 160.00
HT MEDIA (126)
Buy Above 127.60 Target 131.45, 136.00
Sell Below 124.60 Target 121.20, 117.00
PANTALOON RETAIL (325)
Buy Above 327.55 Target 332.45, 338.00
Sell Below 322.40 Target 318.05, 312.00
HDIL (274)
Buy Above 276.70 Target 283.15, 290.00
Sell Below 271.40 Target 267.35, 262.00

Others for Intraday: RPOWER, SAIL, SESAGOA.

GOOD LUCK.

Intraday Trading Calls for 12th September

Stock Market India may open positive and good bounce back expected today.

Today's Intraday Trading Calls / Stock Tips (Keep Appropriate Stop Loss for each trade):

PRAJ INDUSTRIES (167)
Buy Above 168.25 Target 171.55, 175.00
Sell Below 165.55 Target 162.25, 158.00
GMR INFRA (98)
Buy Above 98.65 Target 101.75, 105.00
Sell Below 96.50 Target 94.25, 91.00
SAIL (136)
Buy Above 137.20 Target 140.30, 144.00
Sell Below 134.80 Target 131.25, 128.00
BANK OF BARODA (309)
Buy Above 311.60 Target 316.45, 322.00
Sell Below 307.25 Target 302.20, 295.00
RAJ TELE (117)
Buy Above 118.35 Target 122.15, 127.00
Sell Below 114.40 Target 111.05, 107.00
RPOWER (168)
Buy Above 169.25 Target 172.15, 175.00
Sell Below 166.50 Target 163.35, 160.00

Others for Intraday: RTS POWER, NTPC, SUZLON, TATA POWER.

GOOD LUCK.