Multibagger: Titan Industries

Multi Bagger:Titan Industries Recommended Price 934.50
PN Vijay, Portfolio Manager Report Dated: Nov 11, 2008
Company Profile: Titan Industries is one of the fastest growing companies in the Consumer Goods & Luxury space in India. It is a leading manufacturer of watches and jewelry and has recently forayed into eyecare segment.The company was established in 1984 as a joint venture between the Tata Group and the Tamil Nadu Industrial Development Corporation. By mid nineties, it became India’s largest player in the watch industry overtaking HMT. It launched its first brand Sonata in 1998, and hasn’t looked back since then. At present, the company operates in all ranges (popular/midrange and premium) with its bouquet of brands – Sonata, Titan, Titan Raga, Fastrack, and Xylus. It also introduced global brands such as Tommy Hilfiger and Hugo Boss into India. Currently, the company has a total network of 243 ‘World of Titan’ and 12 Sonata showrooms.In 1995, the company diversified into jewelry under Tanishq. Its pioneering role as a first mover played an important role in a fragmented market. Later on the company launched its second Jewelry brand, Gold Plus. The network has expanded to 114 Tanishq boutiques and 28 Gold plus stores.Titan has now diversified into fashion Eyewear by launching Fastrack Eye-Gear sunglasses, as well as Prescription Eyewear. The company has currently 30 stores and plans to cross the 150 mark by FY11.

Titan had an excellent quarter with the Sales and Net Profits going up 53% and 88% respectively. All segments grew in strong double digits with the mature Watch business growing 19% and Jewelry an impressive 71% (aided by higher Gold prices) and the newly created Eyewear – a scintillating 94%. What was gratifying was that all this growth was achieved with an improvement in margins across segments.The profits got translated into Earnings per share(EPS) growth of 88% with the EPS itself amounting to Rs 19.63 for Q2 of FY0809. For the half year, Titan has shown Sales and Profit growth of 38% and 104% respectively. The momentum in Eyewear makes us believe that going forward also, this growth trajectory is sustainable.

Investment Positives: Titan has reported a strong growth in its revenues, EBIDTA and PAT. Further, all its segments (Watches, Jewelry and Eyewear) have taken part in this growth. Titan operates in the sector which to a large extent is insulated from commodity and interest rate meltdowns. Its foray into Eyewear has been a success and it now has three distinct growing business segments. Titan always had a problem of high valuations but this has been corrected in the recent 40% fall in its share price in the stock market crash inspite of the impressive profit growth.

Concerns: In case of sudden fall in consumer spending, demand for Titan’s products which are upmarket will be affected.If Gold prices move up sharply, the fortunes of its Jewelry business are bound to suffer.

Recommendation: Titan is one of the most admired brands in all the segments it operates in. The company has shown a very robust growth in the past and continues to surpass the street expectations with its stellar numbers. Company’s recent foray into Eyewear has put it into a new league among specialty retailers. With the stock price correcting substantially in the recent stock market crash, we believe the valuations are very attractive. The stock is quoting at 17x FY09E EPS, which leaves excellent scope of appreciation considering that the Net profits are likely to go up by around 60%. We recommend a strong BUY with a one year price target of Rs 1500.

Source: Internet (Poweryourtrade.com)

Stock Idea: Punj LLoyd

This is one company which has been advertising extensively on television, even in these difficult times of a slowdown. But one look at the second quarter performance of the company indicates why the company is go gung-ho and foresees no need to cut down on advertising.

For the second quarter ended 30th September 2008, the net sales rose 54% at Rs.2926.05 crore on a YoY. Its EBIDTA was up 77% at Rs.363 crore. Consolidated PAT was up a healthy 61% at Rs.144 crore.

Interest costs have gone up by around 25% during Q2FY09. Though this cost is not expected to come down soon, the fall in the prices of commodities is expected to offset the rise in interest cost.

During the quarter the company bagged orders from Qatar Petroleum for over Rs.3636 crore and GVK Power of Rs.1005 crore amongst others. Its subsidiary, Punj Lloyd Upstream won its first drilling contract in Libya from Waha Oil Company.

The order backlog currently stands at over Rs.21,000 crore of which only 21% is from the Indian operations. This company also get carried away with the boom in realty and ventured into the sector. For now, it has slowed down but its exposure stands at Rs.100 crore (around 15 acres of land), which in the overall macro picture of the company is not too much.

For Q2FY09, the company had a OPM of around 9% and in the remaining two quarters of this fiscal, it hopes to either maintain it or even post higher margins. It plans to focus on markets in West Asia, North Africa, Sub-Sahara and Africa

Source: sptulsian.com

Intraday Trading Calls for 12th November

Indian Stock Market may open flat to Nagetive but remains very volatile throughout the day today. A flat to positive closing expected.

Today's Intraday Trading Calls / Stock Tips (Keep Appropriate Stop Loss for each trade):
AGRO TECH FOODS (112)
Buy Above 113.80 Target 117.45, 122.00
Sell Below 110.15 Target 106.55, 102.00
INDIABULLS REALEST (130)
Buy Above 131.75 Target 135.40, 140.00
Sell Below 128.20 Target 124.45, 120.00
HPCL (200)
Buy Above 202.25 Target 208.65, 215.00
Sell Below 197.75 Target 193.20, 188.00
BPCL (303)
Buy Above 305.80 Target 312.10, 320.00
Sell Below 300.10 Target 295.55, 290.00
CIPLA (201)
Buy Above 202.85 Target 206.15, 210.00
Sell Below 199.40 Target 195.20, 191.00
CORE PROJECTS (58) Short to Med Term Target Rs. 100+
Buy Above 59.25 Target 62.35, 65.00
Sell Below 57.15 Target 55.10, 52.00

Multibagger: Ankur Drugs & Pharma (531683) CMP Rs. 122/- One Year Target Rs. 300+

GOOD LUCK.

Intraday Trading Calls for 11th October

Indian Stock Market may open flat to positive but remains very volatile throughout the day today.

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

RCOM (235)

Buy Above 237.60 Target 242.45, 250.00

Sell Below 233.15 Target 228.20, 222.00

INDIABULLS REALEST (153)

Buy Above 155.65 Target 160.20, 165.00

Sell Below 151.40 Target 147.25, 142.00

HPCL (213)

Buy Above 214.80 Target 220.55, 227.00

Sell Below 210.55 Target 205.30, 200.00

BPCL (320)

Buy Above 322.70 Target 330.10, 338.00

Sell Below 317.20 Target 312.55, 305.00

GREAT OFFSHORE (359)

Buy Above 362.75 Target 370.45, 380.00

Sell Below 356.40 Target 348.20, 340.00

HCL TECH (169)

Buy Above 171.25 Target 175.35, 180.00

Sell Below 167.40 Target 163.25, 158.00

GOOD LUCK.

Intraday Trading Calls for 10th November.

Indian Stock Market may open positive with gap up, remains positive and good Positive closing expected today.
Today's Intraday Trading Calls / Stock Tips (Keep Appropriate Stop Loss for each trade):

HDIL (117)
Buy Above 118.60 Target 124.35, 130.00
Sell Below 115.50 Target 112.20, 108.00
INDIABULLS REALEST (157)
Buy Above 158.65 Target 162.75, 168.00
Sell Below 155.40 Target 151.25, 147.00
BANK OF BARODA (292)
Buy Above 294.80 Target 301.55, 310.00
Sell Below 289.55 Target 284.30, 278.00
KSK ENERGY (140)
Buy Above 142.60 Target 148.55, 155.00
Sell Below 138.20 Target 134.45, 128.00
STERLITE INDUSTRIES (246)
Buy Above 248.75 Target 254.45, 262.00
Sell Below 244.20 Target 239.20, 234.00
CORE PROJECTS (56)
Buy Above 57.25 Target 60.35, 64.00
Sell Below 54.70 Target 52.20, 49.00

Others for Intraday: CANARA BANK, UNION BANK, YES BANK, BANK OF INDIA, TATA STEEL, ADHUNIK METALIK.

GOOD LUCK.

Stock Idea: Allcargo

Looking at the financial performance of AllCargo, it would be difficult to imagine that the world is going through a slowdown. A company which moves goods is the first to feel the pinch but there seems to be no stopping this company.

Defying all logic, the company, for the third quarter ended 30th September 2008, on a YoY posted a 56% rise in consolidated net sales. Though operating expenses went up by 51%, its EBIDTA was up a whopping 153%. Net profit for the period was up by an unbelievable 145% at Rs.42.05 crore. The consolidated results includes financial results of the direct / indirect subsidiaries, viz: Allcargo Belgium N.V., Hindustan Cargo Ltd and Contech Transport Services Pvt. Ltd. The performance of the company also includes that of Project and equipment division of Transindia Freight Services, which was merged with company in this fiscal. The merger of this company to a large extent has been responsible for the phenomenal performance.

Multimodal Transport Operation (MTO) segment registered significant growth of 60% and this was mainly on account of the Project division. The Container Freight Station (CFS)& Inland Container Depots (ICD) revenue has increased by 90%. The equipment hiring unit was a new contributor and it added Rs.10.31 crore to the topline.

Allcargo now has a fleet of 333 trailers, 51 forklifts, 53 cranes and 18 Reach stackers. The company has stated that it is adequately funded and does not expect to feel any impact of the slowdown. Being diversified, with operations globally and in India, the company is better equipped to sail through this global meltdown. Infact it is taking this opportunity of the slowdown to scout around for acquisitons overseas and plans to finalise them if the pricing is good.
Currently at Rs.404 levels, it has bounced back sharply from the low of Rs.272. Buy if it goes below Rs.300 for long term.

Source: sptulsian.com

Stock Idea: BHEL

The effect of the slowdown cannot be seen in this PSU capital goods company. Infact it seems to be business as usual, with orders burgeoning as has always been the trend.

For the first half ended 30th September 2008, BHEL posted a 31% rise in net sales on a YoY. The value of production (net of excise duty) has also improved by 34.07%. Other operating income was at Rs.599 crore which included one time interest income of Rs.267 crore on IT refund of earlier years. PAT was at Rs.1000.20 crore as against Rs.976.60 crore (Rs.847.60 crore excluding interest on IT refund) in Q2FY08.

Orders worth Rs.14,350 crore were received during the current Q2 and order outstanding currently is at about Rs.1,04,000 crore. So the company continues to have the issues of a huge backlog and unless the expanded facility or new facility does come up soon, this burgeoning issue of order backlog will continue to dog the company.

Wage revision is also a big issue, infact the biggest bane of PSUs. For BHEL, the provision for wage revision was reassessed in the current year at Rs.1907 crore for the period from 01.01.07 to 31.03.09. Amount already provided upto 31.03.08 was Rs.594 crore. Balance Rs.1313 crore is being provided in the year 08-09. In the first 2 quarters of 08-09, Rs.547 crore has been provided. This wage revision is about 5% of the market share of the turnover and will continue to remain so for the next 2- 3 years, denting the margins.

The stock price has recovered strongly from the low of Rs.984. Stay invested and if it touches the same low levels again, best time to pick up the stock then.

Source: sptulsian.com