Stock Idea: Nagarjuna Agrichem Ltd

Nagarjuna Agrichem Ltd (Rs 228)
(BSE Code - 524709)
(P/E - 5.7, Equity - Rs14.9 cr, Promoter’s stake - 78.29%, Market Cap - Rs340 cr)
Nagarjuna Agrichem Ltd (NAC), a co. belonging to the Hyderabad based Nagarjuna group, was established in 1994 for producing Monocrotophos Technical. NACL has since grown substantially and now manufactures a comprehensive range of pesticide technical's, formulations and custom manufactured fine chemicals. NAC has tie-ups with large Indian Agrochemical Majors and MNC’s for the domestic and export markets. NAC has an impressive range of branded formulations in the categories of Insecticides, Fungicides and Herbicides. NAC has one of the largest dealer network spread across India, with marketing and sales offices in addition to an extensive Warehousing & Logistics Infrastructure to handle operations in 20 Indian states. NAC has been continuously expanding its production capacities and reporting better results. On a equity of 14.9 cr. the public holding in the company is 15.48%, and that of the promoters is 78.29%.
The export market offers good growth opportunities to the NAC and it has been strengthening its presence in the overseas market by exploring new markets, promoting existing and new products and protecting its existing product registrations and making investment in new product registrations. NAC’s market spans the entire Indian subcontinent as well as Europe, the Middle East, Japan, USA, Australia and Africa. Low cost production of the Indian agrochemical manufacturers helps them to win CRAMS business from the global agrochemical majors. The extremely low per hectare domestic consumption and thrust on increasing output per hectare promise healthy domestic growth going forward. The per capita consumption of crop protection products in India is one of the lowest in the world
NAC’s sales have been growing by an average 37% over the past five years, while its operating profit rose 35% over the same period. Margins have averaged a decent 15% over these five years. Most importantly, Nagarjuna is a very efficient user of capital. Its RoE has averaged 41.27% over the past three years. For the year ended March 2009, NAC reported 46% growth is net sales to Rs 605.3 cr., whereas net profit grew 91% to Rs 49.2 cr., despite 120% rise in income tax to 31 cr. from 14 cr. NAC improved its operating margins from 17% to 19%. On a equity of 14.9 cr, the EPS stood at Rs 33 and the dividend declared was 50%. The company improved its OPM from 17% to 19.5%. For the half year ended Sept. 2009, NAC has posted 42% rise in net profit to Rs 28.5 cr. on net sales of Rs 338 cr.(up 12%). Interim dividend of 20% has also been declared.
Going forward, emerging global imperative of productivity enhancement will revitalize the crop protection industry. The crop segment that NACL is targeting, is its key crop segment- rice, cotton and in the tea plantation. NAC is a company from the farm sector which combines a high RoE (41.27%) and reasonably low current valuations as compared to its peers such as Rallis India, Bayer Cropscience etc. At current levels the stock trades at about 6.9 times FY09 earnings and at about 5.7 times FY10E earnings (Rs 40) and has a market cap of about 340 cr.. The stock is certainly cheaply valued with its market-cap at just 2.9 times its FY09 operating profit of Rs 117 cr. Investors can start accumulating the stock at current levels and add more on declines for decent returns of 40%-50% over the next 6-8 months.
Source: Internet (Valuenotes by Sanjay Chhabria)

Stock Idea: DIC India Ltd.

DIC India Ltd (Rs 180)
(BSE Code - 500089, NSE Code - DICIND)
(P/E- 8, Market Cap - Rs165 cr, Net sales - Rs515 cr, Equity - Rs9.17 cr)
DIC India(DIC), formerly known as Coates of India, is a 71.75% subsidiary of DIC Asia Pacific Pte Ltd, Singapore, which in turn is a wholly-owned subsidiary of US $ 9 billion Dainippon Inks and Chemicals (DIC) of Japan, world leader (40% global market share) in printing inks, organic pigments and thermosetting resins. The DIC group, with its subsidiary Sun Chemical, is the largest ink company in the world. Around US$ 5 billion (Rs 22,000 crore) of the group’s revenue of more than US$ 9 billion comes from ink-related businesses. DIC is the world’s largest supplier of inks, organic pigments, varnishes, coatings, resins, and toners and ink jet inks. DIC India enjoys strong market position (33% market share) in Rs. 1,500 cr. printing and liquid ink market. There are three segments in printing ink, viz., Publishing inks (covers newspapers, magazines & books), Packaging inks (as covers FMCG sector, has tremendous potential to grow) and high quality emerging segment – Commercial printing inks (covers sales literature, leaflets, brochures, tourist literature, catalogues, etc). Company is the market leader in high volume low value publishing inks segment.
The fortunes of the printing ink industry are linked to the economy, particularly the publishing and packaging sectors. Despite the high GDP growth in the recent past, the growth of the packaging sector in India was impacted by the slow growth of the FMCG sector, restricting the top line growth of the printing ink industry. However, the fortunes of the FMCG industry have revived. This will directly benefit DIC India. Moreover, the publishing sector is on the rebound. The increasing urbanisation and literacy levels as well as new launches and higher media spend are likely to result in comfortable growth rates for the publishing industry. With more foreign publication houses setting up their outfits in India, the publication sector is poised for major growth. All this will benefit DIC India.
DIC India’s focus remains on maintaining strong position as a leading supplier to the high technology and quality end of the market, where new presses with full automation require rapid drying and coating with quick wash-ups and make-readies. In India, the company also manufactures and distributes Varn chemicals and blankets from Day International. DIC India will have full access to the total portfolio of products and technology available with DIC and Sun Chemical. Therefore, the value from DIC and Sun Chemical will be added to its brands and products. The beneficial impact of this is expected to result in better range and quality of DIC India’s products. The parent company has launched several new products in the recent past, to which DIC India is expected to get access. For the nine months ended Sept. 2009, DIC on standalone basis has posted net profit of Rs 14.58 cr. on net sales of Rs 340 cr.. On a consolidated basis, the revenue grew 20.5% to Rs 515.1 cr. in CY 2008 (ended December 2008). The consolidated net profit stood at Rs 18.07 cr.. On a equity of Rs 9.17 cr. consolidated EPS stood at Rs 19.7 and the dividend declared was 35%. The Book value per share stood at Rs 196. The company’s market cap is just Rs 165 cr. against CY08 net sales of Rs 515 cr.
DIC India has changed its business focus towards highly profitable publishing ink and commercial printing ink (growing at 12-15%), while simultaneously cutting down on sales of low margin packaging ink segment. Changed business composition and new product launches will be driving volume growth. Considering good industry prospects, low valuations, DIC India’s strong market positioning and technological & marketing support from DIC, Japan, company is poised for good times ahead. At current market price of Rs 180, DIC stock trades at 9.1 times consolidated CY08 earnings(Rs 19.7) and at 8 times expected consolidated CY09 earnings(Rs 22.5). Investors can start accumulating the stock at current levels and add more on declines for decent returns of 35%-40% over the next 6-8 months.
Source: Internet (Valuenotes by Sanjay Chhabria)

Stock Idea: Jaiprakash Associates Ltd

Jaiprakash Associates Ltd— BUY—220—INR
Sector — Construction (others)
Regd.Off.— S. K. Road, Greater Noida City, Lucknow, U.P. -201306
Listed — NSE, BSE.
Company overview—
Jaypee group is a well-diversified infrastructural industrial group of India that commenced its operations in 1972 as a partnership firm then known as Jaiprakash Associates. Three decades later with growth and diversification the group is now engaged in the businesses of Engineering and Construction, Cement, Private Hydropower, Expressways and Highways, Hospitality, Golf Resorts and Information Technology. With a professional management team and a competent technical cadre the group employs a total workforce of over 25000. Jaiprakash Associates Limited the flagship company of the Jaypee Group is leader in the construction of multi-purpose river valley and hydropower projects and has been involved in construction of major engineering projects for the last three decades. Jaiprakash Associates Limited the groups construction arm is the only company to have four modern ferrule workshops one each in Tala, Baglihar, Chamera and Vishnuprayag sites.
Products & Services—
Company is involved in the construction of multi-purpose river valley and hydropower projects and has been involved in construction of major engineering projects for the last 37 years, including complex hydro power / river valley projects, Expressways and Real Estate Development, etc. Company is involved into Design and engineering of works, Controlled earth / rock fill, Concrete manufacture and placement, Fabrication and erection of penstock liners and steel structures, Hydro-Mechanical equipment design, procurement and erection, Expressway Construction, Real Estate Development.
Company has completed several projects in India and abroad as an Engineering Procurement and Construction (EPC) contractor and possesses necessary experience and expertise to carry out such works in a time schedule. Company has acquired ample tunneling experience in the young Himalayan mountains on various projects inter alia, Dul Hasti (Jammu & Kashmir), Baspa-II (Himachal Pradesh), Vishnuprayag (Uttaranchal) and Tala (Bhutan) Hydroelectric Projects under complex conditions including extreme weather conditions, adverse geological conditions. It is simultaneously constructing nine concrete dams, one barrage and twelve powerhouses with a total generation capacity of over 8190 MW. Company owns a huge fleet of modern construction machinery which include ropeways, electronically controlled parallel cable way system, tower cranes, rotec conveyer system, tunnel boring machine, hydraulic jumbos, modern computerized concrete batch plants, ice making machines, in addition to a large complement of earthmoving machinery. Highly qualified professionals and competent technical persons supported by skilled operators and supervisors, Technicians, Skilled and Unskilled Workers form the backbone of the company. Company has been assigned "CR 1" grade by ICRA Ltd, indicating Very Strong Contract Execution Capacity with best prospects of timely completion of projects without cost overruns, etc.
Recent development—
Jaiprakash Associates has raised Rs 10 billion through issue of non-convertible debentures (NCDs) to Standard Chartered India. Company has also decided to raise low cost funds to the extent of Rs. 5 billion by way of private placement of unsecured rated commercial papers. It has also decided to disinvest / offer for sale upon 60 million equity shares out of 1.21 billion equity shares of Rs 10 each held by the company in Jaypee Infratech, a subsidiary of Jaiprakash Associates.
Valuation—
At current market price, stock is trading at 9.74 P/E multiple of its FY2010 estimated earnings. We recommend investors to buy “Jaiprakash Associates Limited” with medium to long-term investment Horizon.
Source: Internet (Valuenotes by Abhishek Jain)

Intraday Trading Calls for 27th November

Indian Stock Market may open negaive but remains very volatile and a negative closing expected.

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

SCRIP NAME	TRIGGER	PRICE	TARGET 1	TARGET 2
BRFL	Buy Above	190.75	194.50	199.00
	Sell Below	189.25	185.45	181.00
IDFC	Buy Above	167.25	170.35	174.00
	Sell Below	165.15	162.40	158.00
APTECH	Buy Above	170.10	174.35	192.00
	Sell Below	168.40	164.20	160.00
GODREJ INDUSTRIES	Buy Above	206.50	211.10	216.00
	Sell Below	203.70	200.10	195.00
THINK SOFT	Buy Above	304.70	311.25	318.00
	Sell Below	301.05	295.45	290.00
CIPLA	Buy Above	319.20	325.10	330.00
	Sell Below	315.70	310.40	304.00
KPIT CUMMINS	Buy Above	114.65	118.75	122.00
	Sell Below	112.45	109.20	105.00

GOOD LUCK

Stock Idea: Jain Irrigation

This stock, typically comes to the fore only during the Budget. With the Govt always expected to give sops to the agriculture sector, this is one stock which has always been a big beneficiary. But looks like the poor monsoon and the recession in international markets have played on the sequential numbers, which are clearly under pressure.
Its hi-tech agro input products, which includes micro irrigation systems, PVC piping products, tissue culture plants and agri R&D, on a QOQ has shown a 15% decline in sales. Consequently, EBIDTA on the same has come down from 26% in current Q2 to 22%. Industrial products did well and probably helped shore the margins. Revenue of IP was up 31% and EBIDTA margin was up by 1% at 21%. Overall net sales, has shown a sequential drop of 1.8%.
Apart from fall in revenue, operating expenses rose on a QoQ by 2.56%. So these two factors together pulled down the numbers. Net profit was down 23% at Rs.42.56 crore.
Drip irrigation is actually the bets method to combat a poor monsoon and with more and more states realising this, it would only go to increase business for Jain. Infact, the company which has been concentrating more in southern and western India but it is now making plans to enter central and north India. Apart from concentrating on domestic demand, the company is also looking at exports. It has invested $10 million to set up a new plant to make irrigation systems and plastic pipes in Turkey, production at which will begin this month. It is also planning to expand into Israel and U.S but no real investments for the same have been made yet.
It currently has an order book of Rs.900 crore of which majority is for micro-irrigation. It is also planning to tap Asian and Middle-east markets for selling processed food, where it already sells micro-irrigation.
Its growth in FY10 is expected to be led by micro-irrigation division which, it expects to grow by 40% and next driver being food processing, which it hopes would grow by 20-25%.
Companies which have an agri focus would do well and especially Jain. Stay invested.

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

Intraday Trading Calls for 26th November

Indian Stock Market may open negaive but remains very volatile and a flat to positive closing expected.

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

SCRIP NAME	TRIGGER	PRICE	TARGET 1	TARGET 2
AMBUJA CEMENT	Buy Above	92.65	95.20	98.00
	Sell Below	91.40	89.45	86.00
IDFC	Buy Above	170.75	173.65	177.00
	Sell Below	169.35	165.55	161.00
AHLUWALIYA CONTRACT	Buy Above	180.10	185.05	192.00
	Sell Below	177.40	172.35	168.00
GODREJ INDUSTRIES	Buy Above	206.50	211.10	216.00
	Sell Below	204.15	200.10	195.00
BAJAJ HIND	Buy Above	224.25	229.65	234.00
	Sell Below	221.05	216.35	212.00
GMDC	Buy Above	131.75	135.40	140.00
	Sell Below	128.70	124.35	120.00
COMPACT DISC	Buy Above	67.70	71.20	75.00
	Sell Below	66.45	63.20	60.00

GOOD LUCK

Stock Idea: Andhra Bank

Company snapshot
Andhra Bank, founded by the freedom fighter Dr. Bhogaraju Pattabhi Sitaramayya, commenced business on 28 November 1923. The bank is headquartered in Hyderabad and has a concentrated network in the state of Andhra Pradesh with major proportion of its advances being generated from the branches located in the state.
The Bank has posted whopping qtrly result during the qtr ending Sept’09. The return on Asset of bank stood at 1.54% as compare to 1.12 %( Q2FY09) & 1.44 %( Q1FY10).The bank has also shown rise in Return on Equity as it stood at 30.05% as compare to 19.89%(YoY) & 25.60%(QoQ).The Provision coverage ratio of bank stood at 81.12% as compare to 76.65 %( Q2FY09) &
72.26 %( Q1FY10) The cost ratios of the bank depicted the firm trend as cost of funds shown drop to 5.88% from 6.21% (YoY) & 6.13%(QoQ)The cost to income ratio of bank has also shown great improvement to 39.45% from 50.27%(YoY) and 48.78% (QoQ).The Net Interest Margin of bank increased to 2.90% form 2.50% in qtr ended June’2009.The growth was mainly attributed
to drop in cost of funds and higher credit to deposit ratio during the qtr ended Sept’09.
Business Details
Andhra Bank, founded by the freedom fighter Dr. Bhogaraju Pattabhi Sitaramayya, commenced business on 28 November 1923. The bank is headquartered in Hyderabad and has a concentrated network in the state of Andhra Pradesh with major proportion of its advances being generated from the branches located in the state. Andhra Bank is a fast growing public sector bank in the country with a total business size of Rs.110460 crore as on 30 Sept 2009. It renders services through 2421 delivery channels consisting of 1536 branches, 798 ATMs spread over 22 states and 2 Union Territories. The bank played an important role towards developing and expanding self help groups (SHGs). It continued to focus on agriculture and allied activities ensuring a steady flow of credit to this sector. Finance to Agricultural sector by bank stood at Rs 7482 Crores .All Branches of the Bank are under CBS. Bank has also launched Online Tax payment (eTax) along with Internet Banking (Retail as well as Corporate). Bank also provides facilities like SMS Alerts over Mobile Phones for certain type of transactions and account balances are made available to clientele registered for this facility.
As on 30th September 2009, 7.53 Lakh customers got registered for this facility. Bank is also providing its customers facility to request for account information through SMS-pull facility. Customer can seek balance enquiry, mini-statement, cheque status, etc through this facility. Bank also offers customers the facility to subscribe to Initial Public Offers of corporate using Applications Supported by Blocked Amount Scheme. Bank's Internet Banking Customers can participate in Online Trading via M/s Religare. Bank has also launched a web based fast forex remittance facility (AB Speedway) for the benefit of NRIs of U.S.A .
Industry Outlook

Indian banking industry faced many uncertainties during 2008-09 in the face of tight market liquidity in the global financial markets. The RBI's prompt and relevant measures ensured adequate domestic and foreign liquidity to Indian banking industry so that the flow of credit to productive sectors would not suffer much. Yet, on account of the severe global economic slowdown and its spillover effects on India, growth of bank credit to commercial sector decelerated in 2008-09. Moreover, expansion in net foreign exchange assets of the Indian banking industry moderated to a large extent. However, the Indian banks, in general, posted healthy financial results during 2008-09 compared to their global peers despite challenging economic conditions. The outlook for Indian banking industry remains positive in 2009-10 on the backdrop of its stricter prudential regulation by the RBI, sound financial indicators and stable political regime.

Investment Rationale
Bank has recently received R2 approval for the insurance Joint Venture with Legal & General and Bank of Baroda. Also, Bank has signed MOU for launching a banking subsidiary in Malaysia jointly with Bank of Baroda and Indian Overseas Bank. This will help the bank in expanding its presence in Malaysia. Bank has tied up with Piaggio Vehicles aimed at offering a highly competitive retail financing scheme that ensure low interest rates to the customers which will in turn provide boost to the credit offtake of bank. Also, the new corporate slogan ‘Andhra Bank….for all your needs’ is introduced during the first quarter reflecting good recall and visual value. Bank has opened 104 branches during the Half year taking the total number of branches to 1536. With 49 ECs, 38 Satellite Offices and 798 ATMs the total number of delivery channels of banks has increased to 2421. Also, number of ATMs of the Bank increased to 798 as on 30-09-2009. Besides Banks owned ATMs, the ATM/ Debit Cards issued by Bank are accepted on NFS Network, VISA Network and under bilateral arrangements numbering in all 45000 ATMs Number of ATM/Debit Cards issued by the bank increased from 35.4 Lakhs as on 31-03-2009 to 45.52 Lakhs as on 30-09-2009. For remote branch connectivity for CBS, Bank has deployed 251 VSATs. Retail credit registered robust growth of 34.73% over previous year and reached Rs. 7149 Crs as at the end of September-09 Also, lending to MSME sector has gone up by 52.19% and reached Rs. 6835 Crs. All other advances including Corporate credit moved up to Rs. 25645 Cr from Rs. 19800 Cr, year on year. Bank aims to attain a business mix of Rs.1,30,000 Crs by the end of March 2010 at a growth rate of 30% and Rs.1,50,000 Crs by September 2010. Bank is also targeting to reach CASA percentage of 33% of total deposits by March2010. Bank shall be rolling out the insurance products of its own Joint Venture for sale by July 2010. Banking subsidiary in Malaysia jointly with BoB and IOB expected to function next year.
Valuation
At the current price of Rs 117, the Bank is trading at 6.01times to its TTM eps of Rs 19.45. The bank has posted whopping results for qtr ended Sept’09. With the plans of strengthening its network and customer base while focusing on further enhancement in the customer service through innovative products and services, bank will continue to leverage technology for an all-round performance. Looking at the strong financial performance, the bank looks undervalued at the current price of Rs 117. Hence we recommend investors to “BUY” the stock with the price target of Rs 155 in medium term which is 32% above from the current price of Rs 117.

Source: Internet (Valuenotes by Hem Securities)