Analyst Views: GMR Infra, JPAssociates, L&T

Technical Analyst, Ashwani Gujral is of the view that GMR Infrastructure can go back upto Rs 185.
Gujral told CNBC-TV18, Jaiprakash Associates just ran into a strong support of about Rs 190. I think it needs to get past Rs 255-260 before one could say that it's bottomed out. There is s a good opportunity for the people those who are stuck in the stock will probably get out, all of last year’s heroes, the stocks that went up like crazy they have lots of ownership and they are not going to bottom out in a hurry."
He further added, "As long as GMR Infra can sustain Rs 140-145 levels, rallies back upto Rs 185 are possible but again same problem here. We have seen what’s happened to RNRL and RPL same over ownership and that’s going to provide lot of resistance. Again, I have been saying that get into under owned sectors and you’ll probably do very well this year instead of trying to go back into those same stocks."

Mehraboon Irani of Centrum Broking feels that at 2,500-2,600 despite the negative, which has come right now Larsen and Toubro, L&T looks like decent value buy.
Irani told CNBC-TV18, "When L&T came down very sharply and lowered by around 10% as compared to the Friday’s close, temptation was there to buy but the problem is that disclosures if they are not met and the market in which we are right now where even a stray selling here and there could push down prices further. There is always a fear that we could possible shed some more as far as that particular script goes but looking at all the negatives right now, hopefully that is final negative, which we have heard on the L&T front at Rs 2,500-2,600 it looks a decent buy. Because even if we look at the down grades as far as earnings estimate goes by couple of brokerage houses even they are talking of price target of Rs 3,100-3,200-3,300."
He further added, "I am quite confident that we will see a price much higher than this in the next 12 months because if not for this negative news, even if it was at Rs 3,100, I would have said L&T now definitely looks possibly going in for value buying. So Rs 2,500-2,600 despite the negative, which has come right now, assuming we don’t any other negative news coming in for L&T, looks like decent value buy."

Source: moneycontrol.com

Markets Today

It was a dramatic day for markets as they opened in red slipped further but showed smart recovery towards the end of the day. Recovery was led by PSU bank, metal, oil stocks. Hang Seng showed recovery of 600 points and ended in green up 200 points. Sensex has recovered nearly 550 points from the day's low and Nifty has recovered 170 points.
Among the gainers were Bharti, ACC, Cipla, Tata Steel, Reliance Petro, Sterlite Ind, JP Associate, M&M, Cairn India and HCL Tech.
SBI, PNB ended in positive terrain. Heavyweight ONGC is also helped in the recovery.
Punj Loyd, HCC, GMR Infra are the midcap stocks closed in green.
L&T might book hedging losses in UAE arm and the stock was down over 8% followed by BHEL, Unitech, Dr Reddy's Labs, Tata Power, Reliance Energy, Siemens, Tata Motors, Wipro, ABB and ICICI Bank.
The BSE Midcap Index ended at 6,767.92 down 0.54%.
The BSE Smallcap Index ended at 8,248.73 down 1.9%.
Sensex closed down 51.80 points or 0.32% at 15923.72, and the Nifty up 28.80 points or 0.60% at 4800.40.
About 886 shares have advanced, 2095 shares declined, and 67 shares are unchanged.
The BSE Bankex ended at 8,438.99 down 0.5%. SBI, PNB closed up; ICICI Bank, Kotak Mahindra, Oriental Bank, Allahabad Bank moved downwards.
The BSE Capital Goods Index closed down 4.5% at 13,341.09. L&T, BHEL, Siemens, Astra Microwave, BEML, Crompton Greave, Thermax, Greaves Cotton, Areva T&D closed lower.
The BSE Auto Index closed at 4,653.96 up 0.4%. Escorts, TVS Motor, Amtek Auto, Bajaj Auto closed higher.
The BSE Metal Index closed at 15,799.61 up 2%. Sterlite, NALCO, Shree Precoated, Mah Seamless, Jindal Steel, Jindal Saw, JindalStainless closed higher.
The BSE FMCG Index closed down 1% at 2,190.26. Colgate, ITC, Bata India, Godrej Consumer, HUL, GlaxoSmith Con closed lower.
BSE Oil and Gas Index closed at 10,225.67 up 2%. Reliance Petro, Cairn India, ONGC ended in green BSE power index closed at 3,112.34 down 1.3%. Torrent Power, NTPC, Reliance Energy, Tata Power, Power Grid Corp, Crompton Greave ended in red.
The BSE IT Index was down 2% at 3,570.84. I-Flex Solution, Patni Computer, Financial Tech, Mphasis, Tech Mahindra, TCS, Infosys closed lower.
The NSE cash turnover was at Rs 16437.42 crore and the NSE F&O turnover was at Rs 42402.3 crore. The BSE cash turnover was Rs 6877.8 crore. Total market wide turnover was at Rs 65717.52 crore.

Investment Idea: Stone India

Stone India is a part of Duncan Goenka group, the undisputed leader in locomotive brake systems and has a huge range of mechanical and electrical products for the railroad industry. It also manufactures few critical products for defence tanks and armoured vehicles.

Despite all these illustrious credentials, unfortunately, it has not got translated into good profit margins for the company. For the third quarter ended 31st December 2007, the company has shown an overall dip in the performance. On a qoq basis, the net sales dropped by 6% at Rs.18.60 crore. 90% of the company’s sales come from the railways but obviously; it has taken a beating during Q3. Expenditure was more or less consistent at Rs.15.73 crore, yet the lower sales led to the drop in the EBIDTA by 28% at Rs.2.88 crore. OPM dropped from 20.13% to 15.46%. PBT fell down further by 40% at Rs.1.89 crore and due to no provision for taxation; this was its PAT also. NPM slipped down from 15.98% to 10.18%.

The company is putting up a new facility at Nalagarh, Himachal Pradesh, expected to go on stream by end of March 2008. It is also contemplating putting up another new facility in Southern India, though all the plans yet only on the drawing board.

The stock of the company has taken quite a beating after the declaration of the Q3 results and the ongoing bearish trend also added on. Q2 results had also showed signs of a slowdown and this fall in Q3 is also worrisome.

With the Indian Railways planning to expand its network all over India and with the huge allocation earmarked for modernizing and expanding the railways network, clearly the company would stand to benefit. Being a supplier to the defence sector also, whose allocation has been increased in the Budget 2008-09, clearly the company could look ahead for some good times.
Despite the slowdown, given the expansions of the Indian Railways, the company might be able to get some better orders in the coming months. Based purely on this optimism, one can stay invested at the current rate of Rs.95.

Intraday Calls for 10th March

Markets may open weak as all global markets are trading deep in red. But A bounce back expected in mid-session from lowerl levels.
Today's Intraday Picks: GMR Infra, RCOM, JP Associates, Yes Bank.

For Details download the file by Click Here
Good Luck

Weekly Review

Pharmaceutical - Sector Report : Orchid Chemical, Indoco Remedies, Sun Pharma, Dr. Reddys, Ranbaxy
Auto Sector Report: Tata Motors, Maruti Suzuki, Ashok Layland, TVS Motor.
Special Report: Nestle India, Exide Industries.
Download the weekly review file by click here .

Weekly Technical Report

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Investment Idea: India Glycols

India Glycols is the first and only company in the world to produce Ethylene Oxide (EO) / Mono Ethylene Glycol (MEG) from renewable agro route based on molasses, which is a by-product of the sugar industry.

MEG is used in the manufacture of polyester resins, films fibres, and is an important raw material used in the production of coolants, antifreezers, aircraft ant-icers and solvents. Thus the client base of India Glycols covers almost entire India Inc, supplying MEG to more than 1,000 customers in various end-use industries such as Textile, Agrochemical, Oil & Gas, Personal Care, Pharmaceuticals, Brake Fluids, Detergent, Emulsion Polymerisation & paints etc.

Making MEG from ethanol is highly cost effective as against using crude, which is currently ruling at record high prices. Using crude is uneconomical and world over, companies are shifting to use of such renewable agro routes. Currently the price of ethanol has been fixed at Rs.21.50 per litre for the next three years (which is less than a dollar) and this is in no way even comparable to the over $100 per barrel of crude. So in this context, India Glycols, having the largest plant in India for making MEG from ethanol has a great advantage.

The company is now in the midst of enhancing its MEG capacity by 20% at an investment of Rs.25 crore resulting in a very attractive payback.

During the quarter, the company acquired a controlling stake in Shakumbari Sugar & Allied Industries at a consolidated price of Rs.47 crore, which has a crushing capacity of 3200 Tonnes Per Day(TCD) along with a modern distillery of 40 kilo litres per day(KLPD). With this acquisition, the company would be vertically integrated to captively produce additional ethanol requirements.

The company has also established its subsidiary in Singapore to augment its activities in South Eastern Asian region and other related areas. It is already exporting to South East Asia, Middle East, Europe, Australia and USA.

Apart from this, the company has also got into purifying Carbon Di-oxide (CO2), a by-product produced in the distillery, both at its Kashipur and Gorakhpur units which has application in food, beverage and other industrial usage. CO2 plants at both distilleries are to be commissioned in March 2008.

Indian Glycols has had a super third quarter ending. For Q3 ended 31st December 2007, the company, on a QoQ basis reported a 26% jump in net sales at Rs.449.98 crore, which on a YoY was up by 93%.

EBIDTA was up in Q3, on a Q0Q by 29% at Rs.113.53 crore which YoY was up by a whopping 219%. OPM improved from 15.27% in Q3 FY07 to 24.52% in Q2 FY08 and now in current Q3, it was at 25.23%.

The best probably jump has been in its net profit. For the current Q3 it was at Rs.67.50 crore, which on a QoQ indicated a jump of 40% but YoY, it has gone by an unbelievable over 6 times. NPM rose from a meager 4% in Q3 FY07 to 13.56% in Q2 FY08 and now in Q3 FY08 it stands at a healthy 15%.

On an equity of Rs.27.88 crore, the company, for Q3 FY08 posted an EPS of Rs.24.21. What this means is that the company will end this fiscal with an EPS of Rs.80, that’s a certainty. Also based on the present earnings, one can safely say that for FY09, the company will have an EPS of Rs.100, what with the additional capacity also expected to go on stream.

The cash EPS for Q3 was at Rs.31 and this means that we are looking at a certain cash EPS of around Rs.100 in FY08 and Rs.120 in FY09.

For a nine months ending 31st December 2007, though the company had forex gains of Rs.21.80 crore, the same would get added on in FY09 through improved performance and hence an EPS of Rs.100 for FY09 can be reasonably expected.

The stock is currently quoted at Rs.247, giving us a PE of just 3 on the EPS of Rs.80 estimated for this fiscal and if we look at the expected EPS of Rs.100 in FY09, the PE works to a measly 2.50 times. Now if that isn’t good enough, nothing else will be!

What makes India Glycol a great buy is the fact it has a unique business model which enables the company to produce petrochemicals and specialty chemicals from renewable agro route base and that too where the cost of the raw material is fixed and is available in abundant supply. Coupled with growing demand and higher margins through larger volumes, there is no way that this winner of a company can falter. The icing on the cake is that currently, looking at the future discounting, the company is quoted at a dirt-cheap price.

One can safely buy India Glycols at the current rate of Rs.247 for a sure 50% return over the next 12 months.

Source: sptulsian.com