Call from Analysts

[aca_trader]

Hi Ashish,

I am a newbie here, very greeeeeen as far as stocks is concerned. But have worked for a long time, understand disclosures and sublimal messages. You do mention that you cannot elaborate, but in saying what you said about auditing them, have you already not started a movement/momentum?

On a more personal note, what is your take on what generally happens in the stock market - anywhere in the world. It is nice to quote Warren Buffet, which is what everyone who is into trading does, but for one Warren Buffet, there are uncountable numbers who have died trading. And if one reads Illuminati & Free Masonry conspiracy theories, then it may not be all just pure luck and good judgement. The Illuminati is 13 of the worlds riches families and the Rothschilds, the Haupsbergs, the English Monarch, Kennedys, Ford and others have probably amassed all this wealth in collusion and not just business savvy. These are the bankers and the players of the world. If people are interested I can provide some interesting links but a Google Search is enough for Illuminati and Free Masonry.

I am now like the guy who has seen the Illusion and therefore lives outside the city in a small hut. We used to call them lots of things but ...

Take care

Jayesh

First of all, I would like to apologise for not understanding the matter correctly. Hence, my reply may be different from what it should be.

I have read your other posts as well and looks like you are wondering deeply about what goes on inside the market. To be frank, I really have no idea but from a few things I do know, I would like to say that what generally happens in market can be classified in two groups, Real Investment/Trade and other is Manipulation.
Now when a person has started trading/investing in markets, in this limited role, in my opinion, he has to forget about what is really happening in market behind the curtains. He has to follow a tested methodology and earn from it. Whatever is happening in market, he will be able to see but only through movement in prices and not directly.
Nevertheless, if one's pursuit is academic, one can go and think/reserach deeply about such matters and then his thinking/research will give fruits only when it helps in curbing manipulation.

About Waren Buffet, he is the most successful investor and is not a trader. As you rightly said that a thousand traders die but then we have to understand that it's all about taking risk and managing it. Buffet has taken much more risk than a trader would assume and coupled with his ability to identify the trend before it's evident, is enjoying the fruits . A trader on the other hand lives with the philosophy that "Trend is Friend" and hence has a disadvantage compared to Buffet but at the same time, his risk is also very low. Comparing Buffet with traders is like comparing Apples with oranges and therefore he should be compared with PE funds only and that comparision will also be limited as he does not exit like other PE funds.

About secret societies, thanks to Dan Brown and Even Tolstoy, I have an idea about illuminati and free masonary. I don't know if there are really secret societies or not and things are doubtful even after watching a program on Discovery which mentioned that Yale University has also such a secret group and all the finances of US is controlled by these guys and even Bush Jr. is a member of it.
But there is wisdom behind the saying,to a large extent,"It's not what you know but whom you know." I have been very late to realize this as all the time I was running to gather knowledge forgetting networking. But then, human kind has a weakness to put acacdemic knowldge on a higher pedestal as compared to soft skills which is not necessarily true. However, to say that all this world is a conspiracy and these people did acquire all their wealth without business acumen is a statement as deviod of truth as the concept of
a superpower is.

Best Regards,
--Ashish

 

[shrinivas]

( Excuse me for digressing from the thrust of this thread , but ...)
Ganesh

Your day trading skills are truly impressive , Dont mind my asking, though , .... do u offer these profits for tax at 30 % or 10 % ?

I mean what do the rules state ?

AGILENT

you got it wrong...these are NOT intraday figures....hence I believe business income..my holdings are atleast for 3-4 days.......and no concessions on tax.........

ganeshhity

 

[shrinivas]

Ganesh

Hope u are aware.

just checking...

none of my business, of course, but IMHO its always better to be safe than sorry ... and specially when IT matters are concerned ... u know the stiff penalties for short payment ... even if they are detected many years after the event

Your well wisher

Ahh my friend, I've made huge losses this year...so no worry for tax..i'm just now trying to nullify my losses and come to no profit no loss situation..I'm a good tax payer...I do not try to evade them....but ya, I'm getting busy day by day in office schedule and hence lesser and lesser market buying selling now....i would wish i could be a long term investor, but markets allowing chances to make money, and hence i exit at tops (presumed tops)..

ganeshhity

 

[Sarveshk]

Tata Tea -
Analyst meet takeaways Buy; CMP: Rs798 -- Target; Rs. 1040

We attended the analyst meet organised by Tata Tea Ltd (TTL) last week after the acquisition of Energy Brands Inc (EBI) by the company. Even though the recent acquisitions of TTL have helped the company transform itself into a splendid branded beverage play, we believe that the funding issues with regard to the latest acquisition (EBI) will act as an overhang on the stock in the short term.

Valuation of EBI revised at 12.4x sales

In the analyst meet, the management of TTL indicated that EBI's revenues for CY2005 were at $175 million instead of $350 million as was stated earlier. This puts the valuation of EBI at 12.4x its CY2005 revenues against the earlier valuation of 6.2x. TTL may go for equity dilution
The various options available to TTL for raising Rs864 crore required to invest in EBI
are as follows:

it could unlock the value of its investments in various other Tata group companies;
it could restructure/sell partially its north Indian plantation operations;
it could take debt as its stand-alone debt/equity ratio is very low at 0.2x; or
it could go for equity dilution, which may be in any form including a rights issue. The dilution may be to the extent of 8-10%.

TTL's stake in TTGL to go down

TTL and Tata Sons Ltd (TSL) will invest $192 million and $58 million respectively in Tata Tea GB Ltd (TTGL; a vehicle for the EBI acquisition) in the form of equity. TSL will subscribe to convertible bonds of TTGL which will increase its stake in the latter to 23% (current holding = 1.4%). TTL's stake in TTGL will come down to 77% from 98.5% pre-acquisition.

Short-term overhang on the stock

We expect the EBI acquisition to act as an overhang on the stock price in the short
term because of the following reasons.

1. Near-term earnings to reduce by 20-25%

To fund the acquisition, TTL will either raise debt or dilute equity or reduce investment which will affect its earnings negatively
TTL's stake in TTGL will reduce to 77% from 98.5% pre-acquisition
TTGL will have to take $427 million of debt to fund the acquisition which will increase TTGL's interest cost

2. Reduce appetite for further acquisitions
TTL's consolidated debt/equity ratio of nearly 3-4x will reduce its appetite for further acquisitions in tea space

3. EBI to contribute to earnings from FY2009

EBI is expected to start paying dividend from FY2009 onwards and hence will contribute to TTL's profitability only after three years Long-term potential is immense The management of EBI has indicated that the revenues of the company are likely to quadruple over CY2005-07 to $700 million with the potential to reach even $1 billion in the same period. It is also expecting the enterprise value of the company to nearly go up to $10 billion from the current $2.2 billion (appreciate almost five times). Thus, the investment in EBI holds immense long-term potential
for TTL looking at the fact that TTL holds the right to increase its stake in the company to 40%.

Valuation and view
We will revise our earnings for the stock once the funding pattern for the EBI acquisition becomes clear. We maintain our Buy recommendation on the stock with price target of Rs1,040.
SSKI

 

[Sarveshk]

Deepak Mohoni
Buy Tech Mahindra below Rs 552 with a stop loss of Rs 544; This is a day-trading recommendation
Sell Jet Airways above Rs 554 with a stop loss of Rs 565; This is a day-trading recommendation

Ashwani Gujral
Buy Banco Products with stop loss of Rs 190 for a target of Rs 280
Buy KS Oils with stop loss of Rs 220 for a target of Rs 320

E Mathew
Buy ACC with a stop loss of Rs 922 for a short-term target of 1001
Buy Jaiprakash Associates with a stop loss of Rs 430 for a short-term target of Rs 522

Rajat K Bose
Buy ACC with a stop loss below Rs 929.80 for a target of Rs 967
Buy Gujarat Ambuja Cement with a stop loss below Rs 112 for a target of Rs 121

 

[Sarveshk]

DD Sharma, Anand Rathi Securities is of the view that Mercator Lines is the best buy.
Sharma told CNBC-TV18, "Mercator is one of the best play in the shipping sector, particularly the tanker rates for shipping is going very well. In April for example you have seen the VLCC rates were 22,100-22,200 around that level and now they are close to 63,000. So you see the rates whether it is VLCC, Suezmax or Aframax, everywhere the tanker rates has improved significantly from the April-May-June and now in July you see far higher than the April-May rates plus compared to a year ago also they are much better."
He further added, "So the current quarter and the coming quarter for the shipping sector could be quite well and Mercator is well placed, I expect the best out of it. The June quarter results which we see for Mercator which was down, this was mainly due to the dry docking of some ships of the Mercator which impacted the revenue also and cost on account of the dry docking charges. So Mercator is well placed and it is reasonably priced as around four times of the '07 earnings. It offers around 4% of the yield also, so I think it is the best buy."
Diclosure: I owned the above stock.

 

[Sarveshk]

Capita Telepholio recommends buy call for short term
6/9/2006
BUY: Aditya Birla Nuvo at Rs 836

Now full details:

BUY : Aditya Birla Nuvo at Rs 836
BSE Code : 500303
NSE Symbol: ABIRLANUVO
Market Lot: 1

Aditya Birla Nuvo is a unique play on four of India's most exciting
sectors namely garments, insurance, asset management, telecom and
information technology.

Actual consolidated EPS for March 2005 : Rs 7.7
Actual consolidated EPS for March 2006 : Rs 24.8
Projected consolidated EPS for March 2007: Rs 36.1

 

[Sarveshk]

Deepak Mohani:
Buy Hindustan Motor below Rs 43 with stop loss of Rs 42. This is a day-trading recommendation.
Buy Gitanjali Gems below Rs 207.50 with stop loss of Rs 205. This is a day-trading recommendation.

E Mathew
Buy Bajaj Hindustan on declines with a stop loss of Rs 310, for a medium-term target of Rs 390
Buy Lok Housing (279.30) with a stop loss below Rs 272 for a target of Rs 305

Rajat K Bose
Buy Lok Housing (279.30) with a stop loss below Rs 272 for a target of Rs 305
Buy IVRCL Infrastructure (264.70) with a stop loss below Rs 258.80 for a target of Rs 277

 

[mugildata]

Hello,

Any idea about Gitanjali gems? Today it was traded around 210-214. I sold it at 214. It went down to 210 and again picked up around 213.50. Is it worth now to buy this stock?

 

[Sarveshk]

Orient Paper & Industries Ltd.
CMP: Rs. 516 Target: Rs. 750



The company is on a turnaround path with low equity base of Rs.14.84 crores, which is a big positive for the company. Based on an estimated EPS of Rs 75 for FY07, the share has potential to rise to Rs 750.

Cement :-

The company has two cement plants at Devapur, District - Adilabad in A.P. and at Nashirabad, District - Jalagoan, Maharashtra, with aggregate installed capacity of 2.40 million TPA. The installed capacity was raised from 2 MTPA to 2.40 MTPA while cement production was 2.11 MT in Fy06. Sales was 2.22 MT in this year. Both the plants are running to their full capacity and hence the company is planning to increase its capacity to 3 million TPA to take full advantage of its infrastructure as also to increase its market presence. The company is also planning to set up a captive thermal power plant of 30 MW capacity at its Devapur plant, which will reduce the cost substantially and shall make company more competitive. Present cost of external power to the company is Rs.3.32 per unit while 88.58 units of power are consumed for one MT production of cement. Hence, the company is likely to make savings on both by reducing cost of energy as also reducing power intake for each MT of production.

Paper :-

Amlai Paper mill at Dist. Shahdol in M.P. is having an installed capacity of 95,000 TPA and production in FY06 was 82,851 MT. The second plant in Orissa at Brajrajnagar had suspended its operations since January 1999 and there is no scope for revival. Except for about 400 employees, all have already availed of the voluntary retirement scheme and permission for closure is being heard by the Tribunal.

Fans :-

The company has two plants at Kolkata and Faridabad with aggregate installed capacity of 25.80 lakh fans per annum. Sales in FY06 was 26.77 lakh fans cloaking a turnover of Rs.191.90 crores and profit before interest and tax of Rs.11.99 crores for the division. This division has not been contributing significantly to the bottom line while contribution to the top line is about 23%. As this division has a very low margin with strong brand equity, the company at an appropriate time may get out of this business mainly to focus on its core business viz. cement and paper. If that happens, an amount of over Rs.100 crores may get realized from sale of its plant machineries and, brand Huge real estate at Kolkata and Faridabad, where the plants are located shall also get released which can be developed by the company. At both the locations, the real estate prices are shooting up and the company has huge land bank at both the plants.

Financial Position :-

As at 31st March 2006 the equity capital of the company was at Rs.14.84 crores and free reserves of Rs.19.79 crore with Net worth of Rs.34.63 crores. The company also had outstanding preference share capital of Rs.20 crores carrying a coupon rate of 12%. Against this, the total debt of the company was at Rs.436 crores (secured loan Rs.338 crores and unsecured loan Rs.98 crores) resulting in a debt equity ratio of 12.60 : 1. Definitely huge and cause of concern. Even if net current asset of Rs.143 crores are reduced from the debt, the debt equity rate still placed at 8.5 : 1. The company had past losses till FY05, which got wiped off in FY06. Maybe, that was the reason of huge debt equity ratio.

FY07 Performance :-

Cement and Paper industry are presently doing very well and has a bright future ahead for the next 12 to 18 months. Also, the plant capacity of both the products are of the company reasonably good. Taking a clue from Q1 Results of FY07, one can expect a turnover of Rs.1,100 Crores, EBITDA of Rs.230 crores, PBT of Rs.165 crores and PAT of Rs.110 crores resulting in an EPS of Rs.75 per share. In Q1 of FY07 total income of the company was at Rs.260 crores, PAT of Rs.25.71 resulting in an EPS of Rs.17.33.

Valuation :-

Based on an estimated EPS of Rs.75 for FY07, the share has potential to rise to Rs.750 as PER of 10 can be considered for mid size cement and paper company.

Based on an enterprise value method, cement plant can be valued at Rs.1,650 crores taking US$ 150 per MT as valuation norms. All other division viz. paper, fans, real estate can be valued for about Rs.350 crores with total valuation of close to Rs.2000 crores. By reducing debt of about Rs.350 crores (net off current assets) the net valuation of Rs.1650 crores translate into a value per share of Rs.1,100

Conclusion :-

The company is on a turnaround path with low equity base of Rs.14.84 crores, which is a big positive for the company. This kind of equity base, justifies debt of about Rs.300 crores (total debt of Rs.435 crores less net current assets of Rs.135 crores) in the books of the company. Though Q1 result of FY07 has been fabulous, cement margins shall improve further in subsequent quarters. In view of bright future ahead of cement industry as also good future of paper industry the company is likely to post on EPS of Rs.75 in FY07 and over Rs.100 in FY08. Based on FY07 earning, share is available at PER of less than 6 and at about a PER of 4.3 based on FY08 earnings. At current levels of Rs.516 share has potential to give at least 50% return on an annualized basis.