Recommendations From Various Sources

Hi All,

Let us have an active Thread for Recommendations from various sources - sites, indiabulls, sharekhan and others.

Looking forward to your responses.

Thanks and Regards
Re: Excellent sugg and my bit Patel Engineering

supratik said:
Hi All,

Let us have an active Thread for Recommendations from various sources - sites, indiabulls, sharekhan and others.

Looking forward to your responses.

Thanks and Regards
Excellent suggestion but can we have a rider..

lets put only those reccos in which we know the logic/story as well... cos otherwise we have 15 so called experts speaking on Moneycontrol/Ndtvprofit and we might end up having only reccos freom thses guys some of our naive boarders mite fall for them..laste was E Mathew (guy used to frequent on CNBC and the rest is known to everyone..)

Heres my bit though on PATEL ENGINEERING

Patel Engineering Ltd: A good infrastructure play
By Devdas Mogili

Patel Engineering Ltd is a leading civil engineering construction company and undertakes projects in tunnelling, underground works for nuclear, thermal power, hydroelectric and irrigation projects, bridges and marine works.

It has two subsidiaries in the USA - ASI RCC Inc and Westcon Microtunneling Inc.

The group has executed projects in USA, Greece, Eritrea, Chile, Sri Lanka, Nepal and Bhutan. Recently, three new companies were incorporated as subsidiaries of Patel Engineering viz. Patel Patrons Pvt. Ltd, Patel Engineers Pvt. Ltd and Shreeanant Construction Pvt. Ltd, which are yet to commence business.

It recently completed daylighting of the micro tunneling project at Jogeshwari (West) along the railway line in Mumbai for which it procured two micro tunnelling machines from Herrenknecl AG a leading manufacturer in Germany. Patel Engineering (Michigan), Joint Venture is the first and only Indian Company to execute a micro tunnelling project in the country.

Micro tunneling drains out rainwater to the nearest aquatic outlet thereby reducing the risk of water-logging.

Performance: The company has consistently reported better QoQ performance for the last several quarters. For FY05, it recorded net sales of Rs.778 cr. with net profit of Rs.41.55 cr. on an equity base of Rs.4.86 cr. The EPS worked out to Rs.8.55 on the face value of its share of Re.1.

Financial Performance :( Rs. in Lakhs)

ParticularsQE 31/12/05QE 31/12/049Months Ending

31/12/059Months Ending 31/12/04Year Ending 31/03/05Net Sales/Income23131.8619897.2165337.8350100.3477793.96Other Income

Total Expenditure

Inc/Dec in Stock

a. Construction &

b. Gen Adm Exp600.53















5998.94Total Expenditure19291.5817529.1256651.7744331.0470121.00Interest Cost (net)743.97856.341678.281802.892218.97Depreciation875.22751.752409.432108.562661.09PBT2821.621250.585673.682883.304890.34Tax276.67111.18672.51320.42678.03Net Profit 2544.951139.405001.172562.884212.31Minority interest12.856.6335.4921.8356.98Net Profit2532.101132.774965.682541.054155.33Paid up Equity486.04486.04486.04486.04486.04Reserves----12823.56Basic & Diluted EPS

(FV: Re 1/-)5.212.3310.215.238.55Non Promoter share holding %





22.56%Results: It has come out with superb results for the quarter ended 31 Dec 05. On net sales of Rs.231 cr., it clocked net profit of Rs.25.32 against Rs.11.32 cr. for the comparable previous quarter.NP has more than doubled, which indicates the future of the company. The EPS works out to Rs.5.21 on a basic & diluted basis on the face value of Re.1. The annualised EPS works out to Rs.20.8 (FV: Re.1).

Equity & Reserves: The company has a low equity base of Rs.4.86 cr. with reserves excluding revaluation reserves of Rs.128.23 cr. giving its share with a book value of Rs.62 and making it a ripe bonus candidate again.

Dividends: The company has a very liberal distribution policy. More than 80% of its equity consists of bonus issues, which the company has been liberally distributing. In fact, the original equity component is just Rs.0.80 cr. and the balance of Rs.4.06 cr. is by way of bonus issues and one rights issue. The company also split its shares from Rs.5 to Re.1 only a few months ago. Dividends paid in the past were very generous as given: FY2000-250%, FY01 -250%, FY02-100%, FY03-100%, FY04-100%, FY05-100%

Shareholding Pattern: The promoters hold 66.36% of the stake in the company while non-promoter holding is to the extent of 33.64%. Mutual funds have picked up quite a large chunk of the companys share for their various infrastructure schemes. The list of mutual funds holding the shares is quite large.

Forays: The company's core competence lies in hydropower and water supply projects and it is pre-qualified for 2000 MW hydroelectric projects. Recently, however, the company forayed into independent hydel power projects sector. Patel Engineering is eyeing a project size between 100 to 500 MW on a build-operate-transfer (BOT) basis either in the north or northeastern region. The strength of the company lies in its capability and expertise in executing big projects

Prospects The Govts thrust is on infrastructure and rural development. Road projects and rural infrastructure projects received a major focus in the last Budget. The outlay on road projects has been hiked to Rs.19,000 cr. from Rs.15,440 cr. Also, liberal FDI norms in the real estate and construction sector are leading to a further surge in construction activity. Patel Engineering seems to be among the major beneficiaries of the Budget proposals. With the finance minister's roadmap for 'Bharat Nirman' indicating a major thrust on infrastructure, construction and engineering, the Patel Engineering is likely to reap a windfall gain as can be seen from the projects it has bagged from several state govts and Railways.

Projects: Patel Engineering currently sits on a robust order book position in excess of Rs.4,500 cr. The company has completed more than 75 dams, 30 hydroelectric projects, 30 micro-tunnelling projects and 130 km of tunnels. It has bagged two projects the Nettampadu Lift - Stage II irrigation project worth Rs.315 cr. and a railway tunnel worth Rs.59 cr. in Lumdug- Silchar gauge conversion project in Assam. In addition, the company won three contracts from the National Highways Authority of India (NHAI) worth Rs.361 cr. The projects involve widening and strengthening of national highways.

The company has been awarded the Rs.224 cr. project for four-laning and strengthening NH-7 from Madurai to Kannya kumari (160 km to 203 km). It has also been awarded a Rs.238.72-cr. project for widening and strengthening the existing section of NH- 37 from two lane to four lane from Nagaon to Dharmatul and four laning of the Nagaon Bypass from km280.57 (NH-37), crossing NH- 36 near 5 km and up to 262.7 km of NH- 37 in Assam on The East-West Corridor under Phase - II programme of NHDP.

Patel Engineering Ltd will be jointly executing four irrigation projects in Andhra Pradesh worth Rs.1,000 cr. in Rajahmundry, Karimnagar and Visakhapatnam. With Hyderabad-based civil engineering firm Soma Enterprises Ltd. The company is also executing the side-levelling work for the new Rajiv Gandhi International Airport at Shamshabad near Hyderabad. It has also been awarded the Bheema and Kalwakurthy lift irrigation projects in Mahabubnagar district of Andhra Pradesh. It has also been awarded the construction of a 118-kilometre highway near Nashik on which it is working with Delhi-based Ircon International Ltd on a build-operate-transfer (BOT) basis.

Conclusion: Patel Engineering is a highly profitable and attractive dividend paying company with an excellent track record. The company has been reporting solid performance consistently on QoQ basis. Moreover, the stocks from the infrastructure sector are currently the flavour of the season. Stocks like L&T, Nagarjuna Constructions, IVRCL, Gammon India, Simplex Concrete, investors on the bourses are lapping up Valecha Engineering etc. In tune with its peers, Patel Engineering is no exception and has been outperforming the markets with elan.

The share of Patel Engineering is currently traded around Rs.425 which is discounted about 22 times its estimated earnings against the industry average P/E multiple of around 30. If the liberal payout policy of the company is any indication, shareholders can look forward to yet another round of free scrips in the form of bonus shares as it has a tiny equity base of just Rs.4.86 cr. Finally, the company with a strong order book, robust performance and govts thurst on infrastructure development makes Patel Engineering the best play on Indias infrastructure sector.
Re: Recommendtaions From Various Sources

Nice move Supratik and garun. I doubt whether can we discuss others research report in such a detail manner. Will it be violation of any forum rule or IPR. Traderji can comment on this. Albeit we can discuss it in short without explicitly quoting the firm name. Traderji plz advice.



Super Moderator
Re: Recommendtaions From Various Sources

nkpanjiyar said:
Nice move Supratik and garun. I doubt whether can we discuss others research report in such a detail manner. Will it be violation of any forum rule or IPR. Traderji can comment on this. Albeit we can discuss it in short without explicitly quoting the firm name. Traderji plz advice.

You can openly discuss public research reports given out by various broking outfits and/or research firms here provided it is not in violation of their copyright rules.


Active Member
Re: Recommendtaions From Various Sources

Nice suggestion by Supratik. Further to posting the recos, Traderji or any other experienced member may give his opinions on the recos provided by various sites with a bit of supporting details, of course if no violations are made.
Re: Recommendtaions From Various Sources

Lets start guys - good response

This puts us up in spirits

Good piece of work - supra:)

Thanks and Regards
Re: Recommendtaions From Various Sources

Hi, i think its great idea....
here is my first contribution,


• Polaris reported a muted 3Q FY06, below our and consensus
expectations. Revenues declined 5% Q/Q despite a strong offshore
environment and 9% Q/Q growth in product business. EBITDA
margins declined sharply by 500 bps Q/Q leading to 41% Q/Q fall
in absolute EBITDA. Polaris reported a net loss of Rs57MM, for
the first time in our view. Even excluding the provision for
doubtful debt of Rs48MM, Polaris had a net loss of Rs10MM.

• We have maintained that Polaris would face significant challenges
in transitioning from a services company to a product-led
business. 3Q FY06 performance was a reflection of the same in
our view – there was some growth in the product business but
continued pressure on services. Further, we believe Polaris
continues to suffer from size disadvantage and is unable to
compete with the large Indian IT players for new deals.
Interestingly, management stated that it faces pricing pressure in
an environment in which large players are seeing price increases.
• Muted performance was also combined with significant provision
for doubtful debts of Rs48.5MM from a large customer and a onetime
tax charge for a foreign subsidiary. We note that Polaris has
seen several write-offs over the past couple of years, indicating the
need for further improvement of internal systems and processes.

• Overall, we cut our FY07E EPS by 11% to account for the weak
performance and our DCF-based Dec-06 target to Rs100/share.
We remain fundamentally negative on Polaris.


Dheeraj M
Re: Recommendtaions From Various Sources

Good one Dheeraj,

Polaris truly looking weak, but cant be sure if it has bottomeed out.
Your views are appreciated.

Thanks and Regards
Kernex Microsystems

Dear friends

My contribution .. Lately , Kernex has taken a beating and yesterday closed at 273 , 2.7% up from the previous close .
Your views are welcome .

Research Report on Kernex ,,

An excellent engineering stock.

Introduction :- Kernex Microsystems though established in 1991 was initially into developing, installing and maintaining software products upto 2003 have developed Anti Collision services (ACD) for Konkan Railways (KRC) . This product was developed by the company after five years of R & D, testing , field trials, and is the only technology company in India manufacturing and supplying net worked ACD's to KRC, who are the agency deploying the same for Indian Railways.The ACD system developed correspond to the functional and operational requirement of Indian Railways. The Company is the sole licensee of KRCL for manufacturing , installation, commissioning and providing maintainence support etc. of all types of ACD's excluding the auto braking unit. This exclusivity also gives scope to the company to work as technology partner for value addition by developing and providing Moving Block System , Satdham Safety System which are also based on ACD technology. The company also has exclusive international marketing rights of ACD's with a royalty payment to KRC as mutually agreed upon . The ACD's made by the company are suitable and cost effective on medium to low density route both for passenger and freight trains.

What is ACD's :- ACD's are basically electro-mechanical products which has hardware, software and mechanical devices working together and are installed in engine, guard-wagon , and at Railway platform in station Master cabin with repeater installation every kilometer. These prevent head on collisions , rear end collisions, collisions due to derailment or at level crossing or due to inactive crew or due to train parting , or accidents due to landslides and falling boulders. The company also plans to add new features for detecting overflowing, rivers and bridges, detecting displayed tracks and detecting accidents in tunnels.

Scope of work :- The Company has already installed ACD's on 736 km. on Konkan Railway and 1,730 km. from Katihar in Bihar to Dibrugarh in Assam. As per Corporate Safety Plan, submitted to the Parliament, Indian Railways have to cover 56,000 km. of tracks with ACD's in next seven years. This will cost about Rs. 1,875 crores which is about 6.5 % of the total corpus of Rs.31, 835 crores allocated as special Railway Safety Fund. Apart from this, the company will have regular business of maintainence of these systems and equipments, at about 15% as AMC, which also would give excellent Margin.

Apart from ACD's, the company has carried out a trial of 1.5 kms. Of Sky Bus Metro project built by KRC by providing Auto Driving Devices and Driver Control Console and trial run was successful in Auto Driving Mode. Hence, Sky Bus Metro project will be a new area, as such projects are at an advanced stages for implementation for cities like Goa, Mumbai, Hyderabad, etc.

Also, international markets has over 8 lakh km of track of medium to low density traffic requiring ACD type of equipments. Taking 30 % as an acceptable factor approx 2.40 lakh km. of rail track in the world need to have ACD's. Hence, about 10,000 to 12,000 ACD's will be required every year on conservative estimates. Also, as per agreement with KRC on 29-10-04, the company need to increase production capacity of ACD's from 4,200 ACD's to 9,000 ACD's.

Public Issue: - The Company went public on 28-11-05 with an issue of about 40 lakh equity shares of Rs. 10 each at Rs.250 per share for Rs.99.01 crores . Due to this, the equity increased to Rs. 11.40 crores of which, about 59 % is held by the promoters . The issue was to finance project of Rs.99 crores for expanding facility to manufacture ACD from 4,200 ACD's to 10,000 ACD's per annum, and create facilities for manufacturing 1,000 Auto Driving Devices (ADD's) and 500 Advanced Railway Signal Systems per annum. The Company is also establishing an Intelligent Transportation Technology Centre in Nalgonda District of A.P. on 1,035 acres of land for simulation and testing of advanced transportation control systems. The company shall be opening four international market offices in North America (for North and South American countries) Italy (European countries) Mauritius (Africa) and Bangkok (South and South East Asia ) .

The issue evoked very good response and now the share is ruling at around 315 per share.

Financial Performance:- For FY 05 the total sales was at Rs.53.28 crores while PBT was Rs.14.57 crores and PAT was Rs.8.96 crores giving an EPS of Rs.7.86 for 5 months ended 31-8-05 of FY 06 total income was Rs.19.42 crores with PBT of Rs.8.50 crores and PAT of Rs.6.25 crores. However, FY06 is likely to give an income of Rs.60 crores and PBT of Rs.18 crores and PAT of Rs. 12 crores giving an EPS of Rs.10.50 . Since the expansion shall be completed by May'07 the real jump in the performance will come from FY08 . For FY 07 a sales of Rs.100 crores PBT of Rs.36 crores and PAT of Rs.24 crores can be expected. This increase will come mainly from maintainence contract of over Rs.20 crores, on total value of contracts of Rs.150 crores having executed till FY06.

Considering demand scenario, the company may be able to cover 2,500 km. of track in 05-06, 4,000 km. in 06-07 and 7,500 km. in 07-08. Orders for ADD's for Sky-bus can also come in from FY 08. On top of these, maintainence contract will be of sizeable value, adding substaintially to the bottomline from FY07 and onwards.

Comparable Peers: - Though the Company is termed as a technology company, it will be treated more as an Engineering company in due course of time having exclusive, monopolistic and highly sensitive technological product profile. Similar companies are BEML, and Kalindee Rail Nirman. Hence, the company should command a P/E of 25 or above. Considering an EPS of above Rs.20 for FY 07, the share should rule atleast Rs.500 by September 06.

Conclusion :- Due to recent listing, the share is changing hands and are being acquired by the informed and techno-savy investors. Once, the churning of Stock gets over , we would see a sharp jump in the share price on the lines of Everest Kanto Cylinder and A/A Engineering . Hence it is advised to buy the share at present level of around Rs.315 for a safe and consistent gain.

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