Housing and Construction-Ready For The Whipsaw
Nagarjuna Construction, Madhucon, HCC, Patel Engineering, JP Associates, Petron, GMR, GVK, Bhel, Siemens, Alstom, and the entire Real Estate space starting with DLF, Unitech, Anantraj and Parsvnath.
Nagarjuna Construction reported a poor set of numbers for FY08 and promptly blamed the high cost of Steel and Cement which could not be passed on. This is exactly what we are saying for the last six months-that none of the Housing, Engineering and Construction concerns have pass-thru clauses in any GOI contract.
While we will shortly see Smart Money move out of Nagarjuna Constructions, it will simply vanish from HCC, Patel Engineering, Petron Engineering and Madhucon.
The rot is likely to spread to all Real Estate concerns, which are currently valued at a weighted average between the value of land banks held, and profitability. For a brief period of time the housing land bank concerns which carry assets at costs 40 years into the history can show profitability as a simple margin of land developed multiplied by a fixed margin per square foot.
This formula will not work for those concerns like Parsvnath, Akruti, Sobha, Purvankara, Lok Housing, Gulf Oil, DS Kulkarni and Ganesh Housing which have created land banks at the higher end of the land prices and thus may not be able to report simply as per sq feet into developed area. In all of these companies margins will compress over the next 3-4 quarters and stocks could halve from here also.
All those non believers, who have refused to accept a Bear phase may take a look at the USmarkets. They are ahead of us, and the Bears in the US are becoming stronger by the day..the Bulls have thrown in the towel.
Robert Lindsey was not surprised by new data last week that showed new home sales have fallen more than 40 percent from their peak almost three years ago. He can tell from his company's bank account.
"We're literally losing money every month," said Lindsey, general manager of Signature Drywall Inc., in Sacramento, which installs drywall in new homes and apartments in the Sacramento and San Francisco areas.
In 2005, the firm raked in some $30 million in sales. Last year, sales were less than half that and this year Lindsey hopes he can make $8 million. "It's kind of like bleeding to death," he said.
A lot of his competitors feel that way. On Monday the Commerce Department said residential construction spending fell in April for the 26th month in a row.
The housing industry is not monolithic. Yes, there are major players, but for every mega-developer there are hundreds if not thousands of smaller companies engaged in building houses. And when those companies are hurting, the pain - in the form of job losses and weak sales - spreads across an economy teetering on the edge of recession.
California, Florida, Arizona and Nevada, which are all heavily dependent on the housing sector, are among the 11 states that have already fallen into recession, according to Moody's Economy.com
"The collateral damage from a lost construction job is greater than in many other industries," said Mark Zandi, chief economist at Economy.com. "For every job lost in construction you generally lose a little over one more job elsewhere in the economy."
Like falling dominoes, when construction stops, the surrounding restaurants, grocery stories and other businesses get hit.
Guillermo Hermosillo's car dealership in Calexico, Calif., sold as many as 30 vehicles a month during the real estate boom. Many of them were pickup trucks bought by construction workers flush with cash from helping to erect new homes around the city east of San Diego along the U.S.-Mexico border.
"Then the housing (market) crashed and everybody's losing their homes. These guys are left without jobs. You don't see them anymore," said Hermosillo, whose sales are half of what they were last year.
One measure of how much the homebuilding industry has contracted since the high-flying days of the housing run-up: construction permits for new homes peaked at about 2.3 million in September 2005 - about 1 million more new units than were reported in April.
Everything that goes into building a home - from plumbing fixtures, to steel, lumber and masonry, to the transportation needed to move construction materials and the accounting and other financial services involved in selling the home - is tied to an industry that can suffer job losses when housing construction slows.
Among the hardest hit are residential trade subcontractors - firms that handle everything from framing and drywall to painting and electrical. They have seen business plummet as homebuilders scaled back construction. Many subcontractors have slashed payrolls.
Some are trying to transition into commercial construction, only to be rebuffed or forced to lower bids dramatically to gain entry, further squeezing the market for established players.
In California alone, subcontractors have laid off, on average, up to 80 percent of their staff, according to the California Professional Association of Specialty Contractors in Sacramento, which mostly represents firms engaged in new home construction projects.
Kelly Bice, 48, had been working as vice president of construction for San Diego real estate developer Keystone Communities Inc. for more than seven years before he lost his job in February when the company filed for bankruptcy. Bice, who lives in Murrieta, east of Los Angeles, was pulling in around $136,000 a year with bonuses. Now he's scraping by on $500 a week as a consultant on a home renovation project.
"I'm living on my savings," he said. "That's just buying the groceries."
Nationwide, the number of vacant homes is at a record high, and is expected to rise for the rest of the year as foreclosures add to the glut of unsold properties. The slowing economy, coupled with rising gas and food prices, has dimmed the prospect of a pickup in sales this year. And that means potentially less work down the road for subcontractors and the trade workers they employ.
In Miami, where there is more than 3 1/2 year supply of existing homes on the market, general contracting firm O'Steen & Co., also has sliced its payroll.
The company, which handles framing, concrete installation and virtually all other aspects of residential and commercial construction, employs about 40 people, but like similar firms, its number of hires can vary depending on how many projects the company has going.
"Under normal circumstances it should be 200," said owner L. Raymond O'Steen. "From a year ago, I would say the volume of business is probably off 60 percent." Head hunters say workers have fled California for Utah, Texas and other states where there's a better chance to get work in homebuilding.
So many trade contractors in the hardest hit areas say they're struggling to stay in business and hold on to their best talent however long it takes to ride out the downturn. Greg Colgate, president of California Tile Co., in San Diego, started laying off workers last year and now his firm has about 25 employees, down from a peak of about 70 in 2005.
He estimates he'll do about 20 percent of the residential units his company did last year, but has managed to drum up some commercial construction work. He said, "We're just struggling to not have to cut any deeper this year."
(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
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DAILY TRADING CALLS
Overview
The Most Recommended Stock Is In Stock Of The Day Section.
Buy If Breaks- Best To Trade When Stock Starts Trading Above From Recommended Price.
Selling Expecting Once SENSEX Starts Trading Below 15442. Till Then Be Stock Specific Only.
Market Indicators
Stock Current Status Major Support Major Resistance
BSE-SENSEX UP 15332, 14664, 13980 18895, 21206, 25101
NSE-NIFTY UP 4446, 4223, 4005 5545, 6357, 7534
Stock Of The Day (Best Sell)
Stock Sell Around Target 1 Target 2 Stop Loss
AXIS BANK IF BREAKS 730 716 705 740
BANK OF BARODA IF BREAKS 240 235 232 243
BHARTI TELE IF BREAKS 800 788 780 807
HPCL IF BREAKS 238 232 228 241
NAGAR CONSTRUCTION IF BREAKS 176.50 172 170 179.50
RANBAXY LABS IF BREAKS 515 505 500 520
RELIANCE COMMUNICATION IF BREAKS 532 525 520 536
High Risk Buys
Stock Buy Around Target 1 Target 2 Stop Loss
. . . .. .
High Risk Sells
Stock Sell Around Target 1 Target 2 Stop Loss
BANK OF INDIA 278 258 250 284
TRENDSignals
Orbit Corporation
(Bse Ticker – 532837)
BUY FOR TARGET RS.485/- - RS.499/- STOP LOSS RS.459/-
Daily Newsletter June 05, 2008
ashwanigujral.com
Oil price hiked took its toll............
Today the inevitable happened .Government finally raised the price of diesel and petrol and this instilled fear of rising inflation and coupled with weak opening of European market took heavy toll on the market. As we had expected bears had total control today and as a result the Nifty has broken one more psychological level of 4600 and closed below it. Realty, metal, power, oil & gas, auto and capital goods stocks were hammered a lot. Mid cap and small cap also saw blood bath. No sector could escape the power of bears and the market leader stocks like Tata Steel, Cairn and leading IT stocks also wilted under the selling pressure.
Going forward market may retest the previous low and may consolidate at those levels before moving up. We will look for the sign of bottoming out .
Its better to stay on the sidelines then loosing the precious capital in these uncertain times.
Current Support Resistance Trend
4585 4450 4400 4750 4800 Down
Market Wrap
Index NSE BSE
Open 4718 15992
High 4731 15992
Low 4564 15442
Today's Cls 4585 15514
Prev Cls 4715 15962
Change (130) (448)
Sector Analysis
Hot Avoidable
- -
Volume(Cr)
04-06-2008 51.78
03-06-2008 54.10
02-06-2008 39.04
Matrix
Date Recommendations Buy Above Current Stop Loss Target Sector Remark
Money Management
* Do not invest in one or two scrip of your choice. Make a balance portfolio of 7-8 scrip’s and hold it for a period of 20 days (once it moves in positive direction). Recommendations are not to be used as 1-2 day speculation.
* For every recommendation wait for a period of 5 trading days, if the stock does not move in the positive direction then exit and move on to other stock.
* Invest equal amount in all scrip’s of your balance portfolio.
* If you see a gap up opening for the recommended stock wait for an intraday dip to buy.
* 50% of the move in a stock is all because of the sector support. Do home work at your end and choose stocks from strong sectors.
* Diversify your portfolio across sectors and capitalization (large Cap, midcap).
* Scrip’s mentioned in matrix are to be bought only above a certain level mentioned.
* Once your scrip starts trending, upgrade the stop loss to the breakeven.
* Use proper stop loss on closing basis and place it around .
Disclaimer: The Calls made herein are for informational purpose and are not recommendations to any person to buy or sell any securities. The above calls are based on the theory of technical analysis. The author does not accept any liability for the use of this column. Readers of this column those who buy or sell securities based on the information in this column are solely responsible for their actions. The author may have positions in any of the stocks mentioned in this column.
Nifty 50 Index (75 Minute Chart) !
* Nifty 50 Index (75 Minute Chart) !
Another Bearish Breakout in EST For 4465 / But Ripe for Tech Recovery to 4625
By continuing to read this Newsletter, you have read and agreed to the disclaimer posted at www.trade4profit.org
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On-Line Recommendation Portfolio (+) 39054.39% in 113 Months
(Hypothetical Performance) The "Rs.10 Lac-Portfolio" (+)1455.73% in 370 weeks
(Hypothetical Performance)
Important Support & Resistance Levels of Sensex/ Nifty / Nifty 'Near Month'
Index Close Change 3- DEMA 7- DEMA Sup-2 Sup-1 Trend Res-1 Res-2 5D-High 5D-Low
* BSE - SENSEX 15514.79 -447.77 15806.89 16105.04 15139.10 15268.85 15650.01 15897.33 16241.07 16666.03 15442.34
* CNX BANK INDEX 6113.65 -187.55 6254.40 6468.41 5919.70 5993.80 6179.88 6300.43 6471.92 6847.90 6075.05
* CNX IT INDEX 4418.50 -106.35 4490.52 4522.03 4327.54 4356.48 4446.75 4509.10 4588.64 4773.65 4395.65
* CNX MIDCAP 6200.25 -188.70 6322.45 6449.54 6028.85 6091.32 6278.02 6387.61 6559.48 6643.25 6184.35
* S&P CNX NIFTY 4585.60 -130.30 4673.13 4768.99 4471.92 4511.59 4627.20 4701.63 4806.19 4957.40 4564.50
- NSE50 1 MONTH 4568.75 -138.35 4659.32 4758.95 4449.35 4491.94 4615.55 4692.80 4805.43 4958.80 4550..00
Change in Indices in last 5 Days
Index Close L.Change 2DayBack 3DayBack 4DayBack 5DayBack
* BSE - 500 CO'S 6087.93 -195.17 -39.97 -151.90 -2.36 -65.72
* BSE - SENSEX 15514.79 -447.77 -100.62 -352.39 99.31 -209.11
* CNX BANK INDEX 6113.65 -187.55 -45.95 -237.20 7.60 -204.15
* CNX IT INDEX 4418.50 -106.35 -49.35 -114.15 100.10 -26.70
* S&P CNX 500 3719.40 -112.25 -21.90 -106.10 20.25 -52.10
* S&P CNX NIFTY 4585.60 -130.30 -23.70 -130.50 34.80 -83.05
- CNX BANK INDEX - 1 M 6085.60 -213.50 -12.25 -226.70 -41.10 -195.70
- CNX IT - 1 MONTH 4383.65 -129.10 -41.75 -79.05 43.60 -11.65
- NSE50 1 MONTH 4568.75 -138.35 -15.20 -127.80 8.90 -89.80
Gainers / Losers & Stocks with Spurt in Volume (Min Avg Volume >50000/Day)
Scrip Close L.Close Change% Scrip Volume 3 Days Avg Volume Vol change (Times)
Gainers Volume Toppers
ONGC CORPN 886.20 839.30 5.59 BHARAT PETROLEUM 3253519.00 1372191.63 5.77
TITAN INDS 1161.95 1147.05 1.30 HIND PETROLEUM 6661864.00 2842155.00 5.68
YES BANK 144.25 142.55 1.19 ONGC CORPN 7031564.00 3369801.00 5.52
BHUSHAN STEEL 848.10 839.00 1.08 INDIAN OIL CORP 2739406.00 1211153.38 5.11
MPHASIS 231.45 229.25 0.96 MPHASIS 702064.00 372412.34 4.45
ZEE NEWS 52.75 52.30 0.86 ORBIT CORPORATION 826310.00 383418.66 3.59
GUJ INDSTL POWER 96.40 96..25 0.16 MRPL 5263090.00 3103776.75 3.20
FEDERAL BANK 210.60 210.50 0.05 SUN TV 147959.00 113969.00 3.05
LML LTD 11.85 11.85 0.00 VSNL 240422.00 170337.33 2.58
TATA MOTORS 1276505.00 777372.31 2.56
Losers NDTV LTD 286795.00 156097.67 2.34
BOMBAY DYEING 756.55 836.40 -9.55 TATA TEA 314143.00 200666.67 2.30
MCLEOD RUSSEL 79..10 86.95 -9.03 MARUTI UDYOG 638245.00 783585.69 2.27
SESA GOA 3563.75 3916.70 -9.01 HERO HONDA 405584.00 367175.00 2.06
MRPL 74.00 81.10 -8.75 CROMPTON GREAVES 1185048.00 724215.69 2.02
BHARAT PETROLEUM 322.30 351.80 -8.39 CIPLA LTD 1162488.00 809972.31 1.97
BANK OF INDIA 269.80 293.70 -8.14 JINDAL STAINLESS 145435.00 99392.66 1.96
VOLTAS LTD 132.40 143.80 -7.93 SRF LTD 664267.00 402214.66 1.93
INDIABULLS FIN SERVICES 329.85 355.60 -7.24 CENTURION BANK 7616194.00 5204532.00 1.86
CAIRN INDIA 262.20 282.55 -7.20 SESA GOA 994320.00 680751.69 1.86
ESSAR OIL 231.30 249.20 -7.18 HINDALCO INDS 2902132.00 2206989.75 1.86
Support/Resistance for Day Traders (05.06.2008)
We are giving below the Important Support and Resistance Levels of few most actively traded scrips of NSE/BSE (including F&O). Many Traders successfully use Support/ Resistance levels for day- trading. Traders are advised to read the Disclaimerand Rules for Successful trading & apply Stop Loss on all trades.
(Conditions - Avg Daily Volume in 5 days >250000)
Scrip Close Change 3- DEMA 7- DEMA Sup-2 Sup-1 Trend Res-1 Res-2 5D-High 5D-Low
ACC LTD 633.25 -16.45 640.07 649.17 613.04 620.78 640.12 652.66 670.49 685.00 600.10
BANK OF BARODA 241.40 -6.95 249.13 259.72 231.96 235.78 245.13 250.79 259.58 279.00 240.10
BANK OF INDIA 269.80 -23.90 281.25 292.16 243.26 255.53 275.78 290.14 309.81 310.90 262.15
BHARAT PETROLEUM 322.30 -29.50 337.22 345.47 284.86 302.38 337.42 357.47 391.84 374.50 318.25
BHARTI AIRTEL 810.35 -31.05 833.96 847.20 770.22 787.26 822.12 845..34 878.31 896.80 801.00
BHEL 1475.05 -75.10 1529.67 1586.35 1400.52 1432.28 1495.48 1538.50 1598.27 1688.00 1456.30
BONGAINGAON REFI 56.85 -2.15 57.87 58.62 54.10 55.26 57.95 59.55 62.10 62.60 56.50
CANARA BANK 201.00 -3.90 205.20 211.33 193.95 196.72 203.03 207.33 213.16 225.65 199.25
DR. REDDY'S LABS 668.60 -26.35 685.26 688.50 631.02 647.31 679.67 701.08 731.89 728.00 660.00
GAS AUTHORTY (I) 371.80 -12.90 379.48 385.74 355.03 362.03 375.47 385.29 397.86 411.00 366.60
GUJ AMBUJA CEMEN 87.60 -4.80 90..54 94.32 83.36 85.15 88.83 91.29 94.77 105.90 86.60
HDFC BANK 1215.00 -51.40 1256.94 1301.61 1156.28 1181.11 1227.03 1261.11 1304.19 1382.90 1196.10
HDFC LTD 2402.70 -54.30 2447.07 2496..87 2334.73 2359.72 2427.17 2470..39 2532.08 2610.00 2376.20
HERO HONDA 777.00 -21.30 782.21 783.31 731.01 751.12 778.00 804.01 829.07 803.00 732.35
HIND LEVER 230.30 -5.00 232.93 234.58 227.12 227.85 231.63 234.10 237.33 241.95 229.75
HIND PETROLEUM 241.05 -6.45 243.43 244.07 222.72 230.99 245.78 255.90 270.16 260.00 236.30
ICICI BANK 757.55 -3.00 764.51 787.48 716.34 734.13 761.98 785.53 811..61 835.00 726.40
IDBI 80.50 -2.50 82.63 85.86 77.87 78.89 81.52 83.14 85.58 91.70 80.10
IDFC 133.55 -5.30 137.75 143.10 127.00 129.77 135.65 139.45 145.01 153.40 132.20
IFCI LTD 58.15 -3.50 59.59 60.04 54.27 55.99 59.32 61.49 64.68 65.00 57.30
INFOSYS TECHNOLO 1870.70 -51.55 1900.52 1903.49 1819.14 1837.93 1881.27 1914.21 1953.04 2030.00 1853.10
ITC LTD 215..80 -4.10 217.49 217.73 207.09 210.64 217.63 222.82 229.31 224.10 213.00
JAIPRAKASH ASSOC 197.75 -8.85 204.55 214.44 187.30 191.79 201.58 207.58 216.92 236.80 192.10
LARSEN & TOUBRO 2756.15 -90.95 2817.12 2842.70 2659..88 2697.71 2787.23 2846.01 2928.99 3049.80 2715.00
LIC HOUSING FIN 325.30 -8.35 327..34 330.50 311.14 317.01 329.15 337.49 348.87 359.95 300.15
MAHANAGAR TELEPH 93.55 -3.05 94.54 95.87 90.82 91.84 94.53 96.26 98.73 99.45 91.50
MAHINDRA & MAHIN 568.45 -25.40 582.66 601.08 539.96 552.08 575.23 591.69 613.51 648.00 560.25
MARUTI UDYOG 746.55 -35.65 762.99 770.55 699.47 720.23 755.52 781.98 815.55 802.00 731.00
MPHASIS 231.45 2.20 232..98 234.52 223.91 226.81 232.07 236.72 241.42 253.00 226.00
ONGC CORPN 886.20 46.90 865.45 870.02 808.93 844.30 880.18 922.27 956.12 913.95 820.55
POLARIS SOFTWARE 95.50 -4.25 98.24 100.80 91.71 93.25 97.12 99.38 103..02 108.30 95.10
RANBAXY LABS 518.85 -10.70 520.31 514.58 498.76 506.86 524.97 537.02 553.90 541.80 497.10
RELIANCE CAPITAL 1068.15 -47.95 1108.10 1168.72 996.20 1028.19 1087.38 1127.58 1184.34 1283.00 1050.00
RELIANCE COMM 539.80 -12.80 548.62 556.23 516.19 525.98 544.85 558.74 576.34 587.25 532.35
RELIANCE ENERGY 1070.45 -56.35 1118.71 1180.94 1018..41 1040.43 1088.52 1118.72 1164.32 1297.00 1061.10
RELIANCE INDS 2307.00 -99.65 2356.06 2413.13 2192.35 2241.05 2345.33 2411.68 2510.59 2555.45 2285.00
SATYAM COMPUTER 485.85 -13.65 497.46 502.42 456.03 469.12 497.55 514.38 541.70 542.00 482.00
STATE BANK 1331.25 -56.85 1370.48 1428.22 1282..53 1301..90 1351.08 1380.61 1426.64 1539.90 1325.00
STEEL AUTHORITY 154.05 -1.85 155.58 159.62 148.01 150.46 154.42 158.03 161.62 168.50 148.55
STERLITE INDS (I) 840.70 -61.05 875.54 892.55 775.80 805.12 858.57 894.36 945.93 954.10 825.00
SUZLON ENERGY 246.80 -11.75 256.71 269.29 227.08 236.03 250.43 261.27 275.12 292.10 240.25
SYNDICATE BANK 63.90 -3.35 65.91 68.21 60..90 62.16 64.88 66.63 69.21 71.00 63.30
TATA MOTORS 541.05 -29.40 557.75 581.35 495.94 516.47 558.38 583.12 623.84 640.10 535.10
TATA POWER COMP 1164.55 -82.85 1226.83 1291.53 1086.56 1121.21 1191.78 1235.40 1303.33 1411.00 1151.25
TATA STEEL 813.75 -47.90 843..17 863.99 769.69 788.67 833.20 858.44 901.10 925.00 810.10
TCS 956.75 -18.40 971.95 978.90 923.31 936..45 964.30 984.71 1010.27 1057.40 938.15
UNION BANK 127.35 -1.75 130.12 135.07 122.98 124.69 128.35 131.03 134.39 143.15 126.00
VSNL 477.25 -14.05 487.23 494.85 448.32 461.01 480.08 496.40 514.37 525.00 465.00
WIPRO LTD 497.10 -8.10 500.60 500.64 482.00 487.69 498.18 507.63 516.92 520.00 481.00
ZEE TELEFILMS 221.00 -3.40 223.01 225.98 215.10 217.22 222.33 226.13 230.71 238.90 216.10
Bar Reversal Up/ Down, Engulfing in Daily Chats (Min Avg Volume >100000/Day)
Scrip Scrip Scrip Scrip
Bar-Up Bar-Dn Eng-Bull Eng-Bear
Nil * BSE - SENSEX Nil * BSE - SENSEX
RELIANCE INDS RELIANCE INDS
RELIANCE CAPITAL RELIANCE CAPITAL
ESSAR OIL ESSAR OIL
ICICI BANK TATA STEEL
- NSE50 1 MONTH RELIANCE NAT RESOURCES
TATA STEEL PUNJ LLOYD
IFCI LTD CHAMBAL FERT
JAIPRAKASH ASSOC INDIAN OIL CORP
RELIANCE COMMUNICATIONS BHARAT PETROLEUM
HIND PETROLEUM JINDAL STEEL POW
What the Charts Foretell
(FOR Short Term Investors)
* NIFTY/ SENSEX !
Nifty - Another Bearish Breakout in EST Charts - Hourly Charts favour recovery to 4625
Fresh Bearish Breakout in many Stocks - Use Pullback to Book EST Profit
* STERLITE IND.!
Bearish breakout fro Double Top Pattern-likely to touch 800 in near future.
* TATA MOTORS !
Bearish breakout in daily charts- Likely to go below 500 in coming days.
* BOMBAY DYEING !
Moves below short term support - Another close below 770 may target 700 in near future.
* SESA GOA !
Sharp decline from 4347 to 3550 - Ripe for technical rally to 3740.
* STATE BANK OF INDIA !
Heading for 1000 in coming weeks- Technical recovery to 1370 likely in EST.
* AIR DECCAN !
Strong support at 100 -Technical recovery to 115 likely if support is held.
* TATA CHEMICAL.. !
Highly oversold in EST charts- Ripe for technical recovery to 380..
* IFCI !
Strong support at 57 -bearish breakout may wipe of Rs. 5 in near term.
* RPL !
Bearish indications in short term charts=- Further decline to 155-153 likely.
* NAG.FERT. !
Bearish breakout from rising channel pattern - Further decline to 38-39 on charts.
* CHAMBAL FERT. !
Short tem support at 78.5- Bearish breakout can target 70-65 in coming days.
* SUZLON ENERGY !
Daily charts in favour of decline to 220-222 in coming days- Use technical recovery for profit booking only.
* NTPC !
Minor support at 157- Bearish breakout may target 150 in couple of sessions.
* ONGC CORP. !
Bullish target of 930 maintained-Use corrective decline towards 850 for fresh buying with SL.
* RELIANCE POWER !
Highly oversold in EST charts- Ripe for technical recovery to 216-217.
*PUNJ LLOYLD !
HLAll indicators in favour of decline to 240-Use technical recovery towards 300 for profit booking.
* MLL !
Strong support at 101-Bearish breakout may wipe of Rs. 20 in coming days.
* TATA STEEL !
Short term bearish taraget of 820 achieved -Ripe for technical recovery to 838-840 .
* LANCO INFRA !
Heading for 350 in cming weeks- Use technical recovery towards 450 for booking profit.
* R.COM !
On verge of bearish breakout -2 close below 540 may wipe of Rs.40 in near term.
* NAYVELI LIGNITE !
Bearish target of 105 maintained- Use pull back towards 130 for short term profit booking..
* HDIL !
All set to decline to 575 and 550 - Pull back towards 700 may be used for profit booking only.
* INFOSYS !
On verge of bearish breakout - Close below 1870 may wipe off Rs. 100 in near term.
Bulls & Bears (Technically Speaking)
Sesa Goa (Daily) Sterlite Ind. (Daily)
FRESH ADVISORY RECOMMENDATIONS
For Extreme Short Term Investors/ Intra-Day Traders
( First Read Disclaimer at www.trade4profit.org)
Note: It is always advisable to use Stop Loss with every Trade. The Stop Loss Level may
vary according to the Time Frame & Profit Margin for which any trade is being initiated.
BUYING SELLING
Reco.
Date Scrip Reco. Type Buy Around Target Reco. Date Scrip Reco. Type Sell Around Target
05.06.08 R Power Short Term On Declines+SL 216-217 05.06.08 R Com Short Term If Close>540+SL 500
05.06.08 Sesa Goa Short Term On Declines+SL 3750 05.06..08 Sterlite Ind. Short Term On Rally +SL 800
05.06.08 Tata Steel Short Term On Declines+SL 838-840 05.06.08 LITL Sh/Med Term On Rally +SL 350
05.06.08 Tata Chem Short Term On Declines+SL 380+ 05.06.08 Suzlon Sh/Med Term On Rally +SL 220-222
On Declines+SL 05.06.08 Chambal Fert Short Term If Close>78+SL 70
04.06.08 ONGC Short Term On Declines+SL 930+
04.06.08 HPCL Short Term On Declines+SL 270+
04.06.08 Essar oil Short Term On Declines+SL 270+
04.06.08 JP Associates Short Term On Declines+SL 221 & 228
04.06.08 Ranbaxy Short Term On Declines+SL 550+
03.06.08 NTPC Short Term On Declines+SL 167 03.06.08 RPL Short Term On Rally +SL 162
03.06.08 Rel Capital Short Term On Declines+SL 1190 03.06.08 J P Hydro Short Term On Rally +SL 52-53
03.06.08 Tata Steel Short Term On Declines+SL 890 03.06.08 Neyvelli Short Term On Rally +SL 122-123
03.06.08 Orchid Chem Short Term On Declines+SL 242+ 03.06.08 GTL Infra Short Term On Rally +SL 42-43
03.06.08 Suzlon Short Term If Close>260+SL 285+ 03.06.08 Bom dyeing Short Term On Rally +SL 750-700
02.06.08 Reliance Ind Short Term On Declines+SL 2475+
02.06.08 HDFC Bank Short Term On Declines+SL 1415+
02.06.08 Infosys Short Term On Declines+SL 2025+
02.06.08 Tata Tea Short Term If Close>860+SL 925+
02.06.08 GAIL Short Term If Close>405+SL 430+
The Hypothetical "10 Lac-Portfolio" as on 05.06.2008
FRESH RECOMMENDATIONS
( First Read Disclaimer at www.trade4profit.org)
Important Disclosure - None of the promotoers/ associates/ employees of Trade4Profit OR
Kalpataru Investment Consultants has any position in any of the below advised stocks.
Recommendations for 05.06.2008
Opening Price is considered around close of previous day. Avoid BUYINGif Prices open abnormally High and Avoid SELLINGif prices open too low.
1). R Power (Or Fut) : Buy 1500 Shares (700 at opening+ 4x200 at Fall of every Rs2/- ) in 'Investment A/C' . Target 216. Avg SL Rs5/-.
2).Sesa Goa (Or Fut) : Buy 500 Shares (200 at opening+ 6x50 at Fall of every Rs10/- ) in 'Investment A/C' . Target 3750. Avg SL Rs30/-.
3). R Comm (Or Fut) : Sell 1000 Shares (500 at openingif moves below 540 + 5x100 at Rise of every Rs2/- ) in 'Trading A/C' . Target 500. Avg SL Rs2/-.
4). Chambal Fert (Or Fut) : Sell 2500 Shares (1000 at openingif moves below 78 + 5x300 at Rise of every Rs0.50/- ) in 'Trading A/C' . Target 72. Avg SL Rs2/-.
Hypothetical Performance of '10 Lac - Portfolio' in last 370 weeks
Upto Week No. T.Gain/ Loss in portfolio Change in the Week(s) Remarks
0 (09.04.2001) Nil Nil Initial Investment of Rs.10,00,000/-
50 147.47 147.47%
100 184.46 36.99%
150 398.21 213.75%
200 501.32 103.11%
250 667.37 166.05%
300 953.87 286.50%
350 1329.06 375.19%
370 (01.06.2008) 1455.73 126.67%
Hypothetical Performance of '10 Lac - Portfolio' in last 370 weeks
Petrol Bombed...
Wednesday, June 04, 2008
It wasn't black Friday or black Monday. It was the PETROL bomb on the Mumbai Sensex as if the security threat was visible on the Sensex also. Yes, the price hike is all buy positive for the market because out Rs 15 Rs 5 is now being recovered from the consumers which have 1/3 relief on the fiscal deficit. We have already reached 15400 and very close to 14700 its previous low. Chances are very bright that now its previous low also could be broken tomorrow. Market will open on very weak note tomorrow as US too is pointing to bad session.
It is bad for industries where diesel is used and also bad for inefficient 4 wheelers. It is good for 2 wheelers as the higher average could mean switching of 4 wheelers to 2 wheelers especially in lower segment cars such as fronty, santro, indica and neno etc. Unless these vehicles immediately switch to lpg and cng which is happening in most of the cases. Last year Maruti sold 34000 cng vehicles which will now go to 2 lac vehicles. Higher end vehicles will use petrol and diesel even if it becomes Rs 100 a liter.
Minda Industries will be largest beneficiary of this move because Minda has highest market share in 2 wheelers component supply and also have infrastructure in place to cater more than 6 to 10 lac kits of CNG and LPG. It has tie ups with all big names and could enlarge its presence everywhere now for lpg and cng kits.
Will this means end of bad phase of oil co's….? Standalone on this announcement the bleeding will not stop though it will reduce major losses. I think Govt is considering another plan to save the Balance Sheet of oil co's. What I understand is that Govt will give them another way of recovering lost grounds. It could permission to sell all outside products from their platform. This means oil co's will be able to unlock value through some other means.
Market has now come very close to its bottom as the most expected bad news has finally come ie petrol hike where left was not ready to accept the plea. Next bad news is expected on Friday inflation which could be as high as 8.4% this week and heading towards 9 to 9.5% on the back of petrol hike.
Inflation is here to stay and so also the panic but value buying has to happen in market like this. Volumes have dried leaving investors stranded. I think there is nothing to fear in b gr stocks because though it do not provide you exit at the time desired these are very stocks which will have handsome returns. FII do not own these stocks for panic selling.
Every dark night is being followed by very bright sunlight. Advance tax will be released on 15th June which in my opinion are not bad and would reflect the robust working of the co's irrespective huge cost escalations. There is only way of living in cost rising environment is to raise prices and match your revenues.
I understand that few investors are still leveraging on funding in B gr for 5 days trade. Please discontinue all such risky propositions on borrowed funds. Buy only to the extent to your own capital so that you do not face compulsory selling by handful of brokers. We have come across lots of cases where investors buy on Monday to square off the trades on Friday and run a risk. On Friday brokers sells off in losses. Please stop this practice. This is neither advisable nor advocated by market regulator. Also please try to understand the stock you are buying especially if you are buying in bulk.
Lots of concerns are also placed to know the bottom of the market….? Please do not mix up investment with trading? Bottom searching is must for traders are and they should take their chances at these levels with small trading patterns because your trades only will suggest where the bottom is. As far as value searching, you do not have to search for the bottom. If that is not the case then probably Shloka could not hit upper circuit even in today's market.
Investor's wants free insight of co's or just relies on so called tips even for buying bulk quantity. It is simply impossible. What is happening in India Foil, CMM etc need to be understood very precisely because their actual value is dependent on the event to happen. Stock market is controlled by intermediaries and they do not want to see investors entering at the bottom cycle of the stock and hence keep on suppressing the stock prices till the time they want which is wrongly understood by investors and exit sometimes in losses.
Like normal education I think there is huge need to educate investors in stock picking but to my disgrace investors are really keen in learning only hedge and derivative products that too at fancy costs. I have come across 100 MBA's qualified with derivative knowledge and each of them has made losses in the market.
Treat this as an industry and buy shares only when you are convinced. We too buy shares and hold it for years but buy only after we get fully convinced about the story. On a given day we can convince any investors why CMM or Anil Special holds huge upside even though they are underperforming at the moment in the given set of circumstances.
In any case, any co requires nothing less than 8 quarters to built its corporate governance, performance, value unlocking etc and hence any stock identified in H R H R may take time. The best strategy is cost reducing.
Give what you have. To someone, it may be better than you dare to think
Jun 04, 2008print
Complete Outlook of the Stock
Market Update KRC Investment Ideas
MARKET OVER VIEW
· Sensex closed at 15,963 down 101 points, after touching a high of 16,063 and a low of 15,710. Nifty closed at 4,716 down 24 points, after touching a high of 4,739 and a low of 4,634.
· Nifty June Futures ended 10 points discount at 4706 to the spot Nifty of 4,716. Total turnover in NSE's derivatives segment was Rs. 404.49 billion as against Rs. 499.68 billion on Monday.
Market Dynamics
Indices Close % Change Market cap
1 Week 1 Month 1Year In Rs. Cr.
Sensex 15,962.56 (1.92) (9.30) 9.55 2,206,070
Nifty 4,715.90 (1.89) (9.27) 9.51 2,982,791
BSE 100 8,441.15 (2.10) (9.71) 12.65 3,502,826
BSE 500 6,283.10 (2.69) (10.11) 10.78 4,883,289
BSE MidCap 6,547.30 (1.97) (9.54) 4..52 751,642
BSE Small Cap 7,882.29 (3.99) (10.65) 5.46 230,068
FII & Mutual Fund Activity (In Rs.Cr.)
Date FII MF
03/06/2008 (349.30) -
02/06/2008 254.60 157.50
30/05/2008 (1083.90) 451.10
29/05/2008 (733..90) 0.90
28/05/2008 (354.10) 36.90
Significant Bulk Deals (27/05/2008)
Scrip Buy/Sell Buyer/Seller Quantity
Brushman India Buy Pragya Mercantile Pvt. 3,15,000
Tulip Star Buy Anaan Mercantile Pvt. 77,618
Currency v/s Re.( 27/05/2008)
INR / USD INR / GBP INR / EUR INR / JPY 100
42.53 83.44 66.18 40.86
Commodity - In US$ (27/05/2008)
Crude Oil Aluminum Copper Lead Zinc Gold
127.37 2891 8018 2002 1950 897..60
Voltamp Transformers Ltd
(BSE CODE:532757)
CMP 6 Months Target Recommendation
Rs. 900 Rs. 1120 Buy
Voltamp Transformers Ltd (VTL), is a Vadodara based company established in 1963. VTL is a leading company of India who design & manufacture a complete range of Transformers.VTL operates mainly into three segments: Oil filled Power Transformers up to 50MVA, 132KV ratings, Oil filled Distribution Transformers up to 5MVA, 33KV range and Dry Type Transformers (Vacuum resin impregnated type and Cast resin type).
The company has enhanced their installed capacity from 7200MVA to ~9000MVA with capex of Rs 15crs (which was sourced from internal accruals). The commercial production of expanded capacity has started in December 2007.
The Company has installed facility to manufacture oil filled power and distribution transformers up to 50 MVA, 132 KV class, resin impregnated dry type transformers up to 5 MVA, 11 KV class (In Technical collaboration with MORA, GERMANY) and cast Resin dry type transformers up to 7.5 MVA, 33 KV class (In Technical collaboration with HTT, GERMANY). We have four independent units each for oil filled power transformer, oil filled distribution transformer, resin impregnated dry type transformer and cast resin type transformer. The factory is spread over 6 acres of land and has a built up area of 11,350 sq.mtr. The total installed capacity is around 5000 MVA per annum.
Voltamp has a different business model to the industry. The company earns 95% of the revenues from EPC contractors & industrial consumers and rest from SEB's. The company derives as high as 65% (FY07) of its revenues from industries while 30% comes from EPC contractors like L&T, ABB, and Siemens. While, the industry earns 80% to 85% revenues from SEB's and rest from industries. Voltamp has diverse product profile manufacturing oil and dry type transformers. The company enjoys the market leader position in dry type transformers with 40% market share.
In the developed countries the ratio of investment in generation to T&D stands at 1:1, however in India, the past trend shows this ratio to be lower at 1:0.5. As a thumb rule, out of the T&D investment 65 % goes towards transmission and 35 % towards - distribution. Investments in a transmission system comprise of investments in transmission line component and substation component. Both these components account for almost equal proportion of the total cost of setting up the transmission system. Major components under transmission line are the transmission line towers and conductors. Towers including construction costs account for almost 70% of the cost component of the transmission line. While, the remaining cost is accounted by conductors, insulators etc. Under the substation component, the main cost components are transformers and switchgears. The other components are control and relay panels, SCADA, foundations, control room buildings etc.
Voltamp Transformers reported topline of Rs 135 crore, a growth of 10 per cent YoY, for Q4FY08.. This low growth to be a one quarter phenomena and the company to maintain a CAGR of 35 per cent over 2-3 years. EBIDTA margin improved by 600 basis points year on year to 24.6 per cent. The company reported a PAT of Rs 21.6 crore, a growth of 59 per cent YoY. The company's operating margin picked up during the quarter on account of a couple of reasons, i.e. better cost management and some orders taken at high prices getting executed during the quarter itself. The brokerage believes the long-term sustainable margins would be in the range of 18-19 per cent. Voltamp's total order book stands at Rs 448 crore. For the quarter ended March 31, its order book was flat at Rs 407 crore. Out of this, Rs 200 crore orders are for power transformers, Rs 120 crore for distribution transformers and remaining for dry transformers. The company will undertake capital
expenditure of Rs 35 crore for a greenfield project, wherein oil type and dry type transformers will be manufactured. This expansion will increase the company's capacity from 9,000MVA to 13,000MVA in 12 to 15 months.
Massive investments in power generation, transmission, distribution, rural electrification and boom in housing & construction industry are expected to drive the demand for the power equipment manufacturers. The industry majors armed with price escalation clause for supplies to SEBs/ utilities are largely unperturbed by volatility in commodity prices but all equipped or equipping to capitalize on the strong growth opportunities by strategic investment in capacity and technology. On overall the power sector investment in the next 5 years to be in the range of USD 260 billion offering strong growth potential for equipment suppliers to the power sector.
Voltamp has diverse product profile manufacturing oil and dry type transformers. The company enjoys the market leader position in dry type transformers with 40% market share. In FY07, the company earned revenues of 34% from power transformer, 39% from distribution transformers and rest from dry type transformers.
Index Trend
Today Last Close
BSE Sensex 15515 15963 -448
S&P CNX NIFTY 4586 4716 -130
Nifty Support 4523 Resistance 4690
Nifty closed at 4,586. The support on the lower side is at 4,523 levels and thereafter at 4,460. The resistance exists at 4,690 and there after at 4,794.
Derivative Call
INDIAN BANK
Closing 115
Mkt Lot 1100
Margin Rs. 28,000
Outlook Bullish
Recommendation Buy June Fut. @ 115
Stop Loss 110
Target 125-134
Expiry 26/06/2008
Market Action
ONGC LTD (500312)
The stock has closed at Rs 887.The support for the stock is at 875 on the lower levels and first resistance is at 899 levels.. Once past this level the stock will reach at 912 on higher levels. The MACD Indicator is in the negative zone and moving up. The stock can be bought at current level.
DABUR IND(500096)
The stock has closed at Rs 96.10. The support for the stock is at 94.50 on the lower levels and first resistance is at 98 levels. Once past this level the stock will reach at 103 on higher levels. The MACD Indicator is in the negative zone and moving up. The stock can be bought at current level.
Earning Idea
THERMAX
Last Price 429.50
13 day EMA 441
50 day EMA 495
200day EMA 681
Support 419
Resistance 440
Comment Bullish
[THERMAX]
The stock has closed at 429.50 .The support for the stock is at 419 levels. The stock faces resistance at 440 levels. Once past this resistance the stock will reach at 453 levels. The MACD indicators for the stock are in the negative zone and moving sideways. The stock can be bought at current level.
Jun 04, 2008print
KS Oils Ltd
Result Update Q4 FY08
Key Data
CMP Rs 65.15
Date June 4th 2008
Sector FMCG
Face Value Re. 1
BSE Code 526209
52 Week H/L Rs 142.4/ 38.62
Market Cap Rs 2165.5 Cr
Investment Rationale
K S Oils is a leading integrated edible oil company and is the trusted name behind renowned brands like Kalash, Double Sher, K S Gold, among others. A leader in mustard oil in India, K S Oils today enjoys 7% market share in the overall mustard oil segment with a dominant 25% market leadership in branded mustard oil. The Company has been growing at a rapid pace in the recent past and is expected to do so in the coming two-three years due to the economics of packaged edible oil sector. It has generated a turnover of over Rs2,000 crores during FY08. The company has in the recent past successfully undertaken the growth strategy of capacity expansion, green field projects and acquisitions, thus creating an unchallenged competitive advantage. With secured raw material supply source, ‘near to customer' sales points and a robust distribution and dealer network, K S Oils is creating market and brand leadership. With all the factors in favour of KS Oils,
positive outlook for the sector and strong management vision, we believe it would grow by double digits in sales and profits for next three years with increasing margins, thus creating sustainable shareholder value.
Key Developments and Impact
KS Oils buys palm plantation in Indonesia
KS Oils has acquired 50,000 acres of palm plantation in Indonesiawith an investment of Rs230 crore which will be spread over three years and will be routed through its wholly owned subsidiary in Singapore. The strategy behind this is, owning a raw material source to de-risk in the long term due to spiraling commodity and raw material prices besides being another important step in their global ambitions. The plantation is expected to yield palm oil of about 80,000 tonnes annually, which is about 2.3 per cent of India's current imports of 3.6 million tonnes per annum.
Financial Performance
Revenue increased by nearly 130 per cent
Net Sales of the company increased by 129.7 percent in Q4FY08 over Q4FY07 and nearly doubled in FY2008 on the back of higher growth of branded sales, which constitutes almost 61 percent of the total revenues of the company. Power also contributed to the tune of Rs1.36, a significant jump from Rs0.12 crore in Q4FY07. During fiscal 2008, branded sales of the company, increased by 86 percent over the previous year, while retail sales grew to Rs654 crores from Rs230 crores. Operating Profits also have grown at a much faster pace compared to sales growth due to increasing contribution of branded sales, which enjoy substantially higher margins vis-A -vis loose sales.
Valuations
At the CMP of Rs65.15, KS Oils is trading at commodity valuations of EV/Sales of 1.1x and EV/EBITDA of 9.55x its TTM Sales which makes it quite attractive.
Industry Scenario
Indian Edible Oil Industry
Fourth largest edible oil market in the world but one of the lowest per capita consumption!
Market Size and Rate of Growth: Indian edible oil industry is estimated at Rs60000 crore of which mustard edible oil is valued at Rs12000 crore. In volume terms the size is estimated to be 12 million tonne per annum (mtpa).
Source: Industry and KRC Research
The industry is historically dominated by unorganized players which control 85% of the total market and the balance by unorganized players.
Source: Industry and KRC Research
Though the industry has been growing at 5-6 percent in the recent past, the packaged edible oil segment (organized segment) is growing at a much faster pace, 20 percent. The fast growth of organized players has come mainly at the cost of unorganized players among other factors. This rapid growth of the packaged edible oil is expected to be continued in the future also due to various reasons as explained in the following paragraphs.
Per Capita Consumption: Though Indiais the 4th largest edible oil market in the world, the per capita consumption (pcc) of oil in Indiahas so far been the lowest (12kg) compared to other developing and developed countries as evident from the following graph:
Source: Industry and KRC Research
The edible oil sector is further divided into different segments like: Palm Oil, Soy Oil, Mustard Oil, etc. However, Sunflower, Soy Bean, Palm, Blended and Cotton Seed are the top five oil types contributing to more than 90 percent of the total Volumes. The edible oil market is also subject to regional preferences. For example, Mustard oil is majorly consumed in the North-East, Central, North and East regions in India due to its cold climatic conditions, high heat bearing characteristic of Mustard, specific preference for colour and aroma by non-vegetarian consumption pattern of North and East, etc. Following chart gives the size of each segment in volume terms (mtpa):
Source: Industry and KRC Research
Indiaprimarily has been in short supply of edible oil and hence imports almost 33% of its domestic demand for edible oil. Of the total 4.41mtpa imports of edible oil, Palm Oil forms 2.57mtpa or 58 percent and Soy Oil forms 1.7mtpa or 38.5 percent.
Trend of Imports in mtpa: Over 1/3rd of demand met through imports!
Source: Industry and KRC Research
As per industry estimates, demand for edible oil is expected to grow at a 5-year and 10-year CAGR of 6 percent from 12mtpa at present to 16mtpa in 2010E and further to 21mtpa in 2015E.
Source: Industry and KRC Research
Source: Industry and KRC Research
Developments and Impact
KS Oils buys palm plantation in Indonesia
KS Oils has acquired 50,000 acres of palm plantation in Indonesiawith an investment of Rs230 crore which will be spread over three years and will be routed through its wholly owned subsidiary in Singapore. The strategy behind this is owning a raw material source to de-risk in the long term due to spiraling commodity and raw material prices besides being another important step in their global ambitions. The plantation is expected to yield palm oil of about 80,000 tonnes annually, which is about 2.3 per cent of India's current imports of 3.6 million tonnes per annum.
Import duty slashed for edible oils
In a bid to contain inflation, the government recently exempted crude edible oil from import duty, while reducing the duty on refined edible oils to 7.5 per cent. Following the duty cut, soybean oil prices have come down from Rs64 to Rs60, while palm and mustard oil have dipped by Rs3 each. The management believes that this reduction will have a positive impact on the company, as the resultant cost benefits would be passed on to consumers, driving demand.The management expects revenues to rise to 32 billion rupees against earlier targeted revenue at 30 billion rupees with net profit of over Rs200 crore expected in FY09.
Financials
(Rs. Crore)
Particulars Q4FY08 Q4FY07 % chg FY08 FY07 % chg
Net Sales 674.01 293.42 129.71% 2041.06 1070.51 90.66%
Other Income 6.17 0.17 3529.41% 10.51 1.07 882.24%
Total Income 680.18 293.59 131.68% 2051.57 1,071.58 91.45%
Total Expenditure 605.42 259.73 133.10% 1815.84 977.83 85.70%
staff cost 2.69 0.76 253.95% 6.95 2.5 178..00%
% of sales 0.40% 0.26% 0.34% 0.23%
Stock Adjustment 55.93 12.49 347.80% (67.87) 28.83 -335.41%
% of sales 8.30% 4.26% -3.33% 2.69%
Consumtion of Raw Materials 434.15 217.07 100..00% 1570.24 862.20 82.12%
% of sales 64.41% 73.98% 76.93% 80.54%
Purchase of Traded Goods 63.91 1.33 4705.26% 174.30 16.28 970.64%
% of sales 9.48% 0.45% 8.54% 1.52%
Other expenses 48.74 28.08 73.58% 132.22 68.02 94.38%
% of sales 7.23% 9.57% 56.72% 6.48% 6.35%
Operating Profit (EXCL OI) 68.59 33.69 103.59% 225.22 92.68 143.01%
Operating Profit (INCL OI) 74.76 33.86 120.79% 235.73 93.75 151.45%
Interest 11.6 5.97 94.30% 38.44 15.35 150.42%
Gross Profit 63.16 27.89 126.46% 197.29 78.40 151.65%
Depreciation 3.21 1.25 156.80% 11.94 4.52 164.16%
Profit Before Tax 59.95 26.64 125.04% 185.35 73.88 150.88%
Tax 19.76 5.6 252.86% 62.65 16.56 278.32%
Profit After Tax 40.19 21.04 91.02% 122.7 57.32 114..06%
Extraordinary item 0 0 0.00
Adjusted Net Profit 40.19 21.04 91.02% 122.7 57.32 114..06%
Equity 33.24 22.09 33.24 22.09
Adjusted EPS 1.21 0.952 3.69 2.59
Ratios (%)
OPM (excl OI) 10.18% 11.48% 11.03% 8.66%
OPM (inc OI) 11.09% 11.54% 11.55% 8.76%
Interest/Sales 1.72% 2.03% 1.88% 1.43%
GPM 9.37% 9.51% 9.67% 7.32%
NPM (before extra ordinary) 5.96% 7.17% 6.01% 5.35%
NPM (after extra ordinary) 5.96% 7.17% 6.01% 5.35%
Financial Analysis
Revenue increased by nearly 130 per cent
Net Sales of the company increased by 129.7 percent in Q4FY08 over Q4FY07 and nearly doubled in FY2008 on the back of higher growth of branded sales, which constitutes almost 61 percent of the total revenues of the company. Power also contributed to the tune of Rs1.36, a significant jump from Rs0.12 crore in Q4FY07.. During fiscal 2008, branded sales of the company, increased by 86 percent over the previous year, while retail sales grew to Rs654 crores from Rs230 crores. Operating Profits also have grown at a much faster pace compared to sales growth due to increasing contribution of branded sales, which enjoy substantially higher margins vis-Ã -vis loose sales.
Operating margin falls by 130 bps
Operating profit margins fell by 130 bps to 10.18percent in Q4FY08 crore owing to rise in employee cost and purchase of finished goods. However, For FY08, margins increased 237 bps to 11.03percent in FY08. Operating profit nearly doubled from Q4FY07 to Q4FY08 to touch Rs68.6 crore.
Net Profit increased by 91 per cent
Net profit for Q4FY08 touched Rs40.19crore up from Rs21.04 crore in Q4FY07. It has grown at a much faster pace due to higher capacity utilization and tilt in the sales mix. The company has incurred an interest charge of Rs11.6 crore for the quarter ended March '08 as against Rs5.9 crore forQ4FY07. Depreciation increased by 156 per cent to Rs3.21 crore. Net profit was hampered due to higher tax provision on account of deferred tax of Rs22.5 crore thus taking the total tax for Q4FY08 to 19.7 crore up from Rs5..6 crore in Q4FY07.
Valuations
At the CMP of Rs65.15, KS Oils is trading at commodity valuations of EV/Sales of 1.1x and EV/EBITDA of 9.55x its TTM Sales.
Risks
* The company operates in highly competitive oil business and any inability to pass on the increase in input costs could affect the margins.
* The company along with other industry players is exposed to forex loss because of crude edible oil imports and rapeseed oil meal and soya oil meal imports. However the company adopts continuous risk monitoring system and hedges its future foreign exchange risks.
Growth
* KS Oils has managed to pass on any increase in raw material prices to its consumer's inpsite of operating in a commodity business. Hence we believe the company would be able to do so in the future also.
* Buoyant economic conditions leading to a tremendous rise in disposable income would lead to an increase in the per capita consumption (pcc) of oil. With global scale capacities created at low cost and presence in both premium and popular segments, KS OILS is best placed to tap this opportunity.
Relative valuation:
Particulars KS Oils Marico Ruchi Soya
Price 65.15 63.50 91.00
Mcap (Rs cr.) 2165.59 3867.15 1718
EPS 3..69 2.36 8.34
P/E (x) 17..63 26.96 10.92
EV/Sales (x) 1.10 2.56 0.23
EV/EBIDTA (x) 9.55 19.32 5.87
Mcap/Sales 1.06 2.47 0.16
Technicals
Last Price
65.40
13 day EMA
74
50 day EMA
73
200 day EMA
79
The stock is moving downwards.. The support for the stock exists at around 61 levels. The MACD indicator for the stock is moving downwards in negative zone. Investors can buy the stock at declines.
Recommendation & Investment View
Recommendation : Market Out Performer
Investment View : Buy
Disclaimer:
This publication has been prepared solely for information purpose and does not constitute a solicitation to any person to buy or sell a security. While the information contained therein has been obtained from sources believed to be reliable, investors are advised to satisfy themselves before making any investments. Kisan Ratilal Choksey Shares & Sec Pvt Ltd., does not bear any responsibility for the authentication of the information contained in the reports and consequently, is not liable for any decisions taken based on the same. Further, KRC Research Reports only provide information updates and analysis. All opinion for buying and selling are available to investors when they are registered clients of KRC Investment Advisory Services. As a matter of practice, KRC refrains from publishing any individual names with its reports. As per SEBI requirements it is stated that,Kisan Ratilal Choksey Shares & Sec Pvt Ltd., and/or individuals thereof may have
positions in securities referred herein and may make purchases or sale thereof while this report is in circulation.
531273 ( RADHE DEVLOP)
Action Trigger Price Stop Loss Target 1 Target 2
BUY ABOVE 85 84 89 92
S.SELL BELOW 83 84.5 81.5 77 500184 ( HIMADRI CHEM)
Action Trigger Price Stop Loss Target 1 Target 2
BUY ABOVE 448 444 458 470
S.SELL BELOW 442 445 434 420 512393 ( SHARDUL SECU)
Action Trigger Price Stop Loss Target 1 Target 2
BUY ABOVE 160 158 164 170
S.SELL BELOW 157 158.5 154.5 148
Rohit
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