Friday, March 31, 2006

Markets Today

Sensex ends in the red after striking new high; gains 20% in Q4 March-06.The market ended in the red on the last trading day of the financial year FY 2006. But the broad market was quite firm as a number of small-cap and mid-cap stocks rose.

IT stocks lost ground on profit taking after a recent rally. FMCG majors Hindustan Lever and ITC slipped and fall in some of the index heavyweights like ONGC and ICICI Bank also weighed on the barometer index.

Auto, metal and select PSU bank scrips edged higher. Buying was conspicuous in caustic soda makers. A host of MNC affiliates spurted.

Sensex lost 27.08 points or 0.24% to settle at 11,279.96. The S&P CNX Nifty lost 16.40 points or 0.48% at 3,402.55.For the quarter ended 31 March 2006, Sensex recorded a massive rise of 1,882.03 points or 20% from 9,397.93 on 30 December 2005.

The market opened on a firm note today but the Sensex had soon witnessed a sharp fall in early trade before it recovered from lower level instantly. It held positive territory for a better part of trading before weakness gripped the market in late trading. Sensex moved 125.79 points for the day between a low of 11,231.16 and a high of 11,356.95. Today’s high of 11,356.95 is a new all time high for the barometer index.

The market breadth was strong. 1,734 stocks rose on BSE as compared to 748 scrips that declined. 66 stocks were unchanged. Gainers outpaced losers by a ratio of 2.31:1.

Bhel jumped 6% to Rs 2,265. The company is slated to unveil its provisional financial year for FY 2006 on 3 April 2006.

Ranbaxy plunged 4% to Rs 432.50. The scrip had spurted in the past two days after the company announced major overseas acquisitions.

But Cipla rose 4% to Rs 663. Recently, Cipla had announced record date for a liberal 3:2 bonus issue.

Auto stocks rose on expectation of strong sales for March 2006. Light commercial vehicles maker Eicher Motors jumped 15% to Rs 306.95, Force Motors rose 5% to Rs 588, Ashok Leyland gained 4% to Rs 40.40, Tata Motors gained 3% to Rs 936, Bajaj Auto rose 1.7% to Rs 2,741 and car major Maruti Udyog gained 2% to Rs 873.

Metal scrips held firm on expectation of hike in domestic prices. Steel major Tata Steel gained 2.7% to Rs 536.50. The market expects a between 7-10% hike in prices by steel firms in April 2006 due to firm global prices. Hindustan Zinc rose 4.5% to Rs 524 after LME zinc prices struck a new all time high on Thursday.

IT stocks slipped on profit taking. TCS shed 2.7% to Rs 1,914, Infosys lost 1.9% to Rs 2,975, and Wipro shed 0.8% to Rs 559.

Runaway Bull Market! A Time to Pause and Reflect

The market indices are posting all time high closes, and the mood is one of extreme buoyancy....Read this article by technical analyst Rajat K Bose.

Thursday, March 30, 2006

Jet Airways takes off

Jet Airways jumped 5.5% to Rs 985 on reports the company will be able to take over the aircraft, routes, parking bays, landing slots and hangars now vested with Air Sahara.41,563 shares changed hands on the counter on BSE

The stock had plunged from late January 2006 ever since the Jet-Sahara deal was announced. From Rs 1149.90 on 19 January 2006, the stock slipped all the way to Rs 919.15 on 22 March 2006 on selling pressure. Here it found a little support. Th stock settled at Rs 933.40 on 30 March 2006.

The Jet-Sahara deal was stuck over the transfer of Air Sahara’s assets to Jet as the government was initially opposed to it. As per reports, the government has now allowed the transfer of Air Sahara’s entire fleet and airport infrastructure to Jet Airways. The permission to transfer the assets has been granted on the condition that these will not be further transferred or leased to a third party.

Recently, Jet Airways had agreed to pay an advance of Rs 500 crore to Air Sahara as part-payment for buying out the latter, for extending the share purchase agreement by 90 days.After this approval, Jet Airways will get the entire 26 aircraft belonging to Air Sahara, its 26 parking slots in various airports across the country as well as rights to operate 134 flights a day to 34 destinations.

Meanwhile, Jet Airways is in talks with Brazilian aircraft manufacturer Embraer for acquiring Embraer 175 jet to deploy on long haul domestic routes. It is also talking to US aircraft major Boeing company for acquiring a 450 seater Boeing 747-8 Intercontinental aircraft for its proposed non-stop US service.

Jet Airways' net profit plunged 53% to Rs 61.01 crore for the Q3 December 2005 from Rs 129.63 crore in Q3 December 2004. The sharp fall in net profit was despite a decent 22.3% growth in net sales to Rs 1,478.25 crore (Rs 1,208.24 crore), indicating a substantial pressure on profit margins due to escalation of costs.

Source:Capitalmarket

RECOMMENDED SCRIPS

The scrips which we had previously recommended have acheived the predicted targets:

22 February 06
Sector:Auto
Maruti Udyog
CMP:Rs 788
Target Price:Rs850-900
The stock touched a high of Rs 942 Post Budget ,due to the Excise duty reduced to 16% on small cars,currently the stock is trading at Rs 863.


24 February 06
Sector:Pharma
Cipla Ltd
CMP:Rs551
Target Price:Rs 650
The Stock reached a 52 week high of Rs 663 today,while is currently trading at Rs 658.

31 March 06
Sector:IT
Tata Consultancy Services Ltd
CMP:Rs 1795
Target Price:Rs 1950-2000
The Stock has achieved a high of Rs 2010,while it closed at Rs 1968 yesterday.

Stock Alert

Jet Airways may see action on reports aviation ministry’s new guidelines for mergers & acquisitions to be notified next week will enable Jet to take over the aircraft, routes, parking bays, landing slots and hangars now vested in Air Sahara. It may be recalled that the Jet-Sahara deal announced in January was stuck over the transfer of assets as the government was initially opposed to it.

Zee Telefilms (ZTL) may see action after it set swap ratio for spin off of the news unit. Shareholders of ZTL will get 137 shares of Zee News for every 100 shares held in ZTL when the news division is spun off. ZTL’s board had approved a restructuring on Wednesday that will create up to four separate listed entities. Zee said it would spin off the news and regional language channels into Zee News and its cable business into Wire and Wireless India leaving ZTL as a focussed producer of TV programming and Hindi-language entertainment channels. The Zee board also gave in principle approval to hive off its Dish TV direct-to-home satellite TV business.

Nahar Spinning Mills (NSML) and Nahar Exports (NEL) may see action after the group announced consolidation of the textile business under Nahar Spinning. The textiles business of NEL will be hived off and transferred to NSML. Ahead of this, NSML will hive off its investment business in favour of a new company Nahar Capital & Financial Services (NCFSL). One fully equity share of Rs 5 each will be issued for every share held in NSML. Simultaneously, the paid-up value of each share of NSML will be reduced to Rs 5 from Rs 10.
55 fully paid up equity share of Rs 5 each of NSML will be issued for every 100 shares held in NEL. Following the allotment of NSML shares to shareholders of NEL, the paid-up value of NEL shares will be reduced to Rs 3.50 per share from Rs 10 per share.

State Trading Corporation (STC) may edge higher on reports, the company expects 25% growth in exports, 35% growth in imports and 25% growth in domestic sales in FY 2007.

Nagarjuna Agri Tech (NATL) may see action on reports Subhkam Group of Mumbai promoted by Rakesh Kathotia is all set to acquire controlling stake in the company. NATL is diversified company with interests in fertilisers, pesticides, agri-products, power and oil. It belongs to the Nagarjuna Group.

Naya Issue: OPTO CIRCUITS INDIA LTD

Type of Issue:Book Built
Issue Opens:31 March, 2006
Issue Closes:05 April, 2006
Issue Size:4,000,000 (No. of Shares)

Opto Circuits (India) Ltd. (OCIL) was incorporated as a private limited company in June 1992. Subsequently the company converted into a public limited company in April 2000. OCIL is in Optelectronics industry, related to non-invasive health care segment. It is engaged in the design, development and manufacturing of devices that are employing light to sense and detect, medical monitoring products and distribution thereof.

OCIL has a state of the art microelectronic assembly unit in Bangalore. It acquired patient monitoring division of Palco labs, USA in 2003 and renamed the same as Mediaid Inc.The company's range of products include oximeter probes, fluid warmers, cholesterol monitors and a multitude of SpO2 sensors for patient monitoring applications in operating theatres and ICUs of hospitals and nursing homes.

OCIL exports majority of its production to America, Europe and Asia. Around 75% of its sales are made in the US market. OCIL has also been catering to the domestic market through its Bangalore based subsidiary, Advanced Micronic Devices Ltd. OCIL's client base includes Philips, GE and Estill Technologies.

Object Of The Issue
*To upgrade Research & Development facility for Rs.19.38 crore.
*Upgrade infrastructure, modernize and acquire additional plant & machinery for Rs.16.35 crore.
* Investment in Mediaid Inc for establishing marketing offices. For Rs.7.50 crore.
* Acquisition of EuroCor GmbH for Rs.27.21 crore.
* Meet additional working capital requirements and issue expenses for Rs.22.5 crore.

Strengths
* OCIL avails benefits of Income tax deductions and exemptions under section 10B, of the Income Tax Act. The same is available for ten years till FY2010.
* Mediaid Inc., a 100% subsidiary of OCIL has its strong distribution network spread across the US, Latin America and Europe is used by OCIL to market its brands.
* Advanced Micronic Devices Ltd. has an established medical distribution network for over two decades. OCIL leverages their extensive network to drive its domestic market product sales.
* EuroCor GmbH, a 100% subsidiary of OCIL was acquired by OCIL in January 2006. EuroCor is located in Germany and is engaged in the production of 'Stents'. It is a new European life sciences technology corporation specializing in the research, development and manufacture of interventional cardiology products. OCIL can cater to the German market and expand its product range with EuroCor.
* OCIL wants to geographically increase its product reach by setting up branches in Germany, France, Dubai, Singapore, Brazil and Chile.

Weaknesses
* OCIL suffers from high credit risk. Total receivables of the company on consolidated basis have been increasing YOY due to long business cycle. Receivables as a percentage of Total assets have increased from 39% in 2003 to 49% as on September 2006.
* OCIL had come up with an Initial Public Offer in October 2000. The same was not fully subscribed, failing which the issue size had to be reduced from Rs.15.5 crore to Rs.13.74 crore. The project cost had to be revised and the shortfall was met through internal accruals.

Valuation
* Sales and Net Profit of the company have grown at a CAGR of 28.45% and 41.74% respectively from FY2002 to FY2005.
* Book Value of OCIL for the FY2005 and half year ending September 2005 is Rs.32.86 and Rs.26.89 respectively. Networth for the same period is Rs.58.72 crore and Rs.72.08 crore.
* EPS of the company for FY2005 and as on 30th September 2005 is Rs.11.17 and Rs.5.96. Annualized EPS on post issue equity is Rs.10.37. Post issue PE is in the range of 23-26 for a price band of Rs.240 to Rs.270.
* Return on Networth has increased from 28.34% to 33.98% from FY2004 to FY2005 respectively.

For More Information Click Here
To View Prospectus Click Here

Source:Indiabulls

Markets Today

Lifetime closing high for Sensex, Nifty.Market ended at new all time closing high, amid high level of volatility in the last one hour of trade ahead of the expiry of March 2006 derivative contracts. The sharp spurt today was attributed to short covering in derivatives segment.

The Sensex hit a fresh all time high of 11,338.66 at the fag end of the trading session.For the day, Sensex rose 123.56 points (1.10%) to lifetime closing high of 11,307.04. It hit a low of 11,227.82. Sensex oscillated 112 points for the trading session today.The Sensex jumped 387 points (3.57%) in the past 5 trading sessions from 10,840.59 on 23 March 2006.

The S&P CNX Nifty rose 65 points (1.93%) to at an all time closing high of 3,418.95. Nifty April 2006 futures settled at a steep discount of 31 points to the spot closing at 3,388.10.

The barometer index opened with an upward gap at 11,241.78 on the back of strong US markets and after the latest data showed pick up in buying by FIIs and local mutual funds.

FIIs bought shares worth a net Rs 371.70 crore on Tuesday (28 March 2006). On 27 March 2006, they pumped Rs 550.20 crore in the Indian equity market. Mutual funds bought shares worth a net Rs 317.80 crore on 28 March 2006.

US stocks staged a broad rebound on Wednesday, as tech shares rallied on optimism about economic growth and business spending, driving the Nasdaq to a five-year high. The Dow Jones industrial average rose 61.16 points, or 0.55%, to end at 11,215.70. The Standard & Poor's 500 Index gained 9.66 points, or 0.75%, to finish at 1,302.89. The Nasdaq Composite Index climbed up 33.32 points, or 1.45%, to close at 2,337.78

Most of the Asian markets were trading strong. The Nikkei 225 index breached 17,000 mark for the first time in more than 5-1/2 years with tech companies leading the advance.

The highlight of today’s trading was a surge in turnover on the back of block deals in a number of stocks. The total turnover on BSE amounted to Rs 5,302 crore which was much higher than Wednesday’s turnover of Rs 4242 crore.

The market breadth was strong on BSE with 1697 shares advancing and 764 shares declining. 79 shares remained unchanged. A number of small cap and mid cap shares advanced on strong buying momentum. The BSE Mid Cap index was up 1% while the BSE Small Cap index rose 1.57%.Among the Sensex pack, 17 shares advanced while 13 declined

Ranbaxy Laboratories was the biggest gainer (up 9.21% to Rs 449). At the fag end of the trading session, Ranbaxy announced the acquisition of Belgian generic drug company Ethimed NV. On Wednesday, it had announced acquisition of Romanian generics company –Terapia for $ 324 million on Wednesday.

Hindalco jumped 3% to Rs 184.40 and Bharti Tele-Ventures advanced 3.25% to Rs 407.
Wipro jumped 3.10% to Rs 559.25 on 4.69 lakh shares. IT stocks have rises in the past 3 trading sessions helped by a decline in the rupee to a two-and-a-half month low of 44.6950/7050 a dollar on Wednesday. IT companies derive a lion’s share of revenue from exports.

NTPC lost 1.50% to Rs 133.30 while SBI lost 1.45% to Rs 969
Dr Reddy’s shed 1.10% to Rs 1409.50 and Bajaj Auto slipped 1.10% to Rs 2690

Tata group companies Tata Metaliks (up 5.4% to Rs 153.90), Tata Motors (up 1% to Rs 913), Tata Sponge (up 2.53% to Rs 135.85) and TCS (up 2.36% to Rs 1944) were in demand today.

Stocks like Rayban Sun Optics, Andhra Petro, National Steel, Eco Board, Metrochem, Premier Tyre and Avanti Feeds, surged.
Foods and Inns, State Bank of Mysore, Polar Pharma, Country Club and Himalaya Granites declined sharply.

A number of block deals were executed today on BSE. 15.56 lakh shares of Satyam Computers changed hands at Rs 854.10 per share by minutes after opening. In BPCL 13.65 lakh shares changed hands in Rs 420 per share. In Essar Shipping 2.10 crore shares were traded at Rs 32.50 per share. In HDFC 10.13 lakh shares changed hands at Rs 1338 per share. In Hero Honda 11.56 lakh shares changed hands at Rs 889 per share. 16.39 lakh shares of McLeod Russel changed hands at Rs 133 per share. 6.19 lakh shares of Grasim were traded at Rs 1991.20 per share. In Gail India, 22.98 lakh shares changed hands at Rs 312.25 per share and 5.85 lakh shares of Glaxosmithkline Pharma changed hands at Rs 1463 per share.

Sugar counters were in demand for the second day as buying continued. Sugar prices have rallied globally. Bajaj Hindustan (up 1.66% to Rs 498), Dhampur Sugars (up 8.06% to Rs 271), Shakti Sugars (up 9% to Rs 228.70), Balarmpur Chinni Mills (up 3.38% to Rs 188.20), Simbhaoli Sugars (up 5.10% to Rs 175.50), Triveni Engineering (up 12.7% to Rs 127), KM Sugar (up 11.50% to Rs 77.55), Oudh Sugar (up 6.2% to Rs 223.80) and Bannari Amman Sugars (up 3.8% to Rs 1392) and Shree Renuka Sugars (up 5% to Rs 1506.75) were the major gainers.

Bike companies were in action on expectation of strong sales for the ongoing month. TVS Motor jumped 5.3% to Rs 138 and Hero Honda was up 1.40% to Rs 892.50. LML jumped 3.73% to Rs 34.80, Kinetic Engineering surged 5% to Rs 166.05 and Kinetic Motors jumped 5% to Rs 61.40.
Ferrous and non-ferrous metal manufactures advanced today on expectations of a hike in product prices. Firmness in global metal scrips aided the upmove. Hindustan Zinc (up 17% to Rs 500.20) was the top gainer. Other counters like National Aluminium Company (Nalco) (up 2.3% to Rs 293.20), Sail (up 8.22% to Rs 82.95) and Sesa Goa (up 1.35% to Rs 1255) moved higher.

Aurobindo Pharma rose 2.70% to Rs 682.15 after reports that the company is looking for four overseas acquisitions in the range of $ 20-50 million each. It also got final approval from the USFDA for its Zidovudine capsules USP 100 mg.

Bata India surged 11% to Rs 235 after its Q4 results hit the market in early afternoon trade. For Q4 December 2005, Bata India has reported a net profit of Rs 5.49 crore as against a net loss of Rs 21.94 crore in Q4 December 2004. Net sales has risen 8.3% to Rs 193.32 crore from Rs 178.49 crore. It was after a gap of three years that the footwear major has posted net profit.

Essel Propack jumped 5% to Rs 433 after it announced plans on Wednesday to acquire two medical device makers, US based Tacpro and Singapore's Avalon Medical Services.

Zee Telefilms added 0.7% to Rs 241.25 on high volumes of 31.61 lakh shares after the company’s board on Wednesday approved a restructuring that would create up to four separate listed entities. It hit a high of Rs 259.50 in intra-day trade.

India Cements slipped 1.1% to Rs 158.50 after NSE barred further F&O positions in the stock as it has breached the market wide position limit.

Ranbaxy buys Belgian generic drug firm Ethimed

Ranbaxy has acquired Ethimed in Belgium. Ranbaxy has termed the Ethimed acquisition as 'modest' compared to the Terapia deal. This acquisition is a part of Ranbaxy's Europe expansion plan.

The Belgium market is largely a branded, high priced market with increasing generic penetration. Ethimed has significant customer network, over 20 product registrations and is ranked number 10 among generic companies in Belgium.Ranbaxy also said that they were looking at raising more money for expansion plans.

Ranbaxy Laboratories Ltd. climbed 12 percent to 460.80 rupees after it acquired a Belgian generic drug company Ethimed NV. The cost of the acquisition was not disclosed by the company.

Mysore Cements Ltd rose 4.5 percent to 49.60 rupees, after ICICI Bank Ltd sold 7.3 million shares or 8.4 percent of the company's equity.

Source:Moneycontrol

Bata on profit surge, metals shine on hike hope

Bata India Ltd. jumped 12 percent to 238.50 rupees after the shoe company turned into profit for the December quarter. Its net profit for the December quarter was 54.9 million rupees from net loss of 214.9 million rupees a year ago. Net sales increased to 1.93 billion rupees from 1.83 billion rupees a year ago.

Shares in metal companies such as Steel Authority of India
Ltd,Hindalco Industries Ltd, JSW Steel Ltd were 2-7 percent higher on expectations of a hike in product prices, brokers said. Steel firms are expected to raise prices by 7-10 percent from April 1. National Aluminium Co. Ltd. Chairman and Managing Director C.R. Pradhan told television channels his company may increase prices by 2,000-2,500 rupees a tonne from Friday.

Wednesday, March 29, 2006

Zee Telefilms may hog limelight on major restructuring

Zee Telefilms (ZTL) may see action after the company’s board on Wednesday approved a restructuring that would create up to four separate listed entities. The restructuring is a response to investors' concerns that Zee had too many businesses under one company, making it hard to evaluate their prospects, and Zee hopes to attract more investment in the different units to fund their growth.

The news related business of ZTL would be hived off and merged into Zee News (ZNL). Shareholders of ZTL would receive shares of ZNL in proportion. ZNL would be listed independently.Siticable and cable related business of ZTL would be demerged into Wire and Wireless (India) (WWIL) – a new company. The shareholders of ZTL would receive proportionate shares of WWIL as consideration.

Zee also has "in principle" approval from the board to hive off its Dish TV direct-to-home satellite TV business. When approved, this would create a fourth listed company.ZTL had transferred newsgathering activities of ZTL to Zee News in October 2005 in compliance with government guidelines. Downlinking and commercial exploitation of news bearing channels was retained under ZTL.

Essel Propack (EPL) may see action after the company said on Wednesday it plans to acquire medical device makers US-based Tacpro Inc and Singapore's Avalon Medical Services Pte Ltd. for an undisclosed sum. The deal will be completed by April 14, the company said in a notice to the stock exchange. Essel had executed the acquisitions through its subsidiaries Lamitube Technologies Ltd. and Lamitube Technologies Cyprus.
The takeover is deemed synergic given EPL’s polymer based packing business and higher grades of the same raw material being core to the catheters (for non-invasive surgery) it now wants to make.

ONGC may slip on reports in a section of the media that the oil exploration major may have to shell higher subsidies in the fourth quarter of the current financial year to help oil marketing companies book profit.
Escorts may see action on reports the company is set to make foray into Bangladesh to manufacture tractors through a joint venture with the Nitol-Niloy group.
Neyveli Lignite Corporation may edge higher on reports the company will invest Rs 4,192 crore for expanding capacities.

Dabur India may edge higher on reports that the company is aiming at doubling its revenue and profit by the end of 2009-2010. The company is looking at expanding both organically and inorganically in the time frame and it has a series of aggressive acquisitions, domestic as well as international in the pipeline.

Aurobindo Pharma may edge higher after the company said on Wednesday it had received US Food and Drug Administration approval for Zidovudine capsules, which prevents reproduction of the AIDS virus. The approval will enable the company to market the product in the United States and get it qualified under the US President's Emergency Plan for AIDS Relief programme.

Ciba Specialty Chemicals may see action after the company on Wednesday approved the sale of textile effects business as a going concern to Huntsman Advanced Materials (India) for Rs 122.50 crore. The sale is a part of the global restructuring of the Ciba Group. As part of its global restructuring, Ciba had agreed to sell its worldwide textile effects business to Huntsman Corporation, US.

Electrosteel Castings may edge higher after the company said its 12 MW capacity power plant at Haldia has started commercial production.

Naya Issue: EMKAY SHARE AND STOCK BROKERS LTD

Type of Issue:Book Built
Issue Opens:31 March, 2006
Issue Closes:07 April, 2006
Issue Size:6,250,000 (No. of Shares)

Needs to scale up and diversify.The small-sized company is dependent on
stock-market-sensitive brokerage revenue.

Emkay Shares and Stock Brokers (ESSB) was founded as a private limited company in January 1995. It converted into a public limited company in October 2005. The promoters and managing directors of the company, Krishna Kumar Karwa and Prakash Kacholia, are chartered accountants with more than 30 years of experience in the capital market operations between them. Kacholia leads Emkay’s derivatives business and has served on BSE’s governing board and on the advisory derivatives committee of Sebi when derivatives trading was launched in India.

ESSB’s revenue predominantly comprises brokerage income from equities and derivatives on BSE and NSE. It also undertakes distribution of third-party products, portfolio management service (PMS) and demat services. However, their contribution to income is very small. The company now plans to become a full service brokerage outfit providing comprehensive advisory services to its clients.

The gross proceeds of Rs 75 crore from the higher price band of the fresh issue will be deployed for expansion of operations and branch network (both in India and overseas), from current 41 to 100, in the next two years. ESSB will upgrade its technology to support its increasing business volumes and scale up the online trading business. Investment in subsidiaries, involved in share financing (Rs 20 crore from IPO as long-term working capital for the subsidiary) and commodity trading (Rs 5 crore), are also on the cards. The company plans to augment its working capital base to meet the enhanced margin requirements after the increase in business volumes.

Strengths
*The primary focus of ESSB is on institutional broking, which generates almost 55% of its income. This part of the business provides a good base for the company.
*The company is virtually debt-free.

Weaknesses
*Almost 90% of the total income of ESSB is composed of equity brokerage income. Revenues from its depository, PMS and other segments are insignificant. The commodity broking business is yet to take off in a significant way. ESSB doesn’t have a well-diversified revenue model and the risks of a pure stock market play are high
*Compared to its peers, the reach of ESSB is limited to 41 centers, mostly concentrated in the western and southern states of India. It has a few offices in the northern and eastern zones. Its peers are way ahead in the retail segment. We feel it would be quite a challenging task for the company to increase the retail business without any differentiation strategy from its peer group, as the product offerings are very homogenous in nature.
The company needs to optimally, and speedily utilize the IPO proceeds to overcome the above in a cut-throat competitive environment.

Valuation
The industry composite PE is about 18x. At the offer price band of Rs 100 – Rs 120, consolidated annualised EPS of Rs 5.8 based on post-issue equity (Rs 24.15 crore) is discounted 17.3 to 20.8 times. Only IL&FS Investsmart commands a higher PE of 22.6 times. The other comparable and larger listed players such as Geojit Financial trades at a PE of 14.5x, India Infoline at a PE of 20x and India Bulls at 15.9x. .

At the same time, it is noteworthy that Emkay, like Geojit, is a debt-free company, while Infoline had Rs. 36 cr debt (equivalent to its networth), at the time of its IPO. Also, the considerable weightage of institutional business in its portfolio will stand it in good stead if and when the markets tank. In our opinion, at a lower decibel level, Emkay stands for greater stability.

For More Information Click Here
To View Prospectus Click Here

Source:CapitalMarket

Markets Today

Market rallied to a fresh an all-time high of 11,197.64 in late trading as buying intensified in the last one hour of trades.

For the day, Sensex rose 97.45 points (0.88%) to lifetime closing high of 11,183.48. The S&P CNX rose 29.20 points (0.87%) to all time closing high of 3,354.20

The Sensex extended its rally for the fourth straight day on sustained buying. Buying was witnessed across the board today.IT stocks rose for the second day in a row on expectation of impressive Q4 March 2006 results.

Among global markets, most Asian markets were in the positive zone today, with Hong Kong being an exception. Japan’s Nikkei 225 index rose 1.49 percent or 248.17 points to 16,938.41, its highest close in 5-½ years as the yen's fall against the dollar fuelled expectations for higher earnings at export-oriented manufacturers such as Sony Corp.

There was lot of action outside the Sensex stocks. The market breadth was strong. 1628 shares rose on BSE as compared to 859 stocks that declined. 72 shares remained unchanged. Gainers outpaced losers by a ratio of 1.89.

The BSE Mid-Cap Index rose 1.04% while the BSE Small-Cap Index rose 2.05%.The renewed buying interest in small-cap and mid-cap shares was because the buying made today will be considered as buying in the new financial year that begins on 1 April 2006. This is because shares bought today will be settled on Monday 3 April 2006 as per the settlement scheduled announced by the stock exchanges. Normally, investors refrain from buying towards the year-end due to tax considerations. This was why the market breadth had remained weak consistently over the past few days.

The total turnover on BSE amounted to Rs 3,811 crore.Among the Sensex constituents, 21 moved higher while 9 declined.Hindalco jumped 3.90% to Rs 179.80 on 25.40 lakh shares while Gujarat Ambuja Cement rose 3.85% to Rs 103.10 on 21.55 lakh shares

Ranbaxy Laboratories jumped 3.32% to Rs 411 on 28.13 lakh shares. The company and Terapia S.A. (Terapia) of Romania have signed a definitive agreement providing for the acquisition of Terapia by the company. The deal will allow the company to leverage its expanded base in the rapidly growing Romanian pharmaceutical market, across the European Union and the CIS markets.

Tata Power lost 0.81% to Rs 580 and Bajaj Auto lost 0.65% to Rs 2,714.Software stocks were in demand on expectations of robust quarterly results. Satyam Computers surged 4.30% to Rs 855.90 on 7.87 lakh shares.

Infosys Technologies advanced 2.5% to Rs 3032. As per reports, the IT major is contemplating bringing its BPO arm Progeon under its fold, while technically retaining it as a separate entity.Wipro added 2.16% to Rs 540.15 and TCS added 0.55% to Rs 1897.95.

Side counter like SPL Industries, Andhra Petro, Emco, Menon Piston, Etc Network, Bharat Gears, KM Sugar Mill, Rajasthan Spinning and Weaving Mills, Noida Toll Bridge, Triveni Engineering, Praj Industries, Mawana Sugar, Webel Sl Energy and California Software surged.

Orient Beverages, Sanwaria Agro, Bhagwati Autocast, El Forge, Vaibhav Gems, Ansal Infrastrucutre and Titanor Components declined sharply.

Source:CapitalMarket

Thomas Cook gains on acquisition plans

Thomas Cook India surged 4.81% to Rs 597.90 on reports the company is eyeing acquisitions.

As many as 1,620 shares changed hands on the BSE.The scrip had risen 2.5% on Tuesday 28 March 2006 to Rs 553.30. Earlier, since the beginning of this calendar year, the scrip was range bound until early March 2006 when a decline in the stock began. The scrip plummeted to a low of Rs 532.20 on 16 March only to bounce back amid a bout of volatility in the next few days.

According to reports, Thomas Cook is in talks for acquisitions in India and abroad. The company plans to buy three companies in the travel and tourism business in the next two months.

In the AGM that was held on Tuesday the company’s Chairman Udayan Bose also said the company’s board will consider issuing bonus shares in view of the company’s healthy cash reserves. He also dismissed media reports of the company’s intention to de-list from the stock exchanges.

Earlier, this month, Dubai Financial LLC had made an open offer at Rs 619 per share for the shares of Thomas Cook India, which did not attract much buyers, as investors, both institutional and retail, had retained their holdings with the hope of strong growth prospects for the company.

Early this year, Dubai Financial, a unit of Dubai Investment Group, had bought 60% of the equity capital of Thomas Cook India for about Rs 400 crore. Later, it made an open offer to buy 20% of the company's capital from minority shareholders.

Thomas Cook posted a decline in its net profit from Rs 6.29 crore in Q1 January 2005 to Rs 4.70 crore in Q1 January 2006. However, its net sales rose 10.1% to Rs 35.33 crore during the period under review

Ranbaxy acquires 96.7% of Terapia

Ranbaxy spurted 3.08% to Rs 410.05 on back of the company’s announcement that it has acquired a Romanian pharma company for $ 324 million.Ranbaxy has acquired 96.7% of Terapia which is the 6th largest generic company in Romania. Following this, Ranbaxy will become the largest generic company in Romania.

The scrip rose on heavy volumes. As many as 23.8 lakh shares changed hands on the BSE.The scrip has been southbound since 22 February 2006. From Rs 462.90 on 22 February, the scrip nose-dived, amid a little recovery en-route, to Rs 397.80 on 28 March 2006. Earlier, the scrip had rallied from Rs 356.10 on 26 December 2005 to reach a high of Rs 462.90 on 22 February 2006.

Ranbaxy Laboratories has announced the acquisition of 96.7% of Romanian pharma company Terapia from Advent International for $324 million. The transaction is funded from the proceeds of Ranbaxy's recent FCCB issue. In early February, Ranbaxy had announced the successfully launching of $ 400 million zero-coupon FCCBs.

Terapia is the largest independent generic company in Romania. Established in 1921, it has a strong brand name and a consistent track record of growth and profitability. Its pro forma 2005 sales were approximately $ 80 million, and the company has superior EBITDA margins in excess of 35%. The acquisition will be EPS accretive immediately.

This is the second acquisition of Ranbaxy in Europe this week. On Monday 27 March, Ranbaxy had announced the acquisition of unbranded generics business of Allen SpA, a division of GlaxoSmithKline (GSK) in Italy, for an undisclosed sum. With Allen SpA, Ranbaxy has acquired a workforce of more than 3,000, a research and development centre for drug discovery, two state-of-the-art certified manufacturing plants and a sales force of medical representatives spread across the country.

Earlier, this month, Ranbaxy Laboratories had launch of its branded product, Osonide (Ciclesonide) Inhaler, a novel once-a-day (OD), used for the treatment of asthma. The company has introduced this product for the first time in India.

On 22 February, Ranbaxy along with Cipla had offered to produce generic version of Roche’s Tamiflu. Tamiflu - generic name Oseltamivir - is one of the two drugs effective in treating influenza caused by the H5N1 strain in humans.

Ranbaxy Laboratories reported 56% fall in Q3 December 2005 consolidated net profit to Rs 68.60 crore (Rs 156.50 crore). Consolidated sales declined 1% to Rs 1387.70 crore (Rs 1403.90 crore).

Tuesday, March 28, 2006

Biocon gains on acquisition of US drug development firm

Biocon rose 3.6% to Rs 456 after the company said on Tuesday it had won a bid to acquire all the assets of bankrupt US based drug development company Nobex Corp for $5 million plus certain back-end royalties.

Biocon scrip has been moved totally in contrast to the bull market that first began about 3-½ years back. The scrip is currently hovering close to a multi-month low. Over the last one year or so, the stock moved between a level of Rs 400 to Rs 550. The stock’s weak showing has mainly to do with significant pricing pressure in Biocon's key statins segment.

Biocon’s acquisition of Nobex involves only the assets of Nobex, including applications and patents numbering around 300, but not the manpower. Last year, Nobex had filed bankruptcy and Biocon had made an initial bid of $3.5 million to buy out the company's assets.

It may be recalled that Biocon had entered into an agreement with Nobex in October 2004 for co-development of and commercialisation of oral insulin and oral B-type naturiuretic peptide (BNP). The acquisition has now given Biocon full ownership of oral insulin and BNP programmes.

The products would be at least couple of years away but the potential returns from oral insulin alone could be huge, reports suggest.

Source:CapitalMarket

No PAN, no demat gain from Saturday

If you’re planning to open a demat account, you will have to compulsorily provide your permanent account number (PAN), starting Saturday.

“From April 1, no new demat accounts will be opened without the investor’s PAN card number,” C B Bhave, chairman and managing director, National Securities Depository Ltd (NSDL), said on the sidelines of the Skoch summit in New Delhi on Tuesday.

For existing demat account holders, the last date for submission of PAN numbers will be October 1. NSDL has directed depository participants (DPs) to ask clients who have not furnished the PAN, to provide the same by October 1, 2006.

The accounts, without PAN numbers, will be sealed and not made operational till the time the number is provided.

NSDL currently runs 7.5 million demat accounts. Bhave was optimistic that the new move will check such scams. After the Yes Bank scam, the NSDL, in February, had directed all DPs to verify the presence and identity of a client before opening a demat account. Now, the DPs either send their representatives or the client has to be present in person at the time of opening the account.

To check capital market scams, the Securities and Exchange Board of India (Sebi) had mooted the idea of biometric mapping with NSDL, which was put on hold on June 30, 2005.

Source:DNAINDIA

Block deals boost ONGC

ONGC rose nearly 2% to Rs 1,282 on high volume of 16.58 lakh shares after three block deals were struck on counter on BSE.

A block deal of 5 lakh shares at Rs 1264 per share at 10:52 IST. Another deal of 6.96 lakh shares was struck at the same price at 12:07 IST. The third of 3.60 lakh shares was struck at Rs 1285 per shares at 13:14 IST.

The scrip had risen steadily from early March 2006. From Rs 1,136 on 08 March 2006, the stock advanced to Rs 1,224.55 on 22 March 2006. It ended at Rs 1,256.95 on 27 March 2006.

Earlier on 21 December 2005, ONGC, along with China National Petroleum Corporation (CNPC), won the bid for Petro-Canada’s 37% stake in Syrian oilfields for € 484 million ($573 million). This was the first joint bidding by an Indian and a Chinese oil company. In all, eight firms were in the race for Petro-Canada’s stake in the oilfields.

ONGC is India’s leading national oil company engaged in exploration and production of crude oil as well as natural gas. It is the largest producer of crude oil, natural gas and LPG in the country.

The President of India controls 74.14% of the company's paid-up equity share capital of Rs 1425.93 crore as of December 2005.

ONGC’s net profit rose 11.30% in Q3 December 2005 to Rs 3887.76 crore (Rs 3493.32 crore). Net sales rose 3.1% to Rs 12476.07 crore (Rs 12103.53 crore).

Markets Today

The market ended with modest gains amid volatile trade. The Sensex sustained above 11000. Buying was seen in technology and oil stocks. However, capital goods, banking, pharma, metal, FMCG and auto stocks lost ground.

The Sensex closed at 11,086.03, up 7.01 points or 0.06%. It touched an all-time high of 11,146.85.The Nifty ended at 3325, up 3.35 points or 0.10%. It touched a life high of 3344.50.However, the CNX Midcap closed at 4667.30, down 34.95 points or 0.74%. It touched an all-time high of 4730.90.The market breadth was negative, about 796 shares advanced, 1698 shares declined, and 67 shares remained unchanged.

Infosys, ONGC, Wipro, Maruti Udyog, GSK Pharma, MTNL and NALCO were the biggest gainers on the indices.BHEL, Dr Reddy's Labs, Tata Power, ICICI Bank, SAIL and BPCL were the biggest losers on the indices.

The total market turnover was at Rs 54843.58 crore (Rs 548.43 billion). The NSE Cash turnover was at Rs 11494 crore (Rs 114.94 billion). The NSE F&O turnover was at Rs 37434.08 crore (Rs 374.34 billion). The BSE Cash turnover was at Rs 5915.5 crore (Rs 59.15 billion).

Markets today
* Frontline techology stocks rally
* Capital Goods & Consumer Durable stocks end lower on profit booking
* Midcap stocks underperform

Source:MoneyControl

Naya Issue: R SYSTEMS INTERNATIONAL LTD

Type of Issue:Book Built
Issue Opens:28 March 2006
Issue Closes:31 March 2006
Issue Size:4,408,355 (No. of Shares)

Focused on offshore product development services.Unnatural growth in profit in FY 2005 and unexciting acquisitions are disheartening.

Promoted by Satinder Singh Rekhi in 1993, R Systems International is a New Delhi-based software product development company. It helps companies bring products and services to market quickly by using its different products and services comprising the pSuite framework, which is an execution framework for PLM (product lifecycle management) services. Other services include building and supporting software products in diverse areas like Internet security, Internet music delivery, Internet IP TV, banking applications, supply chain management, ERP solutions, and knowledge management. These software products and services find application across industry verticals such as banking and finance, government, health care, high technology and independent software vendors.

R Systems’s marquee clientele includes a variety of Fortune 1000, government and mid-sized organizations like GE, Intel, and ABN Amro.
Of its five large centers for software excellence, R Systems has one center in El Dorado Hills, CA, one center in Singapore, and the other three in India (Pune, Chennai and Noida). It also has a significant presence in the ASEAN area with its local headquarters in Singapore and seven regional offices. Singapore is also its Center for Supply Chain Management (SCM) excellence.

Other than the two 100% subsidiaries, R Systems Inc California and R Systems in Singapore, it has acquired two companies, Indus and ECnet, to cater to the banking, finance and manufacturing and logistics verticals. Indus Lending Solutions Business products cater to the retail lending industry and the ECnet suite of products offer supply chain collaboration solutions.

In February 2002, R Systems acquired a 44.75% stake in Indus from GE. In the transaction, GE received 2,983,475 shares of R Systems for giving up its shares in Indus. As of December 2005, GE was entitled to receive 445,000 warrants under the shareholders’ agreement. On January 2006, GE assigned its rights to such warrants to GE Strategic Investment India. On 30 January 2006, GE Strategic Investment India exercised the right of converting such warrants into equity shares and 445,000 equity shares of Rs 2 each in the company were subsequently issued to GE Strategic Investment India.

Objects of the issue :
The objects of the issue is to raise finance for up-gradation and expansion of its existing infrastructure at an estimated cost of Rs 31.50 crore coupled with repayment of outstanding loans of Rs 3.65 crore and financing the general working capital requirements of Rs 17.95 crore.

Strengths
* In the last few years, software products companies have seen an exponential growth. The year 2005 saw the rise of offshore product development (OPD) players due to the need for more specialised skills across the product development lifecycle. R System is well positioned to take advantage of these opportunities going forward, with its strong domain expertise in this area.
* R Systems has a marquee clientele in its kitty including big names GE, Intel, ABN Amro, and Microsof. Around 34% of the company’s revenue comes from its top 5 clients.

Weaknesses
* R Systems’s acquisition of Indus Software and ECnet does not seem to be successful and has led to the diversion of attention from core focus area of OPD to developing and selling products, where it cannot scale up. On a consolidated basis, the company went into the red in FY 2003 because of these acquisitions. Even now, these acquisitions are not contributing any profit.
* On standalone basis, R Systems’s sales have grown consistently in the last four years. But the bottom line has been fluctuating between Rs 43 lakh to Rs 2.9 crore. It was only in FY 2005 that the company saw a massive rise in net profit to Rs 12.46 crore.

Valuation:
On an expanded equity of Rs 13.54 crore, FY 2005 EPS of R Systems works out to Rs 9.2. Based on this, PE stands at 23 and 27 at the price band of Rs 210 and Rs 250. Comparable companies like Aztec and Geometric are trading at a TTM PE of 28 and 25 times.
Just ahead of the IPO, R Systems dramatically improved its performance in the year ended December 2005. An overnight wonder, will it still keep shining at noon?

For More Information Click Here
To View Prospectus Click Here

Source:Capital Market

Monday, March 27, 2006

Naya Issue: GODAWARI POWER AND ISPAT LTD

Type of Issue:Book Built
Issue Opens:28 March 2006
Issue Closes:4 April 2006
Issue Size:8,695,000 (No. of Shares)

Dependent on group companies
A small steel company using captive power Godawari Power and Ispat (GPIL) is part of the Hira group, which manufactures steel long products in central India. GPIL produces sponge iron, steel billets and captive power generation.

GPIL’s current sponge iron, steel billets and captive power capacity is 2,35,000 tonnes, 2,50,000 tonnes, and 28 MW, respectively. The company intends to set up another unit near its existing facility to manufacture 2,60,000 tonnes of sponge iron, 1,50,000 tonnes of steel billets, and generate 25 MW of power through waste heat flu gases. After expansion the total capacity of sponge iron, steel billets and captive power plant will be 4,95,000 tonnes, 4,00,000 tonnes, and 53 MW, respectively. The expanded capacity is likely to be commissioned in the last quarter of FY 2007.

The project cost (excluding general corporate and issue expenses) is Rs 173.32 crore, which is estimated to be financed through a term loan of Rs 113.5 crore, issue proceeds from the Initial Public Offering and internal accruals.

Strengths
* Along with a consortium of four other corporate bodies (including group companies), GPIL was allotted rights for captive coal mining in January 2006. GPIL’s share is 106.5 million tonnes. In September 2005, the ministry of mines granted an iron-ore mining lease for 106.6 hectares in Ari Dongir and 110 hectares in the Boria Tibbu. Normally, a timeframe of 27 months is required for commencement of commercial exploration of captive coal and iron ore mines. The company has not allocated any funds for developing these mines.

Weaknesses
* The promoters have few more group companies in the steel business, which can lead to conflict of interest and diversion of attention.
* Though highly dependent on its group companies for sale of its products, GPIL has not entered into any firm tie-up with group companies. The company supplies 40% of the billet requirement of some of its group companies, constituting about 75-80% of its current production.
* GPIL has not yet placed orders for equipment to produce sponge iron and steel billets and generate power, which may delay the implementation of the project. The company has still to apply for registrations for the expansion project including excise and commercial tax.
* Due to its cyclical nature, the dynamics of the steel industry keep changing, depending on factors such as demand-supply in China and cost of vital inputs including iron ore and coal. Currently, the steel industry is facing pressure on prices on a high base of last year, as China has become a net exporter. Also, on account of rising input costs, the margin of players has crumbled.

Valuation
At a price band of Rs 70 – 81, GPIL’s PE works out to 7.2 – 8.3 times FY 2005 earning and 12.3 – 14.2 times six-month FY 2006 annualised earning on post-diluted equity. Notably, the sponge iron industry fared badly in the first half of the current fiscal, and GPIL’s performance was also affected. Jindal Steel and Power, which is an established player, commands a TTM P/E of 9.1, while Monnet Ispat is trading at a TTM P/E of 7.4. The sector TTM P/E is around 6.3.

For More InformationClick Here
To View ProspectusClickHere

Italian acquisition spurs Ranbaxy

Ranbaxy gained 1.5% to Rs 406 after the company said it will buy the unbranded generic business of GlaxoSmithKline Plc's Italian division Allen S.p.a for an undisclosed sum.

58,976 shares changed hands in the counter on BSE by the first few minutes of trade.After a major correction since the beginning of this month, the stock had recovered from lower level recently. From Rs 392.45 on 22 March, the stock recovered to Rs 400.20 on 27 March 2006.

With Allen S.p.a, Ranbaxy has acquired a workforce of more than 3,000, a research and development centre for drug discovery, two state of the art certified manufacturing plants and a sales force of medical representatives spread across the country.

The $ 420 million Italian generics market is one of the fastest growing markets in Europe with an annual growth rate of 49%. The total pharmaceutical market in Italy is worth about $ 14 billion. The acquisition would also enable Ranbaxy to utilise opportunities arising from future patent expires.

Source:Capitalmarket

Sunday, March 26, 2006

Naya Issue: Tantia Constructions Ltd

Type of Issue:Book Built
Issue Opens:27 March, 2006
Issue Closes:31 March, 2006
Issue Size:4,350,000 (No. of Shares)

Established in 1964, the Tantia family promoted Tantia Constructions (TCL) caters to the Indian Railways. Its services include earthwork and ballast, rail track linking and welding, bridges and tunnels, electrification and signalling. It is among the five Indian companies capable of providing ‘foundation to finish’ for mega railway bridges spanning 2 km.

TCL has its own steel fabrication unit and is the only Indian company to have fabricated a 100-meter span steel girder on site, 400 metres above sea level. The company’s other areas of construction services include roads, bridges, water sewerage, girders fabrication, jetties, tunnels and power transmission lines.

Apart from projects in India, TCL has also executed projects in Bangladesh, Bhutan and Nepal. The company’s clientele includes almost all zonal railways, Central and state PWDs, Kolkotta metro rail, Hoogly River & Bridge Commission, NEEPC, Indian Oil Corporation, Ircon International, DSIDC, and PIDB. It had made an initial public offering of 1.44 lakh equity shares in 1982 (listed on the Calcutta Stock Exchange and the Delhi Stock Exchange).

Objects of Issue :
* To purchase capital equipments with an investment of 1857 lakhs
* To Invest in BOT/BOOT Projects and Joint Ventures, investment worth Rs1000 lakhs
* To enhance long term working capital by Rs.1500 lakhs
* To repay high cost unsecured loans worth Rs.1700 lakhs and public deposits of Rs.250 lakhs
* To meet the issue expenses upto Rs.200 lakhs

Strengths
* TCL’s current order book (on 20 March 2006) is about Rs 880 crore with a backlog of about Rs 650 crore, i.e., 6.3 times FY 2005 revenue. Rail projects and urban development account for 56% of the current order book
* The government is giving a major thrust to improving the railway infrastructure. Plans for building rail freight corridor projects (connecting Delhi with other metros), port connectivity projects, and up-gradation of projects under the national rail Vikas Yojana are in the pipeline. The Railway Budget 2006-07 has emphasised major technological up-gradations; completion of up-gradation and repair of over-aged tracks, bridges and track circuiting work on all stations on A, B and C routes by March 2007; and public-private partnership in rail projects. Targets for 2006-07 include over 550 km of new lines, over 1,100 km of gauge conversion and 435 km of doubling; and 23 new lines, one gauge conversion, and eight doubling. As it has been associated with the Indian Railways for the last four decades, these new projects hold a major opportunity for the company.

Weaknesses
* TCL has been generating a negative cash flow at the operating level: Rs 7.99 crore (FY 2003), Rs 7.90 crore (FY 2004), Rs 1.67 crore (FY 2005), Rs 5.32 crore (nine months of FY 2006). Debtors outstanding for more than six months stood at Rs 18.40 crore end December 2005.
* The debt-equity ratio of TCL on 31 March 2005 and 31 December 2005 (nine months) stood at an abnormally high level of 5.1 and 3.9, respectively.
* TCL’s claim of Rs 16.86 crore for extra work from the Tamil Nadu Agricultural Development Project is disputed and unpaid.

Valuation
At the offer price band of Rs 45 – Rs 50, TCL’s PE works out to 37.6- 41.7 x FY 2005 EPS on a post-issue equity and 12.9 – 14.3 x 9-month FY 2006 annualised earning on the post-issue equity. TTM PE for the construction sector is abnormally high at 37.
For more Information Click Here
To View ProspectusClick Here

Source:Indiabulls & Capital Market

Tata Power:Buy

We recommend Tata Power at current levels of Rs 605 for a short term profit.Looking at the fundamentals and the technical charts there is some uptrend left in this stock.The MACD signal shows that the stock might go up by a few points.Although the RSI and W%R signals are in the overbought territory the stock might reach Rs 650-660 levels in the coming weeks.

Friday, March 24, 2006

Markets Flared Up

The market flared up amid good buying interest. The Sensex gained over 100 points. Buying was seen in metal, FMCG, consumer durables, capital goods, banking, oil, technology, pharma and auto stocks.
The 30-share BSE Sensex ended at 10,952.90, compared to Thursday’s closing of 10,840,nearly 112 point up.Nifty also gained 31 points and ended at 3278.70 at the end of the weeek.

HINDALCO ,ITC,SAIL,CIPLA and TATA POWER were the top gainers on the Sensex and Nifty.
While BHEL,ORIENTAL BANK,HDFC BANK,DR REDDYS LAB and NTPC were the top losers on the Sensex and the Nifty.

Thursday, March 23, 2006

SBI associate banks hog limelight

Shares of State Bank of India and its subsidiaries surged today on reports Union Cabinet has approved the State Bank of India subsidiaries amendment act.

State Bank of Mysore (SBM) jumped 20% to Rs 5,481.40, State Bank of Bikaner & Jaipur (SBBP) rose 5% to Rs 3,690.55 and State Bank of Travancore (SBT) rose 5% to Rs 3,654. Shares of State Bank of India (SBI) gained 3.4% to Rs 981.25. 15.8 lakh shares changed hands in the counter on BSE.

SBM scrip witnessed high volatility since mid-February 2006. The stock moved between a low of Rs 4,050 to a high of Rs 5,750 since 17 February 2006. SBBJ and SBT had surged early this month but the rally in the scrip had fizzled out later. From a recent peak of Rs 3,737.50 on 16 March 2006, SBBJ had slipped to Rs 3,514.85 by 22 March 2006.

State Bank of India subsidiaries amendment act is aimed at removing the restriction on ownership of shares in these banks. The subsidiaries amendment act also includes stock split of the subsidiaries, but the final approval will be given by the parliament.

At present, a single shareholder cannot own more than 200 shares in SBI associate banks. Moreover, these shares traded in physical form.

Due to this restriction of ownership, these subsidiaries of the bank could not go public. Once a legislation is passed removing the 200-share ceiling, these subsidiaries, can go in for an IPO to sell 49% and raise capital to meet Basel requirements. The seven subsidiaries of the SBI, are a historical inheritance from banks in princely states that were nationalised after Independence.

For Q3 December 2005, SBBJ reported 81% growth in net profit to Rs 52.39 crore (Rs 28.95 crore). Total income rose 17.9% to Rs 605.76 crore (Rs 513.78 crore).

SBM reported 15% growth in net profit for Q3 December 2005 to Rs 39.60 crore (Rs 34.38 crore). Total income declined 0.9% to Rs 423.32 crore (Rs 427.29 crore).

SBT’s Q3 December 2005 net profit rose 38% to Rs 59.62 crore. Total income rose 2.8% to Rs 642.83 crore (Rs 625.60 crore).

Sensex cool down;Nifty up

Sonia Gandhi’s resignation as MP causes market to cool down

The market came under selling pressure at the fag end of the trading session soon after news trickled in that Congress president Sonia Gandhi has quit as a member of parliament.

The 30-share BSE Sensex ended flat at 10,821.6, compared to Wednesday’s closing of 10,841.35. Just before the news hit the market at about 15:10 IST, Sensex was up hovering at 10,860-10,870 level – a gain of about 20-30 points over Wednesday’s close of 10,841.35.However the 50-share Nifty ended at 3241.30,1.15 points up.

Strong liquidity has ensured that the market surged sharply over the past few months without any major correction and the runaway bull run has made market men cautious. Therefore a knee-jerk reaction was witnessed soon after the news hit the market of Sonia Gandhi’s resignation as MP.

Sonia Gandhi said she would also quit a key advisory body after a controversy threatened to disqualify her from parliament.

Earlier today, immense volatility was witnessed on the bourses. Sensex moved 131.31 points between a low of 10,792.98 and 10,924.29. Though volatility was high on the bourses, stock specific activity was robust with select stocks surging.

Recently, a prominent brokerage said a major correction is on cards on the bourses based on technical price patters which could take Sensex to 9,000 over a medium term.

Wednesday, March 22, 2006

Naya Issue:Birla Power Solutions

Type of Issue:Public
Issue Opens:24 March 2006
Issue Closes:29 March 2006
Issue Size:12,000,000 (No. of Shares)

Will not light up your portfolio
Birla Power Solutions(BPS), the BSE-listed Yash Birla group company, was earlier known as Birla Yamaha, before Yamaha moved out. BPS is raising Rs 50.4 crore (issue of 120 lakh shares of Rs 10 each at Rs 42) from public to finance its expansion plans. The Rs 91-crore company was one of the first to manufacture portable generators in India in 1986. It has the expertise to manufacture two- and four-stroke engines. Presently, producing a wide range of generators catering to the power requirement of 500 W to 5.5 KW, it was the first to launch self-start gensets in the country. Recently, BPS pioneered the launch of emission complaint generators under the brand name Birla Ecogen. The company enjoys a 32% market share for its existing range of products.

The proposed expansion project, which is to be entirely financed from the issue proceeds, will simultaneously augment capacities and improve BPS’s existing products including diesel gensets, multipurpose engines, alternators and fuel tank and will also finance the setting up of a new plant to manufacture LPG/CNG gensets, invertors, engines and acoustic hoods. Till 28 February 2006, BPS had spent Rs 2.28 crore from internal accruals for the plant and building of the new project.

Strengths
*The proposed plans to manufacture higher KVA gensets will enable BPS to cater to high value institutional customers and export demand. The manufacture of LPG/CNG gensets will open new avenues.
*Currently, there are 619 direct dealers well versed with BPS’s products. This also helps the company to provide good after-sales services to its customers. It has entered into a marketing and distribution tie-up with the leading Chinese engine and gensets manufacturing company, Kipor, to distribute its products in India. BSP has also a co-branded agreement with Hindustan Petroleum Corporation to sale gensets and irrigation pumps.
*The proposed plant will be located in the tax heaven state of Uttaranchal and will enjoy complete tax exemption for five years. Further, the manufacturing facility will reduce BPS’s dependence on traded products, resulting in improved margin.

Weaknesses
*The power genset business requires large amount of working capital. Moreover, the track record of BPS’s working capital management is far from adequate. Debtors stood at Rs 88.31 crore on September 2005, almost equal to its sales. Around 43% of debtors are more than six months old. Loans and advances stood at Rs 40.21 crore. A significant portion is overdue for many years. Naturally, cash flow from operating activities has been negative since the past three years.
*The auditors have consistently qualified the accounts of the company for inadequate records and lack of reconciliation of receivables, advances and inventories. In fact, there is a long list of auditors’ qualifications covering many aspects of the accounting and record keeping. The list lengthens every year.
*Quarterly reviews have been filed late with stock exchanges. The review for the September 2005 quarter has still not been filed.
*The inverter market is highly competitive. Unorganised players have a dominant (40%) presence. Also, due to the involvement of low technology, many organised players have developed good presence in the market through their network. Therefore, the pressure on prices will remain a concern for BPS’s product line despite the migration of the company from trading to manufacturing. Also, due to the stiff competition from China, the margin on exports of inverters is lower than in the domestic markets.
*BPS’s proposed high capacity multipurpose engines will compete with low value products of leading engine and equipment manufacturers like Kirloskar Brothers, Greaves and TAFE. It will take some time to gain competitive advantage in this segment.
*The rise in the prices of raw material like steel, copper and zinc is likely to put pressure on the margin.

Valuation
In spite of perennial power shortages, the market for portable genesets has stagnated. BPS has tried to report growth through trading in inverters, pump sets, sprayers, vibrators, and lawn mowers. In the year ended September 2005, the company reported a net profit of Rs 3.56 crore on a turnover of Rs 91.02 crore.EPS on an expanded equity base of Rs 22.48 crore works out to Rs 1.6. TTM EPS, after factoring the December 2005 quarter results, is Rs 1.8.

The share currently trades at Rs 54 on BSE, which is at a 29% premium to the offer price of Rs 42. However, the last three- and six-month average price is around Rs 48. The offer price discounts the TTM EPS 23 times. The nearest comparable company, Honda Siel Power, in which Honda, Japan controls a 66.6% equity stake, trades at TTM P/E of 18.5. However, in view of the large overdue debtors and advances and many auditors’ qualifications, the reported financials and discounting of BPS really have no meaning.

Source:Capital Market

Monday, March 20, 2006

Naya Issue:Kewal Kiran Clothing

Type of Issue:Book Built
Issue Opens:20March 06
Issue Closes:23 March 06
Issue Size:3,100,000 (No. of Shares)

Kewal Kiran Clothing (KKCL) is a branded apparel player designing, manufacturing, branding and selling ready-made men’s apparels and other accessories under its various brands. Its brands range from the high fashion premium segment such as ‘Killer’ denim wear and ‘Easies’ casual wear to the middle and economy segment brands such as ‘Lawman’ and ‘Integriti’. The company has an in-house design team that keeps abreast emerging fashion trends and category developments. Through the introduction of new brands, KKCL intends to extend its presence from men’s casual wear to other categories such as men’s formal wear, women’s wear and kids wear.

With the proceeds of the issue, KKCL plans to increase its K Lounge stores to 143, from the current 29, by FY 2008. The company will set up a new manufacturing unit, ramping up capacity to four million pieces per annum, from the present two million. The proceeds will also be utilised to furnish its corporate office.

KKCL will spend around Rs 34.67 crore to set up K-Lounge outlets, Rs 32.39 crore on the new manufacturing facility, and Rs 5 crore to furnish the corporate office.

Strengths
* Demographic and economic trends currently favour a fast growth of the organized branded garments industry. Moreover, KKCL has four brands positioned to cater to different classes of customers.
* KKCL plans to diversify its product line by entering other segments like men’s formal wear, women’s wear and kids’ wear and become a one-stop shop for the entire family.

Weaknesses
* The ‘Killer’ denim brand contributes 53% of the revenue. Denim is a highly competitive segment, which will witness intensified competition post-liberalisation of FDI guidelines.
* Under a franchisee agreement, KKCL allowed a subsidiary to use the trademark `K-Value’. Now the subsidiary has been sold to the promoters at book value.
* KKCL sells its own brands in the export market (predominantly in the UAE). But the share of exports is just 8% in the revenue. Besides, this share has been declining since FY 2004. The expansion plans are also not focused on the export market.
* Sales for the nine months ended December 2005 have shown an unnatural growth of over 200% (on an annualised basis), which might be partly attributed to the acquisition of the washing unit of Kewal Kiran Enterprises, a group company. The FY 2005 performance was lakluster.
* The retailing sector has yet to witness churning. But this could be sooner than later due to the mindless pace of expansion, with big foreign and Indian players tipped to jump into the fray.

Valuation
KKCL made a net profit of Rs 3.72 crore in FY 2005. EPS on post- issue equity works out to Rs 3.0. The shares are being offered in a band of Rs 250 to Rs 275 at a PE of 83 to 91 times. After factoring in the unnatural growth in the nine months of FY 2006, PE stands at 30 to 33 times the annualised EPS of Rs 8.3. Provogue India, a peer, currently trades at Rs 280, which is at 38 times its nine-month annualised EPS of Rs 7.2. Zodiac Clothing, another peer, trades at Rs 268, giving a PE of 24 times its nine-month annualised EPS of Rs 11.1.
For more InformationClick Here
To View ProspectusClick Here

Hold Zee Telefilms and State Bank of India

We feel that investors should hold these 2 stocks as they can get good returns.
Looking at the technical charts for State Bank of India,we can see that the MACD signal shows a upward trend.The RSI and W%R signals seem to show a thrust which can take the stock to Rs 1050 level.So we recommend a hold on the State Bank of India stock.


Momentum stock Zee Telefilms had been buzzing and inching up in trade today. The news driven media counter is up, on back of the government's latest move on CAS.Zee had been under performing, but right triggers like the CAS announcement has helped the stock.Also looking at the charts for Zee telefilms,the MACD signal for Zee tele also shows a upward trend.As an investor one must stay invested in the stock with a target of around Rs 300 level.

GE Shipping slips

GE Shipping slipped 2.5% to Rs 261 on reports its proposed demerger scheme is likely to be delayed.3.72 lakh shares were traded on the counter on BSE

The counter witnessed sustained rise from late September 2005. From Rs 196.90 on 29 September 2005, the stock rallied to Rs 269.60 on 14 March 2006 boosted by the proposed demerger proposal. It settled at Rs 267.60 on 17 March 2006.

As per the reports, GE Shipping’s proposed demerger may get delayed due to protracted negotiations relating to transfer of existing contracts to the demerged company, Great Offshore (GOL). The most complex of these negations are with its largest customer in the offshore segment – the public sector giant ONGC. ONGC has not yet given its nod for transfer of contract from GE Shipping to the new company Great Offshore.

GE Shipping received nod from the Bombay High Court for the proposed demerger on 27 January 2006. According to the scheme of arrangement, GE Shipping is expected to announce the effective date of demerger, following which the offshore services business will stand vested with GOL from the appointed date 01 April 2005.

In September 2005, the board of GE Shipping had approved a split ratio of 80:20 for the proposed demerger. As per the scheme for demerger of its offshore services, all shareholders will be issued one fully-paid share of Rs 10 each in GOL for every five shares held, and consequently, the shares held in the company will stand re-organised into four shares of Rs 10 each for every five shares currently held.

In February 2006, GE Shipping signed a contract to buy a January-built, 1.10 lakh DWT Aframax crude carrier. The double hull tanker will join the company's fleet in the current fiscal. After the inclusion of the vessel, the company's fleet of 72 vessels includes 40 ships of total 2.81 million DWT and 32 offshore assets. The company has eleven new building vessels on order, including five product tankers on orders, with deliveries spread over a period of one and half years commencing March 2006.

The company reported a 75.50% fall in net profit for the Q4 December 2005, to Rs 64.29 crore (Rs 261.89 crore). Net sales slipped 3.70% to Rs 571.94 crore (Rs 593.75 crore).

Source: Capital Market

Friday, March 17, 2006

Sensex Ends Lower on Profit Booking; Nifty Up

The sensex slipped today from higher levels,due to profit booking.However nifty closed at 3233.40 over 6.8 pts up.It touched an all-time high of 3258.30.The Sensex and CNX Midcap Index were trading in the red.The Sensex ended down over 18 points at 10860.It touched an all-time high of 10,951.38.The CNX Midcap ended down over 12 points.It touched an intraday high of 4670.15 and an intraday low of 4626.85.The BSE Midcap Index ended at 5,051.66, down 0.55%.

Selling was seen in capital goods, metal, technology, banking and FMCG stocks. However, oil, pharma and auto stocks witnessed buying interest.
The market breadth was negative, about 750 shares advanced, 1743 shares declined, and 63 shares remained unchanged.

The total market turnover was at Rs 44,811.86 crore(Rs 448.11 billion).
The NSE Cash turnover was at Rs 8767 crore (Rs 87.67 billion). The NSE F&O turnover was at Rs 30299.14 crore (Rs 302.99 billion). The BSE Cash turnover was at Rs 5745.72 crore (Rs 57.45 billion).

Zee Telefilms,IPCL,PNB and VSNL were the top gainers at Nifty ,while Dabur india,HLL,Reliance Energy and Gujarat Ambuja cements were the top losers at Nifty.
L&T, Infosys,Tata Steel and Reliance Energy were the biggest losers on the Sensex.ONGC, Tata Motors, Hindalco, TCS, were the biggest gainers on the Sensex.

Markets today
Power stocks drag
BSE Capital Goods Index down nearly 1%; ABB, BHEL, Siemens drag
Mixed trend seen in IT stocks; Infosys down 1.51%, TCS up 1.61%
Frontline oil & gas stocks hold the market;ONGC up 2.47%,IPCL up 3.97%
Suzlon Energy acquires EVE Holding; stock up 0.50% at Rs 1295.85
Media stocks steal the show; Zee up 6%,TV18 up 5%
BL Kashyap closes at Rs 972.70 as against its listing price of Rs 749.90
Visa Steel closes at Rs 57.15 as against its listing price of Rs 58.90
M&M Financial closes at Rs 233 as against its listing price of Rs 241

Source:MoneyControl

Thursday, March 16, 2006

Naya Issue:UTTAM SUGAR MILLS LTD

Type of Issue:Book Built
Issue Opens:16 March 06
Issue Closes:21 March 06
Issue Size:4,000,000 (No. of Shares)

Promoted by the Adlakha family, Uttam Sugar Mills commenced sugar-manufacturing operations in January 2001 by setting up a 2,500-tonne crushed per day (TCD) plant along with a 6-MW co-generation capacity in Libberheri, Uttaranchal. In the year ended September 2005, the company had a manufacturing capacity of 6,250 TCD and a co-generation capacity of 16 MW.

Uttam Sugar Mills is now coming out with a maiden public issue of 40,00,000 equity shares at a face value of Rs 10 in the price band of Rs 290 to Rs 340. With this issue, the company expects to collect proceeds anywhere in the range of Rs 116 crore to Rs 136 crore.

The object of the issue is to set up two greenfield units to manufacture premium quality white sugar with a capacity of 4,500 TCD and 5,000 TCD along with co-generation of power with a capacity of 15 MW and 30 MW at Muzzafarnagar and Saharanpur in Uttar Pradesh (UP), respectively. Both the units are expected to commence commercial production by October 2006. The units will employ a concept of single sulphitation and re-melt process that is expected to result in production of superior quality sugar as compared to sugar produced by the conventional double sulphitation process.

Uttam Sugar Mills has also received an approval from the Ministry of Commerce & Industry to set up a distillery unit with a capacity of 22,500 kilo liter per annum of alcohol at its Barkatpur facility. Out of the post-expansion co-generation capacity of 81 MW, the company is expected to have a surplus of more than 35 MW and is currently completing arrangements to sell excess power to the Uttar Pradesh State Electricity Board.
The total cost of the two new units is approximately Rs 270 crore and the working capital requirement is Rs 16.70 crore.

Strengths
* Uttam Sugar Mills is one of the few players in the industry to employ the Defeco Remelt Phospho Floatation (DRP) process in its Libberheri unit that results in manufacture of sulphurless sugar. This sugar is preferred by industrial buyers and generally commands a premium over plantation white sugar. The proposed units, too, will employ the same process of manufacturing sugar.
* The Libberheri unit (6250 TCD) is eligible for deduction from income tax under section 80 IC and is also entitled to exemption from payment of excise duties for 10 years with effect from December 2004. This is due to the fact that it is located in the industrially backward region in Uttaranchal.
* Uttam Sugar Mills is also eligible to obtain certain incentives in the form of capital subsidy and reimbursement of the transportation cost of sugar from the UP government. This incentive is available to private entrepreneurs that incur expenditure to set up new production facility or expand the existing facility from FY 2005 to FY 2007. These plants need to commence production by March 2007. It has also set a minimum expenditure of Rs 350 crore to avail this facility. Combining the cost of the Barkatpur plant expansion and the proposed new capacities, Uttam Sugar Mills will also be eligible for the incentives. This is expected to save approximately Rs 1 per kg of sugar sold.

Weaknesses
* Uttam Sugar Mills operates in the western and northern parts of UP and in Uttaranchal where the sugar mills are known to pay more to farmers, either in cash or kind, in excess of the state advised price (SAP) paid. SAP is higher than the statutory minimum price (SMP) fixed by the Central government. This is evident from the fact that for the 2005 sugar season, SMP stood at Rs 74.5 per quintal of sugarcane and SAP was Rs 112 per quintal. However, the actual cost for the company was more than Rs 128 per quintal. Going forward, this is likely to result in higher raw material cost.
* There is a mad rush for setting up and expanding sugar mills in and around UP to avail of the state government’s incentives. This is bound to create excessive capacities and could lead to severe shortage of sugarcane especially when the sugarcane crop in the region falls.
* The promoters have many companies engaged in diverse activities. Plant and machinery for major portion of the proposed units will be obtained from group companies.

Valuation
In the year ended September 2005, Uttam Sugar Mills posted net sales of Rs 187.94 crore and its net profit stood at Rs 26.71 crore. The resultant earning per share based on the post-issue equity capital of Rs 25.77 crore comes to Rs 10.4. The lower price band of Rs 290 discounts the same by 28 times and at the higher band PE ratio stands at just under 33. Compared to the average PE ratio for the sugar industry of around 20 times, the issue is richly priced.
For More Inforamtion Click Here
To View Prospectus Click Here

Tuesday, March 14, 2006

Block deal at premium spurs SBI

State Bank of India jumped 3.6% to Rs 962.50 after a major block deal was executed in the institutional segment of BSE.

The stock rose on high volume of 28.6 lakh shares.

In mid-morning trade, a massive block deal of 34.65 lakh shares was executed in the institutional segment in the State Bank of India (SBI) scrip on BSE at Rs 1,070 per share, at a huge premium to the ruling market price. The reason why the scrip was traded at a huge premium in the block deal was because, the FII ceiling of 20% in SBI has already been reached and therefore no fresh purchases of the scrip are allowed in the cash segment. Thus, a seller normally demands premium for a large block deal in any scrip wherein FII ceiling has been reached.

Block deal was also registered in the institutional segment in another state run bank Punjab National Bank (PNB). 7.8 lakh shares changed hands in PNB in the institutional segment of BSE at average price of Rs 470.13. PNB scrip jumped 3% to Rs 473 following the block deal. In PNB, too, the FII limit of 20% has been reached and therefore the deal in the institutional segment was executed at a premium over the ruling market price.

Tata Steel was another stock wherein a major block deal of 22.5 lakh shares was executed in the institutional segment of BSE at Rs 470 per share. The current FII holding in Tata Steel is quite close to the 24% limit and therefore Tata Steel, too, attracted premium in institutional segment in the block deal.

Source: Capital market

Monday, March 13, 2006

Steel Authority of India (SAIL):-Sell

We recommend sell on SAIL,as the stock seems to have reached in a overbought territory.

It might go up to Rs 70,if it breaks the resistance of Rs66-67.But right now profits should be booked.

The technical charts for SAIL also show a similar trend.The MACD signal might be a bit confusing,but the RSI and W%R clearly show the stock in an overbought area.

Sunday, March 12, 2006

State Bank’s second float likely by next fiscal

State Bank of India (SBI) is likely to go for a follow-on public offer in the second quarter of next fiscal.

“The public offer is likely to be worked out during July-September 2006,” SBI chairman A K Purwar said.He,however,did not mention about the amount that the bank was expecting to raise from the offer.

He said “things are being worked out with the government” on the issue of stock split of its associate banks.He said the stock split issue is before Parliament.

SBI and its associates are governed by the SBI Act and the SBI (subsidiary banks) Act.Purwar,however,denied any move to split SBI shares.

SBI’s seven associate banks include the listed State Bank of Mysore,State Bank of Travancore and State Bank of Bikaner and Jaipur.On the issue of SBI planning to acquire a bank in Bangladesh,Purwar said, “We are bidding for only one bank in Bangladesh.”

On being asked why the bank was bidding for a loss-making bank,Purwar said, “We will turn it around.” He said the bank is witnessing a high credit growth.

“We plan to raise Rs 3,000-4,000 crore subordinated debt in 2006-07 (April-March),” Purwar said. Commenting on the ongoing tightness in the money market, he said, “The liquidity might ease on inflow of funds post-harvest.”

Growth agenda
SBI is bidding for loss-making bank in Bangladesh.
It is also planning to issue Rs 3,000-4,000 crore subordinated debt in FY07.

Source:DNA

Tata Consultancy Services Ltd Buy

Sector:IT
Tata Consultancy Services
CMP:-1795
Target Price:-1950-2000

Tata consultancy services is a good player now in the IT sector.

TCS results for the third quarter 2005-06 were not upto the expectations,but now the share has broke its resistance.Looking at the technical charts,the MACD signal tends to move upwards.The W%R signal has also just started an upward trend.

So we think that the stock is a good buy right now,and it might reach levels between 1950-2000.

Friday, March 10, 2006

Marketing Pact Ranbaxy & Zenotech Laboratories

Marketing pact with Ranbaxy provides booster dose to Zenotech Laboratories

Zenotech Laboratories jumped 5% to Rs 87.85 after it entered into a strategic alliance with Ranbaxy Laboratories to sell its cancer drugs in Latin America and Russia

657 shares changed hands in the counter on BSE and there were outstanding buy order for 2.2 lakh shares at the 5% upper limit of Rs 87.85 on BSE. The scrip is traded in the Z group on BSE.

The stock had come sharply off higher level since mid-January 2006. From a recent high of Rs 105.20 on 16 January 2006, the stock slipped to Rs 83.70 by 9 March 2006.

As per the tie up, Ranbaxy will market Zenotech's oncology cytotoxic injectable products under the Ranbaxy label, leveraging its global marketing and distribution network in the key markets of Latin America (LATAM), including Brazil and Mexico, Russia and other CIS markets. Ranbaxy is also exploring, to expand this collaboration to other markets, Zenotech said.

This collaboration will enable the company to expand its market reach of specialty injectables portfolio to cancer patients in several emerging markets around the world, Zenotech said. This alliance will speed up its biogenerics development program.

For Q3 December 2005, Zenotech reported 61% fall in net profit to Rs 0.08 crore from Rs 0.21 crore in Q3 December 2004. Net sales 133% to Rs 4.29 crore (Rs 1.84 crore).

Source:Capital market

Thursday, March 09, 2006

Naya Issue: SHIVALIK GLOBAL LTD

Type of Issue:Public
Issue Opens:9 March 06
Issue Closes:14 March 06
Issue Size:10,000,000 (No. of Shares)

Shivalik Global (SGL) is engaged in dyeing, printing and processing of woven fabrics; knitting, dyeing and processing of knitted fabrics and yarn; manufacturing of readymade knitted garments, mainly T-shirts; and manufacturing of sewing threads at Faridabad, Haryana.

SGL plans to raise readymade garment manufacturing capacity by 36 lakh pieces, from 24 lakh pieces to 60 lakh pieces, with a capex of Rs 16.60 crore; dyeing, printing and processing capacity of woven fabrics by 90 lakh meters, from 360 lakh meters to 450 lakh meters, with a capex of Rs 5 crore; fabric knitting capacity by 1,000 million tonnes, from 1,150 million tonnes to 2,150 million tones, with a capex of Rs 2.76 crore; dyeing and processing of knitted fabrics by 1,500 million tones, from 4,000 million tonnes to 5,500 million tones, with a capex of Rs 6.24 crore; dyeing and processing of yarn by 500 million tones, from 1,400 million tones to 1,900 million tones, with a capex of Rs 2.50 crore.

Besides, the IPO will address additional working capital requirement of Rs 10 crore, and contingencies and issue expenses of Rs 2.90 crore and Rs 4 crore, respectively. Also proposed is repayment of term loans of Rs 10 crore. The entire project is to be completed by August 2007.

Around 80% of SGL’s turnover comes from dyeing, printing and processing of knitted and woven fabrics. The balance is generated through the garment business. However, when the new garmenting facilities get fully operational in August 2007, the share of the garment business is expected to go up to 45%. The company exports its entire garment production to internationally renowned buyers.

Strengths
After the completion of the project, SGL will become more evenly integrated and value addition will improve. Contribution from garment exports is targeted to reach 45%, from the current 18%.

Weakness
The new garment capacities will be fully commissioned in August 2007. However, trade restrictions on China will also get lifted from 2008, thereby giving rise to severe competition that can impact margin.
Shyam Tex International (almost half the size of SZL) is a promoter (J P Agarwal) group company engaged in the same line of business as SGL. Therefore, conflict of interest is not ruled out. The promoter also has a number of companies engaged in variety of business. This could lead to diversion of attention.

Valuation
SGL made a net profit of Rs 6.09 crore on sales of Rs 176.66 crore in FY 2005. EPS on post- IPO equity works out to Rs 2.5. Even current nine months’ annualised EPS on post-IPO equity works out to Rs 3. The shares are being offered at a price of Rs 60 at a PE of 24 times FY 2005 EPS and 20 times annualised FY 2006 EPS.

Only large and the best garment exporters can enjoy these kind of PEs. Near comparable company, Alok Industries, which is more than six times SGL’s size, is trading at a TTM PE of around 11 times. Even the industry composite TTM P/E is around 13, making the offer highly expensive.
For More Information Click here
ToView Prospectus Clickhere

Source:Capitalmarket

Applications for IPO to be limited to 20 per address

The Securities and Exchange Board of India is set to limit applications for public issues to just 20 from a single address, to prevent a repeat of recent IPO scandals reported DNA.

The software monitoring demat accounts will be modified to notify authorities once this limit has been reached. Besides, depository participants (DP) will be required to physically inspect the genuineness of an application in case there is more than one application from a single address.

“More than one application will be permitted by the DP, but only if it is verified that it is not an application from a non-existent entity and there are persons by those names residing at that address,” said a senior official in the Union finance ministry.

Broker Rakesh Jhunjhunwala told DNA that the move is a welcome one if true. “Anything that avoids a scam can only be good for the markets,” he said.

Another top Dalal Street player, Ramesh Damani, agreed. “There is a lot of silliness in the market. This will go a long way in cleaning up the system.”

The limit of 20 has been decided after taking into consideration the various permutations that can emerge in filing applications from a family residing at one place. “The applications could be from a single person or be made jointly. Therefore, 20 is considered a safe limit,” the finance ministry official said.

Currently, there is no bar on the number of demat accounts a person can hold, just as there is no bar on the number of savings accounts one can hold individually or jointly with some other person.



Wednesday, March 08, 2006

Biggest intraday fall for sensex in 2006

The market witnessed a huge selling pressure. It is the biggest intraday fall for Sensex in 2006. The Sensex closed at 10497.98,with 212.69 points down than the previous day.The Nifty also was down 67 points and closed ar 3115.35.

Foreign investors were net sellers of derivatives contracts worth Rs 1598 crore on NSE on Tuesday (7 March 2006).Such huge selling came as a shock to the market.

Nalco,Hindalco,Tata steel and Sail were the top losers on Nifty,while Cipla,ABB,Shipping Corporation and Hero Honda were the top gainers on Nifty.

Losses were seen in metal, FMCG, auto, consumer durables, oil, technology, pharma and banking stocks,however buying was seen in some capital goods stock.

Tuesday, March 07, 2006

Govt set to go for SBI stock split

Here's some more good news for retail investors. While preparing the ground for a public offer for SBI, government intends to allow a stock split of its equity shares which at present have a face value of Rs 10 each.

In the proposed amendments to the SBI Act, which is likely to be introduced in Parliament during the second half of the budget session, the finance ministry is proposing to reduce the floor on RBI's stake from 55% to 51%. RBI now holds 59.73% stake in SBI and the move will pave the way for a possible 8.73% cut in its stake.

"It will be for SBI to decide on the face value or the timing of the public issue. The face value can be Rs 5 or Re 1, it depends entirely on them.

We are just creating an enabling framework by reducing the floor to help the bank raise more capital to meet its expansion and provisioning needs,"a finance ministry official told TOI.

In case of Rs 5 face value, SBI's shares will be available around Rs 450, while it will be around Rs 90 if face value is Re 1.

In the past too, government has used the stock split route in case of Maruti Udyog Ltd to make the public offer more attractive for retail investors.

It is trying to replicate the model in case of disinvestment of its equity in Shipping Corporation of India and National Minerals Development Corporation where the trading price is on the higher side.

In addition, the finance ministry is providing for the transfer of RBI's holding to government. The central bank has expressed its intention to transfer its stake in FIs and banks as it may be viewed as a conflict of interest with its regulatory functions.

But the only glitch to the transfer is the trading price of SBI shares, which closed 0.6% higher at Rs 903.60 on BSE. The Centre will have to shell out over Rs 28,000 crore to acquire RBI's 314.3 million shares.

Source:-TOI

PAN compulsory for demat accounts

All demat account holders will compulsorily need permanent account number (PAN). The Securities and Exchange Board of India has directed the depositories to make PAN compulsory for all demat accounts that are opened after April 1.

Further, from October 1, the existing demat account holders will not be able to operate their accounts if they do not produce their PAN card.

This rule would be applicable to all demat account holders, including minors, trusts, foreign corporate bodies, banks, corporate bodies, FIIs and NRIs, said a circular from National Securities Depository Ltd. These measures are being taken in order to tighten the `Know Your Customer' norms, post the IPO scam.

Staff at Depository Participants' offices have been asked to personally verify the identity and address while opening demat account and the record of the person who carried out such verification should be made available.

The name of the demat account holder would be compared with the name appearing on the Web site of the Income Tax Department and clarification would be sought from the account holder if there is a mismatch, the circular said.

In the case of joint account, both account holders should have PAN cards. In case the account holders fail to provide copies of their PAN cards to the depositories before October 1, their demat account would be `suspended for debit' until PAN details are provided and verified, it said.

Source:Sify Finance

Monday, March 06, 2006

Tata Tele to offer 15% for $320m

Singapore's Temasek Holdings is reported to be interested in buying a 10% stake,in Tata Tele Ltd. whilst the local Sterling Infotech group could buy 5%. The deal is expected to fetch Tata Tele around USD320 million, said the paper.For detailed information click here.

Sell ITC Futures

With current levels of prices in ITC, the share is a good candidate for selling. If we take a look at numbers from last quarter for ITC, the revenues grew to appr 26049 million Rs with EPS of around 1.42. The revenues have been growing at around 6% over past three quarters while the net profit has been more of less constant. Assuming much better performance for ITC in last quarter of 06, similar to the stellar performance shown by the company in last quarter of 05, we still cannot assume increase of more then 50% in EPs over previous quarter. Taking this into consideration, we can have EPS of around 2.13 for last quarter. Trailing three quarters EPS is 4.44 so the estimated EPS in best case scenario would be 6.5 for FY 05-06. Historically ITC has been valued at PE of around 16-20. Even assuming high confidence levels and market expectations about continuous outstanding performance of the company, currently the share is trading at 27 times its 06 earnings. According to us, this is on a very high side and the times are ripe to see a correction in the share.

If we see the technical charts, MACD shows a signal that share is stabilizing at its level while W%R shows that there might be a downtrend in the share.

Thursday, March 02, 2006

Budget and Sectors

Here is a link to the detailed analysis of how the budget will impact various sectors appeared in the business standard.

Wednesday, March 01, 2006

Automobile Sector

Lets have a look at various sectors affected by the budget 2006-07 one by one

Automobile:-
The excise duty has been reduced from 24% to 16% on
1. Petrol cars with lenght not exceeding 4metres and engine capacity not exceeding 1200cc and
2. Diesel cars with lenght not exceeding 4metres and engine capacity not exceeding 1500cc.

The reduction in excise duty by 8% affects the Maruti800,Omni,Alto,Zen,WagonR,Hyundai Santro and Tata Indica,as only these cars fall into the specified category.
The Government’s decision to develop 1,000 km of access controlled Expressways will further boost demand for the automobile sector.The reduction in the peak rate of customs duty from 15% to 12.5% will benefit the industry in terms of lower cost of imported automotive components.

Maruti Udyog announced the reduction in prices of their 5 models by anything between Rs 13000 and Rs 22000.Hyundai Motors india will also be cutting the price of santro by around s20000-23000.And Tata Motors would be revising the price of Indica shortly.

So overall the auto sector is sure to benefit from the budget.
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