TARGET HIT IN JUST ONE DAY - POLYPLEX

yesterday recommended polyplex at 201.40 for a target of 220.00 touched an intraday high of 225.00 today.

SHORT TERM BUY - PATNI COMPUTERS

  Buy patni computer systems BSE: 532517    NSE: PATNI  CMP : 363.85  buy around 360.00 for a short term target of 386.00 with a stop loss of  352.00

MULTIBAGGER STOCK RECOMMENDATION - GAREWARE WALLROPE

 GAREWARE WALLROPES

BSE: 509557   NSE: GARWALLROP    CMP :  62.30 BOOK VALUE :  91.50

Garware-Wall Ropes Limited (GWRL) a Pune based company is engaged in the manufacture of synthetic cordage and nettings. It also provides range of products for fishing and aquaculture industries, as well as sports, fibre, industrial products and projects business. 

It operates in two segments: Synthetic Cordage, and Fibre and Industrial Products & Projects segment. Its products include twines, ropes and yarns, nettings, woven fabric, metal gabions, machineries and parts. It offers a range of three and four strand hawser laid ropes for a variety of applications, such as fishing, shipping, ports, shipbuilding yards, stevedoring, defense, material handling, construction, electricity boards and various other industrial applications.

The company has maintained its dominant position in the domestic market and is building a strong brand image in overseas markets. Development of new and value added products is being undertaken with renewed vigor.

Demand for industrial and mooring ropes depends on overall economic growth of India which indeed is promising. Considering the large investments being made in the infrastructure development, a growing market has opened up for GWRL’s construction and environmental products.

GWRL is a small cap company having a Market cap of just Rs.142 crores. In FY2009-10, the company’s total revenues grew by just 1.67 per cent at Rs.453.68 crores over previous fiscal but PAT grew by 19.62 per cent at Rs.19.38 crores over FY2008-09. While profit margins are pretty low hovering around 3.6 to 6.5 per cent, the company does around 20 times business of its low Equity base of Rs.23.70 crores. ROE is 9.19 and ROCE is 11.98 per cent. P/BV is 0.60 and 52 week range is Rs.93.45- 55.

GWRL is a dividend paying company. The company paid a dividend of 25% in FY2010 and hopefully company should continue rewarding its shareholders appropriately as bottom line continues to grow over the years.

Conclusion : At Rs.59.75 the shares are trading at a PE of 6.18 which appears to be a reasonable valuation if we consider the strong brand image in it's niche segment.

MULTIBAGGER STOCK RECOMMENDATION - FDC

FDC  LIMITED
 BSE: 531599    NSE: FDC   CMP :101.20

FDC Limited [ Food, Drugs and Chemicals ] having a Marketcap of Rs.1875 crores has its Corporate Office at Aurangabad and 6 manufacturing units at Mumbai, Roha, Waluj, Goa, Bddi and Sinar. FDC exports its products to USA, UK, South Ameirica, Ukraine, Myanmar and Afganistan. The Company’s subsidiaries include FDC International Limited and FDC Inc. Its joint venture entity includes Fair Deal Corporation Pharmaceuticals SA (Pty) Ltd.

The Company’s products can be broadly classified under three broad categories :

• Therapeutic - Anti fungal, anti-anemic, anti-diabetic, anti-intestinal, anti-hemorrhagic, anti-oxidants and anti-spasmodic, Ophthalmics, Orthopaedics, Nutraceuticals etc.

• Food – Antioxidants, Vitamins and Nutraceuticals [Mum Mum I, an infant milk substitute is doing great]

• Bulk Drugs - Active Pharmaceutical Ingredients like Albuterol Sulfate, Cinnarizine, Fluconazole etc.

Shareholders of FDC know the potential of FDC – Sometime in April 2010, the company came up with an offer to buy back 8650000 shares .65/= per share but the company was not successful in buying back the shares as envisaged since the market price was higher than the Offer Price.

Research & Development - As is known the future of a pharma company can be assessed not only based on its current basket of products, filing of successful patents but also on the annual R&D spend. Well, FDC spends less than 5 per cent of its total turnover on R&D – in FY2008-09, it spent 3.56 per cent and in FY2009-10 it spent 2.92 per cent of its total revenues on R&D.

Is FDC an Indian MNC in the making ? Growth rates match that of great MNC’s like Pfizer : Five year top line and bottom line CAGR was 13.35 and 16.49 per cent. [Pfizer’s was 13.28 and 16.57 per cent] Total Revenue in FY2010 stood at 681 crores and PAT stood at Rs.148 crores.

FDC Limited is a zero debt company generating strong ROE and ROCE numbers over the last 3 fiscals : ROE from FY2008 through FY2010 were 18%, 21% and 31 per cent respectively. ROCE in stated fiscals was 22.26 and 38 per cent respectively. FDC has excellent working capital on a y-o-y basis and PAT margins in FY2010 stood at 22.55 per cent. Promotor’s, FII’s and DII’s stake in FDC is 66.35,.3.86 and 9.38 per cent respectively. Company’s Dividend yield stands at 1.98 per cent.

Conclusion : At a PE of 12.5 the shares of FDC Limited are trading at around Rs.101.20 per share and as such it is a reasonably attractive buy if we consider some good pharma companies quoting at PE in excess of 20.00

MOMENTUM CALL - BUY CREWBOS

Buy crewbos products  BSE: 532542  NSE: CREWBOS  CMP : 103.75  buy around 103.00  to 105.00 for a momentum target of  117.00

SHORT TERM BUY - POLYPLEX

buy polyplex     BSE: 524051    NSE: POLYPLEX   CMP : 201.40  buy below 200.00 for a short term target of 220.00 with a stoploss of 192.00

SHORT TERM BUY - CHAMBAL FERTILIZERS

buy chambal fert   BSE: 500085  NSE: CHAMBLFERT     CMP: 76.65    buy below 75.00 for a short term target of 83.50 with a stoploss of 71.25.

SHORT TERM BUY - NAVIN FLUORINE

Buy navin fluorine international  BSE: 532504 NSE: NAVINFLUOR cmp: 280.00 buy below 278.00 for a short term target of 304.00 with a stoploss of 273.00

MULTIBAGGER STOCK RECCOMENDATION - SIMPLEX CASTINGS

Simplex Castings 

BSE: 513472  CMP: 83.00 BOOK VALUE : 106.00 EPS:  21.65 PE : 3.83  

Simplex Casting Limited (SCL), part of 70 years old Simplex Group is a leading manufacturer of iron & steel castings in India. SCL is engaged in manufacturing of Heavy Engineering Castings in various grades for all industrial sectors like Steel plants, Power plants, Railways, Mines, Cement, Chemical, Oil, Defence, Sugar, Ship building etc. Its principle products include ingot moulds, alloy steel ingots, coco bogies, cansub bogies, blast furnace, pump casting etc. SCL has two major units-one heavy grey iron unit and other heavy steel casting foundry, both these manufacturing units are located in chhattisgarh.

Simplex Castings is one of the largest producer of Bogies frame in India supplying wide range of its products to Railways and it is one of the largest manufacturers of Zero Leakage Oven Doors. It has supplied these products to reputed units of Japan, Korea, Egypt and also to SAIL, Tata Steel Limited. SCL is the first Indian company to bring mini blast furnace concept in India and world leaders such as Nippon Steel use Simplex made Ladles.

The Company is now expanding in the field of fabrication, machining and complete equipment supply to ensure better profitability in coming years and it is regularly upgrading its manufacturing facilities. SCL has a very strong consumer base including Indian Railways, NTPC, SAIL, HEG, BHEL, Essar etc in domestic market and giants like Kawasaki, Hyundai in international market. Main positive for the company is the demand for the company`s products in railway sector is on good growth track and it is also tapping various new sectors by expanding both its customer and product base. Due to increasing level of consumption of cast iron & steel castings future outlook for the company looks pretty good.

Financials - Simplex Castings has a steady track record with consistent profits. For the financial year 2011 it recorded 25% growth in sales and 20% rise in profits. EPS stood at 21.57 and stock is trading at a P/E of just 3.9.  Simplex deserves much better valuations considering their long standing operations and operational efficiency. buy on dips for long term gains.

MULTIBAGGER STOCK RECCOMENDATION - PIRAMAL GLASS

 PIRAMAL GLASS   NSE : PIRGLASS   CMP: 119.45

EPS: 8.53  BOOK VALUE : 58.40  PE: 13.97

Piramal Glass incorporated in 1998, is engaged in the business of manufacturing packaging solutions for the perfumery and pharmaceuticals.

Company provides complete solutions including full bottle design capabilities, in-house mould design, CNC machines for mould manufacturing, high quality glass manufacturing and dedicated ancillaries for decoration and accessories like caps, cartons and brushes.

Under pharmaceuticals the company manufactures products such as moulded vials, injectables and bottles. In domestic market PGL enjoys about 40% market share. Further in cosmetics and perfumery segment the company manufactures glass containers for nail polish, perfumes, foundations, attars, etc.

The company is the one of the largest manufacturers of flacconage glass for two segments namely pharmaceutical and perfume. It has an installed capacity of 1,115 tonnes per day, and sales of more than $200 million worldwide. Further the company also manufactures glass bottles for specialty food and beverages.

Company’s manufacturing facilities is located at India and Sri Lanka which makes it a low cost glass manufactures giving it edge above its competitors.

Major customers of containers for pharmaceutical industry are Glaxo Smithkline, Pfizer, E-Merck, Alembic, Aventis, Dabur (India), Ranbaxy, Cipla, Himalaya drugs, Dr. Reddy's Laboratories, and Piramal Healthcare.

Major customers of containers for cosmetics and perfumery business are Dumak LLC, LOreal, Erkui Kozmetic, Compagnie De Diffussion, Niasi, Expak, Baralan International, S F Patel & Sons, Estico and Revolline.

Globally, the company has network of distributors spread across in countries namely Netherlands, Belgium, Thailand, Spain, Columbia, Denmark, Turkey, Indonesia, Mexico, Italy, Russia and Brazil.

The Company has ISO 9001, ISO 14001 certification and OHSAS (Occupational Health, Safety Analysis Series) i.e. ISO 18001 certification.Milestone1984-Piramal Group acquired Gujarat Glass.

1990-The company was merged with the group company Nicholas Piramal India leading to forming of business division of group.

1998- The glass division was demerged from the group leading formation of Piramal Glass which was incorporated in same year.

1999-Company acquired Ceylon Glass Company, Sri Lanka.

2003-Nicholas Piramal India demerged its 54 % holding to Kojam Fininvest.

2005- The company acquired a part of the Glass Group earlier known Wheaton Glass. This led the company to foray into the US market.

2008-Kojam was merged into Gujarat Glass, now known as Piramal Glass

Future Prospects

Piramal Glass plans to raise upto Rs 200 crore through rights issues for further expansion of its business.

Piramal Glass has reported excellent results. the Q4 results, the top-line, on consolidated as well as on standalone basis, grew by about 15%. But, on a standalone basis, the bottom-line grew by about 535%. That means the Indian operations have been doing very well.

Even if we take the consolidated operations for Q4, the bottom-line grew by about 200%. That is the reason that the company or the board has increased the dividend also for this year to 35%, last year it was at 10%.

If you see by the overall performance for FY11, top-line is close to about Rs 1,250 crore with profit after tax (PAT) of about Rs 93 crore and cash profit of about Rs 200 crore which resulted into an EPS of about Rs 11.50 and cash EPS of close to about Rs 24.

Their US and Sri Lanka operations have been doing well. Domestic operations have performed better since last year. Going forward, I won’t be surprised to see EPS of close to Rs 16 to Rs 18 for FY12. Going by these, I think share available on a forward earning PE multiple of less than eight can give you a 30% return from these levels.

MEDIUM TERM BUY - TNPL

 TNPL  NSE : TNPL BSE : 531426  CMP : 130.00
Tamil Nadu Newsprint and Papers Limited manufactures newsprint, printing and writing paper. The Company also owns and operates a wind power farm, which is used primarily for captive consumption. Tamilnadu Newsprint manufactures Eco friendly papers, by adopting innovative technologies for sustainable development.


TNPL is a value buy in mid-cap space trading at a P/E of little less than 5. Pretty high dividend yield of almost 3.50% in the last 12 months. Liabilities are a little high, but is backed up by strong business model with solid revenue growth and consistent profits. Bottom-line growth of over 50% in FY11 is a surprise surge from its routine 20% growth in the last 5 years. NPM of 15% has grown from its routine 10 - 12% in the last 5 years. Buy, accumulate on dips and hold for long term growth.

CALLS WILL BE AVAILABLE FROM FRIDAY

due to unavoidable circumstances iam not able to give calls for next three sessions. calls will be avail from friday 27-5-2011.Keep visiting the site.

INTRADAY CALLS FOR 20-5-2011 FRIDAY

LIC HSGFIN
BUY 206.00
TGT 1 209.25
TGT 2 211.00
STOPLOSS 203.35


TILAKNAGAR

BUY 56.50

TGT 1 58.00
TGT 2 59.15
STOPLOSS 54.25

SHORT TERM BUY - BERGER PAINTS & HINDALCO

buy berger paints   BSE: 509480    NSE: BERGEPAINT  cmp:  106.00 buy below 104.00 levels for a short term target of  124.00 in one to two months

 buy hindalco  BSE: 500440   NSE: HINDALCO  cmp: 196.55  buy below 195.00 levels for a short term one month target of  212.00 with a stoploss of 188.00

MEDIUM TERM BUY -KERNEX MICRO

 KERNEX MICRO SYSTEMS

 BSE: 532686  NSE :KERNEX  CMP : 92.90

 MEDIUM TERM TARGET 129.00 

Kernex Microsystems was incorporated on September 15, 1991 as a private limited company with the object of designing, developing, installing and maintaining software packages for domestic and international markets. They are registered as 100% Export Oriented Unit (EOU) with Software Technology Parks of India, Department of Electronics, Govt. of India, New Delhi.

The company is presently engaged in the business of manufacturing, installing and maintaining of anti-collision systems as well as conceptualizing, designing, and developing certain railway safety and signal systems for Konkan Railways Corporation Ltd. These safety and signal systems are suitable for medium to low speed & density railway tracks like in India and other developing countries.

It entered into technology partnership with Konkan Railway Corporation Ltd, Navi Mumbai for design, engineering and development of anti-collision systems for providing safety to trains in Railways. It hold exclusive license for manufacturing, installation, commissioning and maintenance of anti-collision systems in India. The company also has an outsourced facility for the Konkan Railways Corporation Ltd. for manufacture and supply of ACDs and related accessories.

The company is a technology partner for the development and implementation of ADDs for Metro Sky-Bus Urban Transportation System, Advanced Railway Signal Systems and other safety systems. It holds the exclusive marketing rights of ACD systems all over the world except India.

Interesting indications coming in from Q4 results of the company. Q4 has contributed about 40% of the top-line of what the company has posted for whole of FY11. The bottom-line is about 45% posted alone in Q4. The company has given indications to execute 1,360 electronic gates projects for the Egyptian railway. The team from Egypt will come for inspection of the project in the month of June. They should be able to execute that order in next six months time. The second company is aggressively working on restoration and maintenance on the North frontier railways where they have fixed the anti-collision devices two-three years back. They are also working with their technology partner Konkan Railway for finalisation of version I and II of ACD. All of the restoration, maintenance and up-gradation of the anti-collision devices of version I and II are likely to get completed by October this year. The railway order for anti-collision devices would start flowing in from the month of October or maybe the year-end which will augment the top-line and bottom-line of the company over the next three-five years. The order size will be of about Rs 4,000-5,000 crore which will be spread over next seven years. The company is enjoying 40-45% of debt free status. All this can be a big trigger for the company, though investors have lost a lot of money. There has been a lot of time lag in the receipt of this order. The Egypt electronic gate order and anti-collision order expect to flow in from Indian Railway which will take the share on a different trajectory. In one year’s time, the share would move to about Rs 150.

UPDATE ON ALLIED DIGITAL SERVICES

I have recommended allied digital ( ADSL)  around 92 levels few weeks back. stock is trading at 56 00 levels now. however one can buy this stock for following reasons in long term prospectives.

1. BUY BACK OF SHARES

The Company is Buying 20 Lakh shares from open market through renowned broker Anand Rathi at max. price 140. 2,20,000 shares have already been bought and 2 lakh warrents would be converted to shares as constituent in 20 lakh. Remaining 15,80,000 shares are yet to be bought which is likely to happen in few quantities (20,000 – 50,000) almost every day till 20 lac shares are bought altogether. Now, what’s interesting to note is that the company would buy shares in the open market, the biggies – Corporate institutions, FIIs and HNI are unlikley to sell their holdings because, If at all they wanted to offload their stake they would  done it in past 3 sessions where there was ample liquidity to absorb good quantity of shares. So, what conclusion can be bought now is that the shares that the company would be buying would be of Retailers who always tend to be loosers in panic situations. During a course of Buy-Back, when good amount of Retailer shares are Absorbed the company would face liquidity crunch and will have to buy shares at higher prices. Rembember, If so happens then at the end of the Buy-Back, The retailers would have only 25 Lac (approx.) shares and with little liquidity in the market the share price can easily be bought higher.

2. Strong Presence in Pan India and other prominient locations world-wide

ADSL has over two decades of experience in enterprise IT Infrastructure, management and implementation & consulting on complex IT Solutions for different business verticals and recently, they have startd with the cloud-compuing business which is the most innovative and future – promising product in the IT industry. The Company has about 2,265 Committed Professionals from different managerial and engineering backgrounds operating across 132 locations in India and across locations in USA, Australia and recently in Singapore too.

3. More than commensurate de-rating of valuation makes ADSL a strong value pick

We believe that the company’s fundamentals are largely in place with its continued attempts to transform itself into a high value adding services player. Also the company’s decision of considering buy-back and appointment of a reputed joint-auditor are likely to restore some credibility. With valuations cheap at 3.7x FY12 P/E (on our substantially reduced estimates) and the current stock price at significant discount to FY11 Book Value (Rs160).

4. IMS business to drive 29% revenue CAGR over next three years

The experience and expertise in system integration (SI), technological depth, wide onsite reach and sizeable remote infrastructure make ADSL a leading IMS player in the domestic market. The company has gained a strong foothold in the US market with the acquisition of EPGS in midFY09. After
struggling initially, EPGS is now on a sturdy growth path with FY12 revenue expected at US$55mn, a growth of 28% yoy despite offshoring. Overall IMS revenues of the company are expected to witness FY11-14 CAGR of 38% v/s 16% for SI segment. Resultantly, IMS revenue share would increase from 56% in FY11 to 64% in FY12.

IMS as a service line has been witnessing robust growth   Infrastructure Management Service (IMS) helps companies to optimize/improve the utilization of IT assets and simultaneously reduces the total cost of ownership (TCO). Companies outsourcing IMS save cost and are able to focus on strategic functions.

In the last decade Application Development Maintenance (ADM) and Business Process Outsourcing (BPO) dominated the Indian IT offshoring growth and this decade, IMS is touted to be one of the key growth engines.

As per the NASSCOM Strategic Review 2010, IMS was the only segment within IT services to record a double-digit growth of 10.6% in FY10 mainly driven by offshoring of value-added and more complex services. It also highlights the higher resilience of this service line as compared other IT services in a macro downturn. Another trend that emphasizes on the high growth of IMS is the significant increase in its share in revenues of large companies, Infosys, Wipro and HCL Tech.  Indian IMS industry has reached a size of US$4.3bn, having witnessed a CAGR of 39% over FY07-10.

Within IMS, Remote IMS (RIMS) has witnessed increased traction. In RIMS, the services are provided from remote (not onsite) low cost locations like India NOC to provide a cost advantage to the clients while maintaining/improving the service levels.

As per NASSCOM-Mckinsey, global offshore IMS market would grow to US$26-28bn by 2013. India’s share of the above opportunity is projected to reach US$13-15bn. Domestically, system integration and infrastructure outsourcing segments are expected to grow at 15%pa each.

Drivers of IMS & RIMS

a) Increasing complexity of IT systems A strong technology focus of enterprises in the last decade has led to increasingly complex IT systems with host of business applications, which if not maintained, can lead to operational bottlenecks. Complex IT systems demand more resources to maintain existing service levels and thus become less responsive to the business.   Global studies show that a substantial portion of IT budgets now goes towards maintaining current IT systems. Dependency of businesses on technology to become competitive has made it a necessary investment. The key challenge for an enterprise today is to evolve an IT infrastructure management strategy that leverages the existing investments and achieves increased service levels for the end customers, improved end-user response time through proactive management and reduced costs and increased flexibility.

b) Labour, the largest addressable cost  As hardware costs fall, labor becomes the most addressable cost in infrastructure. As per McKinsey, the costs of non-labour components – hardware, software, maintenance (for instance, software updates and hardware replacement) and facilities – declined by ~44% between 2000 and 2008 as competitive pressures, innovation, and tougher negotiations with vendors brought prices down. Between 2008 and 2011, these costs have been estimated to fall further by 54%, thanks to innovations such as ‘virtualization’ (explained below). Thus the labour cost becomes one of the biggest addressable costs in infrastructure management.

c) Rising demand for ‘virtualization’  Typically in buoyant market conditions, enterprises tend to invest in new hardware (servers, etc) even if the existing infrastructure is not being optimally utilized. The focus is on grabbing maximum business and sustaining the growth momentum through buoyant capex. Resultantly, there is a build-up of buffer asset capacity. As per experts, the server utilization is not more than 60% even for the most efficiently run company during a business bull run.  In a bearish scenario, companies intend to utilize their IT infrastructure optimally and avoid new investments. The phenomenon of ‘virtualization’ is gets increasing importance. Virtualization means optimally utilizing (through cross-utilization, etc) IT infrastructure (servers, storage, computing infra, etc) across multiple locations (offices, branches, etc) by treating them as one common infrastructure.

d) Increasing realization about economic viability of RIM  To a great extent, the robust growth witnessed in the RIM over the past few years has been driven by increasing realization of the economic viability behind offshoring IMS. Enterprises have realized that majority (90-95%) of their technology infrastructure problems could be resolved remotely from an offshore issue resolution/management center by a third party vendor. Further, through RIM, companies avail a significant reduction in problem resolution time (1/4th-1/5th compared to onsite) which ensures higher uptime of the infrastructure. By offshoring, they enjoy significant cost savings for a better level of service (through higher uptime of assets, access to more skilled resources than onsite, 24*7 service, etc).

Most of the IMS players out of India provide SLA-based RIM services to clients. The SLA (service level agreement) clearly underlies the scope of work i.e. the level of service chosen, variety of assets, number of assets, service window (24*7, 8 or 12 hours, etc), uptime required, response time of assets/applications, etc. The variety of assets includes servers, network, desktops, security, applications, database, storage, mails, etc. The customers are less concerned about the number of resources deployed by vendors and its onsite:remote mix and are more concerned about the availability of their IT infrastructure ie uptime  Further, pricing in remote IMS services is more resilient than for other commoditized IT services. Typically, pricing is tied to the level of service and uptime. Generally, no enterprise would like to save cost by taking a lower uptime and lower level of service for its business critical IT systems and infrastructure.

Globally IT spends are being  prioritized in favour of IMS/RIMS as enterprises try to optimally utilize and increase efficiency of their existing IT infrastructure.

ADSL is a strong IMS player

ADSL is an IT infrastructure management and technical support service outsourcing company. It has over two decades of experience in technology and enterprise infrastructure implementation, management and consulting on complex IT and business systems. The company operates across a network of 132 locations across India with a team of ~2,700 employees from different managerial and engineering backgrounds. ADSL has a wholly owned subsidiary in the state of Delaware, USA, by the name of Allied Digital Inc and liasioning offices in Sydney, Australia and New Jersey, USA. EPGS, LLC USA and Digicomp Complete Solutions Ltd are two newly acquired subsidiaries of ADSL. EPGS operates out of 27 locations in the US with ~340 employees.

ADSL enables large and medium enterprises and service providers to reduce their total cost of ownership of IT infrastructure by using a combination of onsite and remote services. The company has been a preferred choice for outsourced technical support for large corporate customers in India.

The experience and expertise in system integration (SI), wide onsite reach, sizeable remote infrastructure and technological depth make ADSL a very competitive IMS player. Company’s IMS clientele includes large domestic corporates. The IMS offering of the company comprises FMS (onsite proactive management), AMC (need-based reactive management) and RIMS (remote proactive management). Company typically signs three-year contracts with customers for providing IMS services.

ADSL provides SLA-based IMS services. Key elements of a SLA are the infrastructure/assets to be managed (network, servers, desktops, storage, security, applications, etc) and the required uptime (availability) of these assets/applications. ADSL commits to a particular uptime level based on its own assessment of the client’s infrastructure. Company then decides on the onsite:remote mix of resources to provide the committed uptime level. The customers are less concerned about the number of resources deployed by ADSL and its onsite:remote mix but are more concerned about the availability of their IT infrastructure.

ADSL’s IMS services are significantly cost-competitive than some of the large Indian offshore vendors who provide onsite IMS services based on people-billing model. By shifting infrastructure maintenance to ADSL from these vendors, clients could save 20-40% for a similar or higher uptime service levels. For IMS contracts, company has a technology–process–people approach unlike competitors which have a reverse approach

5. EBIDTA to expand 200bps over FY11-13; to reach 22% in FY13

ADSL’s margin improved significantly by 200bps in FY10 driven by implementation of hybrid delivery model in EPGS, cross-selling of value added services to EPGS clients, revenue mix shift in the domestic business towards high-margin IMS segment and towards RIM within. As per the management, EPGS operating margin has improved to 7% from near 0% when
acquired. We expect ADSL’s OPM to expand by 100bps each in FY12 and FY13 on further expansion in EPGS OPM (to 17-18% over next two years), continued revenue mix shift towards IMS/RIM and contribution from recently entered Lenovo deal.

6. To turn FCF positive in FY11; growth without dilution/leverage

We estimate ADSL to have turned CFO positive in FY11 and become FCF positive in FY12. Augmentation in CFO and FCF over FY11-13 would be driven by robust revenue growth, margin expansion, reduction in working capital intensity (due to decline in SI revenue share) and no significant capex (current NOC/SOC utilization is low). This and the robust Cash balance (Rs2.2bn, 20% of m-cap) eliminate the need for equity issuance and balance sheet leverage to fund growth over the next 3-4 years. Another pleasant feature about ADSL is its pure RoE of 20%+ (driven by high RoA) as the company has negligible leverage. The utilization of significant C&E would only improve RoE in the coming years.

7. En Pointe Global Services (EPGS) gaining traction

ADSL had acquired 80.5% stake in En Pointe Global Services (EPGS) in July 2008 for equity valuation of US$30mn. The rationale was to gain access to marquee clients in US, up-sell/cross-sell incumbent offerings and to improve margins by remote transitioning of delivery. However, due to shadow costs and additional S&M costs in US, the margin expansion could not be realized immediately after. Now with integration issues ironed out, EPGS operations have reached a steady state. Going forward, we expect EPGS to show good traction in client addition, revenues and margin. Since the acquisition, the company has added many marquee clients such as Washington Mutual (US$4mn client), JP Morgan, City of Sandiego, Lam Research, etc.

When acquired, EPGS was providing low value-added services like desktop management, help desk services, etc and had a 100% onsite business model. Post acquisition, ADSL has introduced onsiteoffshore (hybrid) model and has started providing high value-adding services like complete data center management, managed services and innovative servicing deals like the one with Lenovo (explained later).

With the adoption of hybrid model, the pricing of services to clients has reduced by 20-30% as compared to the 100% onsite model. Despite offshoring, EPGS has had a decent revenue growth from US$30mn when acquired to US$43mn in FY11. The management expects to cross revenue mark of US$55mn in FY12, implying a strong growth of 28%.The current order book for EPGS stands at US$60mn. On the other hand, margin has expanded due to upselling/cross-selling and remote transitioning. From a break-even at the time of acquisition, the operating margin has expanded
to ~7% currently. Management expects margin to further improve to 1718% over the next two years.

8.Lenovo Deal to start contributing from Q1 FY12; to add materially in FY13

ADSL has entered into a deal with Lenovo to service all its client’s laptops and desktops for 3 years in the US. There are 3 levels of services involved from zero human intervention in Level 1 to onsite service engineer support in Level 3. Level 1 has automated resolution where issues are automatically sent to NOC in India and are resolved by pushing solutions through the network without any human intervention. Level 2 consists of relatively heavier updates and in Level 3 a service engineer is sent for onsite support. Though the deal is not exclusive with ADSL, its experience and knowledge base due to long incumbency in this field gives it a strong competitive advantage. The company is currently in negotiations to enter into a similar tie-up with Lenovo in Europe.

Advantage to consumers:

The costs of servicing laptops are quite high in the US markets as
a result such a provision helps to save on these costs for the length of the maintenance period.

The experience of ADSL in solving such issues has led to an automatic resolution of majority of the issues thus saving a lot of time and increasing uptime.

Advantage to ADSL:

The technology leveraged approach of ADSL effectively leads to
non–linear revenue stream (most issues being resolved automatically ie without human intervention)

ADSL accrues 30-35% margins per device per customer from the revenues emanating out of such services.

Possibility of similar deals with other OEM manufacturers will help ADSL scale-up non-linear revenue component.
Revenues from this arrangement are expected to trickle from the current quarter. As per the company, full-year revenues could be ~US$3mn in FY11 and US$15mn in FY12

9. Recent Developments and orders in pipeline

The company has recently made a complete networking deal with India’s one of the largest PSU.

It has made a 5-year deal with India’s largest retail chain.

It has made a cracking services deal and end-user networking deal  with India’s one of the largest Auto component Manufacturer.

Closes the first VDI Deal with fast growing educational Institute in India.

Obtains a large networking order from Indian renowned Family Business Group.

Allied Digital receives ‘Channel World Premier 100′ Award for displayiing dynamic business practises in a challenging business environment.

Forbes Asia awarded ADSL as ‘Best Under a Billion Dollar Company’ for three consecutive years.

Conclusion : Going forward for the next two quarters I personally don’t see significant rise in the turnover or net profits but going further the growth would be exponential. I feel all the negatives in the stock has already factored in and the stock has already seen the worst for ADSL! Any positive news from the management side can trigger a strong rise in the stock price remember, the 13 cr loss from one of its clients in the quarter 4 is still going negotiations and any amount that comes in through the negotiations would actually add to the Q4 net profit which most of them are unaware of.

Some HNI group is anticipated for posting negative comments  in prominent blogs and forums like Moneycontrol, Rediff Money etc.. to create panic among the retail investors, they are absorbing the shares that are sold out in panic. Do not be influenced by any such commentators, do your own research. Let us take the worst case scenario. Say, the company is a fraud just like in the case of satyam -  ADSL holds around 700 crores of reserves with just over 50 crore of loan which amounts to around 650 crore of valuation for a market-cap of around 270 crore. Even if the ADSL’s CEO – Nitin shah comes out to be a fraud, Some big IT company would easily take over it and utilize the infrastructure and its strong presence in India and also in Prominent countries world-wide, as the company is too small for take-over target.

I expect the stock price to gradually move towards the 3-digit mark till the end of the Buy-back which  I expect it to be completed before the F12 Q1 result and as time follows the stock should consolidate near Rs.150. In a decade’s time, the stock could quote in four digits..

MULTIBAGGER STOCK RECCOMENDATION - AHLUWALIA CONTRACTS

Ahluwalia Contracts India

BSE CODE : 532811
NSE CODE : AHLUCONT
CMP : 113.05

52 WEEK HIGH/LOW : 246 / 108.35
MARKET CAP : 753.14 Cr.
PE : 10.27
INDUSTRY PE : 13.19
EPS : 11.68 BOOK VALUE : 40.50  

Ahluwalia Contracts India ltd. (ACIL) is a E.P.C (Engineering-Procurement- Construction) company. Its well diversified premier Building & Structural construction company with over 45 years of experience. Company has developed various projects in the domain of Building, Complexes, Hospitals, 5 Star Hotels, Large Institutes, Medical colleges and Laboratory buildings, Multi-Storied Housing Complexes, residential Township projects & various Sport Avenues and Complexes. ACIL is few of the companies in India who are pre-qualified to bid for most of the mega building projects in the country.

Strong Order Book :

Currently, Company has order Book of over 5,000 Crores which will be increased to 6,000 in next 18 months. Few of its current projects are Mumbai and Bangalore metro project, High-End hotels for ITC and HDIl, Airport modernization in Ranchi, 6x660MW ultra mega power project in M.P. for Reliance Infrastructure (ADAG), etc. ACIL has bagged a DBOT project from Rajasthan State Road Transport Corporation (RSRTC), to build a bus terminal along with commercial complex, at Kota, Rajasthan. ACIL is trying to increase its exposure in power and urban infrastructure which will help in order book rising upward in next 18 months.

Strong Cash Flow :

ACIL is among the few companies in the construction sector that have been consistently generating substantial positive cash from operations. Cash on hand stands at Rs1.7bn and capex is estimated at Rs600mn p.a. over FY11-FY12.

Excellent Client Base :

Company is well diversified among big names which has sound financial health. Presently, About 30% of orders are from government sector & the 70% are from private sector. Few of the clients are ITC, HDIL ( Hotels)  Reliance Infrastructure ltd. (Power), Ranch Airport (Aviation), Mumbai and Bangalore metro ( Metros), DBOT (Road) ( Government Sectors). Residential ( DLF Gurgaon, Metropolis Bangalore, South City Kolkatta,etc. ), Commercial projects for SEBI, Maruti, Apollo Tyres, etc.

Financial :

As per Financial : 31th December, 2010 – The company’s net profit stood at Rs 1,414 lakh, as compared to Rs 2,642 lakh for corresponding quarter of 2009, a decrease of 47%, which was due to slowdown on top-line. Most of the negative news is priced in and ACIL is expected to delivery better result in FY11-12. Indian government aims to spend $1,000 billion on infrastructure in next 5-10 years and ACIL is poised to benefit in long run with superior technology, vast experience, Strong Order book, stable profit margin and good and visible earning.

Strong ShareHolding Pattern :

As of  Dec (2010), Promoter is Holding 72.61%, FIIS 4.98% and DIIS 8.66%. Public only owns approx. 4%. More recently, Nalanda Singapore-based firm had acquired 1.4% stake in Ahluwalia Contracts on Dec 17th for Rs 12.3 crore ($2.7 million). Only 15% is available for retailer. Strong promoters & Increasing DIIS supporting Robust Future Ahead.

Valuation :

ACIL has strong order book and increasing by 20% in next 18 months. Good sale is clearly visible. profit margin is expected to be same if not better which itself give high growth as per current valuation. At the CMP of Rs.119, the stock is trading at FY11E 9x which is very attractive valuation. There are very few companies with good cash flow, strong order book, less debt and healthy profit margin clearly visible in infrastructure space. Stock has corrected almost 60% in last 4 months on the news of CWG Scam, Small/Mid Cap correction, Below expected return and Overall weak market sentiments. Long Term investor with time-horizon of over 18 months, can BUY @ 113 till 100 in systematic way for Target 200 in next 18-24 months to make decent return and take benefit of Infrastructure growth.

UPDATE ON CONCURRENT INFRA

Concurrent (India) Infrastructure Ltd:-Result updates

Concurrent (India) Infrastructure Ltd.
Code:531261
cmp:8

Results:Concurrent India infra recently came up with its quarterly results which went a tad below  expectation.But investors sensing the strong future outlook of the company kept accumulating which resulted in a tiny 2-3% drop in the stock price.Overall on an yearly consolidated basis the results were superb with profits trebling to 13.8crs and sales rocketing by over 150% to touch 162crs.Concurrent India ended the fiscal 2010-11 with an EPS of 3.2rs.

Vakratund ispat:Vakratund has been a great fit to the existing verticals of the company.Vakratund which was acquired by concurrent some months ago chipped in with 19crs of revenues.Vakratund is expected to contribute around 100-120crs of sales in the current fiscal 2011-12.Vakratund is expected to generate strong cash flows which would help concurrent to expand/diversify in other sunrising areas.

2011-12 guidance:Concurrent is expected to grow by over 50-60% for the next few years.On a consolidated basis its expected to notch up 210-240crs of revenues for 2011-12 with PAT growing by the same proportion.The EPS should be around 5rs which at present prices discounts/ridicules it by 1.8 times.

Concurrent should make a new high within that period if it performs as per its sales and profits guidance.The promoters are diligent and visionary, they just need some time to deliver.In the long run concurrent should make a hell lot of wealth for the stakeholders.

Concurrent India infra remains a company with multibagger prospects.

MULTIBAGGER STOCK RECCOMENDATION - JAI BALAJI IND

Jai Balaji Industries Ltd
Cmp:182 NSE : JAI BALAJI
Book value: 142.00 eps : 8.96
1)The company is going to be a 20000-25000crs turnover company by 2014-15.It ended fy09-10 with a sales of around 1900crs.Well its actually hard to digest the humangous guidance given by the management.
2)The company stunned everyone by announcing a mega investment of 16000crs within the next few years.Aggresiveness at its height isnt it?Its marketcap is a mere 1100crs but who dares,wins-Proverb should get vindicated.Also just check how he is swallowing his shares from the open market.It gives immense confidence and conviction.
http://www.bseindia.com/Insidetrade_ScripWise.asp?scripcd=532976

3)Jai Balaji, at present is an integrated 1.2 million tpa steel manufacturer.It expects to add 2 million TPA in another 26 months (first phase) and another 5 million TPA in the following 24 months (5 million tonnes steel, 3 million tonnes cement and 1,215 MW power plant in Purulia, for Rs 16,000 crore).So Jai balaji is going to be a 8 million TPA company by 2014-15.At that time it should be the 4th or 5th largest integrated steel company of india with revenues of 20000-25000crs.

Purulia project Phase 1A financial closure recently completed which is a huge positive.Purulia project is one of the largest steel projects in India (5m mtpa steel,1,200MW power), with 100% thermal coal integration, to be executed in modules
to address funding issues. Phase 1A of this project entails capex of Rs 18.7bn and
comprises of 2m mtpa beneficiation, 1.2m mtpa pallet, 0.66m mtpa sponge iron,
70MW power and 0.3m mtpa EAF. The company recently announced financial
closure for this phase 1A - Rs12.3bn debt by SBI-led consortium and balance
Rs6.4bn through internal accruals/fresh equity.

SHORT TERM BUY - MAN INFRA

Man Infraconstruction

BSE: 533169    NSE: MANINFRA  CMP: 135.00

Buy man infra around 134.00 below levels for a short term one to two months target of  151.00 with a stop loss of 126.00

SHORT TERM BUY - PAREKH ALUMINEX

Parekh Aluminex

BSE: 532606    NSE: PARAL  CMP: 254.35

Buy parekh aluminex around 253.00 for a short term target of  277.00 in one to two months. add more if falls below 253.00

SHORT TERM TARGET HIT - MAN IND

MAN INDUSTRIES recommended at 79.00 on april 29th , (just  before last week) for a short term target of  93.00. stock touched 103.00 today ( 30% returns.) in just eight sessions.

TARGET HIT IN TWO SESSIONS - VIVIMED LABS

vivimed labs recommended at 288.00  yesterday, hit the target in just two sessions . stock touched today 309.00 more than my target of 304.00.( 7 % return).

long term multibagger - garden silk

GARDEN SILK MILLS 

NSE: GARDENSILK  BSE : 500155  CMP: 100.45 BOOK VALUE : 128.00
PE RATIO : 4.80  EPS : 20.98  INDUSTRY PE : 7.90

Garden Silk Mills incorporated in 1979 is among the leading fabric engineer, design maker and a polyester yarn manufacturer in India.
Company’s manufacturing facilities are situated at Vareli and Jolwa in Surat district in Gujarat, which is the largest polyester market in India.
Garden Silk Mills manufacturing facilities has received ISO 9001:2000 certified by BVQI for its quality management.
The company has large and talented pool of designers that are engaged in developing new fabrics, qualities and 2,000 new print ideas each year. Company is equipped with CAD- CAM technologies.
Apparel division of Garden Silk Mills manufactures and markets Vareli Business shirts and ready to wear ladies garments. These apparels are sold across the country.
Garden has marketing network encompasses 68 dealers, 18 company owned depots and 293 retail outlets in over 65 cities in India.
Globally, GSML has product presence in countries that includes U.K., France, Spain, Portugal, Greece, Middle East and Gulf countries, the U.S.A., Australia, Singapore, Thailand, Hong Kong, Mauritius, South Africa and Brazil.
Products
Company manufactures PET Chips, polyester yarn and partially oriented yarn. It also manufactures prepared polyester filament yarn – draw warped, draw twisted, draw wound and draw texturised
Under Fabrics, company manufactures fine filament and micro filament polyester fabrics - georgette's, chiffon's, failles, jacquards - both dyed and printed – mainly used Polyester Sarees and Dress Material.
It has a production capacity of 42 Lac meters per month of greige fabric.
Future Prospects
Garden Silk Mills is expanding its draw twisting, draw warping and polyester spinning capacities. The company is planning to increase the capacity by 300 TMD for the production of POY (partially oriented yarn) and FDY (fully drawn yarn) in coming future.

Garden Silk Mills Limited (GSML) has posted a 17.5% yoy rise in Q4FY11 profits to Rs 27.3 crore.
Net Sales increased by 28.0% year on year to Rs 879.8 crore. Decline in other expenses & stable
spreads helped the company post 30 bps increase in EBITDA margins to 10.2%. However, higher
interest and tax outgo led to 30bps decline in the net profit margins to 3.1%.
For the full year, GSML posted a good 35.4% rise in the net sales to Rs 3404.1 crore as against Rs
2514.9 crore reported in the previous corresponding year. Higher raw material cost pulled down
the EBITDA margins by 90 bps to 8.3%. Despite decline in the EBITDA margins, the net profit
margins remained stable at 2.5%.
At the CMP of Rs 100.2, the stock trades at 4.7x & 3.0x for FY11 and FY12 earnings. Enhanced
capacities and stable spreads would continue to drive growth for the company,  one can BUY on the stock with a target price of Rs 213.00

SHORT TERM BUY - VIVIMED LABS

BUY VIVIMED LABS    BSE: 532660   NSE: VIVIMEDLAB  CMP: 290.45 . buy around 288.00 for short term target of  304.00 with a stop loss of 282.00

medium term buy call - JAYBHARAT MARUTI

   JAYBHARAT MARUTI
   nse code: jaybarmaru  bse: 520066  cmp: 84.20

  

Jay Bharat Maruti is making the sheet metal components as well as assemblies and sub-assemblies for Maruti, M&M and Eicher. But the major portion of the supply of the company goes to the Maruti. If you see the promoter holding, part of the stake is held by Maruti in the company as well.

Going by the financial performance, the growth has been quite good, turnover of more than Rs 1,000 crore plus with EPS of close to about Rs 17. The company has a face value of Rs 5. The depreciation in the books of the company is quite high which results into cash EPS of close to about Rs 33-34.

The share is ruling at a PE multiple of five on the historic earning as well as on a cash EPS it is ruling at a PE multiple of close to about 2.6. So, going by all this and considering the growth in the auto sector,  the company should be able to maintain a growth of about 30% on the top-line, and maybe 35% to 40% on the bottom-line. All their three plants are doing quite well.  going forward, they should not have a problem of posting an EPS of Rs 16 as well as cash EPS of close to about Rs 36-40.

So, going by that, the share looks quite cheap. One can expect a price of Rs 105-110 in next six months or so. The stock price shows quite a good up move, quite a good volatility. Whenever stock crosses Rs 105-110, we see some profit booking come in. So, maybe share is now ruling virtually at its lower level and one can expect a price of Rs 105-110 in next six months.

MULTIBAGGER STOCK RECOMMENDATION - MICRO TECH

  MICRO TECHNOLOGIES

  BSE: 532494   NSE: MICROTECH   CMP: 134.00

  BOOK VALUE: 258.50  EPS : 47.37  PE RATIO: 2.83 

  

  INDUSTRY PE: 23.12     DIVIDEND YIELD :    20.00%

Micro Technologies (India) Limited operates software development centers in India. The Company provides a variety of software services, via their portfolio of over thirty software applications. The technologies include HTML and DHTML tools, Java enabled front ends, XML, scripting languages, Java server pages, ActiveX components, visual basic and, active server pages.

Micro Tech is a value buy in small cap space. Its trading at a P/E of no higher than 3. Revenues have grown from 60 Crores to over 300 Crores and PAT has grown from 17 Crores to 63 Crores over the last 5 years. NPM is more than decent at 17%. Liabilities though on the higher side are very much manageable. Cash flows look good. Dividend yields decent at 1.50% in the last 12 months. Buy, Accumulate on dips and hold for long term gains.

results today 5-5-2011

 indian stock market results today 5-5-2011 thursday

Andhra Bank
Bharti Airtel
Canara Bank
Cipla
Eveready Ind
Fert and Chem
First Leasing
GSL Nova Petro
Gemini Comm
GlaxoSmithKline
INEOS ABS
Intrasoft Tech
Jindal PolyFilm
KSB Pumps
Kotak Mahindra
Midday Multi
Mirc Electronic
Sundaram-Clayto
Surya Roshni
Zydus Wellness

results today 4-5-2011

A P Paper Mills
Brigade Enterp
Broadcast
Essel Propack
Hero Honda
NELCO
Nandan Exim
Nitco
PNB
Store One
TTK Prestige
Technocraft Ind
Teledata Tech
Torrent Power

SHORT TERM BUY - GOA CARBON

buy goa carbon   nse code : GOACARBON  cmp: 92.35 . buy below 91.00 levels for a short term one to two months target of 106.00 with a strict stop loss of 86.00

repo reverse repo hiked 50 bps

In a bid to clamp down on resurgent inflation, the Reserve Bank of India, in its first monetary policy review of 2012, raised repo and reverse repo rates by 50 basis points, thus breaking its calibrated approach. This takes repo (rate at which it lends to banks) to 7.25% and reverse repo (rate at which it borrows) to 6.25%. However, the CRR has been left unchanged at 6%

The central bank in its annual policy on Tuesday said that over the long run, high inflation is inimical to sustained growth as it harms investment by creating uncertainty. "Current elevated rates of inflation pose significant risks to future growth. Bringing them down, therefore, even at the cost of some growth in the short-run, should take precedence," governor D Subbarao said.

The policy aims at maintaining an interest rate environment that moderates inflation and anchors inflation expectations. Second, it targets to foster an environment of price stability that is conducive to sustaining growth in the medium-term, coupled with financial stability. And, thirdly, to manage liquidity to ensure that it remains broadly in balance, with neither a large surplus-diluting monetary transmission nor a large deficit choking off fund flows.

RESULTS TODAY (3-5-2011)

Amrutanjan Heal
Eimco Elecon
Escorts
Essar Oil
Essar Shipping
Finolex Cables
Garden Silk Mil
Guj Sidhee Cem
Ind Motor Parts
Indian Metals &
Jindal Drilling
Logix Micro
Mah Seamless
Nitin Spinners
Pfizer
Phillips Carbon
SKF India
Shri Lakshmi Co
TRF
Thermax
Vaibhav Gems
Wyeth

momentum call target hit- cen enka

friday given buy call in century enka at 210 exactly touched the target 218.00 today. anyone bought this?

buy call - suryalatha spinning

suryalatha spinning mills

buy suryalatha spinning  ( bse only )  bse code : 514138 cmp: 152.00 buy around 150.00 or below levels for  a short term target of  168.00 and a medium term target of  180.00. maintain stop loss at 140.00

SHORT TERM BUY -HATHWAY

short term buy - hathway

buy hathway cable    NSE: HATHWAY  BSE : 533162 CMP: 123.35. buyaround 121.00 for a short term one month target of 136.50 with a stop loss of  115.00