Angel Broking : Live News - REI Six Ten Retail to issue equity shares

Angel Broking : Live News - REI Six Ten Retail to issue equity shares

WEEKLY REPORT

Top Stories of the Week Sensex testing 18850-900 area after losing over 2000 pts in three weeks. CBI arrests eight top banking officials for bribe-for-loan scam. Investors dump Realty shares after disclosure of banking fraud. Global investors shaky on fight between North and South Korea. SEBI probing companies for insider trading. FM assures LIC investors after scam disclosure. Lenders start tightening screws on real estate developers. Navi Mumbai Airport gets a Green nod. SEBI asks Mutual Funds to simplify new fund offers. Nitish Kumar voted back to power with an unprecedented mandate.

Sensex reacts violently as suspected, testing the crucial 19800 area again

Last week I said, “Bias would continue to be negative until 20K is taken out … below 19800 could test 19350-400, the line joining previous two lows of ‘May and ‘Aug shown on the Daily chart … Not respecting this line, would open downsides of 18850-900, which is the breakout level of the previous year-long channel.” Monday was a positive day. Up a smart 400, Sensex touched 19989. The high, however, failed to take out our required level of 20K. The failure, therefore, resulted in sell-off beginning Tuesday. By Friday, Index came down by over 1000 points, touching 18955, a level very close to our targeted downside of 18850-900. While Sensex lost 2.3%, Realty Index took most of the beating, and was down by more than 13%. Small investors suffered as Small-cap Index came down by over 7%. Except for IT Index, all others ended with losses. Some of the stocks had a major breakdown, down more than 10% for the week. The action for the week formed a 3rd consecutive Bear candle in a row, which, however, is now testing our downside target area mentioned as 18850-900. While 18850-900 is the technical support area, the bias would remain negative until Sensex not only trades smartly above a morning session, but also moves above previous day’s high with strength. At Friday’s low of 18955, Sensex had shaved off 2150 points from the Moorat Session high of 21109. A drop of 2000-400 has been a normal phenomenon during the last 20 months of rally. All the drops from previous tops, like 15600, 17493, 17790, and 18048 measured 2000-400 points. We, accordingly, had targeted 18850-900 levels on downside. Now that the normal cut has been seen, we would watch for supportive activity near these lows. This area also corrects the previous rally from 31st Aug by 61.8%, and lies on the upper end of the previous year-long sideways channeled activity. As I said, at least some strength above morning session will be required as a signal of strength. This, followed by strength above previous day’s high could built a recovery scenario.  After 14 days of channeled fall, the short term technical position is reaching oversold zone. Not respecting the 18850-900, may open downsides closer to 200-day EMA at about 18400-500 or 31st Aug low near 17800. As I pointed out previously, a channeled fall indicates Complex Corrective move involving “x” wave. Structurally, some modifications were required inside the channeled activity. Sensex is forming “c” of the 2nd corrective. We are structurally assuming the development since ‘Oct high of 20855, as F leg of the larger 21-month Diametric beginning Mar’09.  Our argument has been that Sensex would turn volatile before the actual top is made, and compared such development similar to what happened during Oct’07 to Jan’08. Once the F leg is completed, we could see the last, G leg, to move higher and complete by Dec’10 (which is the 21st month from Mar’09). Our argument is that top can build over a 2-3 month period, within which, sell-offs could give feeling that top is already in. As the players give up their bullish hopes, the market could reverse. [Technical readings carried forward from previous weeks are shown in italics. Readers can easily identify the new arguments given in regular font] Comparison with Jan'08 top formation We can compare the current phase to the period from Oct’07 to Jan’08, a 2.5 month period just before the high of 21206 was hit by Sensex. This was also an extremely volatile period of nearly two months, just before the market actually topped. The following chart of that period shows two equidistant parallel channels. The Sensex broke the original channel and achieved an equidistant height at the upper parallel.  One may observe the volatile development once it reached closer to the upper parallel. Inside this volatility, the market faced number of sell-offs beginning Oct’07, before it finally topped on 8th Jan’08. A similarity has been drawn for the current phase to the development above, as Sensex is again closer to its previous highs.  Structurally, if we assume E leg is ending at the upper channel showing equality of E with C, then F can drop lower to test the middle line of the parallels, as if did during Oct’07 to Jan’08 period. Once the support at the middle line is held by the F leg, we may expect G to move higher to the uppermost parallel, preferably targeting 22700 (our next Grid level), sometime in Nov-Dec’10. Nov’10 will be 34th month from Jan’08 top, and Dec’10 will be 21st month of rally from Mar’09 bottom. Previous technical arguments Previously, I also compared the Sensex development with the development in Dow chart during ‘2003-07 as shown below. It was also observed, that Sensex has been following a Grid of 2450-2500 points since ‘2008. These Grids are shown on the Weekly chart of Sensex below. One can find a bottom or a top being formed at the Grid levels.  After having our target near Grid of 20250, Sensex is now trading above it. A decisive move sustaining above 20250 can open the next Grid level of 22700. Despite that possibility, the larger label for the rally since Mar’09 will be maintained as a corrective B leg. That is because this rally is slower compared to previous fall (A leg). Against the 14-month period consumed by the fall (A), this rally (B) has consumed 20 months. Our markets, remember, has seen multifold rallies previously, each time continuing for about 4 (four) years, after which, it usually enters a multi-year consolidation phase. In other words, “long-term” means 4 years in Indian context. Remember, Sensex rallied 11-fold from 390 (Mar’88) to 4546 (Apr’92) in four years, after which it consolidated for 11 years from ‘1992 to ‘2003.  In ‘2008, it completed another 4-year rally from ‘2003, during which Sensex rose 7-fold from 3000 levels to 21000. It may now consolidate for 7 year, beginning ‘2008, preferably forming as a Triangle or Diametric.  I explained the 14-month fall as the “A” leg of large multi-year consolidation. The corrective phase beginning Mar’09 retraced about 80% of the previous 14-month fall from 21206 (Jan’09) to 8867 (Mar’09), which was earlier labeled as a Triple Combination. The longer time required while rallying is symptomatic of its corrective label. The rally from 8047 (actually beginning at 8867) was considered as the “B” leg. The next leg downwards would be labeled as “C”. Such a-b-c development since Jan’08 would be considered part of the 2nd wave of what appears as a probable Terminal beginning ‘2003. Even if we see the market reaching levels above Jan’08 highs, the multi-year consolidation is expected to shape up like a large decade-long Diametric, looking similar to the consolidation we saw from ‘1992 to ‘2003. Our trading/investment strategies should be designed accordingly. The suspected corrective phase beginning Jan’08 would be the 2nd wave within the larger 5th wave. This 5th wave could be forming as a Terminal. Terminal confirms when the Sensex drops below the 2-4 line of one higher degree. One may see the Yearly chart in Appendix, which shows the 2-4 line and its values for the next three years. Remember, Terminal development usually violates the 2-4 line. The Sensex is assumed to be under the influence of a large 8-year cycle ever since its birth. As shown on the chart below, '1984 was the beginning of 8-year long bull-run till '1992. In my Super-Cycle Degree count, shown on ASA Long-Term chart under Appendix, I have, in fact, considered ‘1984 as the beginning point for the most dynamic 3rd wave. The next two important turning points occurred exactly 8 years thereafter, in '1992 and '2000. Both these turning points were marked by stock market scams, because of which, the leaders of the rally had extremely difficult time later. For example, ACC, the leading stock of '1992 bull market, remained below its highs till end of '2004. Similarly, the IT stocks, which were leaders of '2000 rally, lost as much as 90% of their top valuations by the year '2003. In the previous 8-year cycle top during ‘1992-93, Sensex lost 57% from 4546 to 1980. In the next cycle top, the cut was almost 58% from 6150 in ‘2000 to 2594 in ‘2001. I had, accordingly, targeted sub-10k levels for Sensex price-wise, and a minimum of 13 months into bear phase time-wise. The price-time targets were achieved as Sensex dropped 63% from 21206 to 7697. The yearly channel, shown below, which I used earlier to project 20000 level for the Sensex during ‘2007, was broken when the Index moved below 17200. Break of this long-term channel also weighed in favor of the larger corrective phase following this 8-year cycle. On Balance Volume (OBV) On Balance Volume (OBV) adds up accumulates each day’s volumes as positive or negative, depending on day’s close. On a broader scale, it has been creating higher top and higher bottom, just like the price chart itself. After last week’s sell-off, OBV now appears crucially poised near the Green line which proved support previously. Appendix : Alternative scenarios for Sensex As for the larger-degree wave-scenarios, I consider two alternatives :    The first one assumes that a large Triple Combination corrective, beginning Sep'1994 got over in Oct'2005 at 7656. The last corrective within this Complex Corrective phase formed as a "Non-Limiting" Running Triangle. This has been my preferred scenario for many years, which I had assumed to be under development since I began long-term forecasting during ‘1997-‘1999. This one was the basis of “Forecast for the 21st Century” article published in Business Standard (which can be read on vivekpatil.com). This scenario also combines well with the traditional channeling technique. Sensex followed a parallel channel for 11 long years from Apr'1992 to May'2003. As I had shown, if one projects the width of this channel on upper side, such a projection also gave 20000 as the “minimum” target. This forecast was achieved. This scenario is shown on the chart given below : As per my second alternative, a Super-Cycle-Degree 3rd (or 5th) began since Nov’84. Its internal 3rd was an “extended” leg, which achieved exactly 261.8% ratio to the 1st on log scale. The Sensex is now forming its 5th Wave, and the same is likely to develop as a ”Terminal”, because its lower-degree 1st wave since May’03 developed as a Diametric (a “corrective” structure rather than an “impulse”).  Within the non-directional legs, 2nd was exactly 61.8% of 1st value-wise, and 161.8% time-wise. The 4th was 38.2% of 3rd value-wise, and 261.8% time-wise, as shown below.    Since the 5th is now more than 61.8% of 3rd, it may lead to a "Double Extension" scenario, wherein both 3rd as well as 5th would be extended waves. This scenario is shown on the the chart given below : Development from May’03 is a 7-legged Diametric formation, marked as a-b-c-d-e-f-g. It is called "Diametric" because it combines two Triangular patterns, one initially “Contracting” up to the "d" leg, followed by an “Expanding” one. The contraction point is the "d" leg, and the legs on either sides of it tend to be equal. Accordingly, "c" and "e" were equal in "log scale", both showing about 60% gains. Similarly, "g" was equal to "a", both showing about 115% gain. . The Diametric development from 2003 to 2008 has been considered as the 1st of the 5th. Due to the corrective structure in the 1st leg, larger 5th could be developing as a Terminal. Since ‘2008, we are into its 2nd wave, which could continue to develop over 8 years from ‘2008.   The "Double Extension" scenario was also shown on following ASA Long-term Index (chart below). I've created this chart combining Index compiled by a British advisor (from '1938 to '1945), RBI Index ('1945 to '1969), F.E Index ('1969 to '1980) and Sensex (thereafter till date).    The wave-count presented on ASA Long-term Index favors the alternate wave-scenario discussed above. The labels show that the market is into the lower-degree 5th of the SC-degree 3rd or 5th wave. If a "Double Extension" unfolds, Sensex could be projected to achieve even 50000+.  A break of 2-4 line would confirm the Terminal development inside the 5th, and would therefore, restrict the upsides to much lower levels than 50K, but end surely above 21000. If the 5th proves to be a Terminal, one larger-degree label of 3rd will have to change to 5th, because only a 5th of the 5th can be a Terminal. The Super-Cycle-Degree marking for 1st and 3rd shown, would then change to 3rd and 4th respectively, as shown in White.   Disclaimer : These notes/comments have been prepared solely to educate those who are interested in the useful application of Technical Analysis. While due care has been taken in preparing these notes/comments, no responsibility can be or is assumed for any consequences resulting out of acting on them.

MONEY BONANZA

Sunday, November 21, 2010

INSIDE NEWS FOR WEEK AHEAD !!

* With a clear vision to aggressively expand operations and reduce NPAs by its new chairman, Indian Overseas Bank is a scrip to watch and join the league of frontrunners within two years.

* Shanghai's woes at Dalal Street! Like all Chinese products even its woes come in bulk and cheap. Are FIIs listening?

* While the auto sales are booming unabated, its time for them to raise prices by 5% to 15% and improve their margins and bottomlines.

* Rejigs at big finance houses is on. JM sold its institutional business to Morgan only to buy ASK's Bric Securities sold its institutional business to Lehman but is getting ready to re-enter by buying someone else's business.

* 'Raja ne bajaya baaja' aur 'Raja ka baj gaya baaja' are two new releases this Friday. Produced by UPA and directed by M. Karunanidhi. Only cinema release and a special show for the MPs in the Lok Sabha.

* Ek Golmaal ne kamaal kar diya, Shree AshtaVinayak ko chaar guna kar diya.

* M&M will be the biggest beneficiary of the growth in rural purchasing power as tractors and UVs go great guns!

* Believe it or not, Elders ventures into baby care!

* Onions at Rs.44 a kilo appear influenced by the 62% to 100% rise in price of vegetable in China last month. But will this erosion in currency value boost asset prices including shares?

* Excessive volumes and the Middle East and European fears can knock off 5% to 10% from the benchmarks in a jiffy.

* SuryaChakra Power is planning to merge some power project companies with itself and contemplating to list on the NSE. Some action is expected in coming weeks.

* Banking scrips appear overpriced as no aggressive growth is expected in their performance. Book profit and stay away for now.

* For the September 2010 quarter, Zicom posted a huge extraordinary loss of Rs.66 cr. but made no disclosure about the nature of the loss. Market veterans suspect that the management is siphoning off the profit it made on sale of a business division. Scrip will continue to slide and make new lows.

* Trend Electronics (formerly Videocon Communications), posted an EPS of Rs.24 for FY10 ending 30 September 2010 and is faring even better in FY11. Some analysts project an EPS of above Rs.30 in FY11 and a share price of Rs.150 shortly.

* LGS Global is expected to post an EPS of Rs.20 in FY11. The share can be picked up immediately for decent gains.

* Morganite Crucible, a 74% subsidiary of a UK-based giant, has posted good Q2FY11 results. With a likely EPS of about Rs.35, the share is likely to touch Rs.400 mark.

* RSWM (formerly Rajasthan Spg & Wvg Mills) is expected to clock an EPS of Rs.30+. A textile analyst projects a target price of Rs.250 in the medium-to-short-term.

* Rama Phosphate, which posted H1FY11 EPS of Rs.17, may record an EPS of Rs.35 in FY11. It is a good medium-term investment with a target price of Rs.150.

* Surana Corporation recorded an EPS of Rs.18 in H1FY11 and is likely to post an EPS of Rs.40+ in FY11. The share can touch Rs.175 in the medium-term.

* Precision Wires may post an EPS of about Rs.28-30 in FY11. The share is going cheap and poised to touch Rs.160 shortly.

* An Ahmedabad based technical analyst forecasts a breakout in Niraj Cement Structurals, Roto Pumps, Sarda Plywood and Sarup Tanneries.

* In the grey market, the Rs.1 lakh form for the Power Grid Corporation FPO is quoting at Rs.2825-2925 while the Rs.2 lakh form for the MOIL IPO is quoting Rs.4875-4925.

Hidden Gem

Hidden Gem NATIONAL PLASTIC INDUSTRIES LTD (BSE CODE: 526616) AT 34/- TARGET OF 57/- & 75/-

STOCK  : NATIONAL PLASTIC INDUSTRIES LTD.  Trading in BSE CODE : 526616

CMP : 33/- to 34/- Promoters Buying Heavily….. Increasing Stake

Target : 57/- to 75/- in Short term and Medium terms

Equity  : 9 Cr

Promoters  Holding : 56% ; Body Corporate : 5%; Public Only 39%

Face Value : 10/-

EPS : 6.5/-  above (As per 20010-11 September Quarter) Estimated EPS for Full Year above 9/- ( Expansion Income will Add)

Book Value: 29/-

Dividend History : 2010 --- 10%; 

National Plastic Industries Ltd having Good Land Bank at Mumbai and Bangalore near 100 Cr above Per share 100/- above; and Valuable Assets.

National Plastic Industries Ltd Expanding plans is very Aggressive.

National Plastic Industries Ltd Stock Will go 57/- to 75/- range in Short term and Medium Term, Like SE Investment (Call Given at 175/- Now including Bonus and Stock split 1250/-) and Bihar Tubes Ltd (Call Given at 57/- Now 165/-) and Nagreeka Exports Ltd call given at 32/- Reached 65/- in 1month time.

For 2010-11 September Quarter Posted Net Income of 12.36 Cr and Net Profit of 1.48 Cr with Equity 9 Cr. As per This EPS is 6.5/- Annualized But in coming Quarters Expanding Income will add So Expecting EPS for 2010-11 is 9/-. Stock Trading at 34/- PE just 5 Industry PE is 14. As per this Stock will zoom to 100/- levels in 6 Months time.

The Company Having Good High Value Ideal Real Estate Property at

1)Andheri (East) Mumbai

 2) Virla Mumbai

3) Kashi Mira Road in Thane District

4) Bangalore Near Satellite Bus Stand and Big Bazar

5) Gaaziabad UP;

All these Lands are very good Value; But Equity is just 9 cr and Land Value near to 100 Cr per share 100/- above Value and good Book Value and EPS 6.5/- Dividend Paying company. Just watch it Stock will go 100/- to 200/- in Near Future.

National Plastic Industries Ltd., then took a quantum leap and commenced the commercial production of Molded Furniture in 1994 and since then has gone from strength to strength. Today National Molded Furniture is available throughout India and has been widely accepted by both traders as well as consumers. There are over models to suit to all applications and all kinds of budgets. Consumers prefer National Molded Furniture for its quality, color and finishing.

National Plastics Industries Ltd. is one of the pioneers in bringing in a revolution for the use of Plastic Crates for the Beverage Industry in India. Today Plastic crates are very well accepted all over India for the Soft-drink Industry, International brand like PEPSI, COCA-COLA are using National crates for crating their bottle besides numerous national and local brands.

National Plastic has been marketing their products under the brand name " NATIONAL". Today ‘National Plastic Industries Ltd’ is an ISO - 9001:2008 ACCREDITED COMPANY and “NATIONAL” products are available across 36 countries including America, Australia etc.

"National Plastics Industries Ltd." with its constant Endeavour for innovation will continue to introduce many new and innovative products both for domestic as well as International markets and thereby will fulfill its commitment to the society as a whole by offering premium quality products at the most affordable prices.

National Plastic Industries Ltd having Lot Expansion Plans in Fututre. Its a Multibagger stock. Just buy and hold 1 year will get 5 times Return like SE Investments Ltd (This Stock I have Recommended at 175/- levels after that reached 1200/- levels including Bonus and Split).

Positive Points for this stock for Up moving:

1)  Company is in Plastic furniture and others Business;  company Circle people and Operators are accumulating at current price. Because Company Stock Good Value at 34/- Good Profit making company and Book Value at 29/- and Good dividend paying company.

2)  Equity is very small at 9 Cr promoters Holding 56%

3)  Company recently going Expansion Plans for Real Estate and and Power Buisness.

4)  Good Profit Making Company for 20010-11 EPS 6.5/- Annualised and Expecting EPS for full     year is above 9/-because Expansion income will add next Quarters.

5)  Company having Good Book Value 29/- and Good Land Bank and Good Assets.

6)  Company having lot of Land Bnak in Mumbai, Bangalore and UttarPradesh; Total cost of this land is Nearly 100 Cr above per share will come 115/- above and Expansion Plans in Future .

7) FII’s Eyes in this stock. If they will start buy Stock will zoom to 150/- levels like SE Investment (Call Given at 175/- Now including Bonus and Split 1250/-) and Bihar Tubes Ltd (Call Given at 57/- Now 165/-).

8) Risk Free at Current Market Price, Its very Cheap price Trading at 34/- Compare to companies Reserves, Assets and Value and Equity and Profits and Future Plans and power Generation.

9) This Stock is not Participated this Market Rally. So Operatrs and FII’;s eye’s in this stock.

Happy Invest ……….. Good Fundamentals and will give good returns from 100% to 500% returns with short and medium terms and Long terms.

END OF AMERICA

Porter Stansberry: These horrific predictions are now coming true

The past five days were the worst of my entire career. No, nothing's wrong with our business, it's doing well. We're having our best year ever, in fact. And no, it wasn't a bad week because of my stock picks – they're doing fine, too. Many of my long-standing predictions about silver, gold stocks, GE, etc. are coming to fruition. That's the problem, actually...

This week was the worst of my career because too many things that should NEVER happen in U.S. capital markets happened this week. The U.S. Treasury Secretary promised not to devalue the dollar... immediately before leaving to attend a G-20 meeting, where the primary agenda is lowering the exchange value of the U.S. dollar. This is terrifying... As soon as our creditors finally realize we're not going to stop printing money, we'll suffer a huge run on the dollar. I've been warning about this constantly since 2008, in a series of essays called "The End of America."

None of our leaders – Democrat or Republican – seem to understand that, as the world's largest debtor, we're playing with fire when we expand the Fed's balance sheet. Why? Just look at the numbers. Currently, the total debt – that's public, corporate, and personal – in the United States is more than $60 trillion. That's $186,000 per person in the United States or $750,000 per family. Last year, total debt increased by $3 trillion – roughly eight times faster than GDP. Normally in a recession, you'd expect to see total debts fall. But not here. Our government believes it can borrow an unlimited amount of money and then print more to repay it. That's like lighting matches next to gas tanks.

We can't solve our country's problems with more debt. Why not? Diminishing returns – one of the core ideas of economics our leaders have never considered. As the debt load grows, it takes more debt each year to produce growth. In 1960, it took roughly $2 in new debt for each $1 in growth. By 1980, it took $2.25. By 1990, it took $3. By 2000, it took $3.50 in additional debt to finance $1 in additional economic growth. It now takes $5 in new debt for each $1 in economic growth.

As you will hopefully understand intuitively, we can't sustain this trend. But that won't stop our politicians from adding, massively, to our country's debts. And eventually, people will figure out we can't ever repay these debts. At that moment, the value of the dollar will simply disappear.

Once a country has used up all its credit, its Treasury Secretary begins to say things like, "We will never devalue..." That's a sure sign devaluation is right around the corner. And even though I knew it would happen here... I'm not happy to see it. It means terrible things for our country. I hope you've already acted to protect yourself.

Another reason I've had such a bad week? The more money the Fed prints, the easier it is for banks and large institutions to game the system. This report shows exactly how Goldman Sachs and other big banks have been front running the Federal Reserve. Their game is simple: They know exactly when the Fed is going to enter the market to buy securities. So they buy right in front of them and make totally risk-free profits – 11% so far in the last year.

That might not sound like much, but because it's risk-free, the banks can apply massive leverage. Even eight- or nine-times leverage produces nearly 100% total returns – risk-free – courtesy of our "friends" at the Fed.

This kind of thing should never happen in the world's leading capital market. But it is happening. What does that mean about our markets? Or our country? It's too depressing.

 

 

 Happy Investing.......

 

 

SURE SHOT

Dear Investors,

According to Market Scenario only stock specific movement we r expected in the market rather then Index shares . In this Scenario BUY VALECHA ENGG 
 @202 TGT 250 CANDC@250 BUY MANALI@17  these three stocks will move in coming trading sessions  so b prepare for a big change in the market . Coming week is Miracle week for the market.....

Happy Investing.......

Dear Investors,

As per my earlier pivot abt nifty levels are SURE SHOT BUY If Nifty sustain the level of 5960 for next 2 trading sessions it will b going R1 6030 R2 6080 R3 6150 R4 6190 then6300 expiry NOV .


Happy Investing...............

Piccadily Agro Industries Ltd - BSE Code 530305

Piccadily Agro Industries Ltd - BSE Code 530305

Piccadily Agro Industries Ltd is an India Based company incorporated in the year 1994. The company's principal activity is to manufacture sugar and their by-products. They operate in two segments, namely sugar, which is engaged in the production of sugar, molasses and bagasse and other which is engaged in the manufacturing of liquor. 

Earlier, only sugar unit was operational, however starting late FY08 the company started with it's liquor unit. The commencement of operation of Liquor unit and it's rapid expansion will now catapult the company into a completely different league. The management is also aiming ambitiously at entering the Indian Made Foreign Liquor (IMFL) Section by introducing it's own brands in the market. 

Story Behind Piccadily Agro Industries Ltd

At the end of FY07, the company was only into sugarcane crushing and thus into the production of raw sugar, however they had started with the setting up of liquor facility. So, till FY07 they were largely a loss making  company.
For FY08 the company had started with the liquor production and sold some 21.77 lacs cases. In that year the company made a net profit of just Rs 1.2 crores but that was on account of 5 crore loss from Sugar Division. At the end of FY08 the company had some 27 crore capital work in progress, so they were still expanding their liquor facility.
For FY09 the company sold 28.6 lacs cases with a turnover of 48 crore. The company achieved Rs 5.4 crore profit from liquor and 3.29 crore profit from Sugar i.e. around 9 crore net profit. At the end of FY09 the company had 43 crore capital work in progress. This was again for the expansion of liquor unit.
For FY10 the company did a turnover of Rs 82 crore from liquor unit i.e. almost a 70% increase in revenue for liquor unit over FY09. The company achieved a Profit before Tax of around 17 crore from liquor unit and assuming 33% tax, a net profit of Rs 11.39 crore, so more than 100% increase in net profit from the liquor unit of the company.  
• At the end of FY10 the company has close to Rs 60 crore debt on it's books, however most of it has gone towards expansion. Between FY09 and FY10 the Gross block of the company increased by Rs 33 crore from Rs 83 crore to Rs 116 crore, while there is another Rs 13 crore capital work in progress.

Latest Jun'10 Results

• Talking about the latest Jun'10 results, the company has done a turnover of Rs 30 crore (Rs 16 crore in Jun'09) from liquor unit.
• However we have to keep in mind the fact that the company had close to Rs 13 crore capital work in progress, so there is still further expansion taking place in the liquor unit of the company.
• The company has recorded a net profit of Rs 7 crore from liquor unit during Jun'10 quarter while a cumulative net profit of Rs 6 crore on account of loss in sugar segment.
• The company can well record a net profit of Rs 30 crore for FY11, while the company is currently quoting at a market capitalization of Rs 105 crore.

Investment Rationale

• As mentioned player, the Management of the company are well known for their Financial and Political clout and thus they can overcome and get easy approvals for the expansion of their liquor unit.  
• At the end of Sep'10 the Management holds 68.89% equity stake in the company which is very good by any standards. 
• Over the last 2 years the Management has increased their stake by almost 10%. At the end of Dec'08 they had 59.18% stake in the company while at present they hold 68.89% stake. The Promoter's made open market purchase as recently as May'10. 
• The company is trading at a forward earnings PE multiple of 3.5 while the other listed companies like Som Distilleries, Tilakanagar Industries, Globus Spirits etc command much higher PE multiples of 15-30. 
• Although company is a small player in comparison to the above mentioned counterparts, however it maintains one of the highest margins in the liquor segment.
• The open market purchase by the Promoter's is the clear indicator of the earnings that the company may come out with in the subsequent quarters. 

2 Phase Buying Strategies Suggested [Always buy in SIP ways]

ü  1^st Phase  : Buy at the current price range Rs 42 – 45 [50% of investment]

ü  2^nd Phase : Add if the price falls down to Rs 33 - 36 [50% of investment]

>>Expect at least 10-12 times return in next 3 years from now!!!

PROFIT MACHINE

Fluidomat Ltd (BSE Code 522017)

Brief description of the Company:  Fluidomat Ltd is an ISO 9001-2008 certified company which manufactures a wide range of fixed speed and variable speed fluid couplings for industrial and automotive drives up to 3500 KW since 1971.

The use of a fluid coupling offers many advantages over the direct coupling of a drive system. The advantage over its counterparts make fluid couplings preferable in many engineering applications.

Keeping in view the amount of investments to be made in the thermal and nuclear power generation, I believe that demand of fluid couplings will see an upsurge. Add to that there are limited number of manufacturers in the world of all types of industrial fluid couplings. So one can find enough opportunity in this space.

The company has been a very consistent performer for the last 5 years increasing it's revenue from Rs 8 crore at the end of FY 06 to Rs 18.25 crore at the end of FY 10. Similarly there's  been a sequential growth in net profit from Rs 0.80 crore to Rs 1.92 crore for the same period. For the half year ending Sep'10 the company has already recorded an improvement of 48% in turnover at Rs 9.59 crore while there's a 59% improvement in profitability at Rs 1.16 crore.

On the basis of annualized half year Sep'10 earnings the company is trading at a PE of 8.62, however for engineering companies the last two quarters are usually the highest revenue accretive and thus the company is available at even cheaper valuations.

The good thing about the company is that for the last 1 year and before the management has been continuously increasing stake and are currently holding close to 47% stake in the company. They have been regularly purchasing shares of the company through open market purchase.

2 Phase Buying Strategies Suggested  

ü  1^st Phase  : Buy at the current price range Rs 38-40 [30% of investment]

ü  2^nd Phase :  Add if the price fall down to Rs 33-35 [70% of investment]

>>> Expect at least 60-100% return in next 12 months time frame!!!

 

Happy Investing!!!

DIWALI GIFT

Patels Airtemp (India) Ltd - BSE Code 517417 CMP 94-95

Patel's Airtemp (India) Ltd is involved in the design and manufacture and sale of extensive range of Heat Exchangers such as Shell and Tube Type, Finned Tube Type and Air cooled Heat Exchangers, Pressure Vessels, Air-Conditioning & Refrigeration Equipments and Turnkey HVAC projects in India and marketing of equipments outside India.

The company has successfully executed several orders of Nuclear Power Corporation of India in the past. With the Government of India signing Nuclear deal with various countries, the company should see huge orders coming its way in the near future. The company will also benefit from the rapid industrialization taking place across country.

Patel's Airtemp & it's Product Category…

Basic Details...

Patels Airtemp India Ltd. was incorporated on August 28, 1992 and is promoted by Shri Narayan bhai G. Patel & associates who have been in the business of design and fabrication of process equipment and engineering goods. 

The company is one of the leading manufacturers of high quality engineering products. The Company is engaged in the manufacturing of equipments like ASME'U' Stamp Vessels & Heat Exchangers, Pressure Vessels, Columns Shell & Heat Exchanger, Finned Tube Heat Exchanger, Air Cooled Heat Exchanger Ventilation Units, Exhaust Air Units, Refrigeration & HVACE equipments, HVAC Systems and Ventilation & Air Washer Plants which are supplied to leading Refineries, Steel, Copper, Aluminum & Automobile Plant, Fertilizers & Chemicals Plants, Textiles and Paper Industries, Refrigeration & Air Conditioning Units, etc. 

Patels Airtemp received prestigious orders worth Rs 16.3 crore from Indian Oil Corporation (IOCL) for supply of Heat Exchangers for Paradip Refinery Project, Orissa in May 2010 and orders worth Rs 5.0 crore from Manav Nesvi Infrastructure Pvt., Ahmedabad for Air Conditioning of Shree Balaji Agora Mall, Ahmedabad in April 2010. The company keep getting orders from its regular reputed customers also.

Financial Highlights:-

·         The company has been witnessing a consistent growth in sales and profits for the last 5 years, i.e. since restructuring took place. Compounded Annual Growth Rate in sales is 30% and profits 72% in the last 3 years.

·         At the end of Mar'09, the company had just Rs 6.55 crore as debt, while it had close to Rs 5.5 crore as Cash and Cash Equivalents. With the Enterprise value of just Rs 51 crore, and an EBITDA of Rs 15.5 crore, the valuations are extremely cheap at EV/EBITDA multiple of 3.29

·         The company has been managing it's working capital requirement well. It has not been piling up inventory and has been improving Asset turnover ratio, indicative of efficient operation.

·         The Net Profit Margins of the company have been on a rise since the last 5 years. The company recorded NPM of 12% for FY 2009-10 which is a lot higher than it's peers.

Investment Rationale:-

·         The company is operating in a sector, which is set to witness high growth.

·         Amongst all its peers (GEI Industrial, Blue Star, etc) the commands the highest margins.

·         The company is available at a PE of just 5.64, while companies like GEI Industrial and Blue Star are trading at a PE of 16-18.

·         Patel's Airtemp has a strong order book at close to Rs 60-70 crore, and is expecting huge orders from IFFCO.

·         The management has been purchasing shares in small quantity through open market purchase.

>>Expect at least 4-5 times return in next 2 years from now!!!

1^st Phase: Buy at the current price Rs 95[50% of investment]

2^nd Phase: Add if the price fall down to Rs 80-82 [50% of investment]

Support around 90-92 levels for the stock. So safe bet considering everything.

Risks & Concerns…

Risks:-

There are few challenges from cheaper imports and the industry is also facing risks from unorganized sector particularly from the marketing in the state and nearby states, which have major thrust on Air-conditioning and refrigerator parts.

The industry is facing stiff competition from big players who are producing on large-scale production and have the advantage of economies in cost.           

Concerns:-

The strong performance in the past is not a bullish sign and doesn't indicate the same or better performance in the future. Each year is different from the previous one!

Do not let my bias win over your common sense! Always do your homework and do not forget to do a research before you invest your money!

Both the IT as well as the manufacturing sector seeks talent. This increases the cost of the talent. The company has to ensure that it acquires good talent and retains it in order to constitute its major competitive edge.

As and when there is a change in the Government, there might be a change in its policies too. Any adverse changes in its policies may affect the business operations of the company.

Happy Investing!!!