RESPONSE TO READER'S QUERY; @ANON 28/12/2011; KARUR VYSYA BANK

                                   CMP 345                                        BSE 15454

TECHNICALS:

• The 5 year Price Charts indicate a consolidation in the short term but with a bit of a negative bias. I would say that the Stock, in the short to medium term or in the absence of any Fundamental triggers such as a Rate Cut,  should be range bound in the 322 to 399 range. Once it trades consistently above 399 levels we could see a trend reversal from negative to positive.
• Rock solid multi year support is at 302 levels and is unlikely to be tested any time soon.
• On the upside, first resistance is at 371 and then a substantial one at 399 which , as I said earlier , it needs to decisively break, for confirmation of uptrend.

FUNDAMENTALS:

• Very briefly, I would say that Corporate Performance has been good, nothing earth-shattering but steady.
• Valuations at CMP look pretty OK; the main plus is , of course, that the Asset Quality of the Bank is good and has been steadily so in the past as well. Given the current concerns over possible Asset Quality deterioration in the Banking Space, this indeed is a big material as well as sentiment positive for the Scrip.
• All in all, even though I dare say there are better Banking Scrips to own, but at CMP and possible 5-10% dips , KVB, in my opinion would be a good addition to one's long term Portfolio.

RESPONSE TO READER'S QUERY; @ANON 28/12/2011; CRISIL

        CMP 884                                     BSE 15454

TECHNICALS:

• A look at the 2 year Price Charts reveals a definite positive trend over the longer term. Short to medium-term the feel is one of sideways consolidation but, as I said earlier, the bias is positive.
• Multi-year support along the 250 SMA which has never been seriously violated on a closing basis other than on 9/3/2011, where the bounceback was swift. SMA 250 is currently at 732.
• Short term good support at 852 and then at 792. On the upside, resistance at 903 and major resistance at 941. I would like to see it trade above 921 levels for a reasonable period for confirmation of uptrend.

FUNDAMENTALS:

• CRISIL, as we all know, is a premier Global Analytical Company providing services in the niche areas of Ratings, Basic Research, Risk And Policy Advisory Services, and high-end Financial Research . It counts among its clients some of the world's largest Banks and major Corporations. It has Standard And Poor's as its majority shareholder. In short, it is India's leading Ratings Agency.
• The Corporate Performance has been consistently good over the past five odd Quarters with a fair record of growth on both topline as well as bottom line. The only problem I have is with the current valuations at PE (TTM) 34 approx which is rich. Even if it does an EPS of 9 in Q4 of CY 2011 (FY IS THE CY), that would put it at about 31x CY2011E which is not cheap.
• Ideally I wouldn't give it more than 30x CY 2011E and that too is a bit of a stretch, in my opinion. But making allowance for the pedigree, growth possibilities etc, 30x CY 2011 should be the upper end of the Best buy range. This roughly translates to a Buy range of 760-844. Therefore buy it as close to 800 levels as possible (mid range) and hope for 25% returns from those levels in the next 12 -18 months.

WILL HISTORY REPEAT ITSELF?!! PART 2

In the earlier Post we had looked at prominent Stocks from the INFRA/ CAP GOODS/CONSTRUCTION space in an attempt to ascertain the kind of Returns they gave after touching their meltdown Lows in 2008-09. In this Post , we shall examine select BANKING STOCKS both from the Private Sector Banking space and PSU Banking space with the same objective.
But before we start off ,one observation is necessary here , which is , that currently the Market seems to be in the process of factoring in possible and likely deterioration of Asset Quality which is why the Banking Space has been rather subdued, if one might call it that, and has been underperforming of late, even in the small pull-back that we saw in the overall Markets in the last few trading sessions. So caution is necessary, since lower levels, even irrationally lower levels ,are possible on some of the Banking Stocks.

The ball-park analysis shows that:

• The three large cap Private Sector Banks AXIS, ICICI BANK, HDFC BANK gave returns of 473%, 406% and 226% respectively from their Meltdown lows, in the susequent 18 month period.
• The more aggressive smaller Private Sector Banks ie YES BANK, INDUSIND BANK gave returns of 846% and 1088% respectively from their Meltdown lows in the subsequent 18 month odd period.
• The PSU BANKS too gave great returns in the 18 month period post their meltdown lows with CANARA BANK giving the highest returns of 525% in a 20 month period post its Meltdown low.

The detailed list for these select Banks is presented below (to be read as STOCK NAME, MELTDOWN LOW DATE, LOW PRICE, SUBSEQUENT HIGH DATE,  HIGH PRICE, PERCENTAGE RETURNS) :

• AXIS BANK 9/3/2009  278   13/10/2010  1595      473%
• ICICI BANK 6/3/2009  252   5/11/2010    1277      406%
• HDFC BANK  6/3/2009  154  4/10/2010   503        226%
• YES BANK   12/3/2009  41   1/11/2010    388        846%
• INDUSIND BANK  6/3/2009  26  2/12/2010 309   1088%
• SBI  12/3/2009  898   8/11/2010  3515                    291%
• PNB  6/3/2009  286   9/11/2010  1395                    387%
• CANARA  27/10/2008  135  9/11/2010  844          525%
• BOB   12/3/2009  180  8/11/2010  1050                  483%
• IDBI BANK 12/3/2009  39  11/11/2010  202          417%

Of course , the usual caveat that the Market and Economic Macros then were quite dissimilar to the ones now does apply ; which implies that the ferocity and extent of recovery this time around would certainly be fairly different too. And, of course, as I said earlier, the Market currently seems to be in the process of working-in Asset quality deterioration issues into the Prices which means that Banking Stocks may see lower prices yet.



SEE PART 1  HERE

WILL HISTORY REPEAT ITSELF?? PART 1

Stock Markets, as all of us know, are cyclical; highs and lows are as inevitable as death itself. However, the challenge for Retail investors is to somehow try and catch the lows so that the Portfolio is always in the money. This , of course, is easier said than done since at the lows there is a slew of negative sentiment in the Market which scares away the Retail investor from entering. And more often than not, we too refuse to learn from history and hindsight. Anyway, in this Post, I just steered back to the market meltdown of 2008 and the subsequent Recovery with a focus on trying to outline the kind of returns which the broad INFRA/CAPITAL GOODS/CONSTRUCTION Stocks gave then for those lucky few who entered at the lows in 2008-2009. The results are stunning, to say the least:

• The larger cap stocks like ABB, SIEMENS, LARSEN, BHEL gave returns of 177%, 304%, 297%, 144%  respectively from their Meltdown lows to their highs 12-18 months later.
• The mid-cap segment like GMR, GVK, LANCO, IVRCL gave returns of 216%, 381%, 637%, 556% respectively from their Meltdown lows to their highs 12-18 months later.
• Others like BGR ENERGY, MADHUCON PROJECTS, GAYATRI PROJECTS gave returns of 703%, 771%, 1080% respectively from their Meltdown lows to their highs 12-18 months later.
• Stocks like ACE, GAMMON INDIA, HCC, JP ASSOCIATES, NAGARJUNA CONSTR, SIMPLEX INFRA, PATEL ENGG gave returns of 737%, 375%, 428%, 474%, 441%, 449%, 350% respectively from their Meltdown lows to their highs 12-18 months later.
• Stocks like ALSTOM, AREVA, CUMMINS, ELECON, EMCO gave returns of 219%, 138%, 450%, 329%, 315% respectively from their Meltdown lows to their highs 12-18 months later.

The List, by no means exhaustive, is presented below for the perusal of Readers. (to be read as STOCK NAME, MELTDOWN LOW DATE, LOW PRICE, SUBSEQUENT HIGH DATE, HIGH PRICE, PERCENTAGE RETURNS):

• ABB 2/3/2009  343   4/10/2010  953    177%
• ABG SHIPYSRD 2/2/2009 62 8/11/2010 484    680% 
• ACE 4/3/09   8.6   3/9/10   72    737%
• AB NUOVO 12/3/09 330 12/3/10 860    160%
• ALSTOM PROJECTS 24/10/08 191 20/10/09 610    219%
• AREVA T&D 2/12/08 130  1/12/09 310       138%
• BHARAT BIJLEE 12/3/09 301 22/7/10 1316          337%
• BEL 26/11/08 545 22/3/10 2252      313%
• BEML 3/12/08 280 19/1/10 1275     355%
• BGR ENERGY 9/3/09 107 7/9/10 860     703%
• BHEL 19/3/2007  194  29/2/2008  473   144%
• CROMPTON 26/3/09 57 24/11/10 343    501%
• CUMMINS 9/3/09 105 10/11/10 578        450%
• ELECON 12/3/09 24 15/10/10 103      329%
• ELGI 28/10/08 14 22/11/10 104       642%
• EMCO 6/3/09 26 19/1/10 108        350%
• FINOLEX IND 12/3/09 25 10/11/10 127    408%
• GAMMON INDIA 2/12/2008 52 18/10/2009 47    375%
• GAYATRI PROJECTS 9/3/2009 42 19/5/10 496    1080%
• GMR INFRA 29/10/08 24 16/10/09 76     216%
• GVK POWER 3/11/08 11 19/11/09 53      381%
• HCC 12/3/2009 14 5/3/2010 74   428%
• HEG 31/3/09 94 9/4/10 377    310%
• INDO TECH TRANS 19/11/08 175 4/12/09 377     115%
• IVRCL 24/10/08 32 16/10/09 210    556%
• JP ASSOCIATES 28/10/2008 31 20/10/2009 178   474%
• JYOTI STRUC 24/10/08 32 14/1/10 193      503%
• KALPATARU POWER 6/3/2009 44 3/2/2010 235   434%
• KEC 12/12/08 22 18/1/10 126    472%
• KEI 5/3/09 8 18/1/10 43     437%
• LANCO 24/10/08 8 4/12/09 59     637%
• L&T 9/3/2009 557 4/11/2010 2212     297%
• MADHUCON 26/11/08 21 8/12/09 183   771%
• MUNDRA 22/11/08 50 18/1/10 132    164%
• NAGARJUNA CONSTR 9/3/09 36 30/4/10 195    441%
• PATEL ENGG 16/3/2009 104 12/4/2010 469   350%
• SIEMENS 27/1/2009 186 29/3/2010 753     304%
• SIMPLEX INFRA 9/3/2009 102 18/1/2010 560     449%

Of course, Readers should keep in mind as a caveat, that no two turnaround Cycles are quite the same; the Market and Economic Macros now are not quite the same as they were in 2009-2010 when the last turnaround happened. More about that later. In the meantime chew on the above stats!!!!!

Happy investing!!

FDI IN RETAIL; DOOR STILL OPEN?!

Reiterating the Government's committment to the Reforms Agenda, the Finanace Minister, Sh Pranab Mukherjee is reported to have clarified that the FDI in Retail Executive decision has not been shelved. Speaking at the Annual Session of the PHD Chamber Of Commerce And Industry on 23/12/2011, the FM said that the Governement was working on building consensus on all Economic Legislation including the Pension Funds Regulatory Development Authority (PFRDA) and FDI in multi-brand Retail. He said," Commitment to FDI, commitment to PFRDA and all other major legislations, which are part of new generation reforms, are very much in the mind of the government and we are working very hard to build up the consensus".

The Finance Minister also reiterated the government's view that growth in the current fiscal year could be between 7.25% and 7.75%, lower than the 9% budgeted earlier in the year. He admitted that the Indian Economy was facing challenges on the fiscal front and further said that the challenges are to be overcome collectively by appropriate Policies and effective implementation.


READ FULL REUTERS ARTICLE RIGHT HERE

 

TATA COFFEE LTD ; BEST ENTRY PRICE

                                         CMP 788                                      BSE 15738

Ideally, it would be advisable that all long-term incremental money should now go into the beaten down rate -sensitives but in order to maintain a healthy buffer, it is also important to have a smattering of good FMCG/CONSUMPTION stories in one's long term Portfolio. Hence, bucking my inclination, I have thought of examining TATA COFFEE in this Post.

TECHNICALS:

• The 2 year Price Charts indicate, without doubt, that the SMA 365 is indeed a solid long term support for the Stock. The SMA 365 has never been violated on a Closing basis in the last 2 years; the closest encounter being on 10/12/2010 when it was violated intraday only. Other than this, on 19/12/2011 it came close intraday but the Closing was well above. Said SMA 365 is currently at 710.
• On the upside, the SMA 200 at 842 levels is the major resistance and consistent closing above this level is a prerequisite for confirmation of the uptrend.

FUNDAMENTALS:

• I will attempt to be brief on this since all of us are aware of the upcoming Starbucks entry in a mooted JV with the Company. This ,in my considered opinion, is going to be a game changer for TATA COFFEE and will complete its transformation from a plan-vanilla Plantation Commodity producer to a high-margin value-added FMCG Scrip.
• Financials in the past five Quarters have been reasonably stable, admittedly not earth-shaking, but still more than par for the course. World Coffee prices have a definite hardish undertone and are likely to remain so the rest of this fiscal, which should shore up the bottom-line of the Company.
• With a little luck, the Company could well do an EPS of Rs 35 this Financial which puts it at about 22x FY12 earnings. This ain't cheap considering the macro Market but I don't think one is going to get this scrip much cheaper anytime soon.
• The Starbucks launch speculated for next Quarter would be a giant sentiment boost and even though the financial contours of the JV and the grass-root roll out will become clearer only with time, the Market is likely to pre-empt the event and give the Scrip a further spike in the weeks to come.

So the short point is, that the long term investor could look at entering in a phased manner in the 710-750 range and hold long for reasonably good gains. Alternately, one could buy a small quantity at CMP 788 and add more in the aforesaid 710-750 range.


TATA COFFEE Q2 FY12 RESULTS  SEE HERE

DOWN IN THE DUMPS

Records, as the adage goes, are made to be broken. The Indian Markets seem to be conforming to the cliche , since in today's trade on the BSE, the earlier record of 123 Scrips touching all-time lows on 16/12/2011 was shattered by a mile and a half;  A record 210 Scrips made Life Time Lows on the BSE. Even at the risk of being labelled vicarious, I am enlisting some of the prominent ones hereunder:

• MTNL  Rs 22.65
• GTL  Rs 29.2
• ZANDU REALTY Rs 1250
• UNITECH Rs 17.45
• ALEMBIC Rs 13.9
• GATI Rs 23.3
• MUKTA ARTS Rs 28.7
• RAMCO INDS Rs 33.15
• NDTV Rs 24.75
• 3i INFOTECH Rs 12.1
• PROVOGUE Rs 17.15
• SUZLON Rs 17.5
• EVEREST KANTO Rs 28
• PUNJ LLOYD Rs 37.05
• RELIANCE COMM Rs 61
• KEC INT'L Rs 31.8
• INDO TECH TRANSFORMERS Rs 76.8
• ZEE NEWS Rs 8.65
• WWIL Rs 5.99
• REDINGTON Rs 65.05
• FIRSTSOURCE Rs 6.35
• ORBIT Rs 25
• VISHAL RETAIL Rs 12.7
• ROMAN TARMAT Rs 15.9
• ALLIED DIGITAL Rs 19.95
• IVRCL ASSETS Rs 21.15
• RELIANCE POWER Rs 70.15
• GAMMON INFRA Rs 9.21
• MAHINDRA HOLIDAYS Rs 266.05
• ADANI POWER Rs 67
• NHPC Rs 18.4
• JSW ENERGY Rs 37.5
• DB CORP Rs 180.35
• ARSS INFRA Rs 116.3
• UNITED BANK Rs 51
• KIRLOSKAR ELECTR  rS 25.5
• TALWALKAR Rs 108
• NITESH ESTATE Rs 14.4
• JP INFRATECH Rs 33.10
• EMAMI INFRA Rs 18.25
• GUJARAT PIPAVAV Rs 48.5
• CAREER POINT Rs 212.15
• PRESTIGE ESTATES  Rs 57.55
• ZEE LEARN Rs 12.4
• PUNJAB SIND BANK Rs 61.4
• KCP Rs 22.55

 Phew!!!!

KINGFISHER JOINS 'ONEWORLD' ALLIANCE

In what can be termed as a major boost for KINGFISHER AIRLINES, the Airline announced today that its efforts to become a part of the Global 'ONEWORLD' ALLIANCE had finally reached fruition. Announcing the Airlines' acceptance into the global Airline Alliance, KINGFISHER AIRLINES Chairman Dr Vijay Mallya said,"

Kingfisher Airlines takes great pride in its track record for quality and innovation. By becoming part of oneworld in February, we will be flying as part of the world’s leading quality airline alliance – and the first carrier from the subcontinent to be accepted into any of the global airline groups.”

Becoming part of oneworld will be one of the most significant steps in Kingfisher Airlines’ history. It will enable us to offer our customers a truly global network served by partners who include some of the best known and most admired airlines in the world, while our King Club frequent flyers will have more opportunities to earn and redeem mileage rewards and enjoy all their other benefits. It will also strengthen us financially, through revenues from passengers transferring to our network from our oneworld partners and the cost reduction opportunities the alliance offers.”

Coming close on the heels of Reports suggesting that the Sahara Group could be soon extending a critical $47 m loan to the cash strapped Airline (SEE THIS), the News regarding the Airlines' acceptance into the Oneworld Alliance will surely go a long way in further strengthening its operational credentials which , in turn, will stand it in good stead in its efforts to refurbish the image of the Airline and boost revenues.

FOR MORE INPUTS  READ HERE

RECORD NUMBER OF STOCKS TOUCH ALL TIME LOW

Even as the Markets continue to pummel us, just as a statistical aside, 123 Stocks touched their Life Time Lows on the BSE on 16/12/2011, the prominent ones among which are as follows:

• MTNL Rs 23.75
• GTL  Rs 31.7
• PRITISH NANDY  Rs 11.6
• DISHMAN PHARMA Rs 34.1
• NDTV Rs 27.4
• 3i INFOTECH Rs 13.6
• PROVOGUE Rs 18.45
• SUZLON Rs 18.95
• EVEREST KANTO Rs 30.5
• PUNJ LLOYD Rs 39.65
• BARTRONICS Rs 22.2
• GVK POWER Rs 9.95
• RELIANCE COMM Rs 66
• INDO TECH TRANS Rs 83.85
• GTL INFRA Rs 7.46
• GREAT OFFSHORE Rs 78.15
• TANLA Rs 5.95
• NETWORK 18 Rs 36
• TV18 BRD Rs 29.5
• FIRSTSOURCE Rs 6.5
• VISHAL RETAIL Rs 14
• ALLIED DIGITAL Rs 22
• RELIANCE POWER Rs 74
• KSK ENERGY Rs 38.95
• NHPC Rs 19.85
• ARSS INFRA Rs 128.8
• MAN INFRA Rs 95
• UNITED BANK Rs 54.5
• TALWALKAR Rs 121.25
• PRAKASH STEELAGE Rs 114
• CAREER POINT Rs 217.15
• RAMKY INFRA Rs 193.25
• ZEE LEARN Rs 13.25
• A2Z Rs99.1

Some carnage, this !!!

Anyway, on the brighter side, short term or positional Traders could well look for short term bounces in these Stocks from their oversold positions.

FDI IN RETAIL GETS RAHUL GANDHI'S BACKING

Reports coming in over the last 24 hours suggest that Congress General Secretary Rahul Gandhi explicitly expressed support for FDI in Retail while speaking in Election rallies across Farukhabad and Kannauj in UP. In fact, he is quoted as saying "that opposition notwithstanding, UPA will bring FDI in Retail" while addressing a rally in Kannauj.

This Blog sincerely hopes that the efforts of the Government bear fruition and not only FDI in Retail but the entire plethora of 2nd Generation Economic Reforms find early introduction and implementation.


READ FULL TOI ARTICLE RIGHT HERE

KINGFISHER AIRLINES LIKELY TO GET LOAN

Latest wire Reports indicate that the ailing KINGFISHER AIRLINES is very likely to get a $47m loan (Rs 2.5 billion plus) from the Sahara Group, which would help it tide over its immediate financial difficulties. The reported deal would provide immense leeway to the Carrier to proceed with its current operations and give it an opportunity to carry out the mooted restructuring and operational overhaul of the Airline.



READ FULL REUTERS REPORT  RIGHT HERE

READ TOI REPORT  RIGHT HERE

RESPONSE TO READER'S QUERY; @SAMUEL JOHNSON 11/12/2011; ALLIED DIGITAL SERVICES

                                     CMP 22                                       BSE 15836

TECHNICALS:

• The overall tenor of the long term Price Charts is definitely negative. On the downside, the next target could be 21 followed by 19 odd levels in the slightly longer term. On the upside there is strong resistance at 24 levels and then at 27. The multi-year low of 22 seen today is not likely to hold and fresh lows are on the cards.

FUNDAMENTALS:

• The fundamentals are not too bad if one were to look at Corporate performance sequentially but the YOY pictures does not seem very encouraging with both topline as well as bottom line having taken a hit in Q2 FY2012.

Frankly , it is tough to make a reasonably accurate recommendation in the kind of Market that we are in presently but my gut-feel is that one should avoid the Scrip and look for better names in the same space.



Q2 FY2012 RESULTS  SEE HERE

FDI IN RETAIL PUSH TO BE RENEWED

It is reported that there is every likelihood of the push for FDI in Retail being renewed after the UP elections, in the month of March.

READ FULL ARTICLE  RIGHT HERE

AREVA T&D; SILVER LINING

The Stock prices of AREVA T&D took a massive knock today on the BSE and NSE amid reports of continuing financial trouble for the Global Power giant with wide and varied interests in Transmission and Deistribution Equipment, Nuclear Power etc. This follows the Company acknowledging on 12/12/2011, a consolidated operating loss of 1.84-2.1 Billion $ in 2011.

Incidentally, the Stock price fall has occured just a day before the demerger Record date for determining the Shareholders of Areva T&D India eligible for 1 fully paid up Equity Share of Smartgrid Automation And Distribution Switchgear Ltd.  (SEE HERE). 

Meanwhile latest News indicates positive developments concerning Britain's approval of the Areva design for upcoming Nuclear Plants, which should come as a shot in the arm for the Company. (SEE HERE)

MORE NEWS INPUTS RIGHT HERE AND HERE AND HERE

RESPONSE TO READER'S QUERY; @SAMUEL JOHNSON 11/12/11; AUROBINDO PHARMA

• A look at the 2 year Price Charts gives me the feel that the Scrip has a bottom in place at 80 levels which it saw intraday on 18/11/2011. Presently the overbearing tone is one of consolidation with a definite positive bias. On the downside there is a good support at 85 and on the upside, supply areas are at 96 followed by 103 and then 112. A confirmed uptrend only if it trades decisively above 123 levels for a reasonable period of time. 
• On the Fundamentals, the precipitous fall in the last couple of months in particular has a lot to do with the poor Q2 FY2012 Results wherein the operating numbers were lower than expected; the results were optically further vitiated by the huge FX MTM loss.
• However, everything is good at a price, as they say and I  feel that one could pick up the Scrip at CMP 91 and dips, if any, and hold for the long term. Good upsides of 20-25% plus over the next 12 months could be expected assuming the operating numbers improve going ahead.

AUROBINDO PHARMA Q2 FY2012 RESULTS SEE HERE

IVRCL LTD.; BEST ENTRY PRICE

               CMP 35.4                                                                      BSE 16213

Continuing with our theme of looking at beaten down good quality Infra Stocks, in this Post we shall examine IVRCL LTD.

TECHNICALS:

• The 5-year Price Charts clearly indicate a troughing out in the Stock at or around Current levels. To my mind, the Price wise correction, if one might call it that is more or less done.
• The 5-year low of 28.4 intraday on 18/11/2011 is very very unlikely to be violated again.
• The lowest point during the 2008 meltdown was 32 intraday on 24/10/2008; In the 1 year immediately after this 24/10/2008 low, the Stock gave returns of 553%.!!!! (It touched 209 on 21/10/2009.)
• Longer term investors should note that the time-wise correction is by no means over so the Stock could consolidate in the broad 30-40 range for a while.
• Shorter term investors should note that, on the upside, 36.5 levels are a key resistance zone; a decisive break above these levels could take the Stock upto 44 levels provided the broader Market too obliges.

FUNDAMENTALS:

• Frankly, it is almost sadistic to talk Fundamentals at this time since as we all know the kind of Macro headwinds the Sector is facing.
• Anyway,broadly speaking, the Company has wide and varied EPC interests in Water Supply and Environmental Projects, Transportation Projects, Building And Industrial Structures, Power Generation and Transmission projects etc.
• Adverse Investment and Fiscal conditions are a definite bug- bear as we all know,but the easing out of the hard IR Cycle will definitely improve matters over the medium to long term.
• The Order Book is healthy, at almost Rs 23000 cr plus; of course there are execution issues but a softening of the IR regime would be the game changer.
• The Stock at CMP 35 is trading at less than half its Book Value.
• Q2 FY2012 Results have been better than those of its peers despite the adverse conditions referred to above.

Overall, one can say with a reasonable degree of confidence that the Stock is a BUY at CMP 35 and all possible panic dips, for the long term investor. Hold for the long term for super-normal Profits.


Q2 FY2012 RESULTS  SEE THIS  AND THIS

IVRCL WEBSITE LINK  RIGHT HERE

GVK POWER & INFRA ; BEST ENTRY PRICE

CMP 10.69                                                           BSE 16213

Some readers may indeed be intrigued by the Stock that I have chosen to examine in this Post. I mean, price-performance wise it seems to be a dog of a stock; has unwittingly destroyed more long term investor wealth in the past year or two; those of you who still have it in your long term Portfolios still have it there since you perhaps feel 'no point selling it at this stage since I didn't sell it at 35 hoping for a recovery'. There is an air of despondence and resignation over the Stock's performance. Isn't it?!! That exactly is the point;  in my book, when the above features characterise any Stock ,it really is the right time to have a close hard look at it from the standpoint of possible long term acquisition.

TECHNICALS:

A look at the Life-time Price Charts clearly tells me that this Stock is very close to its life-time low of 10.06 which it touched intraday on 23/11/2012. It has never ever gone into single digits and the lowest it touched even during the 2008 meltdown was at 10.9 intraday on 31/10/2008. More interestingly, in the next one year after 31/10/2008 it gave returns of 385% (touching 53 on 20/10/2009). Of course there were fundamental reasons too for the sharp upmove post 31/10/2008 but the point I am trying to make is that supernormal returns become a reality only when we step out of line and buy when the chips are really down and the end of the World seems to be just round the corner!!! When you hear Analysts, Anchors and their ilk (God bless them all) talk of single-digit penny stock prices for a Stock, even possible bankruptcies etc and gloom is writ large everywhere then it is definitely the time to go out on a limb and buy. Anyway. GVK seems to have bottomed out and I will stick my neck out and say that IT WILL NOT GO INTO SINGLE DIGITS ON A CLOSING BASIS in a hurry. On the upside, there is a resistance at 11.73 and then at 13.4 levels for those interested in a short term punt.

FUNDAMENTALS:

The Company as most of us know is an Infra major with interests in Power, Roads, Coal Assets and of course the stake in the Mumbai and Bangalore International Airports. As far as Corporate performance goes, one hesitates to take too harsh a view given the extremely adverse Rate Regime and environ that the entire Capital Goods/ Infra Sector has been and is up against, but suffices to say that the results for this Company have been the most encouraging out of the triad of GVK, GMR and Lanco. The Company's performance in Q2 FY2012 has been reasonable to good particularlyin the Roads and Power Sector despite being saddled with umpteen macro headwinds ranging from high cost of capital, time overruns, uncertainty about motive Gas availability to plain and simple Clearance delays which have become the hall mark of the current apparatus, as all of us know. The main sore point, of course, is the HUGE Debt on Books to the tune of Rs 7000 cr approx. The ray of hope is the distinct possibility that the Interest Rate regime as well as the Capex Cycle could well be peaking out, which would brighten up things enormously.

To cut a long discourse short, my Call is that the Stock is a BUY at CMP Rs 10.7 and should be held in the long term Portfolio for absolute super-normal returns over the next 18-24 months. Nimble Short to medium term investors could buy at CMP and ride the volatility alongwith the larger Market for targets of  12 and 13.5 thereafter.


-GVK POWER Q2FY2012 RESULTS  SEE HERE

-GVK WEBSITE LINK  RIGHT HERE

FOOD FOR THOUGHT: BENJAMIN GRAHAM

In earlier Posts we have had a dekko of the lives of PETER LYNCH and WARREN BUFFETT. In this Post we shall pay obeisance to the great BENJAMIN GRAHAM.

Born in London in 1894, Ben Graham moved to the United States in 1895 where he spent his childhood in New York. The loss of his father when Ben was nine years old saw him shoulder tremendous financial responsibility at a very raw age. The young Ben completed his graduation in 1914 from Columbia University and started work in a Wall Street firm by the name of Newburger, Henderson and Loeb, where eventually he rose to the position of Partner by 1920. In 1926, he formed an Investment alliance with Jerome Neuman which lasted till 1956. It is said that even though the Great Stock Market Crash of 1929 wiped out Ben's personal wealth, the Investment Alliance with Neuman quickly bounced back and delivered an average annual return of 17% over the 1926-1956 period.

Ben Graham's investment style was greatly inflenced by the financial hardship that he had to wallow against in his early childhood as well as during the Stock Market Crash of 1929. Ben Graham was a Financial Educator as well and taught at Columbia where one of his students was a certain gent by the name of Warren Buffett!! Ben's investment style found reflection in his first Book entitled 'SECURITY ANALYSIS' which is truly considered an investment Classic. In essence , Ben Graham's investment style was based upon the two pillars of 'thorough analysis' (what we now commonly term as 'fundamental analysis') and ' margin of safety' wherein he unearthed Firms with sound fundamentals but going through temporary downs. Thus , he could truly be called the Father of 'Fundamental Analysis' as we know it today. It is also often said that Warren Buffett's individual investment style is influenced in no small measure by that of his one-time teacher and mentor - Benjamin Graham.

Benjamin Graham passed away in 1976, but continues to find a place in the hearts and minds of countless investors.

Some of his more popular quotes are enlisted hereunder:

"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks."



" Most of the time stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble … to give way to hope, fear and greed."                                                                                            


"Even the intelligent investor is likely to need considerable willpower to keep from following the crowd."


"It is absurd to think that the general public can ever make money out of market forecasts."



Earlier Post on WARREN BUFFETT    SEE HERE

Earlier Post on PETER LYNCH             SEE HERE

EUROZONE SUMMIT LOOMS LARGE

The upcoming parleys in Brussels later today followed by the summit level Meeting of EZ leaders tomorrow continues to cast a shadow over Global Markets. Most Market pundits seem optimistic but then there are the regular naysayers as well who are more circumspect. Even as France has sounded more detrmined to enable a powerful resolution, reports suggest that German officials are rather sceptical over the success of the Franco-German initiative to recast the entire EU Treaty to reflect the need for greater budgetary discipline. Yet other Reports seem to suggest that the German pessimism is nothing but a ploy to nudge the Member States out of their ostrich-like demeanour and make them more amenable to finally accept tighter fiscal and monetary discipline.

In any case, Friday's summit , being touted as a possible gamechanger by many, is very likely to determine the direction of Global Markets at least in the short to medium term. The absolute necessity of the 'Merkozy' initiative to positively reshape the EU Treaty is further underlined by latest data released yesterday that shows the enormity of the problems that some European Banks are facing. This coupled with the latest Standard's And Poor warning that it could cut Credit ratings across the entire EZ has indeed set up the entire concert as a bit of a financial humdinger.

What remains to be seen is indeed whether the Knight in shining armour does get to rescue the proverbial damsel in distress this time around.



MORE INPUTS OF INTEREST  RIGHT HERE

ACTION CONSTRUCTION EQUIPMENT; BEST ENTRY PRICE

                         CMP 38                                                            BSE 16805

It is that time in the Markets when we need to start looking at Capital Goods/ Infra / Construction Stocks in order to get the best entry price for our long term Portfolios. In this Post we will examine ACTION CONSTRUCTION EQUIPMENT.

TECHNICALS:

A close look at the long term Price Charts clearly reveals that the Stock seems to have troughed out at 27 levels that it saw intraday on 16/11/2011. Since then, till date, it has been on a strong uptrend and has given returns of about 41% which is phenomenal. (ie returns of 40% plus in  the last 14 odd trading sessions!!!). The first strong resistance on the upside is indeed the 200 SMA ie 43 levels. If it crosses 43 and trades above it for a reasonable period one could possibly be looking at 51 levels. Of course, lest we let our greed run away with our money, we should ideally expect a period of consolidation as well and the above levels of 43 and 51 may indeed take some time coming. But what is certain is that there is a bottom firmly in place at 27 and the Scrip is in a definite uptrend.

FUNDAMENTALS:

At CMP 38 (52 wk low 27, 52 wk high 64) the Scrip is trading at PE TTM 7.8.  Despite the adverse business and monetary environ,  Results have been reasonably good; better on  topline than on bottom line but that is to be expected since there is a definite squeeze on Margins owing to the Macro headwinds. However, with the Rate Cycle likely to turn and likely monetary easing, the next couple of Quarters should positively outdo the first two. In view of these and also the Management's guidance of about 20-25% topline growth coupled with possible inorganic growth opportunities being whetted , the Company could well do an EPS this FY of about Rs 5-6, which puts it at about 6.5x FY12E at the median of the range. This is not expensive by any stretch; of course it would have been great to have bought in at panic bottom levels of 27 on 16/11/2011 (when it was at 4.5x FY12E) but you know what they say about spilt milk!!

In brief, the Scrip is a BUY at CMP 38 and all dips for better than imagined upsides over the next year or so. It would also be prudent to keep the run-up the scrip has seen in the last 2 weeks in mind and thus to spread out the buys to cover possible dips is definitely advisable.



Q2 FY2012 RESULTS  SEE HERE

Q1 FY2012 RESULTS  SEE HERE

Q2 FY2012 SHAREHOLDING PATTERN  SEE HERE

BLOCK BUSTER EURO-ZONE WEEK

The drama over the Euro-zone crisis seems to be moving towards culmination as the French President Sarkozy and the German Chancellor Angela Merkel meet in Paris today in a bid to iron out a concrete strategy to possibly boot-strap the Eurozone out of its current debt crisis that threatens to engulf that region and indeed, Financial Markets the world over. As leaders of the two largest Economies in the EZ,  the two have a special role to play in finding the elusive solution to the lingering problem. The crucial meeting between the two leaders, now dubbed as 'Merkozy' is scheduled to take place later today and will be followed by a presser around 1230 GMT.

The strategy outcome of the meet today is slated to be presented to EU leaders on Thursday in Brussels before the said EU leaders meet to finally approve a workable decision paper on Friday. Not without reason then, is this week being touted as the make-or-break week for the EZ crisis.

For the sake of World Markets in general, and the Indian Market in particular, this Blog sincerely hopes for a blissful outcome.


MORE INPUTS (REUTERS)  RIGHT HERE

A GOOD BACKGROUNDER (THE ECONOMIST)  RIGHT HERE

HEADS UP ON INTEREST RATES

It is being increasingly felt now that the Central Bank (RBI) would perhaps be taking a long hard look at the current Interest Rate regime with an eye on possibly aiming to inject some liquidity in the System. This follows the plummeting GDP growth trajectory and the creeping realisation that the much touted demand-side management of Inflation may perhaps be at the end of a taut tether. The easing off of food-inflation would also have helped this line of thought. In any case it was always a known that the real culprit was the supply side insufficiency as well as the penchant of Polity to hike Minimum Support Prices of food grains beyond reasonable levels since it made good Political sense to do so.

It is now possible that the RBI would take the first steps by easing the CRR (Cash Reserve Ratio) by 25-30 basis points shortly or at the December 16 quarterly review of the monetary Policy. The key take-away for Equity Investors would definitely be to start looking very closely at Rate Sensitives with an eye to start picking up the Scrips in this zone currently available at basement-bargain prices.


FOR MORE INPUTS READ HERE

NEWS UPDATE; FDI IN RETAIL

Reports coming in over the last hour seem to suggest that the crucial Retail FDI reform is likely to be suspended till political consensus is reached within the ruling coalition.

READ THE DETAILED NEWS REPORT (ECONOMIC TIMES)  RIGHT HERE

READ THE DETAILED NEWS REPORT (HINDUSTAN TIMES)  RIGHT HERE

READ THE DETAILED NEWS REPORT (INDIAN EXPRESS)   RIGHT HERE

BAJAJ AUTO: BEST ENTRY PRICE

                                 CMP 1712                                             BSE 16846

TECHNICALS:

On the 2 year Price Charts, Bajaj Auto seems to reflect a positive trending tenor. On the downside, it has good support at 1658 followed by 1629 and then at 1580. On the upside, the first resistance is at 1715 (interestingly just a little above CMP) followed by a major supply zone in the 1729-1740 range. In the last six months it has run up significantly from 1300 odd levels to 1700 plus levels. Therefore even though the general Chart tone is positive but there could be a period of consolidation in the short to medium term. The SMA 365 forms a multi-year solid support for the scrip and is currently at 1438 levels.

FUNDAMENTALS:

Many Analysts now look upon the Two-Wheeler manufacturers as a proxy to India's hinterland growth story, if one might call it that. This view is not without substance, since the growth of disposable incomes as well as aspirations in the mofussil and rural areas is indeed a reality. This has been clearly recognised by the Markets and the Stock Price has seen steady growth in the last 2 years in general and the last 10 months in particular. This point is also borne out by a comparison of the 2 year price movements vs the 5 year price movements wherein it is evident that the Markets have quietly re-rated the Scrip upwards in the last 1-2 years. Unfortunately a lot of retail investors have also missed out on this rally in this Scrip and most Portfolios are replete with FMCG bought at bloated valuations and a negligible presence of the 2 wheeler outperformers.

 Anyway, looking specifically at Bajaj Auto, the significant Brand prowess as well as the growing demand catchment mentioned above are a given positive for the Stock. Results in the last couple of Quarters have been good on topline growth but muted on the Bottom line due to the adverse Rate regime, business environ as well as pressures emanating from input pricing. However, rather surprisingly, export contribution has been a definite positive. The fall in the value of the Rupee is also seen shoring up profitability. At CMP 1714 (52 wk high 1823, 52 wk low 1165), the Stock is trading at a PE TTM of 14.14x. Latest monthly sales figures for November 2011 have been upbeat and a plateauing off in Input costs together with strong Export performance could see the Company do an EPS FY12E of 125 approx. This puts it currently at about 13.7x FY12E, which is not expensive given the demand macros. However, as mentioned earlier, the scrip has run up appreciably in the last six months and a bout of consolidation seems to be in the offing.

Thus, the long term investor could buy some quantity at CMP 1700 odd and then add more on dips to get an average entry price as close to 1550 as possible. Steady upsides of 15-20% are very much likely over the next 12 months.


BAJAJ AUTO Q2 FY2012 RESULTS  SEE HERE AND HERE

NEWS UPDATE; KINGFISHER AIRLINES

KINGFISHER AIRLINES promoter Vijay Mallya has reiterated that he is in talks with an Indian Investor for a possible stake sale in the Airline. Thus maybe the future holds better promise for KFA stakeholders including minority shareholders.
CATCH THE FULL STORY RIGHT HERE

NEWS UPDATE ; PANTALOON RETAIL

Parliament has been adjourned till Wednesday and thus the FDI in Retail issue still hangs in the balance. This has increased the uncertainty on the bourses for the Scrip which currently is trading in a tight 208-212 range.

CATCH THE DETAILED STORY  RIGHT HERE

FOOD FOR THOUGHT; PETER LYNCH

I have always felt that the best way to appreciate a profession or a vocation is by trying to familiarize oneself with the lives of people who have made a mark in the profession. The same holds true for Stock Markets and investors. In an earlier Post (SEE THIS) I had attempted to draw inspiration from some of the thoughts voiced by the legendary Warren Buffett and my effort was well received by the Readers of this Blog. Carrying on the effort, in this Post we shall familiarize ourselves with another great Investor- PETER LYNCH.

-Born in Massachussets in 1944, and educated at the Boston College followed by an MBA from Wharton, Peter Lynch is best known for his trail blazing stewardship of the Fidelity Magellan Fund from 1977 to 1990. During this period the Assets of the Fund grew from 20m Dollars to 14b Dollars and it is said that Peter Lynch beat the Benchmark S&P 500 by a mile in 11 of those 13 years, delivering an Average Annual return of 29% !!!!!

- Peter Lynch is known in Investment Circles as the 'Chameleon', which was a true reflection of his flexible and nimble investment style. He applied a list of 8 principles to his stock picking method which he himself described as follows:
     

Know what you own.

It's futile to predict the economy and interest rates.

You have plenty of time to identify and recognize exceptional companies.

Avoid long shots.

Good management is very important - buy good businesses.

Be flexible and humble, and learn from mistakes.

Before you make a purchase, you should be able to explain why you're buying.

There's always something to worry about.

His quotes were always incisive and I am reproducing a few for the benefit of interested Investors:

-"Go for a business that any idiot can run – because sooner or later, any idiot is probably going to run it."


-"If you stay half-alert, you can pick the spectacular performers right from your place of business or out of the neighborhood shopping mall, and long before Wall Street discovers them."


-"Investing without research is like playing stud poker and never looking at the cards."


-"Absent a lot of surprises, stocks are relatively predictable over twenty years. As to whether they're going to be higher or lower in two to three years, you might as well flip a coin to decide."


-"If you spend more than 13 minutes analyzing economic and market forecasts, you've wasted 10 minutes."


Now retired, PETER LYNCH continues to inspire investors the world over.



More on WARREN BUFFETT HERE