pid_14_MT32_160614

A Time Communications Publication 1

Caution: Please note that your copy/access to our website is for your exclusive use only. Any attempt to share your access to our website or forwarding your copy to a non‐subscriber will disqualify your membership and we will be compelled to stop your supply and forfeit your subscription thereafter without any refund to you.

T I M E S A TIME COMMUNICATIONS PUBLICATION

VOL. XXIII No. 32 Monday, 16– 22 June 2014 Pages 20 Rs.15

Markets struggle at higher levels By Sanjay R. Bhatia Earlier last week, the markets continued to move higher amidst intermediate bouts of profit booking and selling pressure. The selling pressure was high on Friday, 13 June 2014, on the back of the Kurdish attack in Iraq, which send crude oil prices flaring and also as many stocks were moved to the T2T segment.

The FIIs remained net buyers in the cash segment but were net sellers in the derivatives segment. Domestic institutional investors (DIIs), however, continued to press sales and remained net sellers for the week. The breadth of the market remained positive amidst lower volumes, indicating lack of participation at higher levels. The global markets were weighed down by fresh trouble in Iraq, which saw crude prices rising to a 9‐month high. The US economy painted a disappointing picture on retail sales and jobless claims. On the domestic front, the Indian economy has started showing green shoots. Industrial production after falling for the last two months grew to a 13‐month‐high rate of 3.4% in April 2014, driven mainly by electricity generation and manufacturing. Moreover, the consumer price index fell to a 3‐month low of 8.28% in May 2014 as against the high of 8.59% recorded in April as prices of vegetables and cereals increased at a slower pace.

Technically, the prevailing negative technical conditions weighed on the market sentiment leading to selling pressure at higher levels. The Stochastic, RSI and KST have slipped below their respective averages on the daily charts. Further, the MACD is already placed below its average on the

How to trade effectively in Futures To be in the right position at the right time whether buying or selling An Excel Sheet analysis that reveals: A multi time frame analysis

How to Arrive? How to Drive? How to Select? How to implement a Trade? How to Trade? How to monitor your Trade? Which stock futures are in Up Trend? Which stock futures are in Down Trend? Which stocks witnessed profit booking in long position? Which stocks are witnessing short covering?

Our Excel Sheet will answer all the queries.

By training you on how to use the Excel Sheet, you can become independent and take buy or sell decisions or exit long or exit short or book profit on long or short positions.

Personal Training followed by Telephone training, Support by Email and Yahoo Messenger how to use the Excel Sheet, which is the tool for buy/sell/hold/book profit decisions. Demonstration on MetaStock of the logic of multi time frame analysis.

Enrollment Fees for the Workshop: Rs.4000/‐ and 20 days of Excel sheet to practice and implement.

Date: Saturday, 28 June 2014 Time: 4 p.m. to 8 p.m.

Address: Blue Empire Complex, 302, Blue Ocean I, Wing B, Mahavir Nagar, Kandivali (W), Mumbai‐ 400067.

To attend, please contact Hitendra Vasudeo on 022‐28600371 or 9820219664


daily charts. Besides, the RSI and Stochastic are placed in the overbought zone on the weekly charts. These negative technical conditions would lead to further bouts of profit booking and selling pressure especially at higher levels.

The prevailing positive technical conditions, however, still hold good and would lead to buying support at lower levels. The RSI, KST, MACD and Stochastic all are placed above their respective averages on the weekly charts. The Nifty is placed above its 50‐day SMA, 100‐day SMA and 200‐day SMA. Further, the Nifty’s 50‐day and 100‐day SMA are placed above Nifty’s 200‐day SMA, which is known as the ‘Golden Cross’ breakout. These positive technical conditions would lead to buying support at lower levels.

The +DI line is placed above the ADX line and the –DI on weekly charts. The +DI line is above the 42 level on weekly charts indicating that buyers have an upper hand but that the market has also come off its recent highs indicating that buyers are booking profits at regular intervals.

Now, it is important that buying support emerges at lower levels. If the Nifty manages to move and sustain above the 7600 level, then the Nifty could test the 8000 mark. In the meanwhile, the markets would continue to take cues from the new government’s policy decisions, Rupee‐Dollar exchange rate, global markets and crude prices.

Technically, on the upside, the BSE Sensex faces resistance at the 25420, 25700 and 26000 levels but seeks support at the 24750, 24000, 23408 and 22323 levels. The support levels for the Nifty are placed at 7402, 7229, 7118, 7067 and 6872 while it faces resistance at 7593, 7675, 7700 and 7800 levels.

Investors should book profits regularly.

Yeh Street maange more! By Fakhri H. Sabuwala

The new parliament has been convened, the Presidential address is over, the dress rehearsal of the bureaucrats is done. The FM's meeting with State finance ministers and a lot more is on the governmental front. On the back of these developments, the BSE Sensex surpassed its 16 May 2014 high (the day of Lok Sabha results) and is on its way to make a new high before the first budget of the new government. Big gains are seen in the benchmarks since the day of NaMo's anointment as the BJP’s nominee for PM on 13 September 2013. The Sensex has risen 26% while the broader index BSE 500 scaled up 31.37%.

Nearly 500 of the 2525 active BSE stocks jumped over 100% during this 8‐month period. 92 stocks returned between 90% and 100%, 100+ stocks climbed over 200% while 17 saw their market capitalisation swell over 5 times.

This sharp rally was on the back of the Rs.95,000 crore worth of foreign inflows during this 8‐month period and on hopes of economic revival and quick implementation by the Modi led government. People expect it to speed up project clearances, remove bottlenecks and kick‐start the investment cycle and put the economy on the path of high growth.

Matra Kaushal Enterprise skyrocketed 975%, BF Utilities zoomed 399%, KEC International zoomed 346%, BEML by 299% and CEAT by 293% were the big gainers from stable of the BSE 500 Index. TVS Motors, NCC, Sintex, Suzlon and Sadbhav Engineering jumped between 200% and 300% from the same group.

From the BSE 100, it was Adani Enterprise, Ashok Leyland, PFC, HPCL, UPL, Crompton Greaves, HDIL and Federal Bank, which gained between 100% to 250% in the same period. It is a paradigm shift in the market as the whole market is getting re‐rated. Reading the sentiment, punters seem to yell ‘Yeh street maangey more’.

Farm sector may be the new area of importance in the ensuing budget. Agricultural reforms including the development of irrigation facilities may take the pride of place. The maiden budget of the BJP led NDA government may announce the formation of a national water authority and an irrigation fund for speedier implementation of long pending irrigation projects in the country. It is on this premise, irrigation scrips witnessed a sharp rise and the star performers were Jain Irrigation Systems and EPC Irrigation. If irrigation is going great guns, the business of PVC pipes

BAZAR.COM


(Finolex Industries) and water pumps (Shakti Pumps, Crompton Greaves, KSB Pumps, Roto Pumps) shall also do very well.

For a change, the mid‐week saw Pharma and IT regaining its lost glory. It seems the order for sectorwise rotation in teji is on. Earlier it was Infrastructure, Metals, Capital Goods, Cement, Oil & Gas and FMCGs that held their pride of place. By turns, the market is responding to every move of the PM and FM and keeping a close watch on whom they are meeting and what is transpiring between them.

One school of thought, however, believes that the pace of rise needs a breather and that the Sensex and the Nifty have risen much higher than warranted and before time. Although the secular trend remains bullish, it needs time adjustment, which will unfold in the coming weeks. Conservative observers had indicated of Sensex 30K beyond FY15. This was advanced to March 2015, then December 2014 and to Diwali 2014. But the impatient ones have now revised it to the Budget in July 2014. This talk of breakneck speed is dangerous for investors as they may fall prey to the games played by operators that accompany any rally. Give NaMo and his team the time to settle down. Its not even a month since the new ministers took oath, yet the spin doctors are weaving dreams that may turn out to be traps!

Minor Up/Down swings seen By Hitendra Vasudeo Last week, the BSE Sensex paused once again after a strong rise of two weeks. The Sensex opened at 25543.59, attained a high at 25735.86 and fell to a low of 25171.60 before it finally closed the week at 25228.16 and thereby showed a net fall of 168 points on a week‐to‐week basis.

The last rising swing on the daily chart was from 24163 to 25735. Expect the retracement of the last rising swing on the daily chart and the retracement levels are placed at 25146‐24925‐24769. Expect the retracement to be tested. Further weakness will continue if 24644 is subsequently violated, then expect 24163.

A bearish candle was formed on Friday, 13 June 2014, which suggests that a near term correction is likely of the last swing and a further rally can continue on a rise and close above 25735.

The correction on the daily chart was visible, which was more in terms of time, without eroding the recent price rise. On the weekly chart, we have a support cluster at 24270‐24120. The weekly chart will be under the pressure of

correction on a fall and close above 24100. On the monthly chart, if we look at the macro count then Wave 1 ended at 4643 in September 1994 and Wave 2

ended at 2904 in May 2003. Wave 3 ended in January 2008 whereas Wave 4 ended in August 2013 at 17448. Wave 5 projection can be as low as 28800 but can exceed to 35000. A major problem on the monthly chart can develop below 17448. Broadly, the corrections are for buying as we may surpass 28800 in due course of time.

The daily chart shows signs of minor correction but the same is not yet seen on the weekly chart. Correction and termination of the correction will create higher bottoms unless a vertical fall below 17400 is witnessed. BSE Mid Cap Index Expect the 9700‐10250 range to be tested in due course of time. BSE Small Cap Index Resistance zone is 10200 to 11400, which means spike in the Small Cap Index is to book partial profits. BSE Bankex BSE Bankex can still roll onto 19000. Strategy for the week Traders long and holding stocks can keep a stop loss of 24000.

TRADING ON TECHNICALS


WEEKLY UP TREND STOCKS Let the price move below Center Point or Level 2 and when it move back above Center Point or Level 2 then buy with

whatever low registered below Center Point or Level 2 as the stop loss. After buying if the price moves to Level 3 or above then look to book profits as the opportunity arises. If the close is below Weekly Reversal Value then the trend will change

from Up Trend to Down Trend. Check on Friday after 3.pm to confirm weekly reversal of the Up Trend.

Scrips

Last Close

Level 1

Level 2

Center Point

Level 3

Level 4

Relative Strength

Daily Reversal

Value

Up Trend Date

Stop Loss

Buy Price

Buy Price

Book Profit

Book Profit

EIH 102.00 95.9 96.6 101.2 106.6 116.6 77.4 92.4 16-05-14

LAKSHMI MACHINE WO. 3685.00 3425.0 3488.0 3622.0 3819.0 4150.0 76.2 3459.8 09-05-14

ICRA 2352.15 2320.0 2325.4 2346.7 2373.4 2421.4 76.1 2264.2 23-05-14

EICHER MOTORS 7340.00 7108.0 7166.0 7282.0 7456.0 7746.0 73.6 7164.5 25-04-14

SOLAR INDUSTRIES 1858.05 1575.0 1643.5 1789.5 2004.0 2364.5 70.1 1605.6 04-04-14

EXIT LIST

Scrip Last Close

Sell Price

Sell Price

Sell Price

Stop Loss

Target 1

Target 2

PAGE INDUSTRIES 5966.70 6125.74 6195.10 6264.46 6489.00 5537.9 4950.1

BUY LIST

Scrip Last

Close Buy

Price Buy

Price Buy

Price Stop Loss

Target 1

Target 2

BHARAT ELECTRON. 1817.00 1803.46 1769.00 1734.54 1623.00 2095.5 2387.5

G.E.SHIPPING 379.70 373.00 369.60 366.20 355.20 401.8 430.6

GRAPHITE INDIA 113.45 109.93 104.93 99.92 83.70 152.4 194.8

HDFC BANK 836.00 832.70 825.50 818.30 795.00 893.7 954.7

MAHINDRA LIFESPAC. 553.25 530.87 510.75 490.63 425.50 701.4 871.9

PRESTIGE ESTATE 245.55 242.86 236.02 229.19 207.05 300.8 358.8

TIMKEN INDIA 250.10 242.78 239.00 235.22 223.00 274.8 306.8

ULTRATECH 2765.40 2656.53 2598.00 2539.47 2350.00 3152.5 3648.5

PUNTER'S PICKS

Note: Positional trade and exit at stop loss or target whichever is earlier. Not an intra-day trade. A delivery based trade for a possible time frame of 1-7 trading days. Exit at first target or above.

Scrips BSE Code

Last Close Buy Price Buy On

Rise Stop Loss Target 1 Target 2 Risk Reward

SRS REAL INFRA. 533305 42.40 40.40 42.70 40.10 44.3 46.9 0.83

WEEKLY DOWN TREND STOCKS Let the price move above Center Point or Level 3 and when it move back below Center Point or Level 3 then sell with whatever high registered above Center Point or Level 3 as the stop loss. After selling if the prices moves to Level 2 or below then look to cover short positions as the opportunity arises. If the close is above Weekly Reversal Value then the trend will change from Down Trend to Up Trend. Check on Friday after 3.pm to confirm weekly reversal of the Down

Trend.

Scrips

Last Close

Level 1

Level 2

Center Point

Level 3

Level 4

RelativeStrength

Daily Reversal

Value

Down Trend Date

Cover Short

Cover Short

Sell Price

Sell Price

Stop loss

ARVIND REMEDIES 36.95 31.3 35.2 37.3 39.1 39.4 31.97 38.61 22-03-14

JYOTHY LABORAT. 180.55 158.5 174.9 185.7 191.3 196.4 42.30 189.56 30-05-14

IDEA CELLULER 135.10 116.5 130.4 139.5 144.2 148.6 42.46 138.21 30-05-14

BOMBAY RAYON FAS. 172.95 156.9 168.7 176.3 180.5 183.8 42.91 182.20 30-05-14

GODFREY PHILLIPS 2932.00 2686.7 2867.7 2984.3 3048.7 3101.0 44.78 3122.50 30-05-14


Marketmen are optimistic about the Nath Biogen stock as the company has good growth plans ahead. For FY13, it posted an EPS of Rs.15 and the market expects the current EPS to touch Rs.25 on higher volume of sales.

Poddar Pigment stock is under accumulation by knowledgeable investors. Everest Industries is likely to report a good turnaround in both its Steelfab and Asbestos sheets divisions. Stock is likely to touch the Rs.275 mark.

Good turnaround expected in ferro alloy stocks. Heavy investment buying is reported in R.S.Software counter as this payment gateway company is all set to post an EPS of Rs.50 in FY15. The share is heading towards the Rs.300 mark.

Persons in the know recommend the share of Bhatinda Chemical as its liquor and IMFL division, which is a cash cow, has commenced operations. It could post an EPS of Rs.10 in FY14 and the share is poised to double.

The share of IFGL Refractories can be bought for solid gains and in the falling market as the company is all set to garner an EPS of Rs.24‐25 in FY15. The capacity of its overseas plants is being doubled on the back of robust demand.

Uflex has posted an EPS of Rs.28 in FY14 and is all set to clock an EPS of Rs.38+ in FY15. The share can be grabbed as it fell 9% on Friday, 13 June 2014, and is expected to touch Rs.175 shortly.

One auto analyst strongly recommends the share of JK Tyre, which posted an EPS of Rs.64 in FY14. He projects an EPS of Rs.78 in FY15 and a share price of Rs.400+.

Superhouse is being accumulated by persons in the know. It is another Relaxo in the making. This leather company, which posted an EPS of Rs.30 in FY15, is expected to garner an EPS of Rs.42 in FY15. The share is poised to touch Rs.200 mark.

An Ahmedabad based analyst recommends Elnet Technologies and Moldtek Techno as hot buys for the week. Both these stocks may prove to be multi‐baggers of 2014.

Mangalam Cement Ltd. Code: 502157 Last Close: 201.85 By Amit Kumar Gupta Mangalam Cement Ltd (MCL) is a manufacturer of cement based in North India. It sells its cement under the brand name of Birla Uttam Cement 43 Grade and Birla Uttam Cement, Portland Pozzolana Cement (PPC). It has cement plants and a coal‐based power plant located at Morak in Kota district (Rajasthan). The company owns 15 Wind Turbines with a total capacity of 13.65 MW generation per day. Promoted by Shri B. K. Birla, Mangalam Cement Ltd (MCL) is engaged in the production and sale of both Portland cement and cement clinker. Highlights: MCL’s additional clinker capacity of 0.5 MMTPA and cement capacity of 1.25 MMTPA at Morak (Rajasthan) were under trial run in Q4FY14 and have started commercial production from June 2014. After these expansions, MCL’s clinker capacity stands at 2.3 MMTPA while the cement capacity stands at 3.25 MMTPA. We expect MCL to report a robust volume growth at a CAGR of 20% over FY14‐16E buoyed by the demand‐supply mismatch in the industry.

Realizations are likely to improve owing to the demand recovery with the government’s emphasis on infrastructure development and plan to develop 100 new cities and provide proper housing to all citizens by 2022.

Recently, MCL has upgraded its kiln capacity, which will help in reducing power consumption by 8 units per tonne of clinker and coal consumption by 1%. We expect the company to post substantial margin expansion on the back of higher realization and the recent cost‐cutting initiatives undertaken.

Higher production on expansion of its clinker capacity and the coming on stream of the new grinding unit will ensure effective utilization of idle capacity of the power plant. MCL had to keep one of the power units idle due to the unattractive rates offered by the Government of Rajasthan and the energy exchange for the purchase of its power.

For Q4FY14, MCL’s operating revenue grew 18.53% YoY to Rs.218.43 crore led by 12% YoY growth in volume of 0.57 MMT coupled with 6% rise in price realisation at Rs.3770 per tonne. Higher price realization has augmented profit margins. The Q4FY14 OPM stood at 13.16% as compared to 11.21% in Q4FY13. However, PAT fell by 11.34% YoY to Rs.7.82 crore on Rs.13.3 crore payment on account of deferred tax.

TOWER TALK

BEST BET


Valuation: At the CMP of Rs.201.85, the MCL stock trades at 7.4x FY16E EPS, which appears attractive. We believe that with higher demand, better price realization, a positive economic outlook and rising margins would lead MCL to perform better in the foreseeable future and recommend a ‘Buy’ on the MCL stock with a price target of Rs.300 at a P/E multiple of 11x FY16E earnings i.e. an upside of 43%, over the next 12 months.

Performance Projection: (Rs. in crore)Particulars Q4FY14 Q4FY13 FY12 FY13 FY14 FY15E FY16E Net Sales 218.43 184.28 630.77 706.04 697.31 864.23 1094.58 Other Income 2.54 0.70 6.63 7.10 4.63 4.95 5.45 Operating Profit 28.75 20.66 103.46 130.63 55.75 90.74 142.29 EPS (Rs.) 2.93 3.30 20.97 28.98 11.09 14.33 27.22 Technical Outlook: The Mangalam Cement stock looks strong on the daily chart and has been making higher highs and higher lows and is very strong in all time‐frames. The stock is also trading above all important moving averages like 200‐DMA & 100‐DMA and has formed an ascending triangle pattern in the longer time‐frames.

Start accumulating at this level of Rs.201 and on dips to Rs.170 for medium‐to‐long‐term investment and price target of Rs.255 in the next 6 months and Rs.300+ in 12 months.

Alicon Castalloy Ltd.: Attractive auto pick By Devdas Mogili

Alicon Castalloy Ltd (ACL), formerly known as Enkei Castalloy Ltd. is a 24‐year old auto‐ancillary company incorporated in 1990. It is the flagship company of the Alicon group – a global consortium of casting companies with units in India, Austria and Slovakia. Its manufacturing facilities in India are located at Pune in Maharashtra and Jaipur in Rajasthan. Mr. Shailendrajit Rai is the managing director of the company.

The group offers advanced engineering solutions to some of the largest automobile OEMs in different markets. ACL is one of the largest integrated aluminium casting manufacturing unit in India offering end‐to‐end solutions across the entire value chain and delivering the best in class aluminium castings – Gravity, Low Pressure and Sand Casting. It is also a pioneer user of the unique Pi system for measuring casting in India. This system enhances productivity with the minimum utilization of machines, space and manpower.

ACL is engaged in the business of manufacturing of automotive castings. It also manufactures cylinder heads for 2‐wheelers and 4‐wheelers. It has obtained technical expertise from Enkei Japan, which helped it establish one of the most advanced manufacturing systems for aluminum die cast products in India. ACL’s other products include cylinder heads for passenger cars, cylinder heads for four stroke 2/3‐wheelers, support brackets, intake manifolds, EGR valve and rack housing and CAC tanks. Clientele: ACL’s customers are Maruti Suzuki Ltd, Honda Siel Cars Ltd, Tata Motors, Bajaj Auto Ltd, Hero Honda Motor Industries, Honda Scooter and Motorcycle Company and its global customers include John Deere, Behr Group, GE, Knorr Bremse, ZF Group and GWK Group. Performance: The company reported highly encouraging results for FY14. It recorded total income of Rs.258.32 crore with net profit of Rs.19.11 crore posting an EPS of Rs.17.37 for FY14.

Latest Results: The company has posted very impressive results for Q4FY14. On total sales revenue of Rs.58.19 crore, it clocked a net profit of Rs.8.24 crore registering an EPS of Rs.7.49 as against Rs.5.26 in Q4FY13. Financials: ACL has an equity base of Rs.5.50 crore with a share book value of Rs.84.29. It has a debt:equity ratio of 0.98 with RoCE of 19.34% and RoNW of 23.14%. Share Profile: The company’s share with a face value of Rs.5 and is listed and traded on the NSE and the BSE under the B group and touched a 52‐week high/low of Rs.177.40/Rs.42.

At its current market price of Rs.143, the company has a market capitalization of Rs.157.36 crore against revenue of Rs.258.32 crore providing a good market cap: sales ratio.

STOCK ANALYSIS

Financial Highlights: (Rs in lakh) Particulars Q4FY14 Q4FY13 FY14 FY13

Total Income 5818.51 6529.66 25832.14 25760.25 Total Expenses 12090.37 13989.35 50089.37 49588.99 Other Income ‐50.73 429.96 408.87 692.02 Finance Costs 351.73 380.44 1112.81 1130.41 Tax Expense 215.42 75.85 607.31 502.63 Net Profit 824.15 579.10 1911.15 1687.75 Equity (FV:Rs.5) 550.00 550.00 550.00 550.00 Re Ex Rev Res 10059.34 8857.70 10059.34 8857.70 EPS (Rs) 7.49 5.26 17.37 15.34


Dividend: The company has paid dividends as follows: FY14 ‐ 50%, FY13 ‐ 40%, FY12 ‐ 27.50%, FY11 ‐ 20%, FY10 ‐ 20%. Shareholding: The promoters hold 67.45% while the balance 32.55% is with non‐corporate promoters, institutions and the investing public. Prospects: As the die‐cast industry forms the base for various manufacturing, infrastructure and engineering projects a boost to nation building activities automatically translates into a fillip to growth of castings.

There are a series of growth triggers lined up for FY15 and beyond to boost the share of manufacturing in the GDP. The new manufacturing policy which is targeted at creating of new jobs, the Automotive Mission Plan 2016, numerous infrastructure development initiatives in the power and the other sectors in the 12th Five Year Plan (2012‐17) and the increasing migration of global OEM operations to India augur well for the growth in the castings industry.

The fortunes of the casting industry are closely tied to those of the downstream sectors and industries from where the demand arises. As ACL’s is a leader in the casting industry both in terms of size and quality of output, it stands to gain from any tailwinds that surface.

Today, India is one of the world’s fastest growing passenger car markets and the second largest producer of 2‐wheelers. It is also the world’s largest motorcycle manufacturer and the fifth largest commercial vehicle producer but with the second largest market for commercial vehicles and attractive destination for manufacturing special utility vehicles (SUVs) due to lower production costs.

According to an ICRA report, volumes of utility vehicles increased 52%, 2‐wheelers were up 2.9% while 3‐wheelers (passenger) segment grew 8.5% on the back of fresh permits.

The demand for automobiles and auto‐parts depends on economic growth and the purchasing power and India is perceived to be not only a large market for automobiles and components but also a fast growing manufacturing hub which augurs well for the casting industry in general and Alicon Castalloy in particular. Conclusion: Alicon Castalloy is a single source supplier of many critical engine parts including cylinder heads for some of India’s largest OEMs of 2/4‐wheelers. It also caters to the non‐auto sector like Agriculture, Aeronautical Marine, Locomotive, Infrastructure, Energy, Defence and the Medical/Healthcare industries. Over the last four years, its turnover has more than doubled in both the domestic and the overseas markets.

At its current market price of Rs.143.05, the ACL share discounts less than 10 times its FY14 EPS of Rs.17.37 against the industry average P/E multiple of around 8.2. In view of its impressive performance, good product range, prestigious clientele, good payouts, attractive market cap:sales ratio and bright future prospects, the ACL share is attractively priced at the current level and may be added to one’s portfolio for strong gains in the medium‐to‐long‐term.

Global tensions hit the sentiment By Devendra A. Singh The BSE Sensex (30‐share index) settled at 25,228.17 declining 168.29 points while the CNX Nifty fell 41.30 points to close at 7,542.10 for the week ended Friday, 13 June 2014.

MARKET REVIEW


The mood of market participants spoiled last week as crude oil prices sky‐rocketed on Friday on the back of the crisis in Iraq. Brent crude price was hovering at US $113/bbl and key indices tumbled in 2 out of the 5 trading sessions last week.

The Federation of Indian Export Organisations (FIEO) President Rafeeq Ahmed said, “India’s exports are expected to touch US $350‐360 billion in the current fiscal year from $312.35 billion in FY13‐14, $300.4 billion in FY12‐13 and $307 billion in FY11‐12. But the government has to take several steps to boost exports further.”

“After five years, our export may reach $750 billion. However, there is an urgent need to improve infrastructure and resolve issues related to revenue,” he added.

The Ministry of Commerce and Industry is expected to announce the new 5‐year foreign trade policy (2009‐14) after the Union Budget as it seeks to boost manufacturing and exports.

Meanwhile, data released from the Department of Industrial Policy and Promotion (DIPP) shows that foreign direct investment (FDI) in the services sector fell about 54% y‐o‐y to $2.22 billion last fiscal year. The services sector accounts for over 60% to India’s gross domestic product (GDP).

FDI has also declined in Construction, Hotels and Tourism. Foreign investments are considered crucial for India, which needs about $1 trillion in the 5‐year Plan period ending

March 2017 to overhaul infrastructure such as ports, airports and highways to boost growth. Overall foreign inflows grew 8% to $24.29 billion in FY14 as against $22.42 billion in FY13. To attract further foreign inflows, the government plans to relax the FDI policy in sectors such as Defence, Railways

and Construction. The DIPP has already circulated a draft cabinet note to raise the FDI cap in Defence to 100%. World Bank Economic report on China stated, “China’s economy will grow at 7.6% this fiscal year a notch lower than

last year’s 7.7% and the trend is likely to continue next year as well at 7.5% in 2015. China’s growth will moderate over the medium term as the economy continues to rebalance gradually, the report

said. It further stated that “the slowdown in the first quarter reflected a combination of dissipating effects of earlier measures to support growth, a weak external environment and tighter credit especially for real estate.”

“The economic activity including industrial production has shown signs of a pick‐up in recent weeks. The recent acceleration, which is likely to continue into the next two quarters, reflects robust consumption, a recovery of external demand and new growth supporting measures including infrastructure investments and tax incentives for small and medium‐sized enterprises,” the World Bank added.

Chorching Goh, lead economist for China stated, “the rebalancing will be uneven reflecting tensions between structural trends and near term demand management measures.”

Chinese President Xi Jinping said last month, “China is still in a significant period of strategic opportunity. We must boost our confidence, adapt to the new normal condition based on the characteristics of China’s economic growth in the current phase and stay cool‐minded.”

On the Euro zone front, the Euro group retail sales broadly remained unchanged from May 2014 according to the latest PMI data from Markit. The Euro zone Retail PMI registered at 49.9 in May 2014 compared to April’s 3‐year high of 51.2.

Phil Smith, Economist at Markit said that, “renewed weakness in Italy’s retail sector acted to offset higher sales in both Germany and to a lesser extent in France. Italy was also the only nation where the survey showed deterioration in business sentiment in the month. The weight of weak consumer spending in Italy and to some degree in France is proving hard for Germany to carry on with any kind of momentum. The data thus far points to a marginal gain in Euro group consumer spending in Q2.”

On the monsoon front, the monsoon rains, which make up around 70% of India’s annual rainfall, are crucial to the nation’s agriculture sector and the broader economy. More than 60% of the country’s farmland is rain fed. The timing, distribution and quantity of rainfall are all important for crops. The four month southwest monsoon season that starts from June accounts for almost 70% of total annual moisture that Indian soil receives in a year.

This year could be a below normal monsoon as there is a 60% possibility of the emergence of the El Nino weather phenomenon. El Nino last affected India’s monsoon in 2009 when the monsoon rainfall was 23% below normal.

Key indices moved higher on Monday, 9 June 2014, on consolidated buying by foreign funds. The Sensex gained 183.75 points (+0.72%) to close at 25,580.21 after hitting a new high of 25,644.77. The Nifty was up 71.20 points (+0.94%) to close at 7,654.60.


Key indices were a tad higher on Tuesday, 10 June 2014, on local cues. The Sensex edged up 3.48 points (+0.01%) to close at 25,583.69. The Nifty was up 1.80 points (+0.02%) to close at 7,656.40.

Key indices fell on Wednesday, 11 June 2014, on corrective selling by foreign funds. The Sensex lost 109.80 points (‐0.43%) to close at 25,473.89. The Nifty was down 29.55 points (‐0.39%) to close at 7,626.85.

Key indices rebounded on Thursday, 12 June 2014, on positive global cues. The Sensex climbed 102.32 points (+0.40%) to close at 25,576.21. The Nifty was up 23.05 points (+0.30%) to close at 7,649.90.

Market performance settled on a weaker note on the last trading session on Friday, 13 June 2014, on the Iraq turmoil. The Sensex shed 348.04 points (‐1.36%) to close at 25,228.17. The Nifty was down 107.80 points (‐1.41%) to close at 7,542.10.

Thus, the Sensex tumbled 168.29 points to close at 25,228.17 last week. Investors now await the Union Budget 2014‐15 to be presented in July 2014. Market participants will closely look at the country’s monsoon rain that will crucially decide the economic and

market scenario ahead in future. The Indian companies will further reveal their Q4FY13‐14 corporate earnings. Investors will closely watch the

corporate earnings results. On global front, market participants will closely focus on the crude oil behaviour reacting to the Middle East crisis. If

crude oil prices further boil and the crisis deepen, then the global financial markets will witness bearish movements. The US Federal Open Market Committee (FOMC) is scheduled for the next monetary policy review on 17 & 18 June

2014. GURU SPEAK - By G. S. Roongta Bull run corrects By G. S. Roongta As forecast in the last issue, the stock market made a new high at BSE Sensex 25725 on Thursday, 12 June 2014.

The Sensex, which had settled at 25396.45 in the previous week on Friday, 6 June 2014, after gaining 1180 points on a week‐to‐week basis continued in the higher closing mode making new tops. Thus, the week under review i.e. 9‐13 June 2014 witnessed another life time high in keeping with my forecast that the markets will make new tops till the Budget.

However, the momentum in the market looked weak giving an impression that the bulls were tired. The sliding momentum despite the two way volatility, albeit in a limited range, was a clear sign of fatigue. Individual

stocks making new highs compared to the previous week were also range bound. The Sensex rose one day but fell the next day appearing enervated. This is quite evident from the given table. Date High Low Close Gain/Loss

09-06-14 25645 25497 25580 +184 10-06-14 25711 25347 25583 +3 11-06-14 25725 25400 25474 -109 12-06-14 25611 25409 25576 +102 13-06-14 25688 25171 25228 -348

Thus the closing on the Sensex was lower on Friday, 13 June 2014, compared to Monday, 9 June 2014. Thus the volatility in the BSE Sensex and the CNX Nifty has come down presenting a grim outlook for a few days or weeks ahead. The Sensex high of 25645 on Monday, 9 June; 25711 on Tuesday, 10 June and 25725 on Wednesday, 11 June was less than a 100‐point rise over the next three days. The closing, too, was lower by 100 points over the next four days signalling weakness & fatigue. Similarly, the lows were lower by 77 points from 9‐11 June 2014, which is a cause for concern as it indicates that some more corrections are likely in the days ahead in sharp contrast to the 1180 point rise in the previous week.

The rally in Mid‐cap and Small cap stocks, however, continued unabated. The valuations of such stocks are still suppressed as they appear underpriced. The market picks up 20‐30 fresh stocks every day based on the high expectations of the Modi government taking new initiatives to revive the economy fast. 1) Amtek Auto hit a new high at Rs.272 against a 52‐week low of Rs.58 appreciating 369%. 2) AIA Engineering hit a high at Rs.810 against its 52‐week low of Rs.283 and rose 186%. 3) Astra Polytechnik hit Rs.698 against a 52‐week low of Rs.195 appreciating 258%.


4) BEML hit Rs.786 from its 52‐week low of Rs.126 thus yielding mind‐boggling gains of 523%. 5) Elecon Engineering hit a high of Rs.69 from the low of Rs.18.60 gaining over 271%. 6) Gati hit a high of Rs.125 against its 52‐week low of Rs.23 gaining 443%. 7) Hind Syntex (Dark Horse) hit a high of Rs.14 as against its 52‐week low of Rs.3.50 gaining 300%. 8) JBM Auto hit a high of Rs.230 against its 52‐week low of Rs.39 gaining 490%. 9) J.K. Lakshmi Cement hit a high of Rs.235 against its 52‐week low of Rs.50 gaining over 370% highest rise among

cement stocks. 10) KEC International hit a high of Rs.130 against its 52‐week low of Rs.30 gaining 333%. 11) Suzlon Energy hit a high of Rs.34 against its 52‐week low of Rs.5.50 gaining nearly 516%. These are but a few drops from the ocean of stocks brought to the knowledge of investors in general and readers of Money Times in particular. All these stocks were recommended in Money Times by one or the other analyst on its panel. The rise is thus spread in over 200 to 300 Mid & Small Cap stocks, if surveyed in detail. Since last six months, I have repeatedly emphasized on the great value that mid cap & small cap stocks offer to investors who take a serious view of our astute advice and reap handsome gains.

On 1 April 2014, Money Times launched a new product ‘Panchratna’, which garnered hundreds of subscribers ranging from quarterly, half‐yearly to annual subscriptions. All the five stocks featured in ‘Panchratna’ have given handsome profits ranging between 33% and 91% in just two and a half months as per details given below:‐

Performance Review of Panchratna Scrip Name Recom.

Price (Rs.) High (Rs.)

Date of High (Rs.)

CMP (Rs.) 13-06-14

% Gain

Cheslind Textiles 4.98 9.45 12-06-14 8.70 89.76

Katare Spinning Mills 19.50 26.00 07-05-14 19.60 33.33 Trident Ltd. 18.80 27.30 09-06-14 22.25 45.21 Elecon Engineering 36.75 69.00 02-06-14 62.75 87.76 Essar Ports 50.90 97.25 10-06-14 83.70 91.06 This rise is in just two and a half months. Imagine what the annual rise might be. It’s just mind‐boggling. The first three stocks: Cheslind Textiles, Katare Spinning Mills and Trident are from the Textile sector, which is suffering because of government policies. And there was neither liquidity nor price discovery as there are no sellers of these stocks. Despite that, they rose 33% to 91%. Each of the three Textile stocks was proved their worth rising handsomely in just two months, nothing short of mind‐boggling.

Investors should, therefore, book profit in 30% to 40% of the quantity and hold the balance for the long‐term. The next issue of ‘Panchratna’ will be released on Tuesday, 1 July 2014, wherein efforts will be made to cover stocks

for better returns keeping in mind the Union Budget and its impact on the stock market. Since FM, Arun Jaitely, is expected to announce some major relief next month, the market is expected to remain

bullish. The reforms going ahead are expected to be industry friendly and push for growth by removing bottlenecks in availability of raw materials at reasonable prices or to make imports cheap. Infrastructural development will also bring down input costs. Important points to note are: 1) Macro & micro economy of the country has already started improving with CAD and the Rupee is stronger at

Rs.59.30/USD as against Rs.69 in August/September 2013 thereby gaining nearly 15%. 2) Exports have started rising benefitting industry to cut down inventory and reduce the interest cost of holding

relatively lower stocks followed by improved cash flows. 3) FIIs inflows is rising to hit over Rs.55,000 crore by mid‐June 2014. This will keep the stock market and the Rupee

comfortable. India’s economy has bottomed out and even minor improvements will raise productivity as higher demand is bound to usher better growth, lower inflation and attract higher investments going forward. The market will renew the bull run after this intermediate correction.

By Amit Kumar Gupta STOCK WATCH


Dishman Pharmaceuticals & Chemicals Ltd. (Code: 532526)

(CMP: Rs.110, TGT: Rs.160+) Dishman Pharmaceuticals and Chemicals Ltd. (DPCL) manufacture active pharmaceutical ingredients (APIs) intermediates. The company operates in two segments: contract research and manufacturing services (CRAMS), bulk drugs, intermediates, quats and speciality chemicals. It provides a range of products to the global market including a range of reagents, speciality chemicals, APIs and their intermediates. It operates three business units: Dishman Speciailty Chemicals, which manufactures Phase Transfer Catalysts; Dishman Vitamins and Chemicals, which manufactures Vitamin D2, Vitamin D3, Vitamin D analogues, cholesterol and laolin related products for pharmaceutical, cosmetic and related markets; Dishman Disinfectants, which manufactures antiseptic and disinfectant formulations. The products manufactured by the company include bulk drugs, phase transfer catalyst and fine chemicals.

Its Q4FY14 revenue grew 18% YoY to Rs.410 crore, which was above market estimates. Carbogen witnessed 37% YoY growth compared with analysts’ estimate of 20%; marketable molecules (MM) declined 15% YoY, in line with estimates.

DPCL’s two new facilities, Unit 13 (Vitamin D3) and Unit 9 (Oncology unit) built at a capex of about Rs.200 crore, will start contributing materially in the coming quarters, which bodes well for the non‐Carbogen Amcis CRAMS segment.

Carbogen Amcis revenues were Rs.163 crore (much higher than Rs.131 crore in Q3FY14), with strong EBITDA margin of 13.5% impacted by a likely shift in the product mix towards higher‐margin contract research services.

The management indicated that Carbogen clocked US $100 million in FY14 (with ~19% margins) and has guided for US $102 million revenue with 18% OPM in FY15. It is very positive on the margin outlook aided by increasing capacity utilization given the orders (CHF 96 million orders) on hand.

DPCL has indicated that Unit 9 (oncology unit) capacity is entirely sold out and the revenue impact estimated at US $9 million will be visible in FY15 as the projects scale up. Currently, Dishman has four active projects including one internal project.

Dishman Netherlands has restarted after shutdown for renovation in Q2. Revenues were up 25% YoY and 21% QoQ at Rs.64.3 crore while EBITDA improved 30% QoQ and 24% YoY led by margins of 9.7%. With Vitamin D a price strengthening consistently, the management is optimistic on the outlook on the Vitamin D3 business and expects margins to bounce back to 13‐15% by FY15.

The company believes that the India CRAMS business will begin to scale up from FY15 with the likely commencement of the Astra Zeneca contract of US $5‐7 million.

Although DPCL’s effort to divest its Chinese facility has not been successful, the management has decided to utilize the facility for making some intermediates. For FY15, it expects cash break‐even as against cumulative loss of ~Rs290 crore in FY14. Valuations: DPCL’s performance in the past few quarters and commentary indicates that the company is on the recovery path as a significant proportion of its unproductive assets have begun to contribute. While the company’s patchy execution track record has been a concern, we take comfort from emerging signs of a recovery in Carbogen and Dishman’s ability to secure multiple large‐ticket deals with majors like Abbott, Astellas, Celegene, Astra Zeneca, DSM and J&J in the recent past. Given its significant operating leverage, a pick‐up in revenue growth can deliver significant earning upsides. We recommend to Buy the stock with a price target of Rs.168 (10x FY15E). Technical Outlook: The Dishman Pharma stock is very strong on daily chart and has been making higher highs and higher lows. It is very strong in all time frames and is trading above all important moving averages like 200‐DMA & 100‐DMA. Start accumulating at this level of Rs.110 and on dips to Rs.85 for medium‐to‐long‐term investment and price target of Rs.160+ in the next 6 months.

********

Jaypee Infratech Ltd. (Code: 533207)

(CMP: Rs.31, TGT: Rs.45+)


Jaypee Infratech Ltd. (JIL) is an infrastructure development company engaged in implementing the Yamuna Expressway Project and related real estate development. The Yamuna Expressway is a 165‐kilometre access‐controlled 6‐lane concrete pavement expressway along the Yamuna River from Noida to Agra with the potential to be widened to an eight lane expressway entirely in the State of Uttar Pradesh. The company has also been provided the right to develop 25 million sq. mtrs. of land for commercial, amusement, industrial, institutional and residential purposes across five different locations along the Yamuna Expessway ‐ one in Noida, two locations in District Gautam Budh Nagar (part of NCR) and one location in each of District Aligarh and District Agra, Uttar Pradesh. Lowest quarterly PAT: JIL’s Q4FY14 PAT was its lowest in four years led by weak revenue booking down 20% YoY to Rs.770 crore against the estimate of Rs.1030 crore and margin shrinkage of 11pp YoY (and 2.6pp QoQ) to 33.5%. EBITDA declined 40% YoY (and 28% QoQ) to Rs.260 crore against estimated Rs.400 crore. PAT was Rs.13.2 crore, much below Rs.100 crore in Q3FY14 impacted by the higher tax. Revenue mix: Expressway revenue was stable QoQ at Rs.38 crore, bulk land sales expand revenue was Rs.350 crore, while Percentage of Completion Method (POCM) revenue was Rs.370 crore as against Rs.56 crore in Q3FY14. Deteriorating presales have affected revenue and operating leverage. Operational weakness prevails: Presales were 1.2msf (Rs.180 crore), further down from 0.64msf (Rs.240 crore) in Q3FY14. The Agra parcel was a key driver, with marginal contribution from Sports City (Mirzapur). FY14 presales were Rs.1010 crore against Rs.3270 crore in FY13. Weak collections: Customer collections weakened to Rs.410 crore in Q4FY14 from Rs.510 crore in Q3FY14. FY14 collections were down 40% to Rs.2180 crore. In FY14, it collected ~Rs.1000 crore as against Rs.1500 crore of bulk land sales concluded in Q1FY14. Overall net debt declined Rs.450 crore YoY to Rs.7600 crore. Valuation: We reduce the EPS estimates for FY15 and FY16 by 15‐20% to factor in lower margins and higher tax rate. While JIL’s market mix offers gradual value accretion potential over the longer‐term, the recent monetization has been inconsistent due to higher dependence on investor demand in newer land parcels. With the uptick in sentiment, we believe it would witness steady improvement in demand after the recent torpidity. Our sum of the parts (SOTP) based price target is Rs.45/share (partially valuing Agra and Parcel‐2). The stock trades at 0.7x FY16E BV and 9.4x FY16E EPS and maintain a Buy on it. Technical Outlook: The Jaypee Infratech stock is very strong on the daily chart and has been making higher highs and higher lows. It is very strong in all time frames and is also trading above all important moving averages like 200‐DMA & 100‐DMA. Start accumulating at this level of Rs.31 and on dips to Rs.28 for a medium‐to‐long‐term investment and price target of Rs.45+ in the next 6 months.

By Kukku

Investment Call * Banco Products (Code: 500039) (Rs.94.75) is a supplier of high quality engine cooling components and engine sealing gaskets to the automotive industry for over five decades. The company offers a complete line of radiators, intercoolers, oil‐coolers and all types of engine gaskets that are designed to meet or even exceed the original equipment (OE) engineering specifications. Incorporated on 16 March 1961, Banco produces gaskets and radiators that have applications in automobiles, oil engines, compressors and locomotives. The company has four modern manufacturing plants based at Baroda (Vadodara) and Mumbai with state‐of‐the‐art facilities for Production, Design & Development and Quality Assurance. For Q4FY14, Banco reported 15% rise in total income from operations at Rs.281.68 crore. Operating margins improved by 370 bps to 12%. Operating profit rose by 65% to Rs.33.7 crore on a YoY basis.

FIFTY:FIFTY

Better than stocks! 3500 sq. ft. carpet prime space in Bandra West, Mumbai

For sale, a 29-year old investment company holding 3500 sq. ft. carpet area across two floors in superstructure with lift and terrace

available for residential or commercial use. Brand new construction. Situated off Turner Road near Linking Road & S.V. Road junction, it is 2 minutes walk from the station and 5 minutes drive from Western

Express Highway or Bandra-Worli Sea Link. Interested parties please call 9820708361. Brokers excuse.


PBIDT jumped 52% to Rs.33.7 crore. Thus, PBT increased by 59% to Rs.17.99 crore. Net Profit rose by 47% to Rs.9.35 crore due to higher tax. For FY14, it reported 13% rise in total income from operations at Rs.1161.77 crore as against Rs.1024 crore in FY13 on a consolidated basis. Raw material cost as % of sales net of stock adjustments declined 270 bps to 51% because of which operating margins improved by 260 bps to 14.2%. Operating profit rose 38% to Rs.164.8 crore on a YoY basis. PBIDT climbed 36% to Rs.173.4 crore. Interest cost rose 17% to Rs.19.34 crore. Depreciation amount rose 12% to Rs.32.37 crore. Thus, PBT jumped 47% to Rs.121.69 crore and net profit, too, shot up 47% to Rs.89.81 crore. Banco Products has announced that the company and its subsidiaries (Lake Minerals Mauritius and Nederlandse Radiateuren Fabriek B.V) have decided to sell their total holdings in Lake Cements, a project to manufacture cement in Tanzania, for US $17.7 million, which amounts to 52% premium over the original investment. With this sale of its stake in the cement unit, the Banco stock may get rerated as debts get repaid whereas Nederlandse Radiateuren Fabriek has started contributing to profits. The company has a decent track record of strong ROCE & RONW along with good distribution of dividend. Investors may keep watch on this stock for long‐term investment. Market Guidance * Essel Propack (Code: 500135) (Rs.96.55): As per the conference call after its Q4FY14 results, the company expects the growth momentum to remain strong. The company hopes to increase the ROCE and ROE from 16% and 15% respectively to about 20% each over the next couple of years. Also, it expects strong double digit growth in sales and operating margin to improve to around 18% in FY15 and later to around 20%, which is the standard margin globally. Investors may continue to hold this stock for higher targets. * Although NMDC (Code: 526371) (Rs.176) is producing around 22% of the country's iron ore, the management targets to touch 50% of the country's iron ore production in future, which is a very positive statement. For FY14, the overall top‐line rose 21% to Rs.3884.49 crore. Operating margins improved by 900 bps and operating profits climbed 41% to Rs.2469.71 crore. As a result, PBT climbed 31% to Rs.2952.30 crore. The company had an extraordinary (EO) income of Rs.45.48 crore. PBT after EO rose 34% to Rs.2997.78 crore. Net profit, too, rose 34% to Rs.1962.14 crore. Book value of the share is Rs.76 and it paid Rs.8.5 per share as dividend. Investors can continue to hold this cash rich PSU stock, which has not yet fully participated in the rally compared to other PSU stocks. * Godrej Properties (Code: 533150) (Rs.241) is another good stock. Although it has moved up from a low of Rs.156 to the current level, long‐term investors are likely to get decent long‐term growth. * IDFC (Code: 532659) (Rs.128): Although there may be short‐term pains but long‐term investors can SIP this stock on dips. * FOSECO Ltd (Code: 500150) (Rs.651.45) is a Rs.10 paid‐up stock with a share book value of Rs.139 with dividend of 245%. With the upturn in the auto sector & general engineering sector, it should do well. It has a very strong balance sheet. Investors can keep a watch to add this stock on dips as a good core portfolio choice. * KCP Ltd (Code: 590066) (Rs.50.75), which was recommended in this column a few weeks back, will benefit from the recent increase in cement prices. It will also benefit from the strong revival in engineering and infrastructure projects as it has a giant engineering unit with a captive foundry. Investors can safely hold this stock for the next few years. * Note: Many projects had been held up for the last three years. With the revival of these stalled projects, there will be a huge pick‐up in demand and industry is very likely to revive soon and the feel good factor will return to the industrialists, entrepreneurs and consumers too. Investors, therefore, need to stay invested in quality stocks instead of trading or switching stocks every now and then. The growth in the economy will benefit every segment. From our recommended stocks, many have given multifold growth over the last few years and their 52‐week high is ruling at VST Tillers: Rs.1875, Deepak Nitrite: Rs.975, TVS Shrichakra: Rs.641, Balkrishna Industries: Rs.713,


Monsanto: Rs.2246, Somany Ceramics: Rs.294, Ashiana Housing: Rs.135, Relaxo: Rs.415, Supreme Industries: Rs.578, Suprajit Engineering: Rs.105, PTC India Finance: Rs.35.95.

By Vihari

Jindal Poly Films: For sizeable gains Incorporated in 1974, Jindal Poly Films Ltd (JPFL) (Code: 500227) (Rs.246.85) is a part of Rs.6000 crore B.C. Jindal group a 58 year old industrial group offering a wide range of products. The group has promoted a number of companies involved in diverse activities like manufacturing Polyester film, Polypropylene film, Steel pipes and Photographic products.

JPFL is the largest manufacturer of BOPET and BOPP films in India. In 2005, the company made an IPO of 83,33,325 equity shares of Rs.10 each at a premium of Rs.350 per share amounting to Rs.292 crore by way of 100% book‐building. Its manufacturing capacities include PET:1,27,000 TPA; BOPP Film: 2,14,000 TPA; Metallizer:63,360 TPA; Polyester chips:1,76,400 TPA and Coating films: 3,600 TPA. JPFL has 12 including 5 overseas subsidiaries and five associate JVs.

JPFL entered the power sector in November 2010 with an investment of Rs.660 crore in the equity of group company Jindal India Powertech (JIPL), which is the holding company of Jindal India Thermal Power Ltd (JITPL) a special purpose vehicle (SPV) for the group's power activity. This entire investment was at par value of Rs.10 per share. Jindal Polyfilms currently holds 48.7% in JIPL.

JIPTL is currently working on an 1800 MW (3x600) thermal power project in Odisha at an investment of Rs.9000 crore financed by a debt:equity ratio of 80:20. Angul I is a pit‐head thermal power project located at village Derang in district Angul in Odisha.

The three units of 600 MW each will be developed in phases. It has already obtained all the required approvals including land, water, coal, environmental clearances and has achieved financial closure. One 600 MW unit commenced power generation on coal on 31 March 2014. The second unit of 600 MW is in an advanced stage of completion and is likely to commissioned by end July 2014.

Its Raigarh project at village Lohakhan in district Raigarh of Chhattisgarh has a planned generation capacity of 1320 MW consisting of two units of 660 MW each. The company has entered into a Memorandum of Understanding (MoU) and subsequently an Implementation Agreement with the Government of Chhattisgarh for this project and has applied for acquisition of 1,045 acres of land.

On 1 October 2013, JPFL acquired the global BOPP film business of ExxonMobil Chemical Company (USA) through an overseas subsidiary for about US $235 million, which is subject to customary price adjustments. The transaction covers acquisition of five BOPP production locations in USA and Europe. The manufacturing sites are in Georgia and Oklahoma in USA and in Italy, Netherlands and Belgium in Europe and include a technology center and sales office in Rochester, New York and an office in Luxembourg. Approximately 1450 people work in these locations and this acquisition will make JPFL one of the leading manufacturers of flexible packaging films globally with a combined capacity of about 4,45,000 TPA of BOPP films.

Earlier in 2011‐12, JPFL acquired Rexor SA of France through its subsidiary, Jindal France SAS. Founded in 1954, Rexor SA has emerged as a major European player in flexible & luxury packaging films for special applications. This European leader of tear strips and film wrap has a capacity of 4000 TPA with revenue of about €20 million. ISO:9002 certified since 1996, Rexor SA has improved upon the quality of its products and services by way of high‐performance environmentally‐friendly manufacturing equipment and mastery over the complex polyester/BOPP film coating technologies and expertise in metallisation, demetallisation and cutting of such films.

The Indian market for BOPP Films is underdeveloped due to popularity of low quality, cheap alternative Tubular Quenched Polypropylene Film (TQPP), which is being replaced by BOPP. Growing preference for premium and sophisticated packaging, however, is driving the growth of BOPP in India.

Besides flexible packaging, metallised BOPET films are used for metallic yarn. Metallised BOPP is widely used for gift wrapping. In the last few years, metallised polyester film has found application in sequins for the textile industry for sarees and dress material for women’s wear. However, the largest application of metalized BOPET and BOPP films continues to be in the flexible packaging segment.

For Q4FY14, JPFL’s standalone net profit zoomed 168% to Rs.51.8 crore on 20% higher sales of Rs.675 crore and the standalone EPS was Rs.12.3.

EXPERT EYE


For FY14, consolidated net profit skyrocketed over 1200% to Rs.78.1 crore on 132% higher sales of Rs.5132 crore after the acquisition of the film biz of ExxonMobil. The FY14 consolidated EPS works out to Rs.18.6 and a dividend of 10% has been declared.

JPFL’s equity capital is Rs.42 crore and with reserves of Rs.1633 crore, the book value of its share works out to Rs.399. The value of its gross block is a whopping Rs.3764 crore with addition of capex Rs.1600 crore in FY14. Its unquoted equity investments in subsidiaries and associates amount to Rs.637 crore. Despite heavy borrowings for acquisitions, the DER is 0.82:1 (0.43:1). The value of the current/other investments, cash on hand etc are worth Rs.389 crore in the consolidated book.

The total market size of the packaging industry in India is about $6‐6.5 billion of which flexible packaging constitutes 22% or $1.32 billion (Rs.7,780 crore). This is expected to grow at a 15% p.a. on account of the rising demand for thin films. JPFL has strong record of consistent dividends and bonus shares and had issued 1:1 bonus shares in 1996 and 2010.

Considering its integrated manufacturing facilities, major acquisitions, broadbased product portfolio, synergies in operations, cost optimization, manufacturing and distribution presence in key regional markets, strong customer relationships, focus on high growth segments, rising proportion of speciality product revenues, strong global delivery capabilities with a presence in the fastest growing markets backed by strong global and domestic demand give strong visibility to JPFL’s revenue & profitability growth going forward.

Based on the current going, JPFL is expected to notch a consolidated EPS of Rs.45‐50 in FY15. At the current market price of Rs.246.85, the share trades at a P/E multiple of 5.5‐5 on FY15 estimated earnings. A conservative P/E of just 10 will take its share price to Rs.450‐500 in the medium‐to‐long‐term.

*******

Shivalik Bimetal: Low priced bargain Shivalik Bimetal Controls Ltd. (SBCL) (Code: 513097) (Rs.14.74) (FV: Rs.2) has come out with excellent results in Q4FY14.

Incorporated in 1984, SBCL is specialized in the joining of metals through Diffusion Bonding/Cladding, Electron Beam Welding, Solder Reflow and Resistance Welding. The products include Thermostatic Bimetal, Clad Metal, Spring Rolled Stainless Steels and Electron Beam Welded materials with Multi‐gauge and Multi‐materials strips and Thermostatic Edge‐welded strip for a broad spectrum of industries. It also offers precision manufactured components specific to an application. SBCL has ISO:14001 & 18001 certifications and exports constitute 40% of sales.

SBCL has a plant at Chambaghat in Solan district of Himachal Pradesh to manufacture thermostatic bimetal strips. This was the first plant in Asia outside Japan to undertake the manufacture of such a sophisticated item. It had a technical collaboration with Polymetallurgical Corporation of USA for a period of five years, which has now ended. It acquired technical know‐how for production of Edge Welded Trimetals and in 1999‐2000 updated the manufacturing/engineering technical know‐how for production of Bimetal Strips.

SBCL is one of the very few companies in the world that has the ability to produce Hot Atomic Diffusion Bonding and Electron Beam Welding of different materials and components thereof under one roof. The products find applications in Industrial, Automotive, Aviation, Electronics, Defence, Medical and Domestic Appliances.

Over the years, SBCL has been exploring various expansion and diversification plans and the possibility of joining hands with companies in the related field and with global presence. Accordingly, it ventured into joint ventures and associates as under:‐

In 2005, it formed a 50:50 Joint Venture, Checon Shivalik Contact Solutions Pvt. Ltd (CSCS), with Checon Corporation of Massachusetts of USA to manufacture Electrical Silver Contacts, which are produced by the bonding of silver alloys with base metals like brass and copper. SBCL invested Rs.1.2 crore towards its equity capital and its world‐class

Fresh One Buy – Daily Fresh One Buy – Daily is for investors/traders who are keen to focus and gain

from a single stock every trading day. With just one daily recommendation selected from stocks in an uptrend, you can now book profit the same day or carry over the trade if the target is not met. Our review over the next 4 days will provide new exit levels while the

stock is still in an uptrend. This low risk, high return product is available for online subscription at

Rs.2500 per month. Contact us on 022-22616970 or [email protected] for a free trial


manufacturing facility is based in Solan in Himachal Pradesh. This JV combines the expertise of Shivalik Bimetal Controls with that of Checon Corporation to produce high quality

Silver and Silver Alloy based electrical contact materials and assemblies (using world‐class equipment and professional manpower backed by decades of manufacturing experience).

In 2008, a JV Company named Innovative Clad Solutions Pvt. Ltd. (ICS) was incorporated with the shares held by SBCL and Aperam, which is the majority shareholder.

Both the companies have combined their expertise, experience, marketing network and technical knowledge for manufacturing Industrial Clad in the Special Economic Zone located at Pithampur near Indore in Madhya Pradesh. ICS has established a world‐class Industrial Clad manufacturing facility and SBCL has invested Rs.15.1 crore towards its share of the equity capital.

For Q4FY14, net profit zoomed 111% to Rs.1.9 crore on 12% higher sales of Rs.22 crore Q4FY14 and the quarterly EPS was Re.1. For FY14, net profit zoomed 369% to Rs.4 crore on 3% higher sales of Rs.79.7 crore and the EPS stood at Rs.2.1 on its Rs.2 paid‐up share.

SBCL’s equity capital is Rs.3.8 crore and with reserves of Rs.52.4 crore, the book value of its share works out Rs.29.6. The DER is 0.6:1; Cash‐on‐hand is Rs.3.7 crore whereas short‐term advances are Rs.6.7 crore. The company has acquired land for expansion, which will begin after clearance of the approvals. Capital work‐in‐progress is Rs.17.4 crore. The promoters hold 61.9% in the equity, foreign holding is 0.5% and with PCBs holding 1.7% leaves 35.9% with the investing public.

SBCL continues to foray into new areas utilizing the latest technology and resources for adding new products and expanding various product ranges. Its focus on achieving stable growth, strong execution, cash flow maximization, higher productivity, keeping costs under control by implementing cost reduction programmes and its world‐class quality controls continued to strengthen in FY14. SBCL is, therefore, hopeful of sustaining growth in sales and profitability in the current year.

Despite the volatile economic environment, the global market offers substantial opportunities, which SBCL is fully geared to navigate through meeting the challenges of the changing technology demand and customer expectations. Improved consumer confidence and structural policy decisions in the developed markets provide the required momentum to kick‐start the economy on the path of recovery.

In March 2005, SBCL sub‐divided its equity share of Rs.10 each into five equity shares of Rs.2 each and had also announced a 1:1 bonus issue.

Based on the current going, SBCL is likely to register an EPS of Rs.3 in FY15. At the CMP of Rs.14.74, the share trades at a P/E multiple of 4.91. A conservative P/E ratio of just 7.5 will take its share price to Rs.22.5, which will fetch a decent gain of over 40%. The 52‐week high/low of the share has been Rs.16/5. TECHNO FUNDA By Nayan Patel

Ecoplast Ltd. BSE Code: 526703 Last Close: Rs.41.80 Ecoplast Ltd. is engaged in manufacturing, processing and marketing co‐extruded plastic films used in packaging, industrial and consumer applications worldwide. It offers multilayer co‐extruded polyethylene and co‐polymer films to the packaging industry, and for other speciality applications. It provides lamination films for various applications including Agro Films, Cosmetics & Toiletries, Food & Beverages, Pharmaceuticals, Speciality Applications, Medical/Surgical Products, Cement Packing, Lube Oils, Easy Peel Seal Film, Masking Films and Surface Protection Films, Cable Wraps, Metalizing, Pet Foods and Automobile Products.

It also offers surface protection films for substrates such as stainless steel, coated metals, aluminum composite panels, clean room, PVC/plastic, decorative laminates, carpets, marble/tiles, aluminium sections and PVC sections to

Review Last week, we recommended Ultramarine & Pigments at Rs.64.3. It zoomed to Rs.71.45 level recorded over 11% appreciation in just one week. Hope you enjoyed the profits.

In the issue dated 31 March 2014, we recommended Gulshan Polyols at Rs.86. Within 2.5 months, it zoomed to Rs.206 level and recorded over 162% appreciation.


prevent abrasion and scratching during manufacturing and damage during delivery cycles. Ecoplast was incorporated in 1981 and is headquartered in Mumbai.

It has an equity base of Rs.3 crore that is supported by reserves of around Rs.15.20 crore, which is 5 times the equity and has a share book value of Rs.65.85. The price:book value ratio is just 0.61, which is highly attractive. The promoters hold 59.01% equity stake while the investing public holds the balance 40.99%.

For Q4FY14, net profit zoomed 481.81% to Rs.0.64 crore from Rs.0.11 crore in Q4FY13. For FY14, net profit climbed 40.83% to Rs.1.69 crore from Rs.1.20 crore in FY13 while total turnover rose to Rs.88.71 crore in FY14 from Rs.80.39 crore in FY13. It thus reported an EPS of Rs.5.64 for FY14.

The company has paid regular dividends and paid 12% for FY13 and has declared 12% final dividend for FY14.

The company may declare Rs.105 crore turnover with Rs.2.05 crore profit for FY15. At its current market price, the Ecoplast share discounts around 6 times its FY15(E) EPS of Rs.6.83, which is much cheaper than its peers. The stock appears undervalued and is likely to attract value buying at this level.

Investors can buy this stock with a stop loss of Rs.35 on a closing basis. On the upper side, it will zoom to Rs.55 level in the medium‐term and Rs.80+ over the next 9 to12 months.

Last 5 years performance: (Rs. in crore) Year Net Sales Net Profit EPS (Rs.)

2009‐10 48.61 1.31 4.36 2010‐11 66.06 3.06 10.19 2011‐12 60.85 1.55 5.18 2012‐13 80.39 1.20 4.01 2013‐14 88.71 1.69 5.64 2014‐15 (E) 105 2.05 6.83

Editorial & Business Office: Goa Mansion (Gr. Floor), 58 Dr. S.B. Path (Goa St.), Near GPO, Fort, Mumbai – 400 001. Phone: 022-2265 4805, Telefax: 022-2261 6970. Editor & Publisher: R.N. GUPTA CHENNAI: T.A.S. Venkatasubba Rao (Phone: 044-24917241, Mobile: 9444024664) JAIPUR: Satram Das (Phone: 0141-2636341) BANGALORE: V. Raghurama Reddy (Mobile: 9591763126 / 9379559166) DELHI: P. K. Vasudevan (Mobile: 9810513247) All rights reserved. No portion of this publication may be copied or reproduced without the written permission of the publisher. Any infringement of this condition will be liable to prosecution. Printed & Published by R.N. Gupta for the proprietors Time Communications (India) Ltd. and printed by him at The Urdu Press 79-A, Jairaj Bhai Lane, Mumbai – 400 008. Registration No.: 63312/91, REGD. NO. MH/MR/South - 72/ 2006-08

Disclaimer: Investment recommendations made in Money Times are for information purposes only and derived from sources that are deemed to be reliable but their accuracy and completeness are not guaranteed. Money Times or the analyst/writer does not accept any liability for the use of this column for the buying or selling of securities. Readers of this column who buy or sell securities based on the information in this column are solely responsible for their actions. The author, his company or his acquaintances may/may not have positions in the above mentioned scrip.


Subscription Form

Please fill in the subscription coupon in CAPITAL LETTERS only and send it to:

The Subscription Manager Time Communications (India) Ltd. Goa Mansion (Gr. Flr.), 58, Dr. S.B. Path (Goa St.), Near G.P.O., Fort, Mumbai – 400 001. Tel. Nos.: 022‐22654805, 22616970, Email: [email protected], Website: www.moneytimes.in

I wish to subscribe to:

MEDIUM‐TO‐LONG‐TERM: DAILY TRADING:Money Times (Post/Courier/Online) Nifty (Pre‐market) (Online)

1 yr = Rs.750, 2 yrs = Rs.1400, 3 yrs = Rs.2100 1 mnth = Rs.2000, 1 yr = Rs.18000 Early Bird Gains (Courier/Online) Nifty Options (Pre‐market) (Online)

6 mnths = 4000, 1 yr = Rs.7000, 1 mnth = Rs.1500, 1 yr = Rs.12000

2 yrs = Rs.12000, 3 yrs = Rs.15000 Bank Nifty (Pre‐market) (Online)

Investrak Smart Moves (Courier/Online) 1 mnth = Rs.1500, 1 yr = Rs.12000

1 yr = Rs.8000 Nifty & Bank Nifty (Live Market) (SMS)

Panchratna (Courier/Online) 1 mnth = Rs.3000, 1 yr = Rs.24000

1 qtr = 2500, 2 qtrs = Rs.4000, 1 yr = Rs.7000 Live Market Intra‐day Calls (SMS)

Beat the Street 9 (Courier/Online) 1 mnth = Rs.4000, 1 yr = Rs.36000

1 qtr = 3500, 2 qtrs = Rs.6500, Profitrak Daily (Online)

3 qtrs = 9000, 1 Yr = Rs.11000 1 mnth = Rs.2500, 3 mnths = Rs.7000

Winners (Courier/Online) 1 yr = Rs.5000 6 mnths = Rs.13000, 1 yr = Rs.20000 SHORT‐TERM (1 wk – 3 mnths): Fresh One Buy‐Daily (Online)Profitrak Weekly (Courier/Email) 1 mnth = Rs.2500, 1 yr = Rs.25000

1 mnth = Rs.1500, 1 yr = Rs.12000 Profitrak F&O (Online)

Fresh One Buy‐Weekly (Courier/ Online) 1 mnth = Rs.3500, 3 mnths = Rs.7000

1 mnth = Rs.2000, 1 yr = Rs.18000 6 mnths = Rs.13000, 1 yr = Rs.20000 Fresh One Buy–Mnthly, Qtrly, Yrly (Online) Profitrak Daily Fresh Futures (Online)

1 yr = Rs.17000 1 mnth = Rs.4000, 1 yr = Rs.36000 Techno Funda Plus (Courier/Online) Profitrak Short‐term Gains (Online) 1 yr = Rs.8000

1 mnth = Rs.2500, 3 mnths = Rs.6000, PORTFOLIO RELATED:

6 mnths = Rs.11000, 1 yr = Rs.18000 Portfolio Advisory Service (One‐to‐One/Email)

Investment Advisory Service (Phone/Email) Upto 15 stocks = Rs.1500

One time service = Rs.1000 (for 5 stocks) (Above 15 stocks, Rs.100 per additional stock)

(For courier delivery, add Rs.30 per issue or Rs.1500 p.a. to the subscription amount as courier charges)

a) I am enclosing Demand Draft/Cheque No. ________________ payable at par in Mumbai favouring

‘Time Communications (India) Ltd.’ dated _____________ on _____________________________ at Branch

______________________________________ for Rs. _____________.

b) I have deposited Cash or electronically transferred Rs._____________ via RTGS/NEFT to:

Time Communications (India) Ltd. State Bank of India C/A 10043795661, Fort Market Branch, Fort, Mumbai ‐ 400 001 (IFSC: SBIN0005347) or

Time Communications India Limited ICICI Bank C/A 623505381145, Fort Branch, Mumbai ‐ 400 001 (IFSC: ICIC0006235) and have advised you about Transfer No. _______________________ by e‐mail / phone.

c) I am aware that investment in equities is risky and stock performance is unpredictable and can result in losses in spite of all analysis and projections.

Name:

Address:

City: Pin:

Tel No Mob

Email:

Are you a Investor, Trader, Broker/Sub‐Broker, Investment Advisor, Banker Date & Place: ___________________________________ Signature: ______________________

pid_14_MT32_160614

Documents