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T I M E S A TIME COMMUNICATIONS PUBLICATION

VOL. XXIV No.40 Monday, 10 – 16 August 2015 Pages.22 Rs.15

Market yearns for fresh triggers By Sanjay R. Bhatia

The markets moved higher on the back of follow-up buying support. Although occasional bouts of profit booking and selling pressure were witnessed at higher levels, the markets managed to trade in profit. The FIIs remained net buyers both in the cash and derivative segments. Domestic institutional investors, however, were seen booking profits at higher levels and remained net sellers during the course of the week.

The breadth of the market remained positive amidst higher volumes, which is a positive sign for the markets. On the domestic front, the government struggled in the Parliament as the political logjam continued. The RBI maintained a status quo in its monetary policy review. On the global front, crude oil prices continued to trade soft while precious metals moved downwards. The US markets remained cautious ahead of the weekly jobs data, which could encourage the US Federal Reserve to raise interest rates in September 2015.

Technically, the prevailing positive technical conditions helped the markets witness follow-up buying support at higher levels. The MACD, KST and RSI are all placed above their respective averages on the weekly charts. Further, the RSI is also placed above its average on the daily chart. The Nifty continues to sustain above its 50-day SMA, 100-day SMA and 200-day SMA. These positive technical conditions would lead to regular buying support.

However, the prevailing negative technical conditions still hold good and would weigh on the market sentiment at higher levels. The MACD, Stochastic and KST are all placed below their respective averages on the daily charts. Further, the Stochastic is placed below its average on the weekly charts and is also placed in the overbought zone on the daily and weekly charts. The Nifty's (50-100 day SMA) and (50-200 day SMA) Death Cross breakdown continues to hold valid. All these negative technical conditions would lead to intermediate bouts of profit booking and selling pressure especially at higher levels.

The +DI line and the -DI line both are still converging on the weekly charts and a decisive breakout is awaited. The ADX line, on the other hand, continues to languish around the 15 level, indicating that the market trend lacks strength and a range bound trend is expected. Now it is important that the markets witness follow-up buying support at higher levels and the Nifty continues to sustain above the 8525 level for the rally to continue and for the Nifty to move higher.

The earnings season has largely remained disappointing along with the monsoon session of Parliament. The global cues are also uninspiring. With a lack of positive triggers, the markets are likely to struggle at higher levels and the current rally would always remain under threat especially amidst the prevailing overbought conditions.


The Nifty 8520 level remains a support level. In the meanwhile, the markets would take cues from the earnings season, Parliament session, forthcoming RBI meet on monetary policy, monsoon progress, Rupee-Dollar exchange, global markets, and crude oil prices.

Technically on the upside, the BSE Sensex faces resistance at the 29094 and 29184 levels but seeks support at the 28088, 27248, 26776, 26469, 26108 and 25910 levels. The resistance levels for the Nifty are placed at 8610, 8655 and 8867 levels while its support is placed at 8525, 8425, 8315, 8191, 8065, 8000 and 7940 levels.

Investor's open flirt.....!!!!! Last week was singularly unique as the market benchmark looked tired and fatigued but high net worth investors and their high retail inflows seem to be flirting openly with the mid-caps and small-caps. Over 50 mid-caps hit new record highs thanks to the domestic investors’ appetite for smaller companies, which drove the mid-cap index to a new high. The likes of Sanofi, Tata Elxsi, Welspun India, PC Jewellers, FAG Bearings, Tube Investments, IGL etc recorded new highs on large volumes. It’s observed that the Sensex has gained only 2.5% in the last 90 days, while the BSE Mid-cap and Small-cap have gained 7.5% and 7% respectively. No wonder, retail investors, HNIs and institutional investors are seen flirting with such scrips and in sectors such as Textiles, Tyres, Aviation, Chemicals and Paints, which have managed to post strong gains thanks to the fall in crude prices. Market pundits feel that such open flirting shall continue as long as the inflow of money in the market is robust.

"The rally in mid-cap and small-cap stocks is a sign that retail investors are aggressively buying. The trend seen in the last few weeks is that domestic money is chasing mid-cap stocks while the FIIs are investing in large caps" says Raamdeo Agrawal, Joint MD, Motilal Oswal Financials.

The same sentiment is echoed by Nilesh Shah, MD, Kotak Securities when he says "There is huge domestic money from HNIs and retail chasing mid-cap stocks despite many of them being overvalued. The demand is more for companies where the fresh issuance of new shares are limited."

RBI Governor, Raghuram Rajan, during the week kept repo rates unchanged on inflation worries but struck a dovish note on economic recovery. “Home loans and other borrowings shall get cheaper” he said with RBI asking the commercial banks to pass on the benefits of earlier rate cuts to borrowers. "Since the first rate cut in January 2015, the median base lending rates of banks has fallen by around 30 basis points - a fraction of the 75 basis points in the rate cut so far. As the loan demand picks up in Q3FY16, banks will post more gains from cutting rates to secure new lending as more transmission will take place. The welcome announcement of the government infusing fresh capital into public sector banks will help the loan growth and hence transmission, as will current easy liquidity conditions" said Rajan.

Bankers claim that the higher rate on PPF deposits and on small saving schemes, that are competing with commercial banks and disallows them from reducing the deposit rates. The banks, therefore, see muted growth in deposits and the credit growth is trailing, which keeps the banks from adding more deposits and hence effect deposit rate cuts.

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Anil Ambani led ADAG is entering a chopper building facility at Mihan near Nagpur. A smart city-the first of its kind called Dhirubhai Ambani Aerospace Park (DAAP) will be developed at a cost of $1 billion to manufacture helicopters for both commercial as well as defence applications. This could well be a beginning in capturing a slice of projected $100 billion defence manufacturing pie, which is part of NDA's Make in India plan.

Hero MotoCorp’s Q1FY16 results ignite hope in an otherwise lacklustre segment. The new launches as well as strategic marketing initiatives have made it possible to deliver a 33% boost to the bottom-line despite a 2% declining top-line.

Of the fifty Nifty stocks, FIIs have reduced their stakes in 41 stocks in the April to June quarter. On an aggregate basis, they have reduced their holdings to 28.6% from 29.2% in the preceding quarter. The FIIs reduced their stake by nearly 2% in Hindalco, Tata Motors, Zee Entertainment, BoB and Hero MotoCorp.

Projecting the country's highways sector as ‘unique opportunity’ for investments, the government has rolled out projects worth Rs.6 lakh crore.

All this happening amidst the stalemate in Parliament and suspension of 25 Congress MPs!

God save the country from our rulers.

Mid caps outperform Sensex By Hitendra Vasudeo

Last week, the Sensex opened at 28089.08, attained

a low at 27866.11 and moved up to a high 28359.96 before it finally closed the week at 28236.39 and thereby showed a net rise of 121 points.

A breakout has not yet been witnessed but volatility and choppy movements were still seen intra-day last week.

Weekly Chart

Weekly resistance will be at 28463-28576. The higher range for the week can be 28442-28936. Support will be at 28089-27866 for the week.

The next support cluster points are at 27416 and 27209.

A breakout and weekly close above 28600 is essential with a bullish candle for a rally to test back the peak.

Expect profit booking pressure at the higher range on index and index related stocks.

Weakness & correction with choppy volatility will resume on a fall below 27866. Wider volatility will be seen on a fall and close below 27866.

The wider volatility band is 28576 to 27209.

A rising wedge has been formed and a breakout and weekly close above 28576 is essential. Failure to cross 28576 and a poor weekly close below 27866 can end the Wave (b) structure and the Wave (c) structure can open up.

Monthly Chart

The high and low of July 2015 was 28578 and 27416. The movement has to get out of the band up or band down to show directional movement in August 2015 or later.

BSE Mid-Cap

BSE Mid-Cap index has shown a breakout above 11180 and 11193 peak that ruled since March 2015. The expected level to be attained is 11912 from the current level of 11557. This means that mid-cap stocks still have to perform in days to come with volatility.

Strategy for the week

Traders long can keep the stop loss at 27200. Buy above 28600 with the low of the week as the stop loss or 28000, whichever is lower. Profit booking is to be undertaken at higher level of 29094, 29533 and 30024.

TRADING ON TECHNICALS

Sensex DRV Daily Trend WRV Weekly Trend MRV Monthly Trend

Last Close 28236 27901 UP 27540 UP 26306 UP


Mid-cap stocks will be in action and buying of mid-cap stocks can extend the rise to 11912.

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

Weekly Reversal

Value

Up Trend Date

Weak below

Demand point

Demand point

Supply point

Supply point

VARDHMAN TEXTILES 941.00 804.0 843.7 901.3 998.7 1153.7 73.8 801.0 19-06-15

BRITANNIA INDUSTRIES 3202.00 3074.0 3104.0 3172.0 3270.0 3436.0 73.2 3034.3 15-05-15

HIND.PETR.CORP.(HPCL 970.00 899.0 920.0 949.0 999.0 1078.0 73.0 918.8 22-05-15

MARUTI SUZUKI INDIA 4452.00 4375.0 4388.3 4438.7 4502.3 4616.3 71.7 4302.5 17-07-15

TATA ELXSI 1874.00 1702.0 1738.0 1838.0 1974.0 2210.0 71.4 1625.5 17-07-15

EXIT LIST

Scrip Last

Close Supply point

Supply point

Supply point

Strong above

Demand point

Monthly RS

VINATI ORGANICS 505.45 526.39 533.00 539.61 561.00 414.4 36.79

GUJARAT PIPAVAV PORT 214.40 222.83 225.73 228.62 238.00 173.7 44.9

ARVIND 304.80 309.64 313.05 316.46 327.50 251.8 45.35

ACCELYA KALE SOLUTIO 1031.00 1098.37 1123.50 1148.63 1230.00 672.4 46.13

PRISM CEMENT 98.85 101.88 103.30 104.72 109.30 77.9 47.07

ALSTOM T & D INDIA 520.30 529.80 535.85 541.90 561.50 427.2 47.63

HDFC (HOUSING DEV.FI 1299.00 1313.30 1320.50 1327.70 1351.00 1191.3 48.24

MONSANTO INDIA 3170.00 3234.10 3261.00 3287.90 3375.00 2778.1 48.59

CENTURY PLYBOARD 195.55 203.77 206.68 209.58 219.00 154.5 48.68

J.B.CHEMICALS & PHAR 253.85 269.71 275.00 280.29 297.40 180.1 48.97

HINDUSTAN UNILEVER 906.00 909.55 912.50 915.45 925.00 859.6 49.54

MBL INFRASTRUCTURE 268.60 269.55 272.50 275.45 285.00 219.6 49.89

TAKE SOLUTIONS 139.05 144.64 147.00 149.36 157.00 104.6 52.04

KIRLOSKAR OIL ENGINE 299.75 313.72 319.50 325.28 344.00 215.7 53.09

BUY LIST

Scrip Last

Close Demand

point Demand

point Weak below

Supply Point

Supply Point

Risk Reward

Monthly RS

JUBILANT LIFE SCIENC 286.00 280.99 276.98 272.96 259.95 315.0 349.1 68.58

JUBILANT FOODWORKS 1923.95 1897.39 1885.00 1872.61 1832.50 2002.4 2107.4 61.14

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

Relative Strength

Weekly Reversal

Value

Down Trend Date

Demand

point Demand

point Supply point

Supply point

Strong above

CAIRN INDIA 167.00 151.9 162.6 169.0 173.3 175.3 30.58 171.24 07-08-15

JSW ENERGY 77.05 65.8 74.2 79.7 82.5 85.2 32.96 89.50 24-07-15

VIJAYA BANK 40.35 37.7 39.6 40.8 41.5 42.0 34.10 40.63 17-07-15

GAIL (GAS AUTHORTY O 341.70 320.2 336.0 346.2 351.9 356.4 34.73 357.53 03-07-15

RURAL ELECTRIFICATIO 266.80 244.8 261.0 271.4 277.2 281.9 36.79 279.08 24-07-15


SWARAJ ENGINES 994.00 982.58 967.00 951.42 901.00 1114.6 1246.6 55.09

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

Demand Point

Strong above

Weak below

Supply point

Supply point

Risk Reward

BAFNA PHARMA 532989 28.85 26.55 30.60 25.20 33.9 39.3 -

BHANDARI HOSIERY EXP 512608 58.35 56.95 61.70 53.40 66.8 75.1 -

GANESH ECOSPHERE 514167 174.00 169.90 175.40 157.10 186.7 205.0

GOL OFFSHORE LTD 532786 62.35 61.45 65.15 59.70 68.5 74.0

ORIENT GREEN POWER 533263 14.78 14.68 15.29 13.65 16.3 17.9

PNC INFRA 539150 481.10 465.00 484.10 451.00 504.6 537.7

USHER AGRO 532765 43.20 40.25 43.60 38.60 46.7 51.7

VEDAVAAG SYSTEMS 533056 22.35 21.70 22.55 20.25 24.0 26.3

Marketmen and dealers advise investors to avoid the Power Mech Projects IPO on grounds of overvaluation.

Balkrishna Industries which makes off the road (OTR) tyres is performing extremely well and enjoys a near monopoly in the market. Buy for an electrifying price rise.

Rising volumes in Coal India suggest that Q1FY16 results this week may be good. The share is poised for a substantial rise.

New facilities at Ceat Tyres will enable it to post much better returns from the next quarter. Buy immediately for handsome profits.

The results of Motherson Sumi Systems have not been properly interpreted by investors. While speaking to CNBC18, management has clarified that the depreciation of the Yen and Euro resulted in lower profits and that the actual sale is higher than in the previous quarters.

FMCG major, Marico, is on a major threshold to launch many products and post better profits this year. Buy for decent capital appreciation.

The ongoing expansion plans at Siyaram Silk Mills will add to its ever increasing profits. A 50% in share price rise is a distinct possibility in the next 6 months.

Nath Bio-Genes (India), not so well-known, will benefit from the good monsoon and boost earnings in the coming months.

Nitin Fire Protection Industries is all set to recover its lost glory. Buy immediately before time runs out.

Cadila Healthcare will launch some its most profitable generic versions of patented dugs soon. Buy with a medium range target of Rs.2500.

The NIIT management has stated to the media that the best time for the company starts now. Buy and sit tight for two years for handsome gains.

Sathavahana Ispat is seemingly doing well and is reporting rising volumes. Is something cooking? Brave hearted investors may buy for equally rewarding times.

BGR Energy Systems, which has seen dizzy heights in the past, has posted good results. Buying at this stage can give excellent returns.

KPIT Technologies has proved that false rumours cannot force its share price down. This Kirloskar group company has the potential to cross Rs.200 again.

SNL Bearings has been moving up smartly. It is a subsidiary of NRB Bearings Ltd. Experts feel that it is available cheap at a market cap of just Rs.50 crore whereas if valued at 4x sales of nearly Rs.30 crore, the stock should trade at Rs.135 i.e. double from current levels.

At the CMP of Rs.30, Raunaq Automotive Components is the cheapest auto-ancillary stock available. The shares trade at a P/E of 7x and is ripe for a re-rating looking at the other overheated auto ancillary stocks in the market.

The land parcel of Garware Polyester in suburban Mumbai located close to the Western Express Highway & international airport is up for sale. Pundits predict the land to be worth Rs.200 crore whereas its market cap stands at Rs.330 crore. A screaming Buy!

TOWER TALK


Tamil Nadu Newsprint & Papers, Dhunseri Petrochem, Nandan Denim, have all posted excellent June quarterly numbers. Their share prices can easily appreciate 50% in three months.

Ajanta Soya (CMP Rs.24), a leading Vanaspati & edible oil refiner in North India has a turnover Rs.550 crore with net profit Rs.3 crore, will gear up further this year on lower commodity prices. This scrip has the potential for multi-bagger returns.

An Ahmedabad based analyst recommends buying Adani Transmission, Greenlam Industries, HFCL, LKP Finance & Noida Toll Bridge Company.

STEL Holdings Ltd. (BSE Code: 533316) (CMP: Rs.29.20) (FV: Rs.10)

By Bikshapathi Thota

Sentinel Tea and Exports Ltd (STEL) was incorporated as Public Ltd Company in 1991. Listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The Company is a part of RPG Enterprise-one of the largest business conglomerates in India. The name of the Company was changed to STEL Holdings Ltd in July 2011. The Company currently has investments in RPG group Companies. The present quoted value of the holdings is Rs.380 crore as follows:

The unquoted holdings of the company are:

1) 1,70,000 shares of Doon Doars Plantations 100% subsidiary of STEL Holdings with its registered office in Kolkata with assets in agriculture, value of which is yet to be determined.

2) 10,57,135 shares of Spencer & Company 25% stake in Spencer International Hotels like Taj Westend, Taj Connemara, Taj Savoy valued approximately at Rs.100 crore.

3) 30,00,000 shares of Noida Power Company (20% stake) which operates in greater Noida. At FY14 EPS of Rs.13 will value it approximately at Rs.40 crore.

4) 375000 shares OffShore India Ltd, which holds some group company shares. Value yet to be determined.

Conclusion: If the STEL Holdings Ltd quoted holdings valued at Rs.380 crore and unquoted valued approximately at Rs.150 crore. Discounting the unquoted securities by 30%, we get a value of Rs.100 crore and a total value Rs.480 crore. With zero-debt on its balance sheet, each share is valued at Rs.260 (Rs.480/1.85 crore total outstanding shares).

Presently, STEL’s promoters are the Sanjeev Goenka group & the Harsh Goenka group. If anyone of them takes over the company, it will trigger value unlocking. Presently, the scrip is in T2T category due to 19% promoter stake in the physical mode. But company sources indicate that they have started to demat them where after the scrip will come out of the T2T group. The book value of the share is Rs.65.

Generally, holding companies discount 50% discount to their fair value. In this case, even if you discount 75% of fair value, the share should quote Rs.60+.

BSL Ltd: For slick gains By Devdas Mogili

BSL Ltd is a 45-year old Bhilwara, Rajasthan, based company incorporated in 1970. The company has 3 plants of which two are in Jaisalmer and one in Bhilwara, all three located in Rajasthan. Mr. Arun Churiwala is the Chairman & Managing Director of the company.

BEST BET

Company Holdings CMP (Rs.) Value (Rs. in crore)

CEAT 1372835 1000 137

CESC 2493470 595 149

KEC 4685800 150 71

RPG Life Sciences 502550 181 9

Phillips Carbon 91000 133 1

CFL Capital 47664340 2 10

Summit Securities 69815 380 3

Total: 380

STOCK ANALYSIS


The company manufactures polyester-viscose, polyester-woollen and 100% woollen fabrics, polyester-wool blended and 100% woollen and worsted yarn. It markets its products under the brand BSL Suitings. It has a wide network of area-wise agents, wholesale dealers and retailers throughout the country.

BSL is a leading manufacturer of Fashion Fabrics and Yarns in India. The Company produces a wide range of polyester viscose fabrics and premium range of Worsted Suitings, including Cashmere, Mohair, Angora and Camelhair blends. For the production of special furnishing fabrics, the company uses imported Silk material.

The company also installed 1920 spindles in its Worsted Spinning Division increasing its capacity to 7904 spindles. The company has modernized under the Technology Up gradation Fund Scheme (TUFS) during 2000-2001 and replaced 16 PU-85 Sulzer weaving machines by the latest G-6300 Sulzer Rapier Weaving Machines of latest technology and commercial production on these looms commenced w.e.f 28th September 2000. From a Finland based company it has imported 3.10 MW Captive Power Generation Plant on furnace oil.

Exports: The company exports its products to countries like Peru and Mexico and is the recipient of the Rayon Export Promotion Council for highest export of fabrics during 2012-13 to ‘Focus LAC’ countries. The export of fabrics to Focus LAC countries in the current year continues at an increasing trend particularly to Peru & Mexico.

In exports, the company is exploring new markets in Africa, Australia, Europe and other Latin American countries and increasing the volumes in existing markets

Modernization & Expansion: The company installed 8 Airjet Looms during 2013 with the latest technology. These high speed looms will boost the productivity of fabrics.

The capital expenditure plan for modernization and expansion of its Spinning, Weaving and Processing division is going on as per schedule.

Wind Power Project: The Company’s Wind Power Project is located at Jaisalmer. The newly installed 2 MW Wind Power generator installed in FY15 is reported to be faring well.

Performance: The company recorded total income of Rs.379.88 crore with net profit of Rs.7.19 crore registering an EPS of Rs.6.99 for the year 2014-15.

Latest Results: For Q1FY16, the company posted total income of Rs.87.49 crore with net profit of Rs.2.63 crore as against a profit Rs.0.21 crore registered in Q1FY15. The company thus posted Q1FY16 EPS of Rs.2.56 as compared to an EPS of Rs. 0.20 in Q1FY15.

Financials: The company has an equity base of Rs.10.29 crore with a share book value of Rs.65.28. It has a debt:equity ratio of 2.28 with RoCE of 9.47% and RoNW of 5.15%.

Share Profile: The company’s shares with a face value of Rs.10 is listed and traded on the NSE and the BSE under the B group. Its NSE Symbol is BSL with BSE Code as 514045 and hit a 52-week high/low of Rs.62.20/24.60. At its current market price of

Rs.52.75, it has a market capitalization of just Rs.54.30 crore against total revenues of Rs.380 indicating an attractive market cap:sales ratio.

Dividends: The company has been paying dividend as follows:

FY14-10%, FY11-15%, FY10-7.50%

Shareholding Pattern: The promoters hold 56.44% while the balance 43.56% is with non-corporate promoters, institutions and the investing public.

Prospects: The Indian Textiles Industry has an overwhelming presence in the economic life of the country. Apart from providing one of the basic necessities of life, the textiles industry also plays a vital role through its contribution to industrial output, employment generation, and the export earnings of the country. The sector contributes about 14% to industrial production; 4% to the country’s gross domestic product (GDP); 17% to export earnings. It is the second largest provider of employment after agriculture and provides direct employment to over 35 million people. Thus, the growth and all round development of this industry has a direct impact on the economy. India has the potential to increase its textile and apparel share in the world trade from the current level of 4.5% to 8% and reach US $ 80 billion by 2020. The most significant change in the Indian textile industry has been the advent of man-made fibres (MMFs). India has successfully placed its innovative range of MMF textiles in almost all the countries across the globe.

Financial Highlights: (Rs. in lakh)

Particulars Q1FY16 Q1FY15 FY15

Total Income 8749 9200 37988

Total Expenses 1510 1530 6420

Other Income 114 106 167

Finance Costs 356 366 1438

Total Tax Expenses 94 14 (158)

Net Profit 263 21 719

Equity (FV: Rs.10) 1029 1029 1029

Reserves - - 5688

EPS (Rs.) 2.56 0.20 6.99


The potential size of the Indian textile industry is expected to reach US$220 billion by 2020. A strong raw material production base, a vast pool of skilled and unskilled personnel, cheap labour, good export potential and low import content are some of the salient features of the Indian textile industry. The company expects huge growth in demand for its products in coming years owing to the total Indian urban population, which currently stands at 307 million and provides huge growth opportunities. The Company forecasts good market demand for its products, which is expected to improve margins substantially.

The outlook for the textile industry is very optimistic. It is expected that Indian textile industry would continue to grow at an impressive rate. Assuming that inflation is brought under control and input prices revert to a more moderate level, the domestic market is expected to continue to deliver healthy growth. The raw material prices are expected to stabilize and the demand growth is likely to push up due to the overall economic recovery. The government is also very optimistic of the textile trade and with the pro-active government policies, the Indian textile industry can command a dominant share in the world trade after China. The company is also taking a long-term view of the industry and hopes to boost turnover and margins from the current level. Simultaneously, the company is strengthening the quality of its products and reduce the conversion cost. These initiatives are expected to positively influence the working of the company.

In addition, the company is focusing on Retail markets and RMG/Institutional segment. The company is also exploring new markets for sale of worsted yarn.

Conclusion: BSL is an existing, profit making and dividend paying company with good export presence, brand image and impressive track record.

At its current market price of Rs.52.75, the share price discounts less than 7.5 times its 2014-15 EPS of Rs.6.99 which is also the industry average P/E ratio. However, the future earnings of the company have not been factored into its current market price. As such, considering its impressive performance, good brand image, strong export presence, modernization and expansion plans, attractive market cap:sales ratio and bright prospects going ahead, the share is currently available at attractive valuations. The peer group companies like Vardhaman Textiles, KPR Mills, Welspun India are quoting at much higher valuations. The share may be bought for reaping slick gains in the medium-to-long-term. Above all, the share price is quoting much below its book value indicating good margin of safety even for risk averse investors.

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Market is bullish To read the market accurately is an art based on experience and deep rooted knowledge. While in the stock market vast many investors are carried away by vested basis of calls and advisories that are quite popular but disappear like the fly-by-night promoters of earlier years. Hence it’s important to distinguish between popular lore and true merit that is tried and tested like Money Times for 25 years.

Last week, I had strongly hinted about a breakout that looked almost certain in the coming trading week

ending Friday, 8

August 2015 and gave the reasons

for it.

The BSE Sensex, which

was mostly flat to close at 2814.56 on Friday, 31 July 2015, made good headway almost throughout last week except on the monetary policy review on Tuesday, 4 August 2015.

The RBI governor, Mr. Raghuram Rajan, is basically a conservative focused always on the fears of a rise in the inflation rate reviewed the monetary policy keeping all interest rates unchanged despite the monsoon having behaved better-than-expected by him in his last policy review. Yet he feared that consumer inflation would rise as the success of the monsoon may not last long.

Conservative and pessimistic nature is an inborn quality in some persons who cannot hope for good till it materializes and as such lack the gift of vision. A visionary person is one who can bet on the futures based on available data but Mr. Rajan does not like to bet and prefers to leave growth behind while combating inflation.

GURU SPEAK

By G. S. Roongta

Panchratna 6th

Edition

“Great Dhamaka” this time.

Five Gems from five sectors of Power/Real Estate/Construction &

Engineering/Pipes & Tubes/Iron Ore

All Stocks are highly liquid

All the five stocks have been beaten down heavily and bottomed out

Enough Potential for growth

Do not miss this issue!

Have a look at the annual performance given below.

Issue No.

Date Scrip Name Recom. Rate (Rs)

High achieved (Rs)

1 April 2014 Cheslind Textiles Ltd. 4.98 12.10 Katare Spinning Mills Ltd. 19.50 31.80 Trident Ltd. 18.80 29 Elecon Engineering Ltd. 36.75 81 Essar Ports Ltd. 50.90 150.40

2 July 2014 Hind Syntex Ltd. 14.01 16.30 Suryaamba Spinning Mills Ltd. 31.20 50.40 Standard Industries Ltd. 20 25.50 Sarda Plywood & Industries Ltd. 18.85 51.55 Dish TV India Ltd. 62.95 117.25

3 Oct. 2014 Ashok Leyland Ltd. 41.10 77 Mangalore Refinery &

Petrochem. 61.45 77.80

National Steels & Agro Ltd. 20.30 20.40 Landmark Property Development 5.24 5.75 PVP Ventures Ltd. 8.32 8.59

4 Jan. 2015 Stock A 35.50 39.75 Stock B 94.30 138.50 Stock C 9.95 13.85 Stock D 25.10 31.35 Stock E 14.70 29.45

5 Apr. 2015 Stock A 88.05 124.70 Stock B 68.35 78.95 Stock C 56.30 71.80 Stock D 46.15 59.65 Stock E 54.30 65.65

In the current bull run, Panchratna stocks are a sure way to reap rich rewards.

The next issue of Panchratna was released on 1st July 2015.

Subscription Rate: Rs.2500 per quarter, Rs.4000 for two quarters & Rs.7000 per annum.

You can contact us on 022-22616970,22654805 or [email protected]



This is why the RBI, which enjoyed absolute liberty in deciding monetary policy, has come under a cloud and will be joined by three government nominees on board to decide upon this important policy. The RBI governor will enjoy the second casting vote in the event of a tie.

According to me, there was no reason to keep policy rate unchanged because of the hypothetical fear or uncertainty on monsoon progress. Yet his bugbear of inflation ruled out a soft policy. His hawkish in policy decision was in line with street expectations.

That is why the market sentiment was not impacted much like the last policy review in June 2015 when the Sensex tumbled by over 2000 points when RBI governor feared a weak monsoon below normal that could result in crop failure and unexpected rise in food prices.

He proved wrong in his past prediction and will again go wrong in his fear of a rise in inflation and food cost.

In the view of this, the government’s efforts to bring growth forward remained suppressed factory production could not make much headway despite the fall in cost of production. Capacity utilization remained sluggish due to unavailability of funds and higher financial cost.

Lower crude oil prices could not spur growth except check import growth.

On the one hand, Mr. Rajan wants bank inflation to lower the interest rate but on the other hand, he remains hawkish. So industry is unnecessarily sandwiched in between.

Despite no favorable development on monetary policy review, the market kept its positive tempo to rise from the first day of the week under review.

The stock market rallied upward on 3 August 2015 with BSE Sensex rising 72-50 to close higher at 28187 following by CNX Nifty at 8543.

The fear of CNX Nifty to fall below 8200 by technical analysts was ruled out because it seemed headed towards 8700 no sooner some positive trigger emerges in the near future.

Several stocks from the Banking sector were fancied including Maruti Suzuki to rule at a life time high of Rs.4427 on 3 August 2015.

KPIT, Sun TV, which was dumped earlier, started to flare up 11% from Rs.336 to Rs.374, which came out with weak numbers was also in the limelight while MRF did wonders to hit not only lifetime high but the highest valuation of Rs. 45000. Perhaps, the highest among all listed companies.

Mid-cap and small-cap stocks were faring well with almost dozens of them hitting the 20% upper circuits on a regular basis each day.

Thirumalai Chemicals rose 20% at Rs.240, SPL Industries at Rs.15. The stock market on the day of the monetary policy review on 4th August was not at all shaky despite no change in interest rate. Psychological impact was of course, noticed at the fag end of the market session due to profit booking and bears keeping in mind the previous time made short-sells to maintain the upper hand, which made the Sensex lose by 115 points as 28071 and CNX Nifty down by 26 points to 8516 to salute the RBI governor!

The market had however regained lost ground the next day, Wednesday, 5 August 2015, by gaining more than what it lost on monetary policy day. The BSE Sensex rallied by 151.15 points to close at 2822.3 followed by CNX Nifty rose by 51 points at 8567.95. It may be noted that this was despite no positive development either at the economic or political fronts. Parliament was yet disrupted again and there was no sign of improvement.

This is utter failure on Mr. Modi’s part who could not take any opposition party in confidence. This is utter lack of maintaining good relationship with any party in the entire Opposition. None of them have supported him in his mission. He must have succeeded in cultivating leaders overseas but it makes no sense if domestic relations are at stake.

The market continued to rule high again on Wednesday, 6 August 2015, rising 75 points and expected to close higher once again on Thursday to give higher positive closing on a weekly basis.

The sectoral indices were in good form. Banking sector breathed a sigh of relief as the next policy review is expected to be positive. Commodity sector shows some signs of positive turnaround with the government assurance of raising import duty to rise by 2.5% so that domestic industry may reap a rich harvest against cheap imports so far.

Tata Steel, SAIL, Jindal Steel all spurted between 5 to 7% in the last 2/3 days and were expected to rise further. Aluminium and copper, too, made a headway with Hindalco at its lifetime low at Rs.104 rose to Rs.110 on expectation of good days ahead.

Cement stocks which faced resistance on account of poor offtake is reported to have benefitted by higher capacity utilization and soaring cement prices after the Monsoon session.


Power & Infrastructure followed by Technology stocks have also geared up. Thus good market sentiment are likely to emerge in days to come.

Panchratna subscribers are a happy lot as all stocks recommended right from the 1st edition to 6th edition have skyrocketed. They must feel happy that one who subscribed for the full year by paying Rs.7000 has reaped good harvest to earn or book profits by 10 times or more.

This may sound incredible as no fund house with its mind-boggling charges could not deliver such fancy returns if the following table is any fair indication.

The YoY gains are

mind-boggling

and no fund house or

technical experts has

provided such hefty returns.

The publisher was thus right while advertising the 6th edition of Panchratna as ‘Big Dhamaka’ providing mind boggling gains because it has proved to be that. Those who subscribed have reaped a good harvest while those who missed can only repent.

Week before last we carried a story on Mafatlal at Rs.226 which has shot up Rs.300 i.e. nearly 50% in two weeks! This is how Money Times make good quality recommendations week after week to benefit small investors. Due to paucity of space, we cannot carry a detailed story on MRPL, which will now be featured in the next issue.

By Amit Kumar Gupta

UPL Ltd. (BSE Code: 512070) (CMP: Rs.544.10) (FV: Rs.2) (TGT: Rs.600)

UPL Ltd is a generic agrochemical company engaged in manufacturing and marketing crop protection chemicals. It also offers crop protection solutions and manufactures crop protection chemicals and industrial chemicals at 28 manufacturing locations across the world. It offers a product portfolio of crop protection chemicals, including fungicides, herbicides, insecticides, plant growth regulators, rodenticides, speciality chemicals, nutrifeeds and seeds. The Company operates through two business segments: Agro activity and Non-agro activity. The Agro activity segment includes the manufacture and marketing of conventional agrochemical products, seeds and other agricultural related products. The Non-agro activity segment includes manufacture and marketing of industrial chemicals and other non-agricultural related products. It operates through 76 global subsidiaries in the agrochemical space.

The rising demand of foodgrains and declining size of farmlands in India has increased the scope for agrochemicals & pesticides. The Indian crop protection market was estimated at $ 3.8 billion in FY12 with exports constituting about 50% of the market. The crop protection market has experienced strong growth in the past and is expected to grow further at around 12% p.a. to reach $ 6.8 billion by FY17.

UPL is a direct play on Indian agriculture as the demand for food crops increases with rising commodity prices & high population growth. To expand and grow, UPL has historically focused on acquisition of smaller companies and brands to outperform its peers.

New launches of 69 Actives/Technical; 151 Formulations and Total Country Launches/Registrations of 567 (addressable Market size of USD 5 billion) are expected to boost the top-line over the next two years.

As per the management, the company has 14% market share in India and the target is to increase this to 25% over the next 5 years. As a strategy towards this end, UPL has identified 100 ‘hot spots’ in India – essentially in 50-100 sq. km areas which are high potential markets. UPL plans to aggressively place its products depending on the cropping pattern and other factors in these areas.

No. Gain

1 Trident recommended at Rs.18.80 in first edition shot up to Rs.50 on 5th August. 200%

2 Elecon Eng. made a new high at Rs.96/80 recommended at Rs.36.75. 170%

3 Essar Ports recommended at Rs.51 made a high of Rs.150. 200%

4 Sarda Ply wood recommended in July edition at Rs.18.85 has skyrocketed to Rs.66. 300%

5 Dish T.V recommended in July edition at Rs.62 spurted to Rs.124. 100%

6 Ashok Leyland recommended at Rs.41 in October edition skyrocketed to Rs.90. 140%

7 Stocks recommended in January 2015 and April 2015 have all risen substantially hitting highs between 100% to 150% in a short span of time of 3 to 6 months. We cannot disclose the names as subscribers have yet the choice to subscribe.

STOCK WATCH


Brazilian business (DVA Agro) has achieved breakeven status and the company expects the profitability to sharply improve over the next 3 years

UPL's low-cost manufacturing base in India and its strong global distribution network are its key advantages and provide it with considerable operational flexibility and efficiency over its competitors. We recommend a Buy on the stock with a price target of Rs.625.

Technical Outlook: The UPL Ltd stock looks good on the daily chart for medium-term investment pick. The stock is consolidating a breakout, which changes in an upward move. The stock on the short-term daily chart has formed a strong upward move and shows some strength for making higher highs. The stock is also trading at important support moving averages like 200 DMA.

Start accumulating at this level of Rs.544.10 and on dips to Rs.504.10 for medium-to-long-term investment and possible price target of Rs.600+ in the next 6 months.

***********

Bank of Baroda. (BSE Code: 532134) (CMP: Rs.185.10) (FV: Rs.2) (TGT: Rs.220)

Bank of Baroda (BoB) is a public sector bank that offers various deposit plans. The Bank operates its business in four segments: Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Operations. The Bank’s deposit plans offer other features such as overdraft facility, outstation cheque collections, safe deposit lockers and ATMs. The Bank offers deposit products and services in various categories such as fixed, current, savings and Baroda first wealth pack. The Bank also offers a wide range of products and services including wholesale banking, rural/agri banking, wealth management, CPPC pension, government business, pre-paid cards, interest rates, deposit products, loan products, internet banking, mobile banking, automated teller machine (ATM) / debit cards, demat and NRI Tax Solution.

Bank of Baroda (BoB) delivered better-than-expected numbers for Q1FY16 (PAT of Rs.1,052 crore) led by lower provisions (up 14% YoY but down 67% QoQ). The operating profit was down by 11% YoY due to slower growth in NII (up 4% YoY) and 22% Y-o-Y increase in the employee expenses (Rs.262 crore provision on AS15 and wage revision). The NIM rose 9 bps QoQ to 2.26% largely due to the increase in yields.

While the reported NPAs inched up on a Q-o-Q basis, the total stressed loan (restructured loan + slippages) was relatively lower (Rs.2,055 crore vs Rs.5,443 crore in Q4FY15 and Rs.2,870 in Q1FY15). The bank’s provisions grew 14% largely due to a low base (write-back of investment provision of Rs.319 crore in Q1FY15). The provision coverage ratio was steady at ~65%, which is better than peer banks.

Valuation: BoB has shown recovery in margins and stabilization in asset quality, which is a positive. While the NPA concerns remain in general, we expect BoB to be relatively better as compared to peer banks. A better provision coverage and relatively higher Tier-1 CAR (9.41%) add to the comfort. We have fine-tuned our estimates to factors like better-than-expected profits. We have a Buy with a stop target Rs.220.

Technical Outlook: The Bank Of Baroda stock looks very good on the daily chart, for medium-term investment. The stock is consolidating breakout which changes in an upward move. The stock on the short-term daily chart has formed a strong upward move and shows some strength for making higher highs. The stock is also trading at important support moving averages like 200 DMA.

Start accumulating at this level of Rs.185.10 and on dips to Rs.164 for medium-to-long-term investment and possible price target of Rs.220+ in the next 6 months.

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If your answer is YES to all the three questions, MONEY TIMES, launched by the pioneers of investment

journalism, invites you to join its team of contributors.

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So if you want to join this eminent group, write to [email protected] and send us a sample

of your article written or published.



Bourses register modest gains By Devendra A Singh

The BSE Sensex (30-share index) settled flat at 28,236.39 gaining 121.83 points and the NSE Nifty closed at 8,564.60 up 31.75 points last week ending Friday, 7 August 2015. The bourses rose in 3 of the 5 trading sessions of the week.

Equity markets logged marginal gains last week on positive market sentiment. The Reserve Bank of India (RBI) in its third bi-monthly policy review has kept the key rates unchanged on Tuesday, 4 August 2015. The key repo rate stands unchanged at 7.25%.

The RBI kept the key rates unchanged although the overall business confidence is positive the level of optimism was shade lower in April-June 2015 than in the preceding quarter. Investments as measured by new projects are still weak primarily because of persistently low capacity utilization.

RBI Governor, Raghuram Rajan, said in the policy statement that, “In India the economic recovery is still work in progress. The outlook for growth is improving gradually. On an assessment of the evolving balance of risks, the projected output growth for the FY15-16 has been retained at 7.6%.”

“Nominal bank credit growth is lower than the previous years but adjusted for lower inflation as well as for lower borrowing by oil marketing companies and increased borrowing from commercial paper markets, credit availability seems to be adequate for most sectors,” the statement added.

Turning to the balance of inflation risks, the RBI said that most worrisome is the sustained hardening of inflation excluding food and fuel. Some food prices, particularly protein-rich items like pulses and oilseeds have risen sharply.

On the monsoon front, India Meteorological Department (IMD) has retained its forecast for this year’s monsoon rains at 88% of the long-period average as a strengthening El Nino weather pattern is likely to trim rainfall in August-September 2015 to 84% raising fears of the first drought in six years. Rainfall of less than 90% is considered to result in a drought year although the latest prediction has an error margin of 4% points.

The monsoon rains, which make up around 70% of India’s annual rainfall, are crucial to the nation’s agriculture sector and broader economy which accounts for 14% of the $2 trillion economy. In a country where nearly half of farmland lacks irrigation, poor rainfall in the second half of the June-September 2015 monsoon season may surge food inflation. In some areas of India, rainfall deficit is as high as 57%, IMD data showed.

Monsoon rains covered the entire country ahead of schedule this year accelerating the sowing of summer-sown crops. But a prolonged dry spell in some regions has threatened to wilt planted crops.

Now farmers are completely dependent on the September 2015 rainfall for the cultivation of winter crops. On the other side, poor rainfall in September can hit sowing of winter crops and will lead to higher food prices.

It would be the biggest anomaly since 1997 surpassing the top recordings associated with the El Ninos of year 2002 and 2009.

On the global data, global factory activity remained muted in July 2015 and with new orders barely accelerating there is unlikely to be much improvement this month, a business survey showed.

The global PMI combines survey data from countries including the United States, Japan, Germany, France, Britain, China and Russia.

Key indices ended higher on Monday, 3 August 2015 on positive market sentiment. The BSE Sensex surged 72.50 points (+0.26%) to close at 28,187.06. The NSE Nifty was up 10.20 points (+0.12%) to close at 8,543.05.

Key indices moved lower on Tuesday, 4 August 2015 on selling by foreign funds. The BSE Sensex dipped 115.13 points (-0.41%) to close at 28,071.93. The NSE Nifty was down 26.15 points (-0.31%) to close at 8,516.90.

Key indices gained on Wednesday, 5 August 2015 on equity buying. The BSE Sensex climbed 151.15 points (+0.54%) to close at 28,223.08. The NSE Nifty was up 51.05 points (+0.60%) to close at 8,567.95.

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Key indices moved up on Thursday, 6 August 2015 on buying by foreign funds. The BSE Sensex jumped 75.05 points (+0.27%) to close at 28,298.13. The NSE Nifty was up 20.70 points (+0.24%) to close at 8,588.65.

Market performance settled lower on Friday, 7 August 2015 on minor correction. The BSE Sensex fell 61.74 points (-0.22%) to close at 28,236.39. The NSE Nifty was down 24.05 points (-0.28%) to close at 8,564.60.

For future events, corporate earnings, August & September monsoon, macro figures will play a crucial role for India’s economy. Also, investors will keep a close track on the US Fed interest rate hike decision if the US economy grows better and unemployment falls and the global macro-economic data especially China and Greece will keep dictating market movements.

Indian currency which sails in panic and has breached 64-mark against the US Dollar is hovering near 64.50/USD made foreign funds to keep a close watch on the performance of INR as against other currencies.

Market participants will keep watching China’s market trend, which is another crucial factor that will decide the global market movements in near-term as China equity markets is in declining trend.

Power Mech Projects Ltd IPO opens on 7th August 2015 Power Mech Projects Ltd enter the capital market with an IPO of 4,269,000 equity shares of Rs.10 each in the price band of Rs.615 to Rs.640 per equity share. The bid/issue opens on Friday, 7 August 2015 and closes on Tuesday, 11 August 2015.

Power Mech Projects Ltd is engaged in the business of i) Erection Work that includes erection, testing and commissioning of boilers, turbines and generators (ETC-BTG) and balance of plant (BOP) for power sector; ii) Operation & maintenance (O&M) that includes annual maintenance contracts, other repairs, renovation & modernization, residual life assessment, scheduled shutdowns, retro fits, as well as overhauling, maintenance and upgradation services for power plants and iii) Civil works that includes various civil and construction jobs for the main plant and BOP requirements including excavation, piling, concreting, architectural and building works.

The Issue comprises a fresh issue of 2,128,000 equity shares and an Offer for Sale of up to 2,141,000 equity shares by India Business Excellence Fund I, India Business Excellence Fund represented by its trustee IL&FS Trust Company Ltd, P.Srinivasa Rao, and D.Aakashnag, a minor represented by his guardian D.S.Rao. The Issue will constitute 29.02% of the fully diluted post issue paid-up equity share capital of the company.

The minimum Bid lot is 20 equity/shares and in multiples of 20 equity shares thereafter. The Issue will be through the book building process and will be listed on the BSE and NSE.

The Company proposes to use the IPO proceeds for funding working capital requirements of the company and general corporate purposes.

PRESS RELEASE


By Vihari

Sanwaria Agro Oils: Medium-term proposition (BSE Code: 519260) (CMP: Rs.7.87) (FV: Re.1)

The share of Sanwaria Agro Oils Ltd (SAOL) can be bought for decent gains in the medium-term as the company is reportedly doing well in the current year and likely to post an EPS of Rs.1.2 in FY17. Relatively little-known SAOL has expanded into a business with revenues of Rs.2,600 crore in just a little over two decades with two-thirds of its revenue coming from processing soybean into oil, soymeal and de-oiled cakes. What started as a company with the capacity to crush 200 TPD of soybeans can now handle 3,250 TPD.

SAOL was established in the 1991 and is the largest FMCG in India. It operates from Bhopal in Madhya Pradesh (M.P.) and its factories are set up in Mandideep, Itarsi, Harda all in M.P. and a branch office was set up in Maharashtra. It is primarily engaged in the production of Edible Oil, Crude Oil, and Refined Oil of Soy Bean. It also manufactures other food products under the Sanwaria brand name Rice, Rawa, Maida, Salt, Soya Chunk (Bari), Fortified Soya Oil, High Protein Soya Meal, Full Fatted and Defatted Soya Flour etc. SAOL is granted the Star Export House status by the Joint Director General of Foreign Trade, Bhopal.

SAOL is headed by Anil Agarwal. The family has been in the commodity trading and milling of pulses since the 1950s. Its first unit at Itarsi in Madhya Pradesh went operational in 1993 and was followed by an IPO to fund its expansion. Since then, Sanwaria Agro has grown on the back of a series of acquisitions of sick or closed units, which it has turned around successfully. SAOL has presence in Madhya Pradesh, Chhattisgarh, Uttar Pradesh, Maharashtra, Haryana, Delhi, Himachal Pradesh, Punjab, Uttarakhand and West Bengal.

SAOL has ventured in modern trade also for its brand building like tie-up arrangements with various shopping malls/chains. It has tie-ups with Vishal Retail, Reliance Fresh, Pantaloon (Big Bazar) and ITC Choupals for tapping their

EXPERT EYE

9th edition of ‘Beat the Street 9’

released on 8th June 2015

On 4th

March 2015, the CNX Nifty kissed an all-time high of 9119 and the BSE Sensex had crossed the 30,000 level almost coinciding with the 8

th edition of

Beat the Street 9 released on 9 March 2015.

From these all-time high levels, we have seen a strong & healthy correction as most stocks have corrected 20-40% from their highs. But still in this market, Beat the Street 9 stocks have performed well as shown below.

Now the 9th

edition of ‘Beat the Street 9’ has already been released on Wednesday, 10

th June 2015. So if you want to get multi-bagger ideas like our

past eight editions, then don’t waste any time and subscribe to this newsletter today!

‘Beat the Street 9’ Review

6th Edition dated 1st September 2014

Stocks Recom. at (Rs.) High (Rs.) Gain %

Bharti Airtel 370 426 15.13

TATA Chemicals 385 482 25.19

OIL India 615 669 8.78

ICICI Bank 1545 (ABP) 1965 27.18

Godavari Power 155 186 20

JBF Industries 135 297 120

TV Today 200 262 31

Sonata Software 107 182 70.09

Mahindra Life 530 (ABP) 580 9.43

7th Edition dated 1st December 2014

Stocks Recom. at (Rs.) High (Rs.) Gain %

Reliance Capital 497.5 (ABP) Stop Loss ------

PTC India 87 (ABP) 102 17.24

Jindal Saw 101 (ABP) Stop Loss ----

Karnataka Bank 140 156.5 11.78

Indoco Remedies 281.5 (ABP) 401 42.45

KPIT Techno 169 233 37.86

J M Fin 49 58.8 20

Menon Bearing 140 238 70

Panasonic Energy 315 379 20.31

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Rs.9000, 1 Year: Rs.11000

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retail outlets to sell its branded products. SAOL has expansion plans of Rs.400 crore to be funded through the QIP/Private placement route.

SAOL sells its full range of edible oils under the brand names of 'Sulabh', 'Narmada' & ‘Sanwaria’ to attract different segments of consumers. Sanwaria and Narmada brands of Refined Soyabean Oil are produced from selected Soyabeans of M.P. in Sanwaria's state-of-the-art solvent extraction plant & refinery. It keeps the heart healthy since it has very low cholesterol. It also contains high omega3 & Vitamin E proven antioxidants and also improves brain activity and skin tone. It has a high smoke point which reduces its consumption. It is an ideal cooking medium to keep the family Healthy & Fit.

In FY14, SAOL launched Basmati Rice, Rawa, Maida, Sooji, Daliya and Besan under the brand named ‘Sanwaria’, Soya nuggets/chunks under ‘Sanwaria Pro diet’. The commercial production of new products like Mustard oil, pulses and spices in consumer packs is expected to be produced in the new season during this year. Some value added Soya based products Like Soya Flour, Soya Tofu and Potato based products like Chips, Flakes, and Vanaspati, Ghee and a Vegetable oil refinery are in the pipeline.

Lecithin is used as an emulsifier to increase the life of products, reduce fat content and enhance spreadibility of the product. Lecithin is a mixture of polar and neutral lipids and phospholipids. Polar lipid consists of glycolipids, neutral lipids are triglycerides and phospholipids contain phosphates. This is in liquid form.

Since soya bean meal is mainly used as cattle feed, SAOL exports Soya Deoiled cakes.

In Q4FY15, SAOL’s net profit was flat at Rs.6.6 crore on 42% lower income of Rs.494 crore and the Q4FY15 EPS was Rs.0.2. Its equity capital is Rs.34.8 crore with reserves of Rs.228 crore, the book value of its share works out to Rs.7.5. During FY15, net profit rose 3.7% to Rs.25 crore on 7.7% higher sales of Rs.2662.5 crore and the FY15 EPS is Rs.0.7. The promoters hold 70% in its equity capital, PCBs hold 20.2% leaving 9.7% with the investing public.

The most popular and largest produced oilseed in the world is soybean. It is supported by a wide variety of climates and soils and that is why it is considered to be the most economical crop and has a good worth. Before the 2nd World War, soybean was not considered an important crop and was thus not used on a large scale. But after the war, it rose to become one of the most important crops in the world.

Soybean production constitutes around 55% of the total world production of oilseeds of around 170-185 million tonnes. The production of soybean has increased by about 5.6% over the last 10 years. Around 30% of the world’s total produce is traded annually. USA is the leading producer of soybeans followed by Brazil and Argentina. The leading importing countries of soya oil are China with an import of about 2.5 million tonnes and India with 2 million tonnes of imports.

The consumption of soya refined oil has increased and the demand of soya meal is growing fast as about 98% of soyameal is used as an animal feed ingredient with the remainder used in human foods such as bakery ingredients and meat substitutes. India is primarily a closed economy in the soyabean arena. India exports every year, around 4 to 5 million metric tonnes deoiled cake (DOC) and earns foreign exchange of $1.7-$2.4 billion.

India is the world’s third largest edible oil economy after China and USA. The total Indian consumption is around 12-12.2 million tonnes vis-à-vis China’s 14.5-15 million tonnes. However, the per capita consumption of edible oils in India is likely to climb to 14.25 kg from the current level of around 12.14 kg.

SAOL has followed a Brownfield expansion route with the acquisition of sick units. It is still looking for acquisition opportunities where it can create value. It wants to acquire edible oil and wheat flour brands. With a planned investment going forward, SAOL is eyeing a top-line of Rs.5,000 crore.

On the demand side, a growing population and vastly varied dietary habits have ensured a thriving market for edible oils in the country. India’s annual consumption is around 12 million tonnes, which is met by imports and domestic production in the ratio of 60:40.

Keeping in view the domestic seed growth and expansion plans, SAOL has undertaken steps to establish its dominant presence in basic edible oil and soya business and also seize business opportunities that arise on account of our leadership position in the industry.

SAOL is all set to post an EPS of Rs.1.2 in FY16, which could further rise to Rs.1.6 in FY17. At the current market price of Rs.7.87, the share trades at a forward P/E of 6.5 on FY16E and 4.9 times FY17E. A reasonable P/E multiple of 8.5 will take its share price to Rs.14 on FY17E, which would fetch a decent-gain of 75% in the medium-to-long-term. The 52-week high/low of the share has been Rs.11.38/5.

**********


MRF: Low equity, high earnings; undervalued on an expansion drive (BSE Code: 500290) (CMP: Rs.44933.80) (FV: Rs.10)

MRF Ltd has posted mind blowing quarterly results for the quarter ended 30 June 2015 and has changed the year-end to March from September. Hence the next fiscal results will be for 18 months ending 31 March 2016. The share was earlier recommended at Rs.36870 in April 2015 issue.

Based on its Q1FY16 results, MRF is all set to post an annualized EPS of about Rs.3700 in FY16 on its tiny equity capital of Rs.4.2 crore. A reasonable P/E multiple of 16x, as applicable to blue chip companies, will take its share price to Rs.59200 with a likely gain of over 60% in the medium-term and Rs.72,000 in the long-term. Investors also await a liberal bonus in the current fiscal. The last bonus was 1:2 in 1975.

Madras Rubber Factory (MRF) was initially set up as a toy balloon manufacturing unit in 1946 by Mr. KM Mammen Mappillai. In 1952, the company forayed into tread rubber manufacturing and today it is the largest tyre manufacturer in the country with 8 plants set up across India to cater to the entire spectrum of tyres from passenger vehicles (PVs), commercial vehicles (CVs) to industrial tyres.

MRF has the most diversified portfolio in the industry and commands leadership position in various segments, including 2-wheelers, PVs and Truck/Bus Bias tyres. Its manufacturing facilities are located at Tiruvottiyur and Arakonam in Tamil Nadu, Kottayam in Kerala, Ponda in Goa, Medak in Andhra Pradesh and Union Territory of Pondicherry. A greenfield unit at Tiruchirappalli commenced operation in the 2012-13. The company’s products cater to almost all segments of the automobile industry.

MRF is also the first Indian company to venture into the Defence space in 2008, being the sole supplier of tyres to the Indian Air Force (IAF) and Hindustan Aeronautics Ltd. (HAL) for the Chetak helicopter.

MRF has a strong presence in the replacement market with the widest dealer network in the country totalling 4500 dealers and 300 exclusive T&S centers. It also has a high brand recall among OEMs as indicated by the Original Equipment Tyre Customer Satisfaction Index (TCSI) Study, which MRF has won a record 10 times in 13 years and the only Indian tyre manufacturer to do so.

MRF is present across all categories of tyres and is a market leader in the tyre industry with about 29% market share. It is also a leader in the passenger car tyre segment with a 25% market share and holds a third position in the medium to heavy commercial vehicle (MHCV) segment with 24% market share. MRF also exports tyres to over 80 countries in America, Europe, Middle East, Japan and the Pacific region.

For Q1FY16, its net profit zoomed 94% to Rs.447 crore on 6% higher sales of Rs.3539 crore. During the previous quarter ended 31 March 2015, MRF (Year end-September) had posted 94% higher net profit of Rs.332.6 crore on 4% higher sales of Rs.3312 crore Q1FY16 EPS is Rs.1058. The raw material cost benefit continued this quarter as well. Aided by lower raw material costs, the EBITDA margin witnessed a substantial jump.

For SY14 (September-end), net profit rose 12% to Rs.898 crore on 9% higher sales of Rs.13190 crore and the EPS stood at Rs.2118 and a dividend of 500% was paid.

MRF’s equity capital is Rs.4.24 crore and with reserves of Rs.4535 crore, the book value of its share works out to Rs.10705. The value of its gross block including capital-work-in-progress of Rs.627 crore works out to Rs.6968 crore. Investments, cash and loans given etc stood at Rs.1974 crore (Rs.4655/share). The promoters hold 27.3% in the equity capital, PCBs hold 26.3%, Foreign holding is 9.5% and with DIs holding 9.1% leaves 27.8% with the investing public.

MRF is expanding its manufacturing facility at Sadasivpet in Medak district of Telangana at an additional investment of Rs.980 crore. This unit has been in operation since 1990 and about Rs.4,300 crore has so far been invested in it. Its Tiruchi factory is expected to receive a significant portion of the capex. It accounts for about 25% of the company’s overall production capacity, which is estimated at 15,000 TPD or about 1.2 lakh tyres a day.

MRF has embarked on a 3-year expansion programme at an investment of Rs.4,000 crore to ramp up capacities across its factories. This is the second major investment plan announced by this Chennai-headquartered tyre maker in the last four years. In 2010-12, it took up a Rs.3,000 crore capacity expansion, which included establishing a new factory near Tiruchi. The aforesaid investment of Rs.980 crore is a part of this massive investment of Rs.4,000 crore.

The Indian automobile market will definitely see strong growth. Even at 6-6.5%+ GDP growth, it is worth investing on capacity expansion as the demand for automobiles will remain robust in India.

The proposed investment would result in additional revenue of Rs.4,500 crore for MRF in the mid-term as the asset:investment ratio in the capital-intensive tyre industry is 1:1.1. A stronger focus on the replacement market and a


better product-mix besides lower rubber prices helped the company sustain margins. MRF secures 70-75% revenue from the replacement market.

India’s large market has immense potential for growth with an expected Industry turnover of about Rs.50,000 crore. In terms of the segment mix, the Replacement market contributes around 67%, OEM accounted for 22% and exports were 11%. In the tyre segments, Truck & Bus tyres commanded 50% of the industry turnover.

Notwithstanding the current slowdown in the auto industry, the medium-to-long-term prospects are promising. It is expected that commercial and passenger vehicle industry will grow at 7-8% and 11- 12% respectively in the next 4-5 years time.

Industry analysts expect both the OEM and the replacement demand to rise in unison. Following flattish to negative growth during 2013-15, we expect the domestic tyre demand through 2015-17 to grow at 13-15% driven by strong replacement growth and OEM demand. M&H CVs, two-wheelers and passenger vehicles are likely to support this growth.

Truck/Bus Radials will continue to grow due to the new generation vehicles being fitted with Radials and the expected boost to investment in overall infrastructure growth. These factors will lead to higher radialisation in the commercial segment at a faster pace.

The initiatives taken by the government to accelerate economic activity with special focus on the manufacturing sector are further expected to improve the tyre demand across segments. Greater emphasis on the infrastructure sector, including road and mining sector, will give a boost to economic recovery.

Rubber constitutes 70% of the raw material costs of a typical tyre company. The global outlook and soft off-take of Chinese manufacturers on account of weak demand and the shift to green tyres could result in lower demand for natural rubber thereby keeping prices low. Thus, industry experts expect tyre companies to benefit from lower raw-material costs.

MRF’s exposure to the replacement market and non-CV market has aided the company to maintain the best margin profile among its peers consistently. Higher contribution of replacement tyres (76%), strong brand recall and better product mix has enabled it to garner higher gross margins while a diversified product mix has enabled it to maintain high utilization (which reduces EBITDA volatility during a downturn).

Due to its comparatively higher growth, MRF’s revenue share in the domestic tyre industry improved to 29% in FY14 from 25% in FY10. It also claims leadership position in the PCR (passenger car radial) tyre segment with 28-30% share in the replacement segment.

Going forward, it is believed that MRF will be able to maintain industry-leading EBITDA margin on the back of scale, strong brand recall, higher pricing power and better product mix.

Based on the current going, MRF is all set to garner an annualised EPS of Rs.3700 in FY16 and Rs.4500 in FY17. At the current market price of Rs.44933.80, the share trades at a P/E of 12.1 on FY16E and 9.9 on FY17E earnings. A reasonable P/E of just 16 will take its share price to Rs.59200 in the medium-term and Rs.72,000 in the long-term on FY17E earnings. The 52-week high/low of the share has been Rs.46405/23130.

**********

Renaissance Jewellery: For glittering gain (BSE Code: 532923) (CMP: Rs.83.45) (FV: Rs.10)

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The share of Renaissance Jewellery Ltd (RJL) can be bought for glittering gains as this diamond jewellery firm faring extremely well in FY16 and is all set to post an EPS of Rs.25 in FY16 and Rs.28 in FY17.

Incorporated in 1989 as Mayur Gem and Jewellery Export Pvt Ltd, RJL is engaged in the business of jewellery. In 1997, the Company's name was changed to Renaissance Gem & Jewellery Export Pvt Ltd. In 1998, Sur Style Jewellery Pvt Ltd ('Sur Style') engaged in the manufacture and export of studded jewellery was merged with the company. In 2005, RJL was converted into a public Ltd company and the name was changed to Renaissance Jewellery Ltd.

RJL tapped the capital market in December 2007 with an issue of 53.24 lakh shares at a price of Rs.150 per share aggregating Rs.79.86 crore of the IPO proceeds, Rs.35 crore was spent on setting up an US subsidiary, Rs.10.5 crore on expanding manufacturing capacity at Bhavnagar, Rs.5 crore on modernisation of its Mumbai facility and the rest as the working capital. RJL operates through 6 manufacturing units based in Mumbai, Bhavnagar and Bangladesh with capacity to produce 2.5 million pieces per year and employs 4000 skilled employees.

Apart from its core jewellery business, RJL has its own Home Retail Brand ‘House Full’ with 31 stores across India offering all types of furniture and caters to all segments, bringing appealing designs, lasting quality, and ‘value for money’ tag at their doorsteps. In FY14, RJL added 5 new stores and currently has 31 stores (126,364 sq. ft.) across India. It is present in the regions of Mumbai, Pune, Nasik, Ahmedabad, Surat, Baroda, Bangalore, Hyderabad and Chennai. RJL has plans on exploring opportunities in other regions in the years to come with a 5-year goal of over 100 stores across the country.

For FY15, net profit rose 36.3% to Rs.40.2 crore on 1% higher sales of Rs.227.6 crore. The consolidated FY15 EPS stood Rs.21 Vs Rs.15.4 in FY14 and a dividend of 10% was paid.

For Q1FY16, consolidated net profit zoomed 100% to Rs.4.8 crore on 13.5% higher sales of Rs.252.6 crore and the EPS was Rs.2.5.

Thanks to judicious working capital management, net debt in Q1FY16 stood reduced to Rs.197 crore from Rs.289 crore in Q1FY15 and Rs.272 crore in FY15 as compared to FY14 debt of Rs.342 crore. There has thus been a solid reduction in debt, which will result in lower interest outgo going forward.

RJL’s equity capital is Rs.19.1 crore and with reserves of Rs.380 crore, the consolidated book value of its share works out to Rs.209. The value of its gross block as at FY14 stood at Rs.146 crore. Loans, investments, cash etc were Rs.120.8 crore or (Rs.63.2/share) as at FY15.

In FY14, the Indian gems and jewellery sector contributed US$34.75 billion to India’s foreign exchange earnings (FEE) with a decline of 11% as compared to FY13. The export of gold jewellery and gold medallions together during 2013-14 stood at $11.05 billion which shows a drop of 39.50%.

This was mainly due to the non-availability of gold limiting the extent of trade for many Indian players. Silver jewellery exports, however, encountered a significant increase of 58.57% at $1.46 billion. A FICCI–Technopak report predicts that gems and jewellery exports may touch US$58 billion by 2015.

The Reserve Bank of India (RBI) has liberalised gold import norms. With this, star and premier export houses can import the commodity while banks and nominated agencies can offer gold for domestic use as loans to bullion traders and jewelers. Also, India has signed a MoU with Russia to source data on the diamond trade between two countries.

India is the top global processor of diamonds, while Russia is the largest producer of rough diamonds. In an effort to develop Mumbai as a rival to Antwerp and Dubai, which are currently the top trading hubs for diamond, the Government of India is planning to establish a special zone with tax benefits for diamond import and trading in Mumbai.

With a mission to strive and attain market leadership by product and process innovation, RJL will further enhance its reach in USA with new market segments and product categories and grow its business in the European Union across major retailers to sustain and strengthen its position of proven leadership.

Based on the current going, RJL is all set to garner an EPS of Rs.25 in FY15 & Rs.28 in FY17. At the current market of Rs.83.45, the share trades at a forward P/E of 3.3 on FY16E EPS and 2.9 times the FY17E EPS. A conservative P/E of just 5 will take the share price to Rs.125 in the medium-term and Rs.140 thereafter. The 52-week high/low of the share has been Rs.110/57.90.

VA Tech Wabag Ltd: Profiting from purification (BSE Code: 533269) (CMP: Rs.766.55) (FV: Rs.2)

STOCK SCAN


By Dildar Singh Makani

There is an ever ending shortage of potable water all over the world. With the rising population and urbanization, the problem is aggravated. Health conscious people prefer to consume good quality water especially as over 80% of diseases are caused by drinking contaminated water. The poetic line Water, water everywhere but not a drop to drink aptly fits in here. Authentic reports suggest that total fresh water to total availability is just 3% of which only 2.5% can be considered as fresh water. This situation in all probability is an alarming situation. Therefore, investments in companies engaged in recycling, water treatment, water conditioning, and desalination can be highly rewarding in time to come.

Va Tech Wabag possesses one of the best technical expertises with an impressive track record to its credit. The salient features of making investments in this Company are as under:

Domestic demand in India is slated to rise significantly over the next few years. The demand for usable water, sewerage water treatment is on the rise. In an attempt to provide good quality drinking water, the Government has been spending big money to ensure that each and every household, even in the remotest village, has access to good quality drinking water. As per official announcements, the Government plans to invest more than 7 to 8 lakh crore over the next 20 years to achieve this goal. With the Clean Ganga project, this budget figure can only rise. The total order book at the moment is above Rs.6000 crore.

Va Tech Wabag has to its credit an EPS growth of around 16% in the last 3 years. And with the huge spending in this sector, it can be safely said that the CAGR in the coming few years can be over 30%.

Strength and Weaknesses The Company has a professional team of experts. It has one of the best technical expertises with a global presence. All its subsidiaries are going full throttle.

The only matter of concern is that most of its customers are municipalities and therefore receivable days are very high at 200 days or more. But to counter this problem, the Company is slowly turning to industrial orders, where the receivable days will be relatively smaller.

History: The Company was formed in 1995 as Balcke Durr Cooling Towers Ltd. In 1996 its name was changed to Balcke Durr and Wabag Technologies. In 1999, the Company was acquired by an Australian major Va Tech and in 2000 the name of the Company was changed to its present name.

The business of the Company revolves primarily to designing, supply, construction and erecting of water, waste water treatment plants, including operation and is a maintenance of the same.

Investment Rationale: The Company has been consistently reporting better results. It has always maintained excellent relations with its customers and had never felt the need to write off any part of its receivables. Apart from Indian companies and municipalities’, the Company has successfully executed order from international agencies. The order book position is continuously rising. The Company has also received a big order from Govt. of India to clean the Gang River and probably the only Indian company to have won this. On the face of it, at the CMP of around Rs.766.55, the share looks costly considering that it is available at a P/E ratio of 46. But a relook in the last 3 months, the Company has received orders worth over Rs.1000 crore on the back of a bulging order book position. There is, therefore, no doubt that this is strong company in terms of growth. In an interview to the media a few weeks back, the Company expects the order intake this year to be in the range of Rs.3500 to Rs.3700 crore. Elaborating on the foreign orders received, the company said it has got Rs.580 crore order for sewage treatment plant in Bahrain, Rs.220 crore order of raw water treatment plant in Nigeria, Rs.85 crore pre treatment plant order in Saudi Arabia and Rs.65 crore order for waste water treatment plant in Egypt.

Strategic Tie-ups: The Company has strategic tie ups with Sumitomo Corpn (Japan) Tecpro and Gammon India, and Zawani (Sultanate of Oman). The company is, therefore, well-placed to deliver superb performance over the next few years. The Company intends to use these tie-ups to convert sea water into drinking water.

Financials: In FY15, the Company declared a net profit of Rs.90.41 crore as against Rs.88.58 crore in the previous year translating into an EPS of 16.65. The book value of the share is over Rs.126.

The results for Q1 are not yet out but if the strong order book is any indication, we can definitely expect exemplary results not only in the present quarter, but in the next many quarters to come. It would not be out of place to expect the Company to be able to post a CAGR of over 30 to 35% in the next two to three years. The consolidated results show that the company posted a higher EPS of Rs. 20.35, which indicate that the subsidiaries are also making good profits. The company declared a dividend of 200% and also rewarded its shareholders with 1:1 bonus shares.

Shareholding pattern: The Indian promoters hold a little above 11.15% whereas foreign promoters hold 17.84%. It is worthy to note that Mutual funds hold about 21%, and foreign investors hold another 29%. If we consider that bodies corporate hold about 8%, the floating stock is limited to about 13%. The shareholding pattern suggests that the company commands high esteem of the mutual funds and also other foreign investors.


Warren Buffet has repeatedly said “Buy a share if you can get a good sleep even if the stock exchanges were to remain shut for a pretty long time. That is why he advocated that once you buy this share, do not call up your broker every 15 minutes to know its price. The price of a potentially strong share will definitely go up if you have made the right investment decision.

Our advice to you is……………Buy this share for a minimum 2 years and watch it bloom.

By Nayan Patel

Kanco Tea & Industries Ltd. (BSE Code: 590130) (CMP: Rs.169.10) (FV: Rs.10)

Listed only on the BSE and belonging to the Kanoria family of Kolkata, Kanco Tea was created by demerging the Tea division of Kanco Enterprise Ltd. Kanco Tea has 2 Tea estates namely, Mackeypore Tea Estate and Lakmijan Tea Estate. Kanco is known for its high quality premium Tea which fetches higher price at auctions. Tea cultivation is done over 1136 hectares of land on the South bank of river Brahmaputra in Assam which is known as the quality belt of Tea. Kanco Tea produces over 2 million kg of tea annually.

Kanco Tea has an equity base of just Rs.1.71 crore that is supported by reserves of around Rs.20.39 crore, which is 11.92 times higher than the equity and has a share book value of Rs.135.76 and price:book value ratio is just 1.1, which is highly impressive. The promoters hold 70.35% while the investing public holds 29.24% stake in the company.

For Q1FY16, it reported sales of Rs.5.09 crore as against Rs.4.70 crore in Q1FY15. While PAT jumped 45.31% to Rs.1.86 crore, the Q1FY16 EPS stood at Rs.10.89.

The scrip is trading at P/E multiple of just 8, which is the lowest P/E ratio in the Tea sector. It paid 50% dividend for FY14 & FY15. Most Tea companies are booking losses Kanco Tea is showing good results.

Investors can buy this stock with a stop loss of Rs.140. One the upper side, it will zoom to Rs.200 level in the medium-term. At a P/E ratio of 15, its share price will touch Rs.270 in the next 12-15 months.

TECHNO FUNDA

Financial Performance: (Rs. in crore)

Particulars Q1FY16 Q1FY15 FY15

Sales 5.09 4.70 34.08

PBT 1.86 1.41 3.40

Tax - 0.13 0.31

PAT 1.86 1.28 3.09

EPS (Rs.) 10.89 7.50 17.93

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Printed & Published by R.N. Gupta for the proprietors Time Communications (India) Ltd. and printed by him at The Dangat Media Pvt. Ltd.

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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

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REVIEW

On 22 June 2015, we had recommended Deepak Spinners @ Rs.46.9. Within six weeks, it zoomed to Rs.78.85 level recording 68.12% appreciation.

On 6 July 2015, we had recommended Kamadgiri Fashion @ Rs.62.1. Within just one month, it zoomed to Rs.115 level recording 85.18% appreciation.

Last week, we recommended Twenty First Century Management Services @ Rs.39.95. Within one week, it zoomed to Rs.49.90 level recording 24.9% appreciation. We also recommended Panama Petrochem @ Rs.74. During the week, it zoomed to Rs.82 levels & recorded almost 10.81% appreciation.

Most of these stocks were featured in Techno Funda Plus (TFP) earlier and have yielded higher gains to Techno Funda Plus subscribers.


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