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Saturday, November 1, 2008

News: Bartronics - Aban Offshore - EID Parry - Jindal steel - Matrix Lab


Positive news:

1. Hyderabad based Maytas Infra bagged the "Fastest Growing Construction Companies in India" award in large size category. Maytas Infra bagged this award in small size category in 2006 and in medium size category in 2007. Maytas is one of the few stocks that withstood recent stock meltdown despite operating in the construction and infrastructure space.

2. Religare Enterprises decided to go in for a rights issue of shares to raise Rs 1,802 crore. The rights issue of 2 shares for every 3 shares held (2:3) will be at a price of Rs 355 per share. CMP: 328.

3. Sterlite Industries has shown renewed interest in buying copper major Asarco for $2.1 billion ($500 million lower offer).

Negative news:

1. Real Estate: volume of commercial property sales dropped 30 per cent and home sales by 60-80 per cent in the past 2 months - KnightFrank India.

2. Sun TV board decided to defer share buyback plan.

3. Apollo Hospitals dropped stock split plan.

4. United States alleged that small IT firms are abusing H1B Visa programme.

5. Highway construction and infrastructure projects worth over Rs 10,000 crore hang in the balance with companies struggling to achieve financial closure- ET.

6. Two- wheelers sales dropped by 30-50% during festival season in this year.

Recession news:

1. USA: American GDP in Q3 contracted by 0.3% due to worst consumer spending in 28 years. The slump last quarter was the biggest since the third quarter of 2001. American GDP shrank by 1.4% in Q3 FY2001. Analysts are expecting 2-4% contraction in American GDP growth rate in Q4 and America will officially enter into recession and Dow Jones will touch 6,000 mark by that time.

2. US economy: Consumer spending dropped at a 3.1 percent annual pace, the first decline since 1991 and the biggest since 1980. Chrysler will cut 25% of work force to face slowdown in car sales.

3. American express will cut 10% its work force (7,000 employees) and while Motorola will lay off 3,000 employees. Amex will cut its IT budget in its cost cutting measures which a bad news for Infosys.

4. Japan announced big stimulus package ($275 billion) to revive ailing economy. Job seekers stopped looking for jobs means people are in panic state. Bank of Japan may cut interest rate.

5. Sun Microsystems announced $1.67 billion loss and Electronic Arts decided to lay off 6% of employees.

6. South Korea: Business confidence of manufacturers fell to all time low on record.

7. European Union: Business confidence fell to 15-year low.

Quarterly results analysis:

1. Bartronics India: Excellent performance. Smart Card Company announced 136% increase in sales and 67% rise in net profit. This is a must have stock in every "growth investor portfolio". Bartronics is one of the best stocks for accumulators who can forget about short term falls. Bartronics will become a midcap within 6-8 months. Invest in stocks which have the ability to move into higher zone by showing good growth capabilities. Markets will definitely recognise such stocks after current turmoil.

CMP: 88; P/E: 5.2; Book value: 88.

2. Aban offshore:

Excellent results. Company reported 70% increase in both sales and net profit. It is trading at a forward P/E of just 4 but huge debt is a concern.

CMP: 702; P/E: 12.8

3. EID Parry: Wonderful performance and turnaround story. Company announced a net profit of Rs 610 crore Vs a net loss of Rs 5 crore. Sugar companies are riding high on high sugarcane prices.

4. Jindal Steel and Power: Good results. Company reported 75% rise in sales and 60% increase in net profit.

5. Matrix Laboratories: Good results. Company registered 56% rise in sales and 260% increase in net profit.

6. Sunil Hitech Engineers: Good results. Company posted 88% increase in sales while net profit rose by 31%.

7. BGR Energy Systems: good results. Company posted 36% increase in sales and 47% rise in net profit.

8. BEML: Good results. PSU reported 30% rise in sales and 128% increase in net profit.

9. Tata Chemicals: Good results. Company reported 185% increase in sales and 51% increase in net profit. Company decided to put expansion plans on hold and decided to concentrate on Latin America.

10. Rashtriya Chemicals and Fertilizers: Very good results. Company announced 75% increase in sales and 115% rise in net profit.

Decent results: Apollo Hospitals, Dabur India, Sun TV Net work, State Trading Corporation, Esab India, Indian Overseas Bank, EIH, Venus Remedies, DIC India, Celestial Labs, Nagarjuna Fertilizers, and CESC.

Poor results: ONGC, BPCL, Welspun Gujarat, Orchid Chemicals, KCP Sugar, Teledata, Lakshmi Machine Works, Sundaram Fasteners, TVS Motors, Jai Balaji industries, Viceroy hotels, DCM Shriram Consolidated, Amara Raja Batteries, SREI Infrastructure, Cheviot, Disa India, Andhra Sugars and Birla Corporation.

Must read articles:

1. How to invest in growth stocks? This article is a must read for every growth investor. Not only growth rate but price and sustainability are also important criterion.

2. How to pick stocks based on market capitalization? Excellent article by DNA. Must read.

Biggest positive aspect of current crisis: Bad sentiment is dragging prices of good stocks along with bad stocks. Stocks of wonderful Companies which are showing a growth rate 80-120% are now trading at a P/E of 6-10. Long term investors with 2-3 year horizon should accumulate such stocks in a SIP based manner. Companies with huge debt and stocks which are trading at high valuations will continue to suffer for some more time. It is better to stay away from such stocks unless you are a high risk taker.
Source: Stock Market Guide

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