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Sunday, October 26, 2008

Results analysis - Dolphin Enterprises - Tata Steel - Alstom Projects - PTC - Meghmani - KSB - LUPIN

Negative surprises came from heavy weights like BHEL, Maruti and JSW Steel etc. Positive surprises are coming from mid caps and niche stocks. FMCG is a safe bet in any bear market.


1. Dolphin Offshore Enterprises: Bumper results. Company announced 148% rise in sales and 1452% increase in net profit. Good scrip for "growth portfolio".

CMP: 128;         P/E: 4.8;             Book value: 80.

2. Alstom projects India:

Wonderful results. Company announced 47% increase in sales while net profit rose by 143%. Very good performance. Punj Lloyd, Crompton Greeves and Larsen are other good picks. BHEL gave a negative surprise in Q2.

CMP: 210.5;              P/E: 19

3. Shriram transport Finance:

Good results. NBFC reported 58% increase in sales and 79% rise in net profit. Keep it up.

CMP: 206.6;           P/E: 8.8;             Book value: 90.

4. Rural Electrification Corporation (REC):

Safe investment. PSU announced 35% increase in both sales and net profit. REC is a must have scrip in every "Value investor portfolio".

CMP: 63.3;           P/E: 6;                 Book value: 65.

5. Gujarat State Petronet: Good results. Sales rose by 24% while profit increased by 74%.

6. Tata Steel: Good results. Steel giant reported 43% rise in sales and 50% increase in net profit. Steel prices and demand will decline in the coming months. How will it tackle? Good performance but other income is the main reason.

7. PTC India:

Good results. PSU announced 38% increase in sales and 187% increase in net profit. PTC is a must have stock in every "value portfolio".

CMP: 47.8; P/E: 18; Book value: 65.

8. KSB Pumps: Good results. Company reported 26% rise in sales and 167% increase in net profit.

9. Meghmani organics: Wonderful results. This pigment company announced 47% increase in net sales while net profit rose by 67%.

CMP: 10.75; P/E: 6; Book value: 16

10. Lupin announced 53% increase in net profit. Safe pharma stock in bear market.


Decent results:

Hindustan Unilever, Zee News, Asian Paints, AP Paper Mills, Webel Sl Energy, Punjab Chemicals, Graphite India, SRF, Monsanto India, Sterling Bio-tech, PVR, Torrent Pharma, Colgate-Palmolive, Dishman Pharma, CRISIL, Aditya Birla Nuvo, Usha Martin, Tamilnadu Newsprint, Fulford and Jyothi Structures.

Disappointments: NTPC, BHEL, ABB, Maruti Suzuki and ITC.

Positive surprise: HCC and GE Shipping. Will they keep up this good performance? GE shipping may find it difficult.

Poor results: GSK Pharma, Rain Commodities, Jain Irrigation, GMDC, Kalyani Steels, HEG, Great Offshore, Gammon India, Nirma, JMC Projects, Greaves Cotton, Bank of Maharashtra, Balaji telefilms, Insecticides India, Tata Metaliks, Bharat Electronics, Garware Offshore, Ambuja Cements, JSW Steels, Shah Wallace, MIRC Electronics, Varun Shipping and Eastern Silk.

Must read:

1. 5 myths about the election and the stock market.

Where is the bottom?

1. Fundamentals and growth prospects justify 8,000-8,500 levels as most of the companies are announcing poor results and this bad performance will continue in the next quarter also. Only positive aspect is even good companies are also falling along with bad stockss. Concentrate only on those stocks. SIP based investment is better. One should not have a single bad stock in the portfolio.

2. FIIs: Fundamentals will not play any role in this market. Future market course will depend on FIIs. They are just selling with huge losses means they are in desperate need for money. They will sell whenever a opportunity is available. They just need money to pay back at home. Stock markets will find bottom when they stopped selling. When will they stop selling? No one knew including FIIs.

3. Gold: Generally gold rises when stock markets fell. But gold is also falling. It indicates either liquidity problems or crisis in confidence. Cash is king. People just want to sit on cash.

Final verdict: Don't try to find logic in this market. Everything will depend on foreign investors and their desperate need for money. No new FII will enter into India when our rupee is at Rs 50 levels. Hedge funds are another problem. Things are changing at an alarming pace. Monitor the situation on day to day basis. New investors should stay from stock markets.

Stock Market prediction: BSE Sensex will touch 21,000 levels may be in late 2011. Those who entered at 21,000 levels in January, 2008 need to wait for another 30-40 months. We will get a clear picture by January, 2009. Except stock investors, Indians have not seen the real effects of current economic crisis. Real crisis will be unfolded on Indians in the next 2 months. Stock markets always act earlier than other investment segments. Lucky people who are sitting on cash and those who can wait for 2-3 years will get unbelievable investment opportunities across all financial segments in the coming months. These people are the next millionaires. Do you have cash?

Where is the investment opportunity?

Many niche stocks are corrected by more than 80% and these companies announced wonderful results in this quarter. FIIs will continue to sell their holdings in these stocks just out of necessity. Long term investors should concentrate on these scrips and accumulate them in SIP manner. When will you get outstanding companies at such a very low valuations? 100% growth stocks at a P/E of 4-5. But these scrips are only for long term investors. They will not participate in the short term rallies but provide good investment opportunities for long term.

Very few stocks in other sectors like Punj Lloyd, Crompton Greeves, Sintex, Titan, Texmaco and Axis Bank etc also announced good results in the September quarter. Closely follow the Q2 results and pick 20-30 best scrips that includes value stocks, growth companies and niche companies and build a great portfolio by accumulating on every fall.

Big hope: Indian Government asked LIC, UTI and other Public Sector investment institutions to buy stocks aggressively to arrest stock market fall. Will they succeed?

Big negative: There will be an unimaginable meltdown in the real estate sector which will erode the wealth of big and small investors. Speculative investors are the worst sufferers. Some people in this generation may pay heavy price for their greed or lack of knowledge on the cyclic nature of real estate sector. China is already suffering from real estate meltdown.
Source: Stock Market Guide

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