IRB Infrastructure - Stock Report

A stock research report from Angel broking on IRB infrastructure with target price. Checkout..

The stock research team has maintained a "buy stocks" rating on the stock with a target price of Rs 289.

IRB has one of the largest domestic BOT project portfolios in the Road and Highway Sector comprising 16 projects of which 10 are operational. In light of the immense opportunities that exist in the Road Sector in the near future, IRB’s vast experience and inter-dependent business model, we maintain our bullish stance on the company’s performance.

Moreover, IRB’s Construction arm has a robust Order Book of Rs 9,238cr (8.7x FY2010E Revenues), which lends the Segment high Revenue visibility. We have valued IRB's inter-dependent business model on SOTP basis. Individual Road BOT SPVs have been valued on NPV basis (FY2012E) using the Free Cash Flow to Equity (FCFE) approach (Rs165/share); the Construction Segment has been valued at 8x FY2012E EV/ EBITDA (Rs116/share); the company's investments in land (adjoining Mumbai- Pune Expressway) and its equity stake in the Sindhudurg Airport project have been valued at 1x FY2009 Book Value (Rs 8/share). Buy stocks with a Target Price of Rs 289", according to report.

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NTPC FPO & Stock Analysis

NTPC is one of the better bets among power stocks. Though it has grown at a sedate pace over the last five years, NTPC is likely to deliver better earnings growth over the next decade.

NTPC is one of the better bets among power stocks. Though it has grown at a sedate pace over the last five years, NTPC is likely to deliver better earnings growth over the next decade. Our valuations, on an estimated fair price-to-book-value of 3, support a price of Rs 204 a share with a built-in upside of 20 per cent.

Investors can consider subscribing to the follow-on public offer (FPO) if it is priced at Rs 204 or below. At current market price of Rs 214, the stock is trading a 17 times its estimated FY11 earnings. NTPC may increase its capacity by a third by the end of 2012 after we account for possible delays in execution. The Central Electricity Authority estimates that NTPC may add 10,020 MW to its current capacity of 31,144 MW in the same period.

On current reckoning, the company may end the current Plan period achieving 62 per cent (13,940 MW) of its targeted capacity. This would be higher than its previous Plan period addition of 7155 MW, allowing for higher topline expansion over the next three years.

Equipment delays and execution risks continue to be major hindrances, though. Delays in ongoing projects and the high proportion of cash in the book (Rs 20/share) continue to weigh on its Return on Equity (ROE). Delays in some of the upcoming projects would also entail a loss of the 0.5 per cent additional ROE incentive on tariffs proposed by the Central Electricity Regulatory Commission (CERC) to encourage timely execution.

However, NTPC may still manage some improvement in ROE over the next few years, given the recent increase in regulated tariffs proposed by the CERC. New merchant capacities expected to be commissioned at Korba (500 MW) and Farakka (500 MW) may also aid higher ROEs.

Upside due to regulatory changes such as sale of unallocated power through the merchant route also holds potential for better returns over the short-to-medium term.

Business
NTPC, a public sector utility, is the largest player in the power sector with around 31,144 MW of capacity under its belt, including 2294 MW owned through JVs. The company is amongst the better operating utilities, given that it contributed 28.5 per cent of the total electricity generated in the country last year, with only 19 per cent of the total capacity.

It has been consistently maintaining its plant load factor (91.4 per cent as of March 09) and plant availability factor (92 per cent as of March 09) at higher than normative levels and thereby earning incentives.

Funding: Comfortable
A comfortable funding position is the biggest strength for the company, even as private players grapple with financial closure.

The company has a debt: equity ratio of 0.64 per cent for the year ended March 2009, thanks to a high equity contribution in the earlier projects. However, with the normative debt-equity fixed currently at 70:30, the company may witness increase in leverage and large proportions of cash (equity) may continue to lie unutilised, waiting to be invested.

The increase in debt is not a threat as the interest component will be passed through to customers. For the year ended March, 2009, the average borrowing costs stood at a moderate 7.2 per cent for the company.

NTPC had Rs 17,431 crore in free cash as of Septmber 2009, enough to comfortably fund the equity for more than 15,000 MW of the planned 25,000 MW capacity (in addition to 17,900 MW which are in various stages of commissioning). Given that internal accruals continue to be high, the free cash will only grow further. This may come in handy for the company to finance its backward integration into coal mining and to fund acquisition of mining assets.

The company also has Rs 11, 400 crore of One Time Settlement Scheme bonds issued against receivables. NTPC intends to invest more than Rs 40,000 crore in the next two years, in addition to the current Rs 30,613 crore deployed in capital work-in-progress. Stable cash flows

NTPC's profit grew at a rate of 9.6 per cent compounded annually over the period 2004-09. During the same period, power output grew at a modest annual rate of 6.7 per cent.

However, with newer capacities coming up over the last 18 months and existing plants operating at higher levels, NTPC's profit after tax growth has improved — for the nine months ended December 31, 2009, improved by 11 per cent year-on-year. Unlike private power producers, NTPC is largely dependent on domestic sources of coal from Coal India and its projects carry negligible fuel risk.

The company has signed a new coal supply agreement with Coal India in May, 2009 for the next 20 years for 12 out of the existing 15 power plants with a penalty clause if there is short delivery (trigger level at 90 per cent).

NTPC also has captive mines which are expected to be operational by FY12. Overseas acquisitions of coal mines, along with committed coal linkages may also reduce the dependence on imports.

In FY09, imports made up a little over 4 per cent of the company's coal consumption. Availability of gas from the KG basin would improve the load factors for the company.

Enhancing the value chain
The power trading arm of NTPC is the second largest in terms of market share in short-term trading. It also holds a minor stake in Power Trading Corporation, the largest power trader.

The company is already a seasoned player in operation and maintenance of power projects and is taking up projects for renovation and modernisation and life extension for third parties.

While the company is planning to diversify its fuel mix, most of its hydro projects are delayed and may be commissioned only in the Twelfth Plan. It has formed a JV with NPCIL for 2,000 MW of nuclear power and is also diversifying into renewable sources.

The company has recently formed a JV with BHEL for engineering and a forgings and casting JV with Bharat Forge to reduce equipment delays.

Other concerns
While the stricter operational norms mandated by CERC augur well for an efficient utility such as NTPC, CERC has discontinued advances against depreciation and disallowed the pass through of tax on income , which could pose a downside to tariffs.

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DB Realty IPO Information & Analysis

Angel Broking, stock trading broker, has come out with an IPO research report on DB Realty IPO.

The stock investment research team of Angel has recommended to avoid the issue. The issue of Mumbai-based DB Realty has opened for subscription. The company plans to raise around Rs 1,500 crore from the issue. The price band is at Rs 468-486 per share and the issue will close on February 2, 2010.

DB Realty (DBRL), a leading realty player in the Mumbai Metropolitan region, has firmed up development plans for 100mn sq ft with a total saleable area of 60.9 million sq ft (DBRL's share). Around, 65% (40 million sq ft) of its total saleable interest is concentrated in the outskirts of Mumbai (Dahisar, Mira Road, Mahul, Mankhurd, Pune), 6.6% in South Mumbai, 21% in Western Suburbs and rest in Central Mumbai.

We have assumed average realisation of Rs 6,000 per sq ft on DBRL's salable interest based on its geographical presence, which gives us a Fair NAV of Rs 412/share. Hence, we believe that the IPO is expensive and recommend an Avoid. However, investors could consider alternate, existing listed realty players like Anant Raj and HDIL.

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Automobile Sector Stocks - Results Analysis

In an interview with Ambareesh Baliga of Karvy Stock Broking gave his perspective on the results from the auto sector and the road ahead for the space. He feels stocks like Hero Honda may correct by 10-15% from CMP. Checkout..

Two-wheeler major Hero Honda came in with strong third quarter numbers. Profits surged 78% to Rs 535 crores, while margins came in at a robust 17.27%. The company says the good results are on account of their aggressive rural reach, cost efficiency and the government’s rural schemes.

Mahindra and Mahindra meanwhile disappointed the street with a fall in operating margins. Sales however rose 78% this quarter, while profits more than doubled. The company says margins were under pressure on account of rising commodity prices. The board has also given the nod a 2-for-1 stock split.

Q: Have Maruti and M&M been in line with your estimates?
A: Maruti more or less met our estimates but Mahindra was a clear disappointment and this also clearly shows in the stock price which actually fell quite sharply post the results.

Q: What about the two-wheelers – Bajaj and Hero Honda? Both have seen robust volume growth. Do you think this pace of growth can be sustained?
A: The results were a lot better than what we were expecting for Bajaj Auto and there was clearly a positive surprise. If you are talking of Hero Honda the results were more or less in line with expectations.

But clearly going ahead we feel that the two wheeler market is getting saturated. We may not see the month on month growth that we have been seeing in the past couple of months to continue.

In fact we feel Hero Honda could be an underperformer because the way we see it is the future is basically in exports and Bajaj Auto being in that space could actually benefit. We are looking at this stock possibly coming down say about 10-15% from the current levels.

Q: Most auto companies have reported significant jump in their margins largely because they have benefited from relatively stable commodity prices. Do you think here on profitability is going to be at much lower level?
A: The last 2-3 quarters including the current quarter had the benefit of lower overhead costs and lower raw material costs although they are rising over the past couple of months. But I think the next 2-3 quarters you will clearly see the raw material costs hitting the bottom-line.

At the same time if we see the higher interest rates regime that will also hit the topline to a certain extent with sales being slightly lower than what people have been expecting. So I think these are two things to be watched out for and the raw material costs is on the way up clearly.

Q: Most auto industry leaders have spoken about the stimulus measures benefiting sales growth. The government has been talking bout withdrawing those measures although in a phased manner. What kind of impact will have that on the numbers of auto companies?
A: Instead of seeing a month on month decent growth of what we have seen in the past couple of months I think that will flatten out. I would not be surprised if you see for a couple of months a degrowth as far as the numbers are concerned. So that’s what this withdrawal of stimulus would do.

There are clear signals from the government that come budget surely the stimulus would be withdrawn looking at the talk coming from the finance minister he is talking about 7.75% GDP Growth, then I suppose there is no reason to have the stimulus on.

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Reliance Industries - Stock Analysis

Anand Rathi stock trading broker and investment research firm has recommended to `Hold` stocks of Reliance Industries (RIL) with target price of Rs 1,120 on Jan. 24, 2010.

The stock broking house expects growth in the E&P segment to continue in coming quarters and refining performance to improve on rising throughput and stabilizing margins, petrochemicals might underperform given rising West Asian (Mid-East) capacities.

With D6 volume now averaging 60m cmd, the broker house expects RIL to meet the full year (FY10) target of 40m cmd production. With GAIL`s HBJ pipeline still far from complete, the estimate of 80m cmd for FY11 might be hit slightly, neutralized possibly, though, by higher volumes later.

Though Reliance`s (Q,N,C,F)* refining margin was higher than our estimate (USD 5.5), EBIT margin at USD 2.4/bbl matched our estimate, implying higher costs.

The investment research team expects RIL`s 4Q refining margin performance to improve from 9M levels, in line with rising regional and global margins, on the back of higher winter demand.

With E&P going strong and refining possibly past the worst, the broking house sees a coming petrochemicals capacity glut and possible RNRL case judgement to be key factors weighing on valuations. Any possible inorganic or organic growth plans would also be key to valuations.

The company slightly revised FY10-12e earnings by 1-2%, to adjust for 9M performance.

The company has raised target price to Rs 1,120, adjusting for debt and investments. Maintain Hold.

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Aqua Logistics IPO Information

Lack of presence in the logistics value chain and low global exposure could make the company’s headway into third-party logistics services slow.

Investors can consider giving the initial public offering of Aqua Logistics, an integrated logistics solutions provider, a miss. At the upper price band of Rs 220-230, the offer is priced at about 26 times the company’s likely FY-10 per share earnings on a post-offer equity base. Though the high valuations, to a great extent, are a function of the 32 per cent dilution in equity base that this offer would result in, it still appears a tad pricey compared with some of the listed companies in this space.

The company’s persisting negative cash flow from operations and its relatively poor margin performance are concerns. Investors looking for logistics sector exposure may be better off investing in existing listed companies, many of which enjoy stronger operations and business models.

Growth prospects
Having started as a freight forwarding company, Aqua Logistics has been attempting to evolve into a full-fledged 3PL logistics service provider. Though there’s no denying the high-growth potential in this business, the company’s ability to weather competition and gain a share in this business is as yet unproven. One indication is this: Though the company has broadened its service offerings to include contract logistics and projects, it still derives a chunk of its overall revenues (91 per cent in FY-09) from freight services only.

While the nascent demand for end-to-end logistics services could partly explain the high revenue dependence on freight services, this also suggests that the company’s headway in the high-margin value-add services are likely to be slow.

Despite growing its revenues at enviable rates over the last three years, the company’s performance at the operating and net profit margin levels somehow has not been as outstanding. Operating margin hovered at around 11 per cent levels, while net profit margins contracted from 6.5 per cent in FY-07 to 4.6 per cent in FY-09, suggesting a high dependence on volumes and little pricing power.

Given this background, the shift in focus towards contract logistics and projects would help improve margins. Even so, the extent of improvement may be capped given its relatively less-established brand presence in 3PL.

The company may have to price its services competitively to establish market presence especially since the 3PL market is relatively organised and has many established players such as AFL, Kuehne and Nagel and Reliance Logistics. But to its credit, it has over the years managed to get repeat orders from companies such as Ranbaxy, HCL Infosystems, ABB and BHEL.

The company also utilises the services of its associate and group companies for supply-chain consulting, last mile project execution, specialised transport and supply-chain IT. Its asset light model (peers own assets such as warehouses, trucks or rakes), while affording better flexibility in the selection of vendors, may, however, also restrict its ability to control costs.

Cash flows
Though Aqua has scaled double-digit growth rates in revenues and profits (on a low base), its cash flows from operations have continued to remain in the negative. In the last two financial years, the company’s receivables position has shown strain. The significantly higher debtor days (about 102 days in FY09) as against creditor days (14 days) may also explain Aqua’s strained cash flows.

However, given that the two years gone by had seen the worst of the credit crisis, improvement on this score with better trade undercurrents can be expected. Besides, the company’s plan to infuse Rs 45 crore from the offer proceeds towards funding its working-capital requirements might also help.

Despite the testing business dynamics in the last two years, many of its listed peers (helped by PE funding, strong revenue model or relatively higher pricing power) did manage to keep cash flows positive.

IPO Proceeds
The company plans to raise Rs 150 crore at the top end of the price band. The company is also offering Rs 5 per share discount to retail investors on allotment.

Enam, Subhkam Ventures and HT Media hold equity stakes in the company.

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Syncom Healthcare IPO Information & Analysis

Investments can be avoided in the initial public offering of Syncom Healthcare, which is engaged in the manufacturing and marketing of pharmaceutical formulations in the domestic market.

At the price band of Rs 65-75, the offer is priced at 23-26 times its likely FY10 per share earnings on a post offer equity base. This seems expensive considering that many of the top tier pharmaceutical companies with better business fundamentals, market reach and growth potential are available at much lower valuations. The company’s presence in a highly competitive market and it’s relatively low experience in manufacturing operations also necessitate a cautious outlook .

Company overview
Catering primarily to the domestic market, Syncom manufactures and markets pharmaceutical formulation under its own brand name in four product segments — generics, OTC (over the counter), ethical and herbal. The company also undertakes contract manufacturing for various pharmaceutical formulations, neutraceutical products, food supplements and cosmetics for domestic companies such as Lupin and Piramal Healthcare. Further, it recently added other companies such as Wockhardt, Klar Sehen and Canixa Sciences to its existing list of contract manufacturing companies.

Prospects, challenges
Though the growth undercurrents in the domestic formulation business are getting stronger, the presence and increasing focus of bigger players on the domestic market may make it doubly challenging for Syncom to chart its growth path; the bigger players cater to a chunk of the market already. The rest of the market is characterised by many small and unorganised players.

It will be Syncom’s distribution reach, brand presence and product launches that would help it scale growth in future. While the company has scored decently on these counts so far, growing its revenues at a compounded rate of over 42 per cent in the two years after it set up a manufacturing facility in Dehradun, it was on a low base and driven by volume increase. High competitive pressure and price sensitivity of the domestic market appears to have kept realisations capped, suggesting this could very well be the way forward too.

The company derives a significant share of its revenues from too few a clients; the top ten made up over 69 per cent of its revenues last fiscal. While this per seisn’t reason enough for concern — such high dependence is quite common among companies with smaller scales of operation — what may be discomfiting is its working capital management.

High dependence on a handful of clients and little bargaining power appear to have strained the company’s cash flows, with its working capital cycle increasing to 198 days in FY09 from 153 seen a year earlier — over 57 per cent of the total debtors exceeded six months. While an extended credit cycle to some extent is typical of the OTC segment, the company’s revenue exposure to the segment was just about 24 per cent in the last fiscal.
Source: News

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Thangamayil Jewellery IPO Information & Analysis

Limited geographical reach, reliance on a brand that is yet to be established, focus on gold jewellery and slim margins are the key risks.

Investors can avoid subscribing to the initial public offer of Thangamayil Jewellery (TJL), a retail jewellery chain in Tamil Nadu, as the risks appear to outweigh the potential rewards. In the price band of Rs 70-75, the valuations are at about 6.3 times the estimated FY-10 per share earnings on a post-issue equity.

Though valuations are reasonable and at a discount to the closest comparable Gitanjali Gems, the business carries a number of challenges and is not a preferred exposure for investors.

Limited geographical reach, reliance on a brand that is yet to be established, focus on gold jewellery which is susceptible to price volatility and slim margins open to cost-pressures are the key risks.

Proceeds utilisation

TJL has a chain of four outlets in as many cities in Tamil Nadu. A well- established player in the Madurai jewellery market, TJL penetrated the Karaikudi, Rajapalayam and Ramanathapuram markets in 2008-09. Despite the store additions, the company’s overall sales have only gone up 10 per cent to Rs 246.8 crore in FY-09.

Proceeds of the issue will part-finance additions of a store each in seven new cities during 2010-11, with a total investment of Rs 22 crore (including equipment).

For two of these cities, store locations are temporary, shifting to new premises when they come up, requiring higher capex. Location is yet to be decided in the third city. Though it may help topline, scaling up may not contribute significantly to profits in FY-11.

Regional markets no doubt hold substantial purchasing power and may be good for wedding jewellery with national players unlikely to step in.

Still, given that such markets are likely to have established local players, it may take time for a new entrant to make a mark. TJL is well-recognised in Madurai alone; investments in brand-building in new regions may be high in the initial period.

TJL is also susceptible to competition from established regional brands, should they choose to make an entry.

The gold jewellery business inherently has low margins, subject to high working-capital requirements and price volatility. Working capital — purchase of raw material (gold, silver and diamond) — will also be partly funded from this issue.

The company’s inventory turnover, though, has dropped from 6.3 times sales in FY-08 to 3.8 times in FY-09, further to 2.7 times in the first half of FY-10, lower than most industry peers.

Margin pressure

Sales and net profits registered a 71 per cent and 72 per cent three-year CAGR. Gross margins were at 5 per cent for FY-09 with net margins down to 3 per cent, though these figures are on a par with industry peers. Sales for the first half of FY-10 stood at Rs 209 crore, while net profits were at Rs 7.9 crore, leading to an improvement in gross and net margins rising to 6 per cent and 4 per cent respectively.

This was, however, due to fall in selling expenditure, now set to rise as TJL begins the brand-building exercise. With a larger store network, hike in depreciation is also likely. TJL’s practice of trading some of its gold inventory could expose the company to losses on the price front, when there is little cushion to handle price risks.

About 15 per cent of sales come from recycled jewellery on which margins are typically lower by about 2 percentage points. Any increase in this segment could pressure margins.

A degree of risk stems from TJL’s dependence on gold jewellery at a time when diamond-studded jewellery is starting to eat into the market for pure gold jewellery. Gold accounted for 97 per cent of TJL’s sales in FY-09 (99 per cent in FY-08) with barely 2 per cent contributed by silver and negligible contributions by diamond.
Source: News

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Bajaj Auto - Stock Analysis & Stock Report

LKP Shares, stock trading broker has recommended to buy stocks on Bajaj Auto with target price of Rs 2,100 against current market price (CMP) Rs 1,800.

The stock investment research team of broker said that the company has posted significant growth in Q3FY10. The management is very positive on the company`s growth banking upon the recent launch of Pulsar last month and looking forward to the new launch by April.


Market Cap 25,938.14
* EPS (TTM) 89.97
* P/E 19.93
* P/C 18.12
* Book Value 129.23
* Price/Book 13.87
Div(%) 220.00
Div Yield(%) 1.23
Market Lot 1.00
Face Value 10.00
Industry P/E 29.33

Bajaj Auto's results outperformed the street expectations. The company's strong thrust on the entry-level segment has fetched it market share gains. After recording a peak margin of 22% in the last quarter, the company surprised us by maintaining them at the same level.

Going forward, we expect increased input costs to pull down the full year margins to 20.2%. However, the robust volume growth, and cost saving at employee expenses level and marketing costs may somewhat offset this increase. Success of Discover 100cc along with the Pulsar models and the upcoming new launches in the Discover family will provide a strong boost to the topline. Growth in the exports along with new launches in the three wheeler segment will also provide a strong boost to the topline.

At CMP of Rs 1800, the stock is trading at FY11 P/E of 13.2, on an FY11E EPS of Rs 136.5. We believe the stock is looking attractive and hence recommend a BUY rating on the stock with a target price of Rs 2,116, which translates into an upside of ~22%.

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Polaris Software - Stock Investment Research Report

Anand Rathi, stock trading broker and stock investment research firm has recommended to buy stocks of Polaris Software with target price of Rs 250 on Jan. 21, 2010.

Polaris Software looks to be a good mid cap stock. It has reported a good set of 3Q figures, with USD revenue rising 3.9% qoq. They raise FY10-12 earnings estimates slightly. It has won 30 new deals, the highest in a single quarter over the last two years. They reiterate its Buy stocks rating and target price of Rs 250.

Key points from the 3Q results. Polaris Software`s 3QFY10 revenue grew 0.2% qoq (rupee) and 3.9% (USD). Margin was flat qoq. Consolidated net profit rose 13.9% qoq.

The company won 30 new deals, the highest in any quarter in the last two years.
Geographically, Europe was down 1.3% while ROW grew 1.2%.

Market Cap 1,725.04
* EPS (TTM) 13.05
* P/E 13.37
* P/C 10.05
* Book Value 70.21
* Price/Book 2.49
Div(%) 55.00
Div Yield(%) 1.58
Market Lot 1.00
Face Value 5.00
Industry P/E 24.02

Polaris has maintained its EPS guidance for FY10 of Rs. 15/-

The stock investment research house pointed out at target price of Rs 250, the stock would trade at 12 times FY-11e earnings. At this stock valuation, Polaris would trade at a 33% discount to IT large caps.

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Stock Market Trading Tips - Investment For Mid-Term Time Frame

Here are 3 stock market trading tips provided by Mr. Himanshu Tiwari. He has provided these stock trading tips as his recommended hidden gems.

Himanshu Tiwari's Hidden Gems

Mid Cap Stock

Essar Shipping
CMP: Rs.82
Target: Rs.110

Small Cap Stock Picks

Kamat Hotels
CMP: Rs.69
Target: Rs.85-100

Ester Industries
CMP: Rs.23.5
Target: Rs. 30

P.S. You may consider these as operator driven stock investing tips and take your decision accordingly. You should invest as per your own risk appetite in such stock tips.

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Jubilant Foodworks IPO Information - For High Risk Investors

Hem Securities has come out with a research report providing Jubilant Foodworks IPO information (initial public offering). The research firm said high risk appetite investor could buy IPO

The 22,670,447 equity shares IPO of Jubilant FoodWorks, Domino’s business operator in India, opened for subscription. The company is going to raise up to Rs 328.72 crore and the price band is at Rs 135-145 per share. The offer will close on January 20, 2010.

Hem Securities IPO Valuation of Jubilant Foodworks IPO:
The company is bringing the issue at a price band of Rs 135-145 per share which will turn into P/E multiple of 35.44-38.06 at post issue EPS of Rs 3.81 (Basis PAT annualized for 6 months ending Sept’09). The company with its massive expansion plans has shown strong financial performance for 6 months ending Sept’09 but huge accumulated losses is a major cause of concern for company. Hence high risk apetite investor can buy IPO of this pizza maker.

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Transport Corporation of India - Company Stock Analysis

A multi-modal logistics player, Transport Corporation of India has a presence in different segments of the industry, such as, moving goods by More Picturestrucks, supply chain solutions, warehousing and coastal cargo transport via small ships.

The company, like other players in this sector, is expected to benefit from a revival in the domestic economy, especially, in its key customer segments, such as, automobiles and consumer durables. It is likely to gain from the recovery in external trade as well.In addition, recent media reports point out that strong demand from the manufacturing and industrial sectors has pushed truck rentals close to a two-year high, in the first week of the new calendar year.

Transport Corporation currently trades at a discount to its larger peers in the logistics sector.The company initially offered only low-margin movement of goods across the country via trucks, but over the past few years it has been attempting to move up the value chain in the logistics business. As part of that strategy, Transport Corporation also offers supply chain solutions, warehousing and door-to-door delivery of goods.

Its logistics network, includes 7.8 million sq. ft of warehousing space at the end of May 09, a rise of 20% over the past two years, and as per various estimates nearly 18-20% of this space is company owned and the remainder is leased. In addition, its fleet includes 7,000 trucks and trailers (both owned and managed), coupled with five cargo ships with a capacity of nearly 16,500 dead weight tonnes (DWT). Transport Corp’s higher margin divisions like supply-chain solutions, XPS division (door-to-door delivery of goods) and seaways division (coastal cargo transport services) together contributed 46.3% of its total segment sales of Rs 670.85 crore, in the first half of the current financial year.

Its lower-margin freight division contributed 50.7% of sales during this period.The company had invested Rs 202 crore between year-ended March ’07 and March ’09, but its total debt increased by just 6.5% to Rs 232.9 crore during this period. That’s because Transport Corporation was able to quickly deploy additional assets in its logistics network and ensured its debt burden didn’t rise much. As a result, Transport Corporation’s leverage ratio was just 0.9 at the end of FY09, as compared to 1.4 two years earlier.The company’s operating profit margin rose by 210 basis points y-o-y to 7.5% during the September ’09 quarter, while its net sales rose just 5.7% to Rs 357.1 crore.

Market Cap 875.05
* EPS (TTM) 4.90
* P/E 24.62
* P/C 14.23
* Book Value 37.28
* Price/Book 3.24
Div(%) 30.00
Div Yield(%) 0.50
Market Lot 1.00
Face Value 2.00
Industry P/E 22.23

The company benefited from a tight check on operational costs, like employee costs and fuel costs on a y-o-y basis during the second quarter of FY 10, which helped segment profit of the key freight division rise 158.8% to Rs 6.16 crore.Various brokerage house reports also point out to a distinct improvement in volumes transported by logistic players during October and November ’09, at a time when the Index of Industrial Production also surged 11.7% y-o-y in November ’09.

Transport Corporation at Rs 100 per share, trades at 20.4 times its trailing four quarters’ earnings. Other players in the logistics sector like Gateway Distriparks trades at 19.2 times its trailing earnings, while the country’s largest logistic service provider, Container Corporation of India trades at 22.3 times. Investors could consider Transport Corporation in a bid to take advantage of the long-term growth opportunities in the logistics sector.
Source:Investors Guide

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Kirloskar Electric - Mid Cap Stock Analysis

Kirloskar Electric Company Limited (KEC) is one of India 's leading manufacturers of electrical and power equipment.

Apart from manufacturing power and distribution transformer a wide range up to 50 MVA in 200 kV class, Kirloskar Electric also produces several types of special transformers like furnace, flame proof as well as conventional dry type, earthing, special converter, high voltage testing, short circuit testing, nitrogen gas cushioned, cast resin etc.

It is also one of the leading manufacturers of AC/DC motors, AC generators, DG sets, tractions etc. At the same time, its Switchgear division manufactures high voltage switchgear in the range of 3.3 to 36kV for indoor as well as outdoor applications. Recently, it has setup up a new plant at Maharashtra & Haryana for transformer & rotating machine respectively. In order to consolidate and integrate its operation, company has recently merged Kaytee Switchgear Ltd (KSL) & Kirsloskar Power Equipments Ltd (KPEL) with itself.

Due to drastic fall in metal prices and synergies of merger, KECL has the potential to improve its margin going forward and can report an EPS of more than Rs 8 in FY10. This stock looks good from a longer term perspectives. It has moved a lot in past few days. I would recommend to buy stocks around 65 levels where it seems it has strong support.

Market Cap 495.87
* EPS (TTM) 7.52
* P/E 13.05
* P/C 9.68
* Book Value 28.15
* Price/Book 3.49
Div(%) 0.00
Div Yield(%) -
Market Lot 1.00
Face Value 10.00
Industry P/E 27.73

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Best Stocks To Buy Below Rs.50 In 2010

Here is a list of best stocks to buy below Rs.50 in 2010. These stocks are recommended by renowned stock analysis experts, SP Tulsian and Ashish Chugh.

Donear Industries - Stock Analysis For Mid-Term Investment
Donear Industries is into textile and they have a very strong brand Donear Suitings for which Yuvraj Singh is the brand ambassador. The company has set up a new textile plant in Surat with an investment outlay of about Rs 220 crore for which they have gone for a borrowing of about Rs 120 crore. Prior to that it was a debt-free company and it has been doing quite. It had given bonuses in last five-years with a very high promoter stake of 90%, which the stock exchanges has asked them to reduce to 75%. Click here to read complete stock analysis.


Tourism Finance - Public Sector Stock To Buy
Tourism Finance is promoted by – one can call it a semi public sector undertaking (PSU) with IFCI holding 32% and 25% held by State Bank of India (SBI), Life Insurance Company (LIC) and four other insurance companies.

The company is into providing finance to tourism related projects. It has been giving a consistent performance. In fact this has not been in the news. If you look at FY09, they had an EPS of about Rs 3.6 which is likely to be maintained for FY10 as well. Click here to read complete stock analysis.


Ugar Sugar - Small Cap Stock To Buy From Sugar Sector
Ugar Sugar has not participated in the run up for a simple reason that for September 2009, the company had posted a net loss. This has been scaring investors and keeping them away. The state with the most advantage in the sugar sector is Karnataka because there you have a recovery of 11.5-12% plus you are not seeing such a hue and cry for the sugarcane price as well. Click here to read complete stock analysis.


IFGL Refractories - Value Stock
IFGL Refractories is currently trading at a price of about Rs 48-49. This is a refractory company based in Orissa. Besides the plant in Orissa, this company has got two major subsidiaries called Monocon International and Hofmann Ceramics. In total this company has got manufacturing operations in seven countries. Now, 2008-2009 was a difficult year for this company mainly because of the fact that the steel industry saw a meltdown and the steel industry biggest customers. As a result of which the second half of the company was not that good. The company suffered losses in the second half of 2008-2009. Click here to read complete stock analysis.


SSPDL or Srinivasa Shipping and Property Development Limited
SSPDL is a very interesting real estate company where the current market cap of the company is very small compared to the kind of projects this company is doing. SSPDL is basically a play on the realty market in South India. This company is executing projects in Chennai, Bangalore, Kerala, Hyderabad and Vizag. The company has recently completed one project called Alpha City in Chennai, which is an IT park and also part rented that project. Click here to read complete stock analysis.


Andhra Cement - Safe Value Stock
We like Andhra Cement because of the capacity expansion, which is going in the company. This is a GP Goenka group company, which has got two cement plants with a total capacity of 1.4 million tonne per annum. In FY09, this company achieved a sales of close to Rs 370 crore, profit after tax (PAT) was about Rs 60 crore, which results in an EPS of about 4.5. At the current price of about Rs 28, stock is traded at a price to earning multiple of about 7. Click here to read complete stock analysis.

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Andhra Cement - Safe Value Stock

Investment analyst, Ashish Chugh has recommended to buy stocks of Andhra Cement in his stock analysis report. This article is from series "Stocks To Buy Below Rs.50 in 2010"

We like Andhra Cement because of the capacity expansion, which is going in the company. This is a GP Goenka group company, which has got two cement plants with a total capacity of 1.4 million tonne per annum. In FY09, this company achieved a sales of close to Rs 370 crore, profit after tax (PAT) was about Rs 60 crore, which results in an EPS of about 4.5. At the current price of about Rs 28, stock is traded at a price to earning multiple of about 7.

Now this company is undertaking a capacity expansion, which will take its capacity from 1.4 to 3.5 million tonne per annum. The increased capacity is going onstream in the next couple of days – maybe next week as what GP Goenka mentioned in a recent interview with CNBC-TV18.

So you have a company which is available at a price to earning multiple of about 7 on the old capacity and with the new capacity going onstream next week, which is going to potentially add the turnover by 2.5 times since the capacity is going up from 1.4 to 3.5 million tonne per annum, I think at the current market cap of about Rs 350 crore and the current P/E of 7, the stock is undervalued.

Another thing is that promoters have been increasing their stake in the company through market purchases and there has been a lot of inter state transfer between the promoters also. So promoters also realize the potential of the company and heartening fact is that the promoter’s stake in the company is close to 75%. So over the next few years, there is potential for dilution.

I see Andhra Cement is one of those candidates where potentially since there is a lot of interest in the cement companies from foreign players, there could be some kind of a strategic investor coming into the company or maybe some majority stake being given to some potential investor. Andhra Cement maybe a fit case where those possibilities exist.

Fundamentally, also at a price to earnings multiple of 7 on 1.4 million tonne capacity, of course, earnings are going to grow up when the expanded capacity goes on-stream. So at Rs 28 again, this is a market where midcaps and smallcaps have run away quite a bit.

To look for a safe stock in this kind of a market is slightly difficult. Andhra Cement at Rs 28 looks to be a stock where the downside looks restricted even if the market falls. And since the earnings are going to rise in the coming years, there is scope for significant appreciation from these levels.

Disclaimer by Ashish Chugh
It is safe to assume that my family and I may have a holding in the stocks discussed.

Go back to series "Stocks To Buy Below Rs.50 in 2010"

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SSPDL or Srinivasa Shipping and Property Development Limited

Investment analyst, Ashish Chugh has recommended to buy stocks of Srinivasa Shipping and Property Development Limited or SSPDL in his stock analysis report. This article is from series "Stocks To Buy Below Rs.50 in 2010"

SSPDL is a very interesting real estate company where the current market cap of the company is very small compared to the kind of projects this company is doing. SSPDL is basically a play on the realty market in South India. This company is executing projects in Chennai, Bangalore, Kerala, Hyderabad and Vizag. The company has recently completed one project called Alpha City in Chennai, which is an IT park and also part rented that project.

Incidentally, Alpha City project was nominated for the category of Best Commercial Property by CNBC-Awaaz Crisil Real Estate Award in 2008. Besides this, company is also doing some other projects called Chennai Central, which is a shopping mall covering an area of 1.27 lakh square feet in Chennai, construction of which is expected to commence shortly. Then it is doing Matrix Tower in Chennai, which is again an IT park of 2 lakh square feet. It is doing a project called Promenade on 10 acres in Chennai covering an area of 11 lakh square feet, which besides mall and office complex will also house Novotel and Ibis brand of hotels.

This company is doing Northwoods in Hyderabad on 42 acre land, which comprises of 200 villas. The company is doing Retreat, which is a 120 acre gated community in Hyderabad. Then Retreat project in Bangalore covers about 48 acres and is located at Devanahalli, which is close to a new airport and it is also doing Retreat in Kerala on an area of close to about 320 acres. Besides these real estate projects, the company has also taken building contracts.

The company has got close to Rs 100 crore of construction contracts for buildings. Major ones being TCG IT park valued at about 36 crore, NSIC office complex about Rs 25 crore and one more group housing project worth about Rs 18 crore.

Another interesting thing is that Indiareit Fund Advisors, which is a company promoted by Ajay Piramal group, has also invested in some of the projects of this company. So I believe that at the current market cap of Rs 40 crore and the current price of Rs 35 per share, I think this does not reflect the full potential of the company.

The expected sales revenues from these various projects can be many times more than the current market cap of the company. Of course, there could be concerns over the short-term, which we saw with the most real estate companies. So at the current price of about Rs 35 per share, I don’t see too much of downside from these levels and if all goes well with the company, the stock has the potential to be a multiplier in the years to come.

Go back to series "Stocks To Buy Below Rs.50 in 2010"

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IFGL Refractories - Value Stock

Investment analyst, Ashish Chugh has recommended to buy stocks of IFGL Refractories in his stock analysis report. This article is from series "Stocks To Buy Below Rs.50 in 2010"

IFGL Refractories is currently trading at a price of about Rs 48-49. This is a refractory company based in Orissa. Besides the plant in Orissa, this company has got two major subsidiaries called Monocon International and Hofmann Ceramics. In total this company has got manufacturing operations in seven countries. Now, 2008-2009 was a difficult year for this company mainly because of the fact that the steel industry saw a meltdown and the steel industry biggest customers. As a result of which the second half of the company was not that good. The company suffered losses in the second half of 2008-2009.

In the first half of the current financial year company has achieved a profit of close to Rs 17 crore. We have been recommending the stock on CNBC-TV18 earlier also but what reinforces your liking for the stock is the recent interview, which the management of the company had on your channel about a few days back now. They mentioned that the second half of the current financial year can be substantially better than the first half. We also believe that the worst maybe over for the company.

The company, which had installed its expansion project at Kandla, has now restarted that project. That project will add about Rs 150 crore to the revenues and that will become operational in 2011 and besides this, the company also looking for more overseas acquisitions. Now because of the company’s organic and inorganic expansion projects, which are going on, company has the potential to become a significant player in the world refractory market over the next couple of years.

So at the current market cap of about Rs 150 crore and price-to-earning of about 4-5, we do not see too much of downside from these levels. At a PE multiple of 4-5 the stock looks undervalued.

Go back to series "Stocks To Buy Below Rs.50 in 2010"

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Ugar Sugar - Small Cap Stock To Buy From Sugar Sector

SP Tulsian has recommended to buy stocks of Ugar Sugar in his stock analysis report. This article is from series "Stocks To Buy Below Rs.50 in 2010"

Ugar Sugar has not participated in the run up for a simple reason that for September 2009, the company had posted a net loss. This has been scaring investors and keeping them away. The state with the most advantage in the sugar sector is Karnataka because there you have a recovery of 11.5-12% plus you are not seeing such a hue and cry for the sugarcane price as well.

All the mills, whether it is Ugar or Renuka Sugar are paying a price of about Rs 240-250 for a recovery of 11.5% which translates to an equivalent price with 10% recovery to about Rs 220.

Now this company has recently commissioned a new mill of 2,500 tonne in this season. The old mill at Ugar had a capacity of about 10,000 tcd. If you take any sugar mill in the country, I do not think that anyone will be able to exceed the production what they have done in the previous years because of the overall low production of sugar expected in the country.

However, this company is likely produce about 17 lakh bags of sugar for this season against 15.5 lakh in the previous year.

Apart from that they have 56 megawatt (MW) cogeneration capacity. Even the debt portion of the company is not very stiff. It is at about Rs 130-140 crore which has largely realized to finance the working capital. The December quarter results are likely to be quite good. The company should be able to post a profit after tax (PAT) of about Rs 36-40 crore on an equity of about Rs 11.25 crore, which is at present.

So once the results are out for the December quarter, we all know that even in the March quarter there will be more sweeteners because of the increase in prices and operation of the cogeneration plant. These two quarters can drastically change the view on the stock. I won’t be surprised if this stock reaches about Rs 35 maybe by April end in this year.

Go back to series "Stocks To Buy Below Rs.50 in 2010"

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Tourism Finance - Public Sector Stock To Buy

SP Tulsian has recommended to buy stocks of Tourism Finance in his stock analysis report. This is recommendation in series "Stocks To Buy Below Rs.50 in 2010"

Tourism Finance is promoted by – one can call it a semi public sector undertaking (PSU) with IFCI holding 32% and 25% held by State Bank of India (SBI), Life Insurance Company (LIC) and four other insurance companies.

The company is into providing finance to tourism related projects. It has been giving a consistent performance. In fact this has not been in the news. If you look at FY09, they had an EPS of about Rs 3.6 which is likely to be maintained for FY10 as well.

The book value of this share at present is about Rs 37 and I think it is ruling at a price to book of 70% with a price of about Rs 26. We have seen all – whether it is small PSU banks or maybe financing or lending institutions to the power sector – have appreciated in the last six months by about 50-70%.

But I do not think that this has come into focus of analysts or maybe even investors. If somebody can take a call, I don’t think that there is any downside. The way we have seen a run up especially in stocks like LIC Housing and GIC Housing, this can also come on the radar.

IFCI holds a 32% stake and since IFCI is also regaining its health and again loaded with news, this could also be tagged along with the company or we may see a good restructuring or maybe even infusion of fresh funds to enlarge the level of activity.

If all those things can happen, I won’t be surprised if the company surpasses Rs 5 EPS for FY11. As I said, the book value is close to Rs 38 now which could rise to about Rs 42-43 by then. The stock has very good potential to appreciate by about 50-60% in the next six months.

Go back to series "Stocks To Buy Below Rs.50 in 2010"

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Donear Industries - Stock Analysis For Mid-Term Investment

SP Tulsian has recommended to buy stocks of Donear Industries in his stock analysis report. This article is from series "Stocks To Buy Below Rs.50 in 2010"

Donear Industries is into textile and they have a very strong brand Donear Suitings for which Yuvraj Singh is the brand ambassador. The company has set up a new textile plant in Surat with an investment outlay of about Rs 220 crore for which they have gone for a borrowing of about Rs 120 crore. Prior to that it was a debt-free company and it has been doing quite. It had given bonuses in last five-years with a very high promoter stake of 90%, which the stock exchanges has asked them to reduce to 75%.

But since the Surat project of Rs 220 crore, which had gone onstream just six-months back, the company have been providing depreciation on the written down value method while all the listed companies are providing depreciation on the straight-line method. This is was because of the policy having adopted for written down value method. The depreciation burden has been quite high and that has resulted into the net loss.

If the company would have opted to provide depreciation on the straight-line method, there would have been net profit. If you see their H1 performance, they had a topline of close to Rs 115 crore in which Surat project has not contributed much – with a net loss of about Rs 5.80 crore and in this Rs 5.80 crore the depreciation element was at about Rs 17.5 crore. So if I take the cash profit element, the company had posted a cash profit of about Rs 11 crore for six-months on a equity of close to about Rs 10.40 crore.

The share has a face value of Rs 2 and now this Surat project will start contributing to the topline as well as to the bottomline. Maybe, I don’t know what would the logic will be, it may prevail upon the management to opt for the change in the depreciation policy and if they opt to do that – there would be a reversal of depreciation, which can result in a huge write back of the depreciation which can improve the bottomline.

But even if you take on a fundamental basis with a market cap of the company at about Rs 165 crore, as I said the debt is only to the extent of Rs120 crore – this company with an enterprise value of Rs 300 crore is ruling at a very low valuation. Their brand itself has been estimated in the past at about close to Rs 130-140 crore.

There is good upside. We have been seeing renewed interest coming in the textile stocks. I think if someone can take a call on this stock with six months view, one can expect at least 60% return from hereon.

Go back to series "Stocks To Buy Below Rs.50 in 2010"

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Prakash Industries - Stock Investment Research Report

Stock report on Prakash Industries from Motilal Oswal stock brokers stock market investment research team. They have recommended to buy stocks of Prakash industries for ~30% returns on the back of hike in production and capacity expansion.

The company will spend Rs 33 billion over five years to nearly double its crude steel production, expand its sponge iron capacity to capitalize on iron ore integration and put up a 625MW power plant.

The company's steel making capacity will increase from 550,000tpa to 1mtpa by March 2012 and its sponge iron capacity will increase from 400,000tpa to 1mtpa. Prakash Industries is extracting nearly 1mtpa of coal from the Chotia mine to feed its 100MW CPP and sponge iron kilns.

Market Cap 2,456.13
* EPS (TTM) 18.65
* P/E 11.40
* P/C 9.53
* Book Value 73.65
* Price/Book 2.89
Div(%) 0.00
Div Yield(%) -
Market Lot 1.00
Face Value 10.00
Industry P/E 22.41

Over FY09-12, expected EBITDA is to grow at 39% CAGR to Rs 7.9 bn due to raw material integration. Expected PAT growth is of 40% CAGR to Rs 5.6 billion. Target price comes to be Rs.285 (30% upside) based on 5.5x FY12E EV/EBITDA. "Buy stocks", says Motilal Oswal stock research report.

Download detailed report here.

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Stock Market Trading Tips - Buy Genus Power Infrastructures

This is an operator and stock traders call provided by a trader group. I am considering it as stock investing tip for short term to medium term.

Buy stocks of Genus power infrastructures ltd. for short to medium term investing at CMP Rs.180 with target of Rs.350. The time horizon could be 6 months.

It is a small cap stock with P/E of only around 5 whereas Industry segment in which it operates have average P/E ratio of 18. Book value of Genus is around Rs.184 which indicates strong value.

Market Cap 266.60
* EPS (TTM) 36.23
* P/E 4.98
* P/C 4.53
* Book Value 184.53
* Price/Book 0.98
Div(%) 10.00
Div Yield(%) 0.55
Market Lot 1.00
Face Value 10.00
Industry P/E 18.78

One with higher risk appetite should buy stocks of Genus for decent gains in short term.

This stock trading tip is provided by Mr. Himanshu Tiwari, who is a stock trader and discusses tips on stock market.

Checkout stock tips section on Indian Stocks News regularly or get e-mail updates so you don't miss.

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Nirlon - Small Cap Stock For Mid-Term Investment

Nirlon Ltd. was an industry leader once, slid into loss making category long ago and since then lost its position in the stock market as well as in the industry segment.

It was due to this reason and also the climax of the bearish phase in the stock markets that its share fell to a low of Rs 13.90 in March, 2009 when the market in general formed second and a higher bottom at 8047 on the BSE Sensex. However, from March onwards the markets resumed their long lasting uptrend and this share also started climbing up phasewise and reached a high of Rs 72.25 sometime in August- September, 2009.

Since the share had risen so much in too short a period, it was obvious for it to attract selling in the nature of profit-taking. It therefore, corrected upto Rs48.70 in October, when the maket also fell sharply down.

However, the share is showing up-going tendency thereafter and closed at Rs 62 on Friday.

Market Cap 361.52
* EPS (TTM) 0.25
* P/E 248.40
* P/C 101.80
* Book Value 11.46
* Price/Book 5.42
Div(%) 0.00
Div Yield(%) -
Market Lot 1.00
Face Value 10.00
Industry P/E 9.91

The stock looks very expensive in terms of valuations looking at P/E Ratio and earnings. These expensive valuations seem to be on the back of Nirlon business park developed by Nirlon in Mumbai. The stock has shown a distinctive uptrend against the downtrend in the market. Investors willing to take risk can buy stocks for medium-term investing.

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The Bulls & The Bears - Fighting In Indian Stock Markets

Have a look at the stock market movements in past few days/weeks and you would notice Indian stock markets are going nowhere. It's a tough war going on, The Bulls Vs. The Bears!

The Bulls have been ruling for past almost 9 - 10 months on markets but we should not underestimate The Bears since they are as much powerful as The Bulls. They have power to fight back and win too.

It is quite possible that Bears are building their positions and taking guards and might start attacking soon. Once their positions start unwinding, The Bulls won't have any space to hide.

Let's see what could be the climax of this, very soon...

The signal could be one big red closing for the day and it could be start of the Bear phase.

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Seshasayee Paper - Small Cap Stock With Bonus Possibility

A small cap stock with bonus candidature due to it's small equity with good EPS numbers and very good book value.

BSE Stock code: 502450
Seshasayee Paper produces a wide range of products such as printing and writing papers, packing and wrapping papers and specialty papers. In addition to catering to domestic market, company has been exporting to around 20 countries across the world. For FY09, company could sell its entire production and achieve zero stock of finished goods at the end of the financial year, a record repeated for the twealth time in the last fifteen years. Financially company has reported terrific set of nos for the last two quarters with an all time high OPM of 25%.

Market Cap 174.49
* EPS (TTM) 22.52
* P/E 6.89
* P/C 3.38
* Book Value 171.14
* Price/Book 0.91
Div(%) 35.00
Div Yield(%) 2.26
Market Lot 1.00
Face Value 10.00
Industry P/E 8.52

For current year it may clock a net profit of Rs 40 cr on estimated sales of Rs 575 cr i.e. EPS of Rs 35.50 on equity of Rs 11.25 cr. Incidentally, current fiscal is the golden jubilee year (50th year) for this company, hence it is may reward share holders with 1:1 bonus in near future.

One may buy stocks for mid term investments around 130 levels.

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NHPC - Stock Analysis

If we look at NHPC company stock analysis, there is nothing much to discuss stock fundamentals since the company has recently came out with its IPO and that it's stock has just got listed in the stock market.

On the day of its listing, it reached a high of Rs 39.70 and since then started falling and ultimately reached a low of Rs 29.85 in early November. From Rs 29.85, the share rallied upto Rs 33.40 but before it could go further up, and increased selling pressure pushed it back.

This stock has recently rallied a bit and reached at 36 today. This seems to be on the back of recent news of NHPC Limited Announcement of Agreement For Preparation Of DPRs. In stock technical analysis terms, recent move shows that the worst is seemingly over for the scrip and it may appreciate in price though slowly and gradually over a period of time.

Buy stocks in small quantities and hold for more than a year for best investment return.

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Stocks To Buy For Mid-Term Investment

Here are few stocks to buy for mid-term investing recommended recently by stock trading brokers.

Steel sector stocks

SAIL (Steel Authority of India)
CMP: Rs.255
Stock price target: Rs.291
Factors to consider: String balance sheet, focus on India, aggressive capacity expansion.

JSW Steel
CMP: Rs.1134
Stock price target: Rs.1400
Factors to consider: Expected volume CAGR Growth of above 30%.

Infrastructure sector stocks

ERA Infra Engineering
CMP: Rs.212
Stock price target: Rs.290
Factors to consider: Focus on high margin contracting and equipment rental business provides it lot of opportunities in infrastructure sector.

Auto ancillary sector

Clutch Auto
CMP: Rs.53
Stock price target: Rs.125
Factors to consider: Expected EPS in current year to be Rs.9-10 and Rs.14-15 in FY11.

All recommendations by: Anand Rathi stock broking and financial services firm

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Reliance Power - Blue Chip Power Stock - Time To Buy?

With Reliance Power's recent announcement of commencing production in phase-1 of Rosa power plant, it is time to consider Reliance power as long term investment. Many stock market analysts have started publishing their stock research report recommending to buy stocks of the company.

With commencement of Rosa power plant production, Reliance power would soon start adding these production numbers to balance sheet. They are expecting Rs. 3300 Crores revenue from this plant in next 1 - 2 years at full production capacity.

If we look at the numbers, total income in March 2009 was Rs. 334 Cr. I expect with addition of above said Rs. 3300 Cr. revenue, it would significantly increase all the numbers including EPS. Tata Power operates on net profit margin of 12.32%. Even at 10% operating profit margin, Reliance Power would add approx 330 Cr. of profit to it's approximate year 2009 profit, Rs. 275 Cr. So in next 1 - 2 years, the total figure of profit could be Rs.609 Cr. and adjusted EPS Comes at 2.54 for these forward earnings.

At CMP, Rs.155, with forward EPS of 2.54, forward P/E comes to be 61. Although it seems expensinve in P/E ratio terms, Reliance power has always commanded P/E ratio of more than 100 due to it's being in Power business and it's huge projects which would go operational in next 4-5 years.

So with the forward earnings discussed above, Reliance power stock can easily double in 2 years time frame.

Power sector is one sunshine sector everyone would be looking at in next few years due to continuously surging power demand in India. With demand for power sector businesses, power stocks would be sought after ones in future.

Considering all these factors, buying stocks of Reliance power could yield good returns with long term investing strategy. But stocks at every dip and also buy in SIP (Systematic Investment Plan) manner.

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McLeod Russel - Small Cap Stock - A Largest Tea Producer

McLeod Russel (MRIL) is currently the largest producer of tea in the world. Another small cap stock discussed in small cap stock list for 2010.

McLeod Russel (MRIL) is an old-world company, growing tea. It has been doing so now for more than a century. And it shows. It manages over 50 tea estates including the recent foreign acquisition of Phu Ben Tea Company of Vietnam, which happened in March, 2009.

MRIL has stuck to its core business, and taken advantage of two big players divesting their interest in tea plantations, and now it is in an enviable position to reap the harvest of its acquisitions.

From a loss of Rs 19.7 crore in FY2005, MRIL has grown its net profits at 57 per cent to reach Rs 88.8 crore at the end of FY2009. While at the same time, revenue has grown at 27 per cent compounded annual growth rate (CAGR) to Rs 829 crore at the end of FY2009.

With a plan to reduce its debt:equity ratio to 0.3-0.4.over the next few years, it has let institutional investors buy a 6.95 per cent extra stake in the company in the first two quarters of FY2010. The fund industry’s interest in it has also gone up from 9 funds to 20 funds (as at the end of October, 2009) over the past six months.

Market Cap 2,863.91
* EPS (TTM) 16.75
* P/E 15.62
* P/C 13.68
* Book Value 54.76
* Price/Book 4.78
Div(%) 40.00
Div Yield(%) 0.76
Market Lot 1.00
Face Value 5.00
Industry P/E 30.54

At its current price, the stock trades at 15.21 times its earnings which is still slightly below its historic valuations of 15.66. It looks expensive looking at stock valuations and the run up in the stock in this rally has been quite astounding, its year-till-date gain is 423.84 per cent. Hence, buy stocks to take fresh positions only at dips.

Go back to Small Cap Stock List For 2010

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Gateway Distriparks - Small Cap Stock From Logistics Sector

Set up as a joint venture by NTSC, Parameshwara Holdings, Windmill International and Thakral Corporation, Gateway Distriparks (GDL) is into the business of warehousing and container freight stations (CFS). Checkout this small cap stock from small cap stock list for 2010.

It owns and manages CFS and inland container depots (ICDs). It has invested Rs 350 crore via its subsidiary, Gateway Rail Freight, in container trains. It is the next biggest private entry in this segment as the market is dominated by Container Corporation of India. Institutions have shown credible interest in GDL, with Blackstone taking it to the next stage by agreeing to buy 37.5 per cent stake for Rs 300 crore.

GDL is expanding and has spent Rs 570 crore on creating assets for rail and road business, and further plans to invest Rs 250 crore by March, 2010. Its profits (consolidated) went up by 6.67 per cent in FY2009 to Rs 77.44 crore. The growth in this segment, is not as high as the amount being invested since this segment is at a nascent stage.

Even though there has been much fund activity in this scrip (fund count is at 18 in October up from 16 in May, 2009), but institutional investors have been buying heavily into this counter from 25.82 per cent in March, 2009 it is now at 38.07 per cent at the end of September, 2009.

Market Cap 1,481.17
* EPS (TTM) 7.64
* P/E 18.00
* P/C 15.23
* Book Value 58.81
* Price/Book 2.34
Div(%) 35.00
Div Yield(%) 2.55
Market Lot 1.00
Face Value 10.00
Industry P/E 43.50

The stock though has not really gone too far during the year (up 49.53% till November 27, 2009), it is still trading above its historic valuation of 16.74 P/E. It discounts its EPS of Rs 6.55 with a P/E of 18.87. It is a worthy buy in this segment and could be accumulated at dips.

Go back to Small Cap Stock List For 2010

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