This time it is a large cap stock analysis of BHEL. What makes BHEL a growth stock with value and a stock to buy in your investment portfolio?
Bharat Heavy Electricals Limited (BHEL) is engaged in the energy and infrastructure sector. The Company caters to power generation and transmission, industry, transportation, renewable energy and defense. With a network of 15 manufacturing divisions, two repair units, four power sector regions, eight service centers, 15 regional offices, one subsidiary and a number of project sites spread all over India and abroad, BHEL is a one of the Navratna companies in public sector.
Company's products include thermal, nuclear, gas and hydro-based utility power plants. BHEL also produces steam turbines, generators, boilers and matching auxiliaries. Circulating fluidized bed combustion (CFBC) boilers for thermal power plants and custom built hydro power equipment are other products of company.
To conclude the product portfolio, BHEL manufactures and supplies some of the most important products in power generation sector. Power generation and realted infrastructure is one of the most encouraged and under developed sector in India and government is actively promoting the same. A long queue of power and energy projects is being planned and lined up to meet the power demand in India. This gives opportunity of tremendous growth for BHEL in future.
Bhel's current order book stands at Rs.1580 billion (5 times FY10 revenues). All these orders are from projects which have financial closure. This estimates the visibility of 25% EPS CAGR for next 3 years.
Company has a very strong order book position for next few quarters. This ensures steady stream of revenues and earnings. The reasoning mentioned above compelled me to include this large cap stock in my list of "Stocks to buy in 2011".
Stock valuation
At current stock price of Rs.1975, the stock trades at 17.6x FY11E earnings of Rs 112 and 14x on FY12E earnings of Rs 140. The cheap valuations at current stock price and growth visibility make it a growth stock to buy at these levels. One should buy stocks of BHEL for a target price of Rs.2900 for medium term (12-18 months)
Showing posts with label Stocks To Buy In 2011. Show all posts
Showing posts with label Stocks To Buy In 2011. Show all posts
Stock analysis - Mahindra & Mahindra : Buy stock for medium term
Stock analysis of Mahindra & Mahindra from medium term investment perspectives.
As we all know, Mahindra & Mahindra is one of the leading automobile sector player when it comes to SUV and tractors. There is competition to them but minimal. And it does not looks like anyone would be their big competitor in near future to snatch away their market share. In SUV space, everyone is trying to take away the market share that Mahindra scorpio enjoys but hardly anyone has been able to do that.
Recently Mahindra & Mahindra has avquired Ssangyong motors. Ssangyong motors is a big South Korean SUV maker. This deal would bring in SUV technology and presence in large markets for Mahindra & Mahindra.
Mahindra & Mahindra have many subsidiary companies holding good amount of value. This value unlocking will happen eventually but many of it's subsidiaries doing good business are actually adding value. This should take it's intrinsic value only towards north.
Company has debt to equity ratio of only 0.4 which shows that it's balance sheet is strong. Company is expected to grow at 12% Compounded Annual Growth Rate in next two years.
At estimated EPS 0f 44.9 in FY 12, stock trades at forward P/E of ~14. With company's strong market share in automotive sectors, it is part of consumer growth story in India. Mahindra & Mahindra has a good upside potential in near future. Buy stock for medium term with target of Rs.800
As we all know, Mahindra & Mahindra is one of the leading automobile sector player when it comes to SUV and tractors. There is competition to them but minimal. And it does not looks like anyone would be their big competitor in near future to snatch away their market share. In SUV space, everyone is trying to take away the market share that Mahindra scorpio enjoys but hardly anyone has been able to do that.Recently Mahindra & Mahindra has avquired Ssangyong motors. Ssangyong motors is a big South Korean SUV maker. This deal would bring in SUV technology and presence in large markets for Mahindra & Mahindra.
Mahindra & Mahindra have many subsidiary companies holding good amount of value. This value unlocking will happen eventually but many of it's subsidiaries doing good business are actually adding value. This should take it's intrinsic value only towards north.
Company has debt to equity ratio of only 0.4 which shows that it's balance sheet is strong. Company is expected to grow at 12% Compounded Annual Growth Rate in next two years.
At estimated EPS 0f 44.9 in FY 12, stock trades at forward P/E of ~14. With company's strong market share in automotive sectors, it is part of consumer growth story in India. Mahindra & Mahindra has a good upside potential in near future. Buy stock for medium term with target of Rs.800
Buy stocks of Exide Industries at every dip in its stock price
Why should you buy stocks of Exide Industries at every dip in its stock price? Let’s have a look at this mid cap stock, it’s stock valuations and why should you invest in it.
This is another stock in my list of "Stocks to buy in 2011". Exide Industries Limited (EIL) is undisputed the number one battery manufacturer in India. And do you know Exide is one of the top five battery manufacturers in world? Yes it is.
If you own an automatic vehicle (Truck, car or bike) in India, checkout your vehicle’s battery and there are high chances that you would see the name “Exide” on it. I am sure don’t need to open it, you would probably know it. Overall Indian battery market is more than Rs.10,000 crores. It has grown in past 5 years (2005-2010) at 30%. Average profits for battery industry grew at 50% every year, thanks to ever growing demand from automotive sector in India.
Target markets for battery industry are mainly divided into two segments, automotive and industrial. Automotive sector (cars/trucks/bikes etc.) is expected to grow at 20%. The same is for industrial segment. Leading stock broker firm, Angel stock broking has mentioned in it’s industry report that revenues for battery industry are expected to grow at 19.7% compounded (CAGR) for next 3 years. In automobile, new cars as well as battery replacement for old cars is what drives the volume for batteries. In industrial segment, it is railways and power sector. All the entities mentioned here are on growth curve and not expected to slow down their growth for sure.
Exide industries has very strong distribution network with presence at 206 locations and they are expected to grow to 250 by mid 2012. Company has plans to make it’s presence in small 3-tier cities where battery market is dominated by unbranded and unorganized sector batteries.
Being market leader, company has full control and power for pricing it’s products. Company revises it’s prices whenever need arises which helps maintaining it profit margins.
Company has a plan to invest Rs.400 crores and expand the capacity for growing two wheeler and 4 wheeler markets. Exide has already launched batteries for electric bikes. It is researching and developing batteries for electric and hybrid cars which is going to be next big growing sector looking at ever rising petrol and diesel prices. So huge growth ahead if Exide comes up with good products for this market.
A few concerns
Last two years have been slow due to recession but economies are recovering and India is growing at pretty good rates now. Many new competitors are entering this segment, recent example being Tatas. Another concern is competition from cheap imports from China. These could take away some market share from this industry leader. Amara Raja is making it’s moves fast to capture more and more market share.
Stock valuation
One of the best part I liked about Exide is that it is a zero debt company. It has very good cash flow which would help it expand without any debt. Company has observed high returns on networth (RONW) ratio which is good. At current ock price, stock trades at P/E ratio of 17.40. Company’s EPS has grown at more than 40% CAGR (Compounded Annual Growth Rate). The Price to Earnings growth ratio stands at 0.6. All this makes Exide a high growth and value stock to buy. One may buy stocks of Exide at every dip in it’s stock price for long term investment.
This is another stock in my list of "Stocks to buy in 2011". Exide Industries Limited (EIL) is undisputed the number one battery manufacturer in India. And do you know Exide is one of the top five battery manufacturers in world? Yes it is.
If you own an automatic vehicle (Truck, car or bike) in India, checkout your vehicle’s battery and there are high chances that you would see the name “Exide” on it. I am sure don’t need to open it, you would probably know it. Overall Indian battery market is more than Rs.10,000 crores. It has grown in past 5 years (2005-2010) at 30%. Average profits for battery industry grew at 50% every year, thanks to ever growing demand from automotive sector in India.
Target markets for battery industry are mainly divided into two segments, automotive and industrial. Automotive sector (cars/trucks/bikes etc.) is expected to grow at 20%. The same is for industrial segment. Leading stock broker firm, Angel stock broking has mentioned in it’s industry report that revenues for battery industry are expected to grow at 19.7% compounded (CAGR) for next 3 years. In automobile, new cars as well as battery replacement for old cars is what drives the volume for batteries. In industrial segment, it is railways and power sector. All the entities mentioned here are on growth curve and not expected to slow down their growth for sure.
Exide industries has very strong distribution network with presence at 206 locations and they are expected to grow to 250 by mid 2012. Company has plans to make it’s presence in small 3-tier cities where battery market is dominated by unbranded and unorganized sector batteries.
Being market leader, company has full control and power for pricing it’s products. Company revises it’s prices whenever need arises which helps maintaining it profit margins.
Company has a plan to invest Rs.400 crores and expand the capacity for growing two wheeler and 4 wheeler markets. Exide has already launched batteries for electric bikes. It is researching and developing batteries for electric and hybrid cars which is going to be next big growing sector looking at ever rising petrol and diesel prices. So huge growth ahead if Exide comes up with good products for this market.
A few concerns
Last two years have been slow due to recession but economies are recovering and India is growing at pretty good rates now. Many new competitors are entering this segment, recent example being Tatas. Another concern is competition from cheap imports from China. These could take away some market share from this industry leader. Amara Raja is making it’s moves fast to capture more and more market share.
Stock valuation
One of the best part I liked about Exide is that it is a zero debt company. It has very good cash flow which would help it expand without any debt. Company has observed high returns on networth (RONW) ratio which is good. At current ock price, stock trades at P/E ratio of 17.40. Company’s EPS has grown at more than 40% CAGR (Compounded Annual Growth Rate). The Price to Earnings growth ratio stands at 0.6. All this makes Exide a high growth and value stock to buy. One may buy stocks of Exide at every dip in it’s stock price for long term investment.
Stock to buy for long term - Blue Star Limited
Compounded Annual Growth Rate (EPS) of more than 30% and Price to Earnings Growth (PEG) of less than 1 certainly makes Blue Star limited a bluechip stock to buy.
Here is a stock analysis of bluechip stock Blue star in my series of “Stocks to buy in 2011”. Being bluechip stock, Blue star provides stability to your stock portfolio and resistance in times of stock market correction as bluechips tend to correct lesser than mid cap and small cap stocks.
Blue Star Limited (Blue Star) is a central air conditioning and commercial refrigeration company. Blue Star has three business segments: electro-mechanical products and packaged air conditioning systems, cooling products, and professional electronics and industrial systems.
Air conditioning sector
The market size for air conditioning in India growing constantly. Home air conditioning and commercial, both have tremendous demand and growth due to rising incomes and huge rise in high end realty constructions like shopping malls, high end offices, hospitals, schools and commercial buildings. Estimated size of this market was more than Rs. 10500 crores in 2009-10. Out of this, commercial and central air conditioning market was in tune of 5000 crores.
cold storage, water cooler, bottled water dispensers, deep freezer, milk coolers, ice-cubers are another commercial cooling business opportunity in India that is growing rapidly due to huge growth in organized retail sector. Latest Angel stock broking reports says that Blue star has 30% market share in central air conditioning market in India with lots of repeat business from institutional clients.
Governments decision on setting up country wide cold storage chains poses a great opportunity for company’s growth. Blue Star Electromechanical Limited, completed the acquisition of the plumbing and fire-fighting businesses of D.S. Gupta Construction, the largest independent plumbing and fire fighting contracting company in India. With this acquisition, the company will not only be in a position to aggressively pursue an integrated MEP (Mechanical, Electrical and Plumbing). It will add a vertical of new services and get benefitted from existing set of clientele.
Company’s financial numbers show Five year compounded annual growth rate (CAGR) of 22.6 per cent in sales and 40.1 per cent in profit after tax. Average return on net worth over the last five years was pretty high at 43.9 per cent.
In next 1–2 years, although company’s profit after tax levels may remain flat due to high debt of acquisition cost of D.S.Gupta constructions, revival in commercial estate demand and cold storage opportunity (both private retail and government) provides high growth potential for company.
Stock Valuation
At present, the stock trades at a twelve-month trailing price-to-earnings (PE) ratio of 17.6 (February 16th), which is fairly below its five year median PE of 21.86. Stock dividend yield stands at 2.3%. It has posted a five-year earnings per share (EPS) CAGR of 34 per cent. This translates into a price-earnings to growth (PEG) ratio of 0.60.
Should you buy stocks of Blue star?
Looking at company’s market share and position, order book of Rs.1990 crores, growth prospects due to demand in commercial real estate sector and cold storage chains, one may buy stocks of Blue star at current price or below it for long term investment horizon (3-4 years).
Here is a stock analysis of bluechip stock Blue star in my series of “Stocks to buy in 2011”. Being bluechip stock, Blue star provides stability to your stock portfolio and resistance in times of stock market correction as bluechips tend to correct lesser than mid cap and small cap stocks.
Blue Star Limited (Blue Star) is a central air conditioning and commercial refrigeration company. Blue Star has three business segments: electro-mechanical products and packaged air conditioning systems, cooling products, and professional electronics and industrial systems.
Air conditioning sector
The market size for air conditioning in India growing constantly. Home air conditioning and commercial, both have tremendous demand and growth due to rising incomes and huge rise in high end realty constructions like shopping malls, high end offices, hospitals, schools and commercial buildings. Estimated size of this market was more than Rs. 10500 crores in 2009-10. Out of this, commercial and central air conditioning market was in tune of 5000 crores.
cold storage, water cooler, bottled water dispensers, deep freezer, milk coolers, ice-cubers are another commercial cooling business opportunity in India that is growing rapidly due to huge growth in organized retail sector. Latest Angel stock broking reports says that Blue star has 30% market share in central air conditioning market in India with lots of repeat business from institutional clients.
Governments decision on setting up country wide cold storage chains poses a great opportunity for company’s growth. Blue Star Electromechanical Limited, completed the acquisition of the plumbing and fire-fighting businesses of D.S. Gupta Construction, the largest independent plumbing and fire fighting contracting company in India. With this acquisition, the company will not only be in a position to aggressively pursue an integrated MEP (Mechanical, Electrical and Plumbing). It will add a vertical of new services and get benefitted from existing set of clientele.
Company’s financial numbers show Five year compounded annual growth rate (CAGR) of 22.6 per cent in sales and 40.1 per cent in profit after tax. Average return on net worth over the last five years was pretty high at 43.9 per cent.
In next 1–2 years, although company’s profit after tax levels may remain flat due to high debt of acquisition cost of D.S.Gupta constructions, revival in commercial estate demand and cold storage opportunity (both private retail and government) provides high growth potential for company.
Stock Valuation
At present, the stock trades at a twelve-month trailing price-to-earnings (PE) ratio of 17.6 (February 16th), which is fairly below its five year median PE of 21.86. Stock dividend yield stands at 2.3%. It has posted a five-year earnings per share (EPS) CAGR of 34 per cent. This translates into a price-earnings to growth (PEG) ratio of 0.60.
Should you buy stocks of Blue star?
Looking at company’s market share and position, order book of Rs.1990 crores, growth prospects due to demand in commercial real estate sector and cold storage chains, one may buy stocks of Blue star at current price or below it for long term investment horizon (3-4 years).
Stock to buy : Corporation Bank
Corporation bank is a well managed PSU banking stock to buy. I had posted stock analysis and recommended a few months back to buy stocks of this bank if it corrects below Rs. 550 levels.
Since then stock market has corrected a lot and Corporation bank stock is not exception to this correction. Now the banking stock trades at below Rs.550 levels.
Corporation bank has 1,000-plus branches in the southern and western parts of the country. It has the reputation of being one of the best-managed public sector banks in India. It has relatively clean balance sheet compared to other banks and impressive track record.
Bank is expanding in Northern part and Tier II cities allover India. Nonperforming loans of bank are around 1% which is not much risky. Price to BV (402 in 2010, FY 2011 should be even higher) ratio at Rs.542 is 1.34 which is very good. Dividend yield at current stock price comes to be 3% which makes it a good dividend yield stock.
Must read: Should you buy stocks now at these levels?
Average return on equity ratio for bank has been 18 per cent for past three years. It is a healthy ratio. According to bank's expectations, bank is likely to post EPS growth of 14 per cent for next 2 years.
Bank has been recording very good EPS growth for past 5 years and it is expected to do so for at least next 3 years. One may buy stocks of Corporation bank if stock market corrects further and if stock is available at even lower levels. All in all, Corporation bank is one of the stocks to buy in 2011 in my list for next 2-3 years.
Also read: Stock report - Corporation Bank
Since then stock market has corrected a lot and Corporation bank stock is not exception to this correction. Now the banking stock trades at below Rs.550 levels.
Corporation bank has 1,000-plus branches in the southern and western parts of the country. It has the reputation of being one of the best-managed public sector banks in India. It has relatively clean balance sheet compared to other banks and impressive track record.
Bank is expanding in Northern part and Tier II cities allover India. Nonperforming loans of bank are around 1% which is not much risky. Price to BV (402 in 2010, FY 2011 should be even higher) ratio at Rs.542 is 1.34 which is very good. Dividend yield at current stock price comes to be 3% which makes it a good dividend yield stock.
Must read: Should you buy stocks now at these levels?
Average return on equity ratio for bank has been 18 per cent for past three years. It is a healthy ratio. According to bank's expectations, bank is likely to post EPS growth of 14 per cent for next 2 years.
Bank has been recording very good EPS growth for past 5 years and it is expected to do so for at least next 3 years. One may buy stocks of Corporation bank if stock market corrects further and if stock is available at even lower levels. All in all, Corporation bank is one of the stocks to buy in 2011 in my list for next 2-3 years.
Also read: Stock report - Corporation Bank
Buy stocks of JSW Steel for medium to long term
Another stock to buy in the series "Stocks to buy". This post reasons why to buy stocks of JSW Steel for medium to long term investment.
JSW Steel Limited (JSW) is in the business of production and distribution of iron and steel products. The Company has two primary business segments, Steel and Power (used mainly for captive consumption). The Company’s products include hot-rolled coils/steel plates/sheets, rolled products (long), cold-rolled coils/sheets, galvanized plain/corrugated/color coated coils/sheet, steel billet, and bars and rods.
Let's have a look at few key drivers for growth of JSW steel in year 2011.
JSW Steel is set to buy 41.29% stake in Ispat industries for Rs 2157 crore (Rs 19.85 per share) through the issue of fresh shares. Present promoters would hold around 20% - 22% but Management control would be with JSW steel. Ispat's stock valuation are at very cheap level as it is stuck in debt raised for its expansion plans.
JSW Steel is also the top bidder to buy banks' Ispat Convertible Debt at premium. Ispat owes about USD 1.5 billion, including foreign-currency loans, to lenders including IFCI Ltd., IDBI Bank Ltd. and ICICI Bank Ltd. On November 26, 2010, it converted part of the debt into equity by issuing 77.7 million shares to lenders.
All steel majors like Tata steel and Arcelor Mittal were looking to buy stake in Ispat but JSW steel has snapped the deal quickly to own controlling stake.
Company has announced a new capex of Rs 4bn on setting up of a new cold rolling mill (CRM) complex of 2.3mtpa in two phases at its Vijaynagar unit to cater to the niche auto and white goods segment demand.
The acquisition is definitely positive for JSW steel in long term. It will become largest steel company in India with total capacity of 14.3 million tonnes. With expected EPS of Rs 112 for FY 12, stock price target could be around Rs 1200. Gains of ~30% at current stock price. Investors may buy stocks for medium to long term.
JSW Steel Limited (JSW) is in the business of production and distribution of iron and steel products. The Company has two primary business segments, Steel and Power (used mainly for captive consumption). The Company’s products include hot-rolled coils/steel plates/sheets, rolled products (long), cold-rolled coils/sheets, galvanized plain/corrugated/color coated coils/sheet, steel billet, and bars and rods.
Let's have a look at few key drivers for growth of JSW steel in year 2011.
JSW Steel is set to buy 41.29% stake in Ispat industries for Rs 2157 crore (Rs 19.85 per share) through the issue of fresh shares. Present promoters would hold around 20% - 22% but Management control would be with JSW steel. Ispat's stock valuation are at very cheap level as it is stuck in debt raised for its expansion plans.
JSW Steel is also the top bidder to buy banks' Ispat Convertible Debt at premium. Ispat owes about USD 1.5 billion, including foreign-currency loans, to lenders including IFCI Ltd., IDBI Bank Ltd. and ICICI Bank Ltd. On November 26, 2010, it converted part of the debt into equity by issuing 77.7 million shares to lenders.
All steel majors like Tata steel and Arcelor Mittal were looking to buy stake in Ispat but JSW steel has snapped the deal quickly to own controlling stake.
Company has announced a new capex of Rs 4bn on setting up of a new cold rolling mill (CRM) complex of 2.3mtpa in two phases at its Vijaynagar unit to cater to the niche auto and white goods segment demand.
The acquisition is definitely positive for JSW steel in long term. It will become largest steel company in India with total capacity of 14.3 million tonnes. With expected EPS of Rs 112 for FY 12, stock price target could be around Rs 1200. Gains of ~30% at current stock price. Investors may buy stocks for medium to long term.
Selan Exploration : Stock to buy in 2011
I had published a post Selan Oil Exploration: Soaked in Crude almost three years back as stock analysis for investment. It was at Rs. 150 at that time. The stock trades at around 400 now. I just thought to research a bit on it for current scenario and I found it recently recommended as multibagger stock to buy in 2011 by Ashish Chugh on CNBC-TV18. Let's see what he says.
Ashish Chugh believes that even at the current price this stock may turnout to be a potential multi-bagger stock.
The financials of Selan Exploration for the past two years have been almost flat. There was not much increase in either production. This is mainly because of the fluctuating oil prices. The revenues and profits are inline with the oil prices but there has not been any substantial increase in production in the last two years.
Selan exploration is doing 3D contour mapping for past 2 years of not just the Bakrol field, which is giving them major production as of now but for some other fields also. The new technologies which are available enables the company to identify the reservoirs where if drilling is done will give them about 10-15 times more oil than what the current wells are producing.
To calculate roughly, the company is doing about 2.5 lakh barrels every year from about 20 wells, which means that each well is giving them close to 12,000-13,000 barrels, and the new wells are capable of producing 1-1.5 lakh barrels per year, this could translate (if the company starts drilling two new wells) to double their production.
If company starts drilling wells in next 3-6 months, 10 wells would almost quadruple their oil production. This thing may get start reflecting in the company’s topline and the bottom line in probably year 2011-12. If you see the valuations at which the recent deals have taken place, if you look at Cairn-Vedanta deal, if you apply just 50% of that valuation to only the Bakrol field where we have the data for 2P reserves you get a mind boggling figure.
At the current valuation it may just be a fraction of the valuation for the Bakrol field and leave aside the other fields which are still virgin where no data has been declared and I believe this is a stock where institutional investors will find value even when the stock goes to four figure mark because by that time the production would have got ramped up significantly. Probably the 2P reserves data for the other fields might also get announced by the company and the financial numbers would start looking a lot better than what they are now. This is a company where the drilling is happening or the production is happening just in one field, which is a Bakrol field—operating margins are anywhere between 80-85%.
Once the ramp-up happens and with oil prices being steady and at higher numbers, I think this maybe a stock to watch out for in the years to come. The only thing is that as of now there are a few unknowns; the first is that when they start drilling is something, which nobody knows about but I believe that since they have already spent about two years in data acquisition drilling can happen in the next probably three to six-months. Oil exploration by nature is a risky business but I think the risk is getting mitigated because of the fact that all the fields are proven fields. So, in the years to come, we may see a massive scale up in the production of the company. This makes Selan exploration a stock to buy or at least a stock to watch out for, for the future.
Any correction in stock price towards Rs. 350 would definitely be a nice opportunity to buy stocks of Selan exploration.
Ashish Chugh believes that even at the current price this stock may turnout to be a potential multi-bagger stock.
The financials of Selan Exploration for the past two years have been almost flat. There was not much increase in either production. This is mainly because of the fluctuating oil prices. The revenues and profits are inline with the oil prices but there has not been any substantial increase in production in the last two years.
Selan exploration is doing 3D contour mapping for past 2 years of not just the Bakrol field, which is giving them major production as of now but for some other fields also. The new technologies which are available enables the company to identify the reservoirs where if drilling is done will give them about 10-15 times more oil than what the current wells are producing.
To calculate roughly, the company is doing about 2.5 lakh barrels every year from about 20 wells, which means that each well is giving them close to 12,000-13,000 barrels, and the new wells are capable of producing 1-1.5 lakh barrels per year, this could translate (if the company starts drilling two new wells) to double their production.
If company starts drilling wells in next 3-6 months, 10 wells would almost quadruple their oil production. This thing may get start reflecting in the company’s topline and the bottom line in probably year 2011-12. If you see the valuations at which the recent deals have taken place, if you look at Cairn-Vedanta deal, if you apply just 50% of that valuation to only the Bakrol field where we have the data for 2P reserves you get a mind boggling figure.
At the current valuation it may just be a fraction of the valuation for the Bakrol field and leave aside the other fields which are still virgin where no data has been declared and I believe this is a stock where institutional investors will find value even when the stock goes to four figure mark because by that time the production would have got ramped up significantly. Probably the 2P reserves data for the other fields might also get announced by the company and the financial numbers would start looking a lot better than what they are now. This is a company where the drilling is happening or the production is happening just in one field, which is a Bakrol field—operating margins are anywhere between 80-85%.
Once the ramp-up happens and with oil prices being steady and at higher numbers, I think this maybe a stock to watch out for in the years to come. The only thing is that as of now there are a few unknowns; the first is that when they start drilling is something, which nobody knows about but I believe that since they have already spent about two years in data acquisition drilling can happen in the next probably three to six-months. Oil exploration by nature is a risky business but I think the risk is getting mitigated because of the fact that all the fields are proven fields. So, in the years to come, we may see a massive scale up in the production of the company. This makes Selan exploration a stock to buy or at least a stock to watch out for, for the future.
Any correction in stock price towards Rs. 350 would definitely be a nice opportunity to buy stocks of Selan exploration.
Automobile : Best Sectors & Stocks To Buy In 2011
I received good number of comments and emails in response to series "Best Sectors & Stocks To Buy For 2011". Here is the first sector and stocks from it we should be buying in 2011. Listed top stocks in this series have a basic objective to preserve the investment and achieve good capital appreciation.
Investors may build their investment portfolio buying stocks listed in series ""Best Sectors & Stocks To Buy For 2011".
First sector in this series I would like to highlight today is Automobile sector in India.
Indian automobile sector is experiencing immense growth for past 15 years or so now. It is one of the essential core industry of economy. Lots of auto companies are launching new car/vehicle models every month looking at country's ever growing middle class which is one of the largest in world. There is great demand for small and mid size cars in India by consumers. Along with this demand, auto companies are even exporting cars produced in India to abroad, thus making India a car manufacturing hub.
Indian automobile industry is expected to grow immensely in next 5 - 10 years. Indian economy is constantly growing at above 8.5% GDP and it is expected to do even better in times to come. This means growth and rising incomes for middle class and expansion of middle class itself which would translate in more and more buying power. This would only boost the demand for four wheelers and two wheelers so automobile sector looks one of the very promising sector to perform better and better in coming years.
The first stock to buy that comes to my mind from automobile sector is Maruti. Maruti is continuously launching new models to keep the market share intact and grow further in value segment. Slowly, Maruti has started focusing on luxury cars segment too which is a high margin segment.
Another stock looks good to me is Escorts. How is it related to automobile? It is one of the largest auto component maker in India. The growth of automobile sector would only add to demand for company's products.
One of the biggest indirect beneficiaries of growing small car markets in India would be ... Exide industries. More than 60% small car batteries in India are made by Exide industries. So growing automobile sector would help Exide grow further. Addition to this could be electric scooters and cars in future.
I would be posting stock analysis of each of these companies in detail very soon. Keep following Indian Stocks News for updates on Best sectors and stocks to buy in 2011.
Investors may build their investment portfolio buying stocks listed in series ""Best Sectors & Stocks To Buy For 2011".
First sector in this series I would like to highlight today is Automobile sector in India.
Indian automobile sector is experiencing immense growth for past 15 years or so now. It is one of the essential core industry of economy. Lots of auto companies are launching new car/vehicle models every month looking at country's ever growing middle class which is one of the largest in world. There is great demand for small and mid size cars in India by consumers. Along with this demand, auto companies are even exporting cars produced in India to abroad, thus making India a car manufacturing hub.Indian automobile industry is expected to grow immensely in next 5 - 10 years. Indian economy is constantly growing at above 8.5% GDP and it is expected to do even better in times to come. This means growth and rising incomes for middle class and expansion of middle class itself which would translate in more and more buying power. This would only boost the demand for four wheelers and two wheelers so automobile sector looks one of the very promising sector to perform better and better in coming years.
The first stock to buy that comes to my mind from automobile sector is Maruti. Maruti is continuously launching new models to keep the market share intact and grow further in value segment. Slowly, Maruti has started focusing on luxury cars segment too which is a high margin segment.
Another stock looks good to me is Escorts. How is it related to automobile? It is one of the largest auto component maker in India. The growth of automobile sector would only add to demand for company's products.
One of the biggest indirect beneficiaries of growing small car markets in India would be ... Exide industries. More than 60% small car batteries in India are made by Exide industries. So growing automobile sector would help Exide grow further. Addition to this could be electric scooters and cars in future.
I would be posting stock analysis of each of these companies in detail very soon. Keep following Indian Stocks News for updates on Best sectors and stocks to buy in 2011.
Best Sectors & Stocks To Buy For 2011
I am receiving a very good response for the series of stock recommendations, Stocks To Buy In 2011, from all fellow investors and Indian Stocks News readers/subscribers. In such emails, I received a message from Mr. Aditya and he has suggested to discuss the stocks in top down manner, sector wise. In each sector, we can find best three stocks to buy in 2011 and discuss them.
I am reproducing Aditya's message here.
---------------------------------------
hi vinay,
thanks to u for yr great initiative to bring the good analysis of the stocks.
it is really helpful.
your idea to ask from the readers for new stocks for the 2011 is great but as i gone through the posts it will be a long list as every one is having a long favorite list of stocks in my view we can discuss this in top down manner with sector wise and best in that sector u may have a voting form on the site having fields like sector (max 5) and stocks in the sector (max 3) to cut the crap
anyway its only an idea from my side
my pick for the current time will be mic electronics
bye
aditya
----------------------------------------
Certainly we are going to do that. In fact this is in line of what I am about to put up for discussion on Indian Stocks News. I have thought to put up series of discussions for
- Small cap stocks to buy in 2011
- Mid cap stocks to buy in 2011
- Large cap stocks to buy in 2011
and
- Best sectors to invest in 2011
I am also going to put up a form very soon for surveying the best sectors so everyone can vote for the sector they think is best for investment. I would analyze all the stocks that we discuss here from investment point of view and post individual stock analysis here.
Posts in series "Best sector & stocks to buy in 2011" till now
=> Automobile : Best Sectors & Stocks To Buy In 2011
For now, you can either post your comment for best sectors and stocks using below comment form or mail me at vinay at indianstocksnews dot com
Keep watching this space for stock analysis and recommendations for 2011 or alternatively receive an update thru Indian Stocks News email newsletter directly in your mailbox whenever I post here and do not miss on stock ideas.
I am reproducing Aditya's message here.
---------------------------------------
hi vinay,
thanks to u for yr great initiative to bring the good analysis of the stocks.
it is really helpful.
your idea to ask from the readers for new stocks for the 2011 is great but as i gone through the posts it will be a long list as every one is having a long favorite list of stocks in my view we can discuss this in top down manner with sector wise and best in that sector u may have a voting form on the site having fields like sector (max 5) and stocks in the sector (max 3) to cut the crap
anyway its only an idea from my side
my pick for the current time will be mic electronics
bye
aditya
----------------------------------------
Certainly we are going to do that. In fact this is in line of what I am about to put up for discussion on Indian Stocks News. I have thought to put up series of discussions for
- Small cap stocks to buy in 2011
- Mid cap stocks to buy in 2011
- Large cap stocks to buy in 2011
and
- Best sectors to invest in 2011
I am also going to put up a form very soon for surveying the best sectors so everyone can vote for the sector they think is best for investment. I would analyze all the stocks that we discuss here from investment point of view and post individual stock analysis here.
Posts in series "Best sector & stocks to buy in 2011" till now
=> Automobile : Best Sectors & Stocks To Buy In 2011
For now, you can either post your comment for best sectors and stocks using below comment form or mail me at vinay at indianstocksnews dot com
Keep watching this space for stock analysis and recommendations for 2011 or alternatively receive an update thru Indian Stocks News email newsletter directly in your mailbox whenever I post here and do not miss on stock ideas.
Stock To Buy - Delta Corp Ltd. - Is It Really?
Mr. Soundar Rajan, avid Indian Stocks News reader, was the first person to respond the latest series Stocks To Buy In 2011 with his stock ideas for 2011. Delta corp is one of his suggestions. Let's evaluate it and see if it is a stock to buy.
As on 1st February 2011, Goa govt. has ordered to close 2 casinos of the company as per this news in Economic Times. I will post updates upon some clarity and impacts of news.
Company & Business: Delta Corp Ltd. (Formerly Arrow Webtex Limited) is engaged in the business of textiles and real estate development / consultancy. Having started as a pure textile player, Delta Corp Limited has transformed into a diversified company, with interests in real estate (in India as well as East Africa), gaming and entertainment, and hospitality. Delta Corp has de-merged its textile business into a new entity which is now called Arrow Textiles Limited.
Delta Corp is promoted by Mr. Jaydev Mody, an eminent and successful Indian entrepreneur and erstwhile Managing Director of Peninsula Land Limited ('PLL') (promoted by the Ashok Piramal Group).
Delta Corp along with its subsidiaries currently operates in the following lines of businesses:
Entertainment and Gaming: Delta Corp is the largest gaming company in India (offering over one thousand gaming positions) and the only listed company in this space. The Company is an early entrant in this space and has attained leadership position in a short span of time. The Company owns and operates 3 offshore live gaming casinos in Goa on River Mandovi – Casino Royale, Caravela and King’s Casino. Delta Corp owns 3 out of the 6 offshore live gaming casino licenses issued by the Government of Goa.
Real Estate: Through its subsidiaries and JVs, company intends to ride the growth wave of development in the East African countries. Delta Corp has formed a joint venture company with Reliance Industries Limited (“RIL Group”), namely, Delta Corp East Africa Limited (“DCEAL”), through its wholly owned subsidiary Delta Pan Africa Limited (“DPAL”). DCEAL has already acquired close to 803,720 sq-ft of land with a development potential of closed to 2 million sq-ft. It has planned a combination of commercial office space development, retail and hotel projects.
Hospitality Business: Delta Corp has formed a JV with Peninsula Land limited i.e. PLL Delta Hotel Limited (‘PLLDHL’). Going forward, PLLDHL intends to develop 3/4 star 100 bed hotels in various urban locations in India primarily in Southern and Western India.
Checkout the sept. quarter result, you can see the multifold jump in revenues (275.55 against 33.69 crores same quarter previous year). This, I think is due to the acquisitions and sell off company executed in this quarter. Look at the number of acquisitions company done in point no. 4 in this result pdf.
Now, a bit about Delts corp's balance sheet. In latest chairman's report, he has mentioned that the money they got from selling property in Prabhadevi, Mumbai, has een used to pay off the debt they had. Now they have total debt of only 67.75 crores. So debt part is not a thing to worry much about. Debt to equity ratio stands at 0.25
Company's operating profit margin (61%) and net profit margin (50.12%) is tremendously profitable for company and so investors!
If we have to believe the news that a bunch of investors including stock broker Rakesh Jhunjhunwala and Radhakrishna Damani have picked up an 11% stake in Delta Corporation Ltd. for Rs200 crore and Rakesh Jhunjhunwala will join the Delta Corp. board.
Looking at company's recent acquisitions, partnerships with RIL and Peninsula for business and big investors parking their money, I sense the possibilities of big growth coming for company. Although the stock at present valuations with book value only Rs. 15.31 and stock price at Rs. 95 seems costly from value investing perspectives, this could be the premium put on stock due to anticipated growth in future. Buying stocks at this level is bit expensive but at lower levels, it is certainly attractive for future growth. Promoters hold bit more than 48%.
Reading chairman's message is advisable.
If one does wants to be part of this anticipated growth with good promoter and big investors for long run, he/she may buy stocks of Delta for long term. But remember, it is only for long term, maybe 3 - 5 years or more.
As on 1st February 2011, Goa govt. has ordered to close 2 casinos of the company as per this news in Economic Times. I will post updates upon some clarity and impacts of news.
Company & Business: Delta Corp Ltd. (Formerly Arrow Webtex Limited) is engaged in the business of textiles and real estate development / consultancy. Having started as a pure textile player, Delta Corp Limited has transformed into a diversified company, with interests in real estate (in India as well as East Africa), gaming and entertainment, and hospitality. Delta Corp has de-merged its textile business into a new entity which is now called Arrow Textiles Limited.
Delta Corp is promoted by Mr. Jaydev Mody, an eminent and successful Indian entrepreneur and erstwhile Managing Director of Peninsula Land Limited ('PLL') (promoted by the Ashok Piramal Group).
Delta Corp along with its subsidiaries currently operates in the following lines of businesses:
Entertainment and Gaming: Delta Corp is the largest gaming company in India (offering over one thousand gaming positions) and the only listed company in this space. The Company is an early entrant in this space and has attained leadership position in a short span of time. The Company owns and operates 3 offshore live gaming casinos in Goa on River Mandovi – Casino Royale, Caravela and King’s Casino. Delta Corp owns 3 out of the 6 offshore live gaming casino licenses issued by the Government of Goa.
Real Estate: Through its subsidiaries and JVs, company intends to ride the growth wave of development in the East African countries. Delta Corp has formed a joint venture company with Reliance Industries Limited (“RIL Group”), namely, Delta Corp East Africa Limited (“DCEAL”), through its wholly owned subsidiary Delta Pan Africa Limited (“DPAL”). DCEAL has already acquired close to 803,720 sq-ft of land with a development potential of closed to 2 million sq-ft. It has planned a combination of commercial office space development, retail and hotel projects.
Hospitality Business: Delta Corp has formed a JV with Peninsula Land limited i.e. PLL Delta Hotel Limited (‘PLLDHL’). Going forward, PLLDHL intends to develop 3/4 star 100 bed hotels in various urban locations in India primarily in Southern and Western India.
Checkout the sept. quarter result, you can see the multifold jump in revenues (275.55 against 33.69 crores same quarter previous year). This, I think is due to the acquisitions and sell off company executed in this quarter. Look at the number of acquisitions company done in point no. 4 in this result pdf.
Now, a bit about Delts corp's balance sheet. In latest chairman's report, he has mentioned that the money they got from selling property in Prabhadevi, Mumbai, has een used to pay off the debt they had. Now they have total debt of only 67.75 crores. So debt part is not a thing to worry much about. Debt to equity ratio stands at 0.25
Company's operating profit margin (61%) and net profit margin (50.12%) is tremendously profitable for company and so investors!
If we have to believe the news that a bunch of investors including stock broker Rakesh Jhunjhunwala and Radhakrishna Damani have picked up an 11% stake in Delta Corporation Ltd. for Rs200 crore and Rakesh Jhunjhunwala will join the Delta Corp. board.
Looking at company's recent acquisitions, partnerships with RIL and Peninsula for business and big investors parking their money, I sense the possibilities of big growth coming for company. Although the stock at present valuations with book value only Rs. 15.31 and stock price at Rs. 95 seems costly from value investing perspectives, this could be the premium put on stock due to anticipated growth in future. Buying stocks at this level is bit expensive but at lower levels, it is certainly attractive for future growth. Promoters hold bit more than 48%.
Reading chairman's message is advisable.
If one does wants to be part of this anticipated growth with good promoter and big investors for long run, he/she may buy stocks of Delta for long term. But remember, it is only for long term, maybe 3 - 5 years or more.
Stocks To Buy In 2011
Dear Investors,
We have experienced a volatile year 2010 for stock markets and we are on the verge of saying goodbye to it. We have seen BSE SENSEX starting the year at 17,500 only to dip to 15,500, then jumping to 18,000 levels, again back to 16,000 then touching historical highs of 21,000 and again a dip of 2,000 points to 19,000 followed by 1000 points rise to 20,000 with another dip of 1000 points ... hufff ... tiring but exciting roller coaster like ride.
As I believe, for long term investors, these ups and down should not matter since Indian growth story is intact and India is still growing at 9% (GDP rate). What we should be doing is, concentrate on individual stocks to buy in 2011 which would make us money in long run.
I have few stock ideas for 2011 which I would be discussing on Indian Stocks News in this series. But I may not and can not provide attention to all the good stocks to buy in stock market. So I am inviting all of you to share and discuss the best stocks to buy in 2011 which have potential to fetch manifold returns in long term. I received tremendous response last year and you can watch it here: Best Stocks To Buy For 2010 - Let's Share Ideas
You may have views on specific sectors for 2011 which investors should target, stocks to buy and even stocks to avoid and sector/s to avoid for 2011. I would welcome every stock idea and publish it with your views, opinion and of course your name. :)
Keep watching this space for updates on best stocks to buy in 2011. Alternatively, subscribe to Indian Stocks News email newsletter to get the post updates directly in your mailbox and do not miss on stock ideas.
You may send your stock ideas here: vinay at indianstocksnews.com or post them in below comment box. I would analyze each and publish the analysis with name of contributor on Indian Stocks News.
Let's collaborate on ideas to invest better!
Stock Ideas for 2011 discussed till now:
Large cap growth stock to buy - BHEL
Small cap growth stock analysis - Kabra extrusion technik
Selan Exploration : Stock to buy in 2011
Buy stocks of JSW Steel for medium to long term
Stock to buy for long term - Blue Star Limited
Buy stocks of Exide Industries at every dip in its stock price
Stock To Buy - Delta Corp Ltd. - Is It Really?
We have experienced a volatile year 2010 for stock markets and we are on the verge of saying goodbye to it. We have seen BSE SENSEX starting the year at 17,500 only to dip to 15,500, then jumping to 18,000 levels, again back to 16,000 then touching historical highs of 21,000 and again a dip of 2,000 points to 19,000 followed by 1000 points rise to 20,000 with another dip of 1000 points ... hufff ... tiring but exciting roller coaster like ride.
As I believe, for long term investors, these ups and down should not matter since Indian growth story is intact and India is still growing at 9% (GDP rate). What we should be doing is, concentrate on individual stocks to buy in 2011 which would make us money in long run.
I have few stock ideas for 2011 which I would be discussing on Indian Stocks News in this series. But I may not and can not provide attention to all the good stocks to buy in stock market. So I am inviting all of you to share and discuss the best stocks to buy in 2011 which have potential to fetch manifold returns in long term. I received tremendous response last year and you can watch it here: Best Stocks To Buy For 2010 - Let's Share Ideas
You may have views on specific sectors for 2011 which investors should target, stocks to buy and even stocks to avoid and sector/s to avoid for 2011. I would welcome every stock idea and publish it with your views, opinion and of course your name. :)
Keep watching this space for updates on best stocks to buy in 2011. Alternatively, subscribe to Indian Stocks News email newsletter to get the post updates directly in your mailbox and do not miss on stock ideas.
You may send your stock ideas here: vinay at indianstocksnews.com or post them in below comment box. I would analyze each and publish the analysis with name of contributor on Indian Stocks News.
Let's collaborate on ideas to invest better!
Stock Ideas for 2011 discussed till now:
Large cap growth stock to buy - BHEL
Small cap growth stock analysis - Kabra extrusion technik
Selan Exploration : Stock to buy in 2011
Buy stocks of JSW Steel for medium to long term
Stock to buy for long term - Blue Star Limited
Buy stocks of Exide Industries at every dip in its stock price
Stock To Buy - Delta Corp Ltd. - Is It Really?
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