Groundnut oil prices high on increase in liquor consumption

Recently I read a story in Business Line. The story says Groundnut oil prices high on increase in liquor consumption . "The problem with groundnut oil is that mills are not getting kernel for crushing. One of the reasons is rise in direct consumption, including as snacks, especially for liquor consumption," says Mr B.V. Mehta, Executive Director of the Solvent Extractors Association of India. I don’t know on what basis Mr. B.V. Mehta claimed this. This shows how two seemingly unrelated events affect one another.

Long back, I own 1000 Nagarjuna Fertilizers Ltd. in physical form. At that time Cables are restricted to Metros. Doordharshan and All India Radio are the only sources of current news to non-metro areas. One day, the price of Nagarjuna Fertilizers started to fall. We have no clue what so ever. Doordharshan flashed a news item stating that fire was broke out in the Krishna – Kothavari Gas rig. I didn’t know the fact that 90% of Nagarjuna Fertilizers’s energy requirements are met by ONGC’s Krishna – Kothavari Gas rig and fire in that area would drastically affect the production of Nagarjuna Fertilizers. I came to know this reason after 15 days. I lost around 50% of my investment because of my ignorance.

Multi Baggers

Poweryourtrade is the web initiative of TV18 group to offer Premium Service ( Read: Paid Service ) to Indian investing public. Daily they offer two trading tips each from three analysts ( I don’t know what are all the qualifications for Analyst to offer Stock tips). SEBI already initiated action against one of it’s analyst for counter trading.

Recently this website revamped it’s layout and started to give more emphasis for Delivery calls named as “ Multi Baggers” Even though these calls were given for more than one year, the price and volume movement of recommended shares were not abnormal.

After the layout changes, it started a section for investors ( previously it caters mainly Traders). Usually it’s analyst pick one stock per week as Multi Bagger on Mondays before the commencement of trading. The selected stock usually touch 10% upper circuit within the first 30 minutes of trading. After 3 -4 days or next week, the price comes down to previous level.

Though I am not complaining of any scam, I wish to stress that don’t rush to buy these stocks immediately after these recommendations. Wait to settle dust then again evaluate yourself about the investment worthiness of the company. Then invest

Don't copy if you can't paste

At training program for top management.

A well-known motivational speaker gathering the entire crowd's attention, said,
"The best years of my life were spent in the arms of a woman who wasn't my wife !"

The crowd was shocked!

He followed up by saying, "That woman was my mother!"

The crowd burst into laughter and he gave his speech, which was well received.

About a week later, one of the top managers who had the training decided to use that joke at his house. He
tried to rehearse the joke in his head. It was a bit foggy to him.

He said loudly, "The greatest years of my life were spent in the arms of a woman who was not my wife!"

Naturally, his wife was shell shocked, murmuring.

After standing there for almost 10 seconds trying to recall the second half of the joke, the manager
finally blurted out "... and I can't remember who she was !"

As expected, he got thrashing of his life time....

Moral of the story: Don't copy if you can't paste

DLF Ltd - IPO Note

Dear Sir/Madam,

 

DLF, India's largest property developer plans to raise Rs87.5-96.2bn (US$2.2-2.4bn) through an issue of 175mn shares diluting its equity by 10.3%. Its issue price band of Rs500-550 is at 19-31% premium to our NAV estimate of Rs420 per share. Upside to our NAV could result from the incremental land acquisitions, construction, hotel, multiplexes, insurance, healthcare and SEZ businesses. However, due to lack of clarity of these businesses, we think th e 31% premium adequately satisfies the option value offered for upside from these businesses.

Click below for the detailed IPO Note.
http://www.indiainfoline.com/content/rep/IPO_Notes/2007/6/1162007/DLF Ltd.pdf

Warm Regards,

Ashutosh Narkar
India Infoline Ltd.

Nagarjuna Construction Company Ltd (NCC) (Q4 FY07) - Investment Update

Nagarjuna Construction Company Ltd (NCC)

Recommendation: HOLD

CMP: Rs168
Target Price: Rs182

Nagarjuna Construction (NCC) posted a healthy topline growth of 56% yoy during FY07. Though the numbers were close to our estimates for the year, it was lower than management guidance of Rs30bn. With its present order book of Rs73bn, NCC is well placed to reach Rs40bn revenue target for FY08E. However, high order intake accretion is needed during FY08 to meet our revenue estimate for FY09E (46.4% of FY09E revenues on account of assumed new orders). While turnover CAGR is expected to be 37.3% during FY07-09E, margin upside during FY08-09E seems ruled out as new orders result in higher initial costs. Further, there is a capital raising plan, which is likely to result in an 18-20% equity dilution, not factored into our projections. We recommend a HOLD.

Click below for the detailed Investment Update:
http://www.indiainfoline.com/content/rep/Result_Analysis/2007/6/562007/nagarconst_0307.pdf

 

Warm Regards,

Amar Ambani
India Infoline Ltd.

 

Madras Cements (MCL) (Q4 FY07) - Result Update

Madras Cements (MCL) – Q4 FY07

CMP: Rs2754
Rating: HOLD
Target: Rs2921

Q4FY07 Financial Highlights

• Net Sales increases yoy by 45.1% to Rs4.4bn
• Operating profit increases by 100.4% to Rs1.3bn
• Operating margin increases by 840 bps to 30.6%
• Realiza tion per ton increases by 32% to Rs2923
• Cost per ton increases by 17.7% to Rs2028
• PAT stood at Rs710mn for Q4FY07 compared to Rs326mn for Q4FY06

 Valuation
The series of negative measures for cement industry has reduced the upside possibilities in cement pricing. We expect demand supply situation to be favourable for players in Southern market in FY08 and surplus situation is expected from second of FY09. MCL is expanding its capacity from 6mn tpa to 8mn tpa in FY08 and to 10mn tpa in FY09 which is expected to take care of price moderation in FY09. MCL is putting up 36MW captive power plant in two phases at Jayanthipuram which is expected to bring down power expenditure. We have revised down our estimates for FY08 and FY09 as MCL is unable to pass on the cost in creases. MCL is trading at 9.7x and 9.4x of its estimated FY08 and FY09 earnings of Rs283.5 and Rs292.1 respectively. Recommend HOLD with target price of Rs2921. Our target price discounts estimated FY09 earnings by 10.0x .

Click below for the detailed Result Update:
http://www.indiainfoline.com/content/rep/Result_Analysis/2007/5/3152007/madrascem_0307.pdf

 

 

 

Warm Regards,

 

J Radhakrishnan
India Infoline ltd