Normal Bang"Stock "Stock Picks" for the "Year 2013"


> Our “Stock Picks” for the “Year 2013”
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> ING Vysya Bank: 
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> CMP: Rs 526
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> Target: Rs 610
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> ·         ING Vysya Bank has shown consistent and steady performance over the past few quarters with strong hold on asset quality, operational efficiency and commendable NIMs.
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> ·         All these parameters has led to an improvement in the return ratios of the bank.
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> ·         Going forward, we believe that the banks financial and operational parameters will continue to improve with above industry credit growth along with focus on asset quality, improvement in CASA and stable NIMs
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> ·         We expect the bank’s profitability to grow at 28.8% CAGR over FY12-FY14E.  RoE is expected to improve to 15.4% in FY14E from 13.6% in FY12 and RoA is expected to improve to 1.3% in FY14 from 1.0% in FY12.
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> ·         At CMP, the stock is trading at 1.7x and 1.5x FY13E and FY14E Adj BVPS and 12.32x and 9.83x FY13E and FY14E EPS respectively.
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> Finolex Cables:
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> CMP: Rs 57
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> Target : Rs 75
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> ·         FCL’s Electrical Cables business has been giving strong performances and is likely to continue with the same. The Communication Cables business also seems to be bottoming out and with the revival in optic fiber demand expected in the country this business is expected to do well in the future.
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> ·         The company has a strong brand image. It has a wide distribution network and backward integration which provides strong competitive advantages to FCL over its peers.
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> ·         FCL has formed JVs with J-Power Systems, Japan for manufacturing EHV cables and with Corning, USA for marketing optical fiber in India. These JVs will help the company enter new markets (EHV cables) where demand is high and will help strengthen the product portfolio of the company.
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> ·         The company over the years has closed down most of its derivative contracts and expects to get rid of all the loss making contracts by FY13. This will improve the bottom line going forward.
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> ·         At CMP the stock trades at 6.4x & 5.3x its FY13E & FY14E EPS.
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> Gateway Distriparks Ltd:
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> CMP: Rs 139
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> Target : Rs 176
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> ·         Gateway Distriparks Ltd (GDL) is an integrated logistics player in the container movement space.
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> ·         Capacity constraints at JNPT port as well as drop in volumes in the Rail segment was partly offset by better volumes at Chennai and Vizag CFS in FY12
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> ·         While the company is facing pressure due to global slowdown but revival of international trade and addition of capacities at Faridabad (expected by March 2013) and JNPT should bode well for the company going forward.
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> ·         In addition, the three month moving average of Indian non-oil foreign trade data is showing some signs of improvement which should augur well for GDL.
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> ·         At CMP, the stock is trading at a P/E of 10.7x and 9.7x its FY13E and FY14E earnings.
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> ·          
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> Phillips Carbon Black
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> CMP: Rs 93
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> Target: Rs 138
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> ·         Phillips Carbon Black (PCB) reported loss in Q2FY13 on account of lower realization and lower capacity utilization resulting from excessive dumping of carbon black from China which continued to put pressure on the company’s margins.
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> ·         However, on the positive side; Imposition of safeguard duty and Decline in crude prices (leading to decline in prices of carbon black feed stock) have taken place which could bring a significant revival in the company’s business.
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> ·         Going forward, we believe that the imposition of safeguard duty will lead to an improvement in the realization rate of carbon black as well the capacity utilization of the company. Moreover, power revenues will also witness an improvement which will lead to an increase in EBITDA margins.
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> ·         As the tyre companies have already imported large quantities of carbon black in anticipation of safeguard duty, Q3FY13 results can remain under pressure. The benefit of positive development will be visible in Q4FY13E results only.
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> ·         At CMP, the stock is trading at 2.8x its FY14E EPS
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> Sterlite Technologies:
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> CMP: Rs 31
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> Target : Rs 42
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> ·         The company’s core business of conductor and optical fibre is likely to show improved performance in the coming period.
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> ·         The increase in capacity of optical fibre from 12 mn km to 20 mn km with improving demand from both Indian and international markets will help company to report higher earnings.
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> ·         3 large BOOM transmission line projects are under implementation with first one to commission from April 2013 and other two are on schedule to start in April 2014.
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> ·         These 3 annuity projects once commissioned will add substantial value to the company.
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> ·         At CMP, the stock is trading at 12.4x and 9.1x its FY13E and FY14E EPS respectively.
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India Infrastructure Finance Company Limited- Issue of Tax Free Secured Redeemable Non Convertible Bonds


India Infrastructure Finance Company Limited
Issue Period: 26 Dec 2012 to 11 Jan 2013
Key Benefits:
  • Credit Ratings: AAA by CARE, AAA (Stable) by ICRA and BRICKWORK
  • Interest on these Bonds is Tax-Free, no TDS is applicable, Wealth Tax is not levied
  • No lock in period and no upper limit on investment amount
  • Issue Size: Rs 1,500 Crore with an option to retain oversubscription upto Rs 9,215 Crore
  • Additional Coupon Rate - Category - IV Applicants - 0.50% p.a.
  • IIFCL is a Government of India undertaking
Issue Structure: Issue of Tax Free Secured Redeemable Non Convertible Bonds

Options / Series of BondsSeries 1Series 2Series 3
Tenor10 years15 years20 years
Coupon Rate % p.a. (Category I, II and III)7.197.367.40
Additional Coupon Rate % p.a. (Category IV)0.500.500.50
Total Coupon Rate % p.a. (Category IV)7.697.867.90
Frequency of Interest paymentAnnualAnnualAnnual
Face Value / Issue Price per BondRs 1,000
Minimum ApplicationRs 5,000 (in multiples of Rs 1,000 thereafter)
IssuancePhysical and Demat mode
Interest on application % p.a.As per coupon rate applicable to investor category
Interest on refund % p.a.5.0
Proposed to be listed onBSE

Basis of Allotment : On first come first serve basis

Investor CategoryI - InstitutionalII - Non InstitutionalIII - HNI (more than 10 lacs)IV - Retail (upto and including 10 lacs)
Issue allocation15%15%30%40%
  • When Bonds held by the original allottees of Category IV are sold / transferred, coupon rate will be revised to the coupon rate for Category I, II & III investors. Refer to details.

 

10 golden rules of investing: How to secure your financial future–Economic Times

Recently the Economic Times presented a nice article about “10 golden rules of investing: How to secure your financial future” .

PE is not the only factor

Rule 1: Know your worth before you begin

Rule 2: Don't invest in a product you don't understand...

Rule 3: Do not invest and forget

Rule 4: Look beyond price and past returns for real value

Rule 5: Factor in inflation while calculating returns

Rule 6: Buy insurance to guard against the unforeseen...

Rule 7: Don't leave tax planning till end of financial year

Rule 8: Be prepared for a financial emergency

Rule 9: Give precedence to retirement savings

Rule 10: Learn to cut your losses

For full article, please click here

investchips.com re-launched

Dear Friends,

My Photo

Thanks for your continuing support. I am very happy to share that your beloved blog is re-launched with more focus – investment and technology . There will be regular updates on these topics. Looking forward to your continuing support.

Yours,

R John Christy

“Don't ever lose your cash boys"

The excerpt below is from Jesse Livermore World's Greatest StockTrader by Richard Smitten, published by John Wiley & Sons, Inc. One day Livermore called his two sons into the library at “Ever-more” on Long Island. He sat behind the massive desk and the twoboys sat down in front of him. He leaned forward and took a wadof cash out of his pocket. He peeled off ten one dollar bills. He did this twice, then folded the bills and handed each boy a pack of ten ones.The boys sat looking at him, each holding their money. “Boys, always carry your money folded and in your left pocket. Go ahead do it. You can keep the money.”

The boys did as they were told and put the folded money in their left pockets. “You see, pickpockets always go for a person's wallet,which is usually in the back pocket. Or they will come up behind you and go for your right front pocket, because most people are right handed. You all right with this so far, boys?” he asked. The boys nodded.He continued. “All right, that's why you keep your paper money folded in your left pocket. See, if a pickpocket gets into your left pocket, and he gets that close to your balls, you're going to know about it.” The boys looked at each other.

Their father continued. “Don't ever lose your cash boys—that's the moral of this story. Keep it close to your balls, and don't let anyone near it.”

 


India Infoline, in a recently published research report recommended buying of Indian Bank with a 9-month target price of Rs223 . It cites number of reasons to support it's recommendation.
Indian Bank differentiates itself from other public banks
Indian Bank having a major presence in southern India witnessed a loan CAGR of 22.7% over FY08-12. In the aforementioned period, the bank delivered superior RoAs (average 1.55% over FY08-12) underpinned by robust NIM (average 3.5%), lean operating structure and sanguine asset quality. Operating efficiency was driven by reduction in headcount, improving employee age pyramid and calibrated branch expansion. Asset quality though has deteriorated in recent quarters; however, displayed stress has been lower than peers.
After having shed majority of the short term corporate loans, Indian Bank’s loan growth is expected to accelerate H2 FY13 onwards. NIM would likely stabilize near 3.2% with the impact of lending rate cuts being offset by improvement in deposit franchise, more productive deployment of excess liquidity and re-pricing of term deposits. With the bank having no or low exposure to some publicly known stressed companies, slippages are less likely to surprise negatively in coming quarters. Even if PCR is sustained at the extant prudential level of 70%+, credit cost is estimated to be manageable. Therefore, RoA of the bank would likely settle at 1.2% over FY13-14; much better than projected sub-1% delivery for a host of PSU Banks. Another important differentiator for Indian Bank is its robust capitalization (Tier-1 capital at 11.8%) and higher government stake (80%).
Valuation attractive both on relative and absolute basis
On YTD basis, Indian Bank has substantially underperformed peers and the Bankex. Consequently, it is one of the cheapest stocks amongst PSBs with valuation at 0.68x FY14 P/adj.BV. On absolute basis too, valuation is alluring in the light of impressive RoA/RoE delivery (average 1.2%/18% respectively). Based on 1-yr rolling fwd P/adj.BV, valuation is at 30% discount to 5-year mean. Amid improving appetite for mid-sized PSU banks, Indian Bank is our preferred bet. In our view, choosing a bank with relatively resilient earnings profile and robust capitalization is important. Indian Bank with stronger NIMs, higher PCR and sturdy capitalization provides much better comfort. Initiate coverage with a BUY recommendation and 9-month target price of Rs223.
Though the reasons explained above are impressive, we advice caution and a small  exposure. Previous experience showed that politicians played a major role in ruining this bank and even now this risk is relevant as the election nears...... 


WWW.INVESTCHIPS.COM This post is written by R.John Christy for www.investchips.com.

REC Tax Free Bond - Product Note

REC Tax Free Bond Public Issue - Product Note.pdf Download this file

REC  is  a Navratna status Central Public  Sector  Enterprise under Ministry of Power.

Issuer Rural Electrification Corporation
Credit Rating AAA - by CRISIL, CARE, ICRA & FITCH
Instrument Tax free Secured Redeemable Non-convertible Bonds
Face value of each bond Rs. 1,000
Minimum application To be decided
Trading Proposed to be listed on BSE and NSE, Trading only in Demat Form
Lock in period Nil
Taxability Interest –Tax free; Short term/long term Capital Gains on transfer –Taxed at applicable rates
Tenor 10 years and/or 15 years
Coupon To be decided
Interest on application money To be decided
Mode of Allotment Demat (NSDL and CDSL)
Details of Depositary and beneficiary account of applicant.
MOA, AOA and Power ofAttorney or relevant resolution or authority in case of companies, 
corporate bodies, registered societies, MFs, Insurance Companies etc.



Please find attached a short product note on REC for marketing the REC Tax free bond issues ..

 

The issue is likely to open on 3rd December.

 



India Infoline Recommendation for Diwali 2012

 

CompanySectorMarket Cap (Rs bn)CMP (Rs)Target (Rs)
Dr. Reddy'sPharma3001,7691,980
GCPLFMCG236692792
ICICI BankBanking1,2211,0591,340
IPCAPharma54428492
Karur Vysya BankBanking64469530
Mahindra SatyamIT127108129
NBCCReal Estate17142198
Radico KhaitanBreweries17127145
Swaraj EnginesAuto Ancillary5431548

 

Train AC fares dearer by more than 3% from Oct 1

 

With the exit of Trinamool Congress from UPA, Finance Ministry has decided to levy service tax on AC and freight services fares, which are set to increase by 3.7 per cent from October 1.

Fares of AC First Class, Executive Class, AC-2 tier, AC-3 tier, AC Chair Car will go up by 3.708 per cent from October 1 and a notification to this effect will be issued today, a senior Railway Ministry official said.

The decision for levying service tax on AC classes and freight and auxiliary services was taken yesterday at a meeting between Railway Minister CP Joshi and Finance Minister P Chidambaram.

The service tax will apply to tickets issued in advance for journeys to commence on or after the date of its implementation. In case of tickets already issued excluding service tax, it will be ensured that the same is recovered either by TTEs in the train or by the booking offices before commencement of journey.

In case of cancellation of tickets by the passengers, service tax will not be refunded by railways, the official said. On concessional tickets, service charges will be 30 per cent of the total fare.

The service tax is 12.36 per cent but after the abetment of 70 per cent it will be 3.708 per cent on passenger fares in AC classes and freight.

Passengers traveling in AC classes were brought under service tax from July this year as per the Finance Bill 2012 but the levy had since been kept in abeyance because of opposition by the TMC.

Freight rate will also go up by 3.708 per cent from October. However, auxiliary services rendered at stations like catering and parking will have to bear the burden of 12.36 per cent as there will be no abetment on these services.

 

 

 

No charges on e-transfer up to Rs 1 lakh, banks told |

 

To promote cashless transactions, the finance ministry has asked public sector banks to take steps to reduce the fee to zero for electronic transfer of funds up to Rs one lakh.

Currently, most banks charge a maximum fee of Rs 5 per transfer of funds up to Rs 1 lakh from one account to another through National Electronic Funds Transfer (NEFT) system.

Transfer of funds up to Rs 10,000 through NEFT system attract a maximum charge of Rs 2.50 per transaction.

In a recent communication to the state-owned banks, the ministry had asked them to "take action" to reduce the NEFT charges to zero for value up to Rs 1 lakh.

However, some banks are yet to intimate the ministry about the action taken by them to reduce the charges, sources said.

RBI has, however, retained maximum charges of Rs 15 per transaction for electronic transfer of funds beyond Rs 1 lakh to less than Rs 2 lakh,

The government has been asking banks to encourage transactions through e-payment channels so as to reduce the number of transactions through cheques and other expensive modes of transactions.

The public sector banks have also been asked to identify top 20 per cent branches in respect of business volumes to bring down the number of cheque based transactions by at least one-fifth in the current financial year.

The banks have also been asked to ensure that all payments and disbursements by them, except sundry payments, are made only electronically.

The RBI had recently said that it is "desirable" that the benefits accruing on account of increasing volume of transactions are passed on to the customers so as to incentivise greater use of the electronic payment system.

 

Samsung Galaxy S III, S II, Note go cheaper in India

 

Samsung has quietly reduced the prices of its top end phones in India by approximately Rs 2,000 to 3,000. The price cuts comes at a time when the South Korean manufacturer's chief rival Apple launched its latest device, the iPhone 5, which met with phenomenal success and looks set to break all sales records.

On Samsung India's official e-store, the current flagship Galaxy S III is now priced at Rs 35,499, a drop of Rs 3,500. This device has received rave reviews from critics and buyers alike and has performed well on various benchmark tests.

The Galaxy Note has also received a price cut in India, as it now costs Rs 29,990 on Samsung e-store in India. Previously, the 5.3-inch phablet cost Rs 32,990 in the country. Considering that the company has begun taking pre-orders for its successor, the Galaxy Note II, this price cut was expected by industry exper

Last year's flagship phone, the Samsung Galaxy S II, has also been subjected to a price cut and now costs Rs 25,900, down Rs 2,000 from Rs 27,900. The phone remains quite popular in India and comes with Ice Cream Sandwich version of Google's Android operating system.

Prices of phones priced below Rs 20,000 remained unchanged on Samsung India's e-store.

Samsung phones on contract received similar price cuts ahead of the iPhone 5 launch in the US and UK, making them more appealing to buyers who do not wish to burn a hole in their pockets for a new high-end phone.

Considering that Samsung decided to slash the prices of its top end offerings just when the iPhone 5 was rolled out worldwide, it seems that the company is trying to gain buyers' attention through an aggressive pricing strategy.

However, it remains to be seen whether this move will bring some Apple loyalists to Samsung stores or not.

 

SECURED Debenture Issue From Shriram City Union Finance

Shriram City Union Finance Ltd – SECURED debenture Issue is opening on 12-Sept-12. Soft copy of application form and product note is available with us. Do email me your requirement on the same.


Rating:

AA- from CRISIL & CARE

Indicates a high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

 

Issue Term Sheet

Series

I

II

III

IV

Frequency of Interest Payment

Annual

Annual

Cumulative

Cumulative

Tenor

36Months

60Months

36Months

60Months

Min Inv Amt

Rs10,000

Face Value

Rs1,000

Redemption Amount

Individual

Face Value plus any interest amt

Rs1,386.20

Rs1,743.30

Non Individual

Rs1,352.90

Rs1,666.65

Coupon Rate

Individual

11.50%

11.75%

11.50%

11.75%

Non Individual

10.60%

10.75%

10.60%

10.75%

 

Key points to remember:

Allotments of the bonds are on first come and first serve basis.

Its SECURED debenture issue.

Strong brand and performance track record

NO TDS on interest

Tradable NCDs to be listed on NSE & BSE.

Annual and cumulative interest option

PAT grown from Rs126cr in FY2008 to Rs524cr in FY2012. Profit grew 4.5times growth in last 4years.

The HelpYourNGO “Pay It Forward” Scholarship





Quantum Asset Management Company is the investment manager of Quantum Mutual Fund which is India’s first dedicated, direct-to-investor mutual fund.

HelpYourNGO.com Private Limited is an organization founded by Ajit Dayal that assists other NGOs and charities. The HelpYourNGO “Pay It Forward” Scholarship will be granted to one individual who is pursuing a Master’s degree at any university outside India.

The winner will be awarded a sum of Rs. 200,000 for writing the best essay on a specific topic.

Eligibility criteria:

To be eligible to apply for the HelpYourNGO "Pay It Forward" Scholarship, the candidate:
  1. Should be a citizen of India

  2. Should be a resident of India

  3. Should hold, at the minimum, a Bachelor’s degree from India

  4. Should plan to pursue a Master’s degree in any field at a college/university outside India – candidates pursuing part-time or online degrees are not eligible

  5. Should have the requisite student visas in place by September 1, 2012

  6. Will need to submit proof of the above criteria if the candidate is the winner. If the first selected “winner” fails to provide proof any of the above criteria within 7 calendar days of being announced as the winner, the jury will declare the candidate ineligible and select the next winner, till an eligible winner is selected

  7. Should submit, via email, an essay of less than 1,400 words on the following topic “Do NGOs play a useful role in India? Why? Would you work in an NGO in India? Why?” The essay should be typed in English and submitted by email to Info@HelpYourNGO.com . The last date for submission is August 25, 2012. The winning essay will be announced on September 15, 2012. The candidate agrees that by submitting this essay and applying for the scholarship, the content belongs to HelpYourNGO and the essay – in part or in totality – may be used by HelpYourNGO in any shape or form that HelpYourNGO deems fit with our without due credit to the author.

  8. A jury consisting of Ajit Dayal + 3 other members of the management teams that that work in companies he is involved with will make the final decision and select the winner.

The person who wins this grant will, on a best efforts and ability basis, grant a Rs. 200,000 scholarship to another student ten years after having won this grant. For example the recipient of the 2012 HelpYourNGO "Pay It Forward" Scholarship, will endeavor to grant Rs. 200,000 as a scholarship to another student in the year 2022. The winner will be free to select his or her terms and conditions for such a scholarship.


Thus the winner of the scholarship today will, in time, help another deserving student who is planning to study abroad. This is the concept of “Pay It Forward”. The good done to you today, will be carried on by you in the future when you are able to do good to others and repay society and help others.


Thus the winner of the scholarship today will, in time, help another deserving student who is planning to study abroad. This is the concept of "Pay It Forward". The good done to you today, will be carried on by you in the future when you are able to do good to others and repay society and help others.

 

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Information and opinions provided on this website (www.investchips.com) has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. Investchips.com and its affiliates, information providers or content providers and R.John Christy and his Family shall have no liability to you or third parties for the accuracy, completeness, timeliness or correct sequencing of information available on this website or feeds, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information. Investchips.com,its affiliates, information providers ,content providers and R. John Christy and his Family shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this website. Any action you choose to take in the markets is totally your own responsibility. Investchips.com and R. John Christy and his Family will not be liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of this information. This information is neither an offer to sell nor solicitation to buy any of the securities mentioned herein. Opinions expressed by R. John Christy are his own and not of his past, present and future employers.
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