Wednesday, April 22, 2009
KS Oils infuses Rs 370cr in greenfield venture
UK ruling in SABIC case will impact net profits: Punj Lloyd
However, today, the UK adjudicator has ruled in favour of SABIC and has thereby moved on to the next stage of dispute resolution.
Commenting on the same, Atul Punj, Chairman of Punj Lloyd, said the company will be appealing this case to a higher authority in the SABIC case. But the legal process will take a year or 12-14 months, he added.
Punj feels there is some contradiction in the ruling that has come.
He said the ruling will have negative impact on the company’s net profits, but will not impact the business.
“We are taking some rationalization measures at SCL and the other projects of SCL are on stream,” Punj added.
Reduce Sesa Goa, target of Rs 90: Emkay
"Sesa Goa reported 4QFY09 and FY09 results, which are in line with our estimates. For 4QFY09, net sales stood at Rs 15.7 billion (yoy down 7.8%, qoq up 5.8%), EBITDA stood at Rs 7.4 billion (yoy down 39.3%, qoq up 28.8%) and PAT stood at Rs 5.5 billion (yoy down 32.5%, qoq up 16.3%). Sesa reported EPS of Rs 6.96. For FY09, net sales stood at Rs 52.3 billion (yoy up 36.8%), EBITDA stood at Rs 25.1 billion (yoy up 8.9%) and PAT stood at Rs 19.9 billion (yoy up 29%). Sesa reported EPS of Rs 25.25."
"The company has maintained its guidance for 20-25% volume frowth for FY10E. As on 31st March ‘09, Sesa has cash balance of Rs 41.4 billion. We maintain 'REDUCE' on the stock with revised target price of Rs 90 (1.2x FY10E book value)," says Emkay Global Financial Services' report.
HCL Tech may correct up to Rs 125: Gujra
Gujral told CNBC-TV18, "HCL Technologies has been showing some strength. Overall midcap IT recently has been showing more strength than largecap IT. HCL Technologies could correct today to about Rs 125 and its got resistance now at Rs 144."
Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.
Tuesday, April 21, 2009
Punj Lloyd has support at Rs 83: Gujral
Gujral told CNBC-TV18, "Punj Lloyd is underperforming its peers. It’s got strong support at Rs 98 and in case that gets broken then it could probably even fall towards Rs 83. I think resistance is at higher levels around Rs 120-125 from where it started retreating.”
Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.
Saturday, April 18, 2009
Suzlon to set up Rs 50,000-cr steel plant
Adlabs Films to invest Rs 100 cr
its existing 425 movie screens into digital format in the next 18-
24 months. Converting conventional screens into the digital format
will allow Adlabs to offer better picture quality to audience
besides swifter distribution of movie prints.
The move would also help Adlabs curb piracy which tends to originate
when the conventional physical prints are transported to various
locations. Adlabs which runs its movie exhibition business under the
Big Cinemas brand in India, Malaysia and US, has already started the
process of digitalisation in its US movie theatres
NTPC, Nuclear Power to Spend $3 Billion on India Atomic Plants
HCC bags Rs 296.90 cr order from Himachal Pradesh govt
Next Bull Rally Has Begun (Read This)
“You are going to see a lot of bouncing off the bottom because there’s a tremendous amount of uncertainty in the market,” Mobius said, “But I have a feeling we’re at the bottom and now we’re building a base for the next bull market.”
Mobius correctly predicted in December that emerging markets will rebound before developed nations. In 1999, he was voted among the “Top Ten Money Managers of the 20th Century” in a survey by the Carson Group, and in 2006 he was included in the “Top 100 Most Powerful and Influential People” by Asiamoney magazine.
Courtesy : Bloomberg.com
Valecha Engineering gets projects worth 1.36 bln rupees
A project for road resurfacing of a runway at Srinagar is worth 710 million rupees, while the other, for construction of an underpass near the domestic airport at Delhi is worth 650 million rupees, the company said in a statement to the exchange.
The firm also said it has formed a wholly owned subsidiary at Sharjah, UAE, known as Valecha International FZE.
Friday, April 17, 2009
HDIL has target of Rs 148: Bose
Bose told CNBC-TV18, "In HDIL I am looking at a target of Rs 148 and it is one counter in the realty space, it gives very strong moves either ways. If it falls, it falls dramatically and when it rises back it rises equally dramatically. So now the next target would be Rs 148 and if that is crossed then Rs 154 would be the target. My clients might be holding this stock in their trading portfolio."
Disclosure: Analyst doesn't hold the above stock but his clients might have holding.
Remain invested in Suzlon Energy: Tulsian
Tulsian told CNBC-TV18, "This is definitely not the level to make a fresh entry in Suzlon Energy, but those who are holding can definitely remain invested because the company is making all the efforts by raising money and increasing their stake in RE Power, which they have been holding on. There is a good value in that company also.”
He further added, “If one sees the overall market cap of the company it is close to 2 billion which itself is quite low. Taking all into consideration I do not think that entry at these levels at Rs 60 is feasible. If somebody wants on a day to day trading basis can initiate a long call but with a stoploss. For the investors I do not think this is the right time to buy maximum, if one is invested remain continued or holding it.”
Disclosure: Analyst doesn't hold the above stock.
Tata Steel can touch Rs 330: Bose
Bose told CNBC-TV18, "If Tata Steel is an investment, I would say, you need not worry about much because Tata Steel after forming a base for about six months, it has actually moved up. In 40 calendar days right from a low of Rs 148 yesterday it went to a high of Rs 199 and today also it has moved up but a stock that has moved up nearly 100% or even more in 40 calendar days and being a largecap stock there is some risk buying it here."
He further added, "If the stock manages to sustain above the Rs 293-295 range then there is a possibility that it may actually move up to test its 200 day moving average around at Rs 330. So beyond Rs 299 the target would be Rs 330 if it is a trading stock and if it is investment then just hold on."
Disclosure: Analyst doesn't hold the above stock but his clients might have holding.
Buy Andhra Bank, target of Rs 74: Karvy Stock Broking
"In 4th QFY09, we expect the bank to record 22% growth in deposits and 31% growth in net advances and would report 39% (Y/Y) growth in net interest income (NII) to Rs 4.5 billion; in this quarter growth rates in credit and deposits and better cost of funding would marginally enhance margin. Andhra Bank's fee-based income growth would drift down and treasury income would be absent. We estimate that the bank's other income would de-grow by 22% (Y/Y) and total net income would grow by 15% (Y/Y)."
"We expect loan losses provisions of Rs 450 million compared to Rs 285 million in Q4FY08; we estimate the bank's bottomline to grow by 6.9% (Y/Y) to Rs 1.33 billion. We rate the stock as a BUY with a price target of Rs 74 at 1.05x adjusted book value FY2010," says Karvy Stock Broking's research report.
PFC Q4 net profit up 32.2% at Rs 390.6 cr
The company's total income went up to Rs 1,817 crore versus Rs 1,365.2 crore, YoY.
PFC, in the press conference, said the company reported notional loss of Rs 230 crore in FY09 due to rupee depreciation. The company sanctioned Rs 57,000 crore loans and raised Rs 21,500 crore in FY09, PFC added.
IDFC can test Rs 100-120: Chouhan
Chouhan told CNBC-TV18, "IDFC is forming a very strong formation and it’s in the range of Rs 45-75 in the last six months, the next target for the stock is like some where around Rs 100-120. Even if we look at the overall picture of the Infrastructure pack then we can say that after six months or one year we are going to see good run-up in this particular infrastructure pack, so out of that we are specifically bullish on IDFC.”
He further added, “Technically if it breaks Rs 75 and sustains above that then we can see levels as high as Rs 100-120 on the higher side and incase if there is failure of the trend, then also one can accumulate the stock on declines and they can hold on for atleast for 6-7 months to get very good returns.”
Disclosure: Analyst holds IDFC but not GE Shipping or Educomp. He has recommended both the stocks to clients.
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Unitech's debt at Rs 8900 crore, land bank at 11,178 acres
The company has deferred payment of Rs 1,647 crore due in the second half of financial year 2009 via debt restructuring, and has restructured its total debt of Rs 2,316 crore in FY09, it said. On its operations, the company said it will sell commercial office blocks in “We will induct private equity into some of our projects,” the company, which has been facing a cash crunch, said, adding that pressure continues on sales and its other sources of income in FY10. It also said it would launch 40 projects in 15 cities in FY10, 90% of which would be residential. Its projects in FY10 would cover 30 million square feet, representing 7% of its total land bank. |
Realty major Unitech has resistance at Rs 56-58: Mathew
Mathew told CNBC-TV18, "Today has been a great day for Unitech but one must remember that investors may hold on, but for traders - I think we are heading into a resistance zone between Rs 56-58. I would closely monitor how this stock behaves whether it is able to take out that resistance between Rs 56-58 with ease or does it struggle a lot because right now my stoploss is clearly defined at around Rs 45. Below Rs 45 as a trader I would come out of my long positions."
Disclaimer: It is safe to assume that analyst and his clients may have an investment interest in the stocks/sectors discussed.
G20 London Summit - The top ten outcomes
The Prime Minister’s Office has released a statement of the top ten outcomes from the G20 London Summit:
The top ten outcomes from the G20 London Summit - a Global Plan for Recovery and Reform.
- 1. A global plan: an agreed global plan for recovery endorsed by countries representing 85 percent of the world’s GDP.
- 2. Restoring growth and jobs: deliver a $5 trillion fiscal expansion, to raise output by 4 percent by the end of next year, commit to take whatever action is necessary to secure a faster return to trend growth. International Monetary Fund (IMF) to assess regularly the actions taken and actions required.
- 3. Additional resources: $1 trillion through the IMF, other international financial institutions (IFIs) and in trade finance to help kickstart the global economy, meet balance of payment needs and provide social support for countries in crisis.
- 4. Help for the poorest: agreements worth $50 billion in support for the poorest countries including through Special Drawing Rights, IMF gold sales and trade finance. a firm recommitment to achieve our aid promises and support for a World Bank vulnerability fund.
- 5. Stopping the next crisis: created a new financial stability board to spot risks, agreed regulation of credit agencies and hedge funds, new commitments on capital and new rules on pay and bonuses.
- 6. Crackdown on tax havens: agree to take action against tax havens including tough sanctions to use in future against those that don’t come into line. The Organisation for Economic Cooperation and Development (OECD) will publish list.
- 7. Governance: agreement to reform mandates and governance of IFIs to make them more accountable, more representative and more effective including heads of IFIs appointed on merit.
- 8. Kick start trade: no new trade barriers before end of 2010 and rectify any measures taken with public WTO monitoring. Additional 250 billion dollars to support trade finance and close the global trade finance gap, including 50 billion through new World Bank programme. Renewed focus to WTO deal and use g8 to drive progress.
- 9. Greening the future: commitment to use fiscal stimulus for low carbon investment, to identify and work together on policies for green growth and to reach a new climate change agreement at Copenhagen.
- 10. Commitment to more: G20 commit to meet again later this year with strict monitoring by IMF, WTO and FSB of the commitments we have made.
Why India Is No China
It's true -- India is no China. And Brazil's no Russia.
They've never been all that similar, really. In fact, Standard & Poor's recently questioned "whether the BRIC [Brazil, Russia, India, China] countries ever shared much in common, other than scale and high portfolio inflows."
Well, of course they didn't. In other news, S&P 500 components Google (Nasdaq: GOOG) andGeneral Electric (NYSE: GE) don't share much in common, except that they're both large U.S.-based companies.
You wouldn't think that Google and GE are interchangeable -- so don't fall for the idea that countries are interchangeable. If you do, you'll get burned.
First, the status quo
As investors (heck, as humans), we like to group things together. It simplifies complex information and gives us a way to make complicated decisions.
And when it comes to international investing, it's convention to lump countries into one of two categories: developed markets vs. emerging markets.
The exact distinction is hazy. Former Secretary-General of the U.N. Kofi Annan defines a developed market as "one that allows all its citizens to enjoy a free and healthy life in a safe environment." Political scientist Ian Bremmer defines an emerging market as "a country where politics matters at least as much as economics to the markets."
Basically, to be considered developed, a country needs a high standard of living that isn't continually threatened by political crisis. Besides the United States, think of countries such as Japan, France, and Australia.
The emerging markets are then split into the BRIC countries -- a term coined less than a decade ago by Goldman Sachs, because it was sexy to bundle together the four emerging-market countries that combined size with tremendous growth prospects -- and everyone else (countries such as Peru, Turkey, Egypt, and Thailand).
These groups are dangerous!
All of that splitting and grouping gives investors the false sense that the BRIC countries are essentially interchangeable: emerging, large, poised for growth.
Even basic country data demonstrates just how large this fallacy is:
Country | GDP per person (in U.S. dollars)* |
|---|---|
United States | 47,165 |
Russia | 12,487 |
Brazil | 8,480 |
China | 3,174 |
India | 1,078 |
*Calculated using nominal GDP and population per CIA World Factbook, correcting for a typo in Russia's GDP figure.
Gross domestic product (GDP) per person is one way to gauge the standard of living and productivity of a country -- and they demonstrate just how different these countries really are.
Yes, the emerging markets are quite different from the developed market -- the U.S.'s GDP per person is more than 40 times greater than India's -- but the chart also shows the great disparity among the BRIC countries. Russia is almost 12 times as prosperous as India, and even China is roughly three times so.
And this is just the economic disparity.
You also have to factor in the country's political situation, overall economic stability, market conditions, cultural differences, and still more economic data such as national debt, balance of trade, inflation, savings rates, etc.
In other words, in international investing, country differences are at least as important as company differences -- because any potential that company has depends upon the context of its location.
For example, even though they're both companies that deal in global commodities, it could be argued that Vale (NYSE: RIO) is more closely linked to its fellow Brazilian Petroleo Brasileiro (NYSE: PBR) than it is to Aluminum Corp. of China (NYSE: ACH) -- aka Chinalco. In a more extreme example, Chinalco may be more closely linked to Chinese search engine Baidu (Nasdaq: BIDU) than it is to Vale.
Why? Because country-specific considerations frequently outweigh industry-specific considerations. Ask any company that has been subject to onerous regulation, excessive taxation, a devalued currency, or nationalization by its home country.
If this is true for a company like Vale, whose prices are dictated by global commodities demand, it's even more true for a company like Toyota (NYSE: TM), which relies on demand from its home country for more than half of its revenue.
What does this mean for investors?
The substantial differences between countries -- not to mention between developed and emerging economies -- lead to three takeaways.
- Because of the addition of tricky country-specific dynamics, diversification may be even more important in international investing than it is in domestic investing.
- Emerging markets demand a greater risk premium than their developed brethren. In other words, you should demand a larger margin of safety (and lower earnings multiples) for companies in emerging markets.
- It isn't enough just to pore over the financial statements of a company and its competitors. Knowledge of a company's country is just as important as knowledge of the company itself.
5 Stocks You Should Avoid Right Now
April 9, 2009 |
Today, we thought we'd take the flip side of that coin and examine five stocks that are anything but incredible.
Why they are so dangerous
What first caught our eye about these five dogs is that they are five of the six most heavily traded stocks on our major exchanges:
exchanges:
Company | Average Daily Trading Volume, Last 3 Months | Recent Share Price |
|---|---|---|
Citigroup (NYSE: C) | 48.1 million | $2.85 |
Bank of America (NYSE:BAC) | 43.7 million | $7.60 |
Ford (NYSE: F) | 40.8 million | $3.25 |
General Electric (NYSE:GE) | 29.7 million | $10.94 |
Fannie Mae (NYSE: FNM) | 29.4 million | $0.70 |
General Motors (NYSE:GM) | 27.2 million | $2.10 |
Source: Capital IQ, a division of Standard & Poor's.
Millions upon millions of these shares have traded hands -- on a daily basis -- over the past three months. That might make sense; after all, every one of these stocks has headlined the nightly news at least once during that time period.
Now, we have to acknowledge that many of these transactions were from the big-money institutions or the short-term day-trading crowd. But somewhere in there is the little guy.
And you should stay away
Of the six most heavily traded stocks, we believe you should avoid five of them outright:
- Citigroup
- Bank of America
- Ford
- Fannie Mae
- General Motors
Why? Because these five stocks have three troubling commonalities:
1. Convoluted relationship with the government.
According to the Center for Responsive Politics, the "Finance, Insurance, and Real Estate" industry spent more than $3.4 billion on lobbyists between 1998 and 2008 -- more than any other industry. Over that same time span, General Motors and Ford "donated" nearly $200 million to Washington.
What did those five companies get for all of those political contributions? All but Ford have received well-publicized bailout funds. And while the taxpayer money will be used to save these companies from a far worse fate (we hope), Uncle Sam's money comes with strings attached.
Under normal circumstances, businesses are accountable to three constituencies: their customers, shareholders, and employees. Businesses will do well when they do right by all of them. These five companies, however, are now accountable to a supra-constituency: the federal government. That frightens us, because it's unclear how customers, shareholders, and employees will fare when these companies try to do right by the feds.
2. Gordian knot-like financials.
Take a look at Citigroup's balance sheet. For all of the information, for all of the numbers, it's among the most confusing documents we've ever examined. Call us when you figure out what it owns and what it owes. Heck, call Citi CEO Vikram Pandit first. He may benefit from the knowledge.
See, it's seemed to us that as the credit crisis persists, insiders haven't been totally clear about what's on their books. Though some have a vague sense that mark-to-market accounting has forced them to write down asset values too far, only time will tell ... and time may not be on these firms' sides right now.
The auto companies have some of these same issues -- they have consumer finance/lending divisions -- but their pension obligations present an entirely different yet similarly complicated set of problems.
3. No near-term catalysts.
The financial companies will survive in some form -- our government has committed to that. But their future will be unlike their past. Regulation will be stricter. The massive 30-plus-times leverage that drove outperformance earlier this decade will be a dark relic of a bygone era. And now, skeptical investors may never ascribe the same market multiple to profits.
We just can't see a world in which these companies post the same kind of profits that we saw for the past 10 to 15 years.
But wait, I count six ...
GE is the sixth company on that list, and it faces some of the same issues mentioned above. In fact, GE lost its AAA credit rating earlier this month for the first time in 40 years.
Yet we're hesitant to write GE off, because GE is a massive conglomerate that owns a collection of diverse and cash-generating operating businesses. As a result, its balance sheet is in better shape than some others, and its recent deal with Berkshire Hathaway shows that the company can tap resources that smaller, more troubled names cannot.
So we're taking a wait-and-see attitude here. That may not be a satisfying answer for anyone looking to buy GE, but remember Warren Buffett's observation that there are no "called strikes" in investing.
What you shouldn't avoid right now
Contrast the future of Citigroup or General Motors with, say, the future of Apple (Nasdaq:AAPL). Apple was recently named the "World's Most Admired Company" by Fortune. It hasn't received any TARP money from the government; even better, as of the end of 2008, Apple had more than $25 billion in cash and short-term investments ... with zero debt.
That means the company has a bulletproof financial position and can continue with business as usual -- snazzy marketing and innovating new products -- while competitors are spending their time figuring out ways just to survive.
This isn't to say that Apple doesn't face challenges. It's tricky to be in a business where you need to keep pace with rapid development cycles. But at least Apple isn't encumbered by convoluted relationships with the government and convoluted financials.
Buy one-foot bars
There's value in a company like GE. Heck, there may even be value in one or all five of the stocks we've advised you to avoid. But given their complexity, they're the proverbial "seven-foot bars" that Warren Buffett says he avoids in investing. (Remember, Berkshire got a 10% dividend on those preferred shares it bought from GE -- shares that are far more interesting to us than the common stock.)
Instead, Buffett looks for "one-foot bars that I can step over." In other words, lay-ups, short putts, or fastballs down the middle (to diversify our sports analogy). These are easy investments where the reward profile far outweighs the risk profile.
Fool co-founder David Gardner believes Apple represents just such an opportunity today, and he and his brother Tom have found all sorts of similar opportunities for their Motley Fool Stock Advisor subscribers. That, after all, is the silver lining of a down market, and if you're prepared to be a long-term investor, you can take advantage.
Click here to join Stock Advisor free for 30 days and enjoy immediate access to all of David and Tom's proprietary research. There is no obligation to subscribe.
Brian Richards does not own shares of any companies mentioned. Tim Hanson owns shares of Berkshire Hathaway. Apple and Berkshire Hathaway are Motley Fool Stock Advisorrecommendations. Berkshire is also an Inside Value pick and Motley Fool holding. The Motley Fool has a disclosure policy.
The Greatest Company in the History of the World
Meet the world's greatest company: ExxonMobil (NYSE: XOM). Biggest, strongest, most efficient, most evil -- there's hardly a superlative that hasn't been said about this most successful of the Standard Oil grandchildren. But while much is made of just how great or how evil folks peg Exxon to be, there's strangely little discussion over the core drivers of why its stock has been a huge success.
It would be easy to say that Exxon's success and that of Standard Oil's other grandchildren -- Chevron (NYSE: CVX), ConocoPhillips, Marathon Oil, etc. -- was just a function of their being in the right place at the right time. Hawking oil and gasoline at the dawn of the Industrial Revolution, after all, is a Category 5 tailwind.
But there's much more to Exxon's success. And, fortunately, those discernable traits are ones we can spot in other opportunities.
1. An owner-operator culture
John Rockefeller didn't run an infamously efficient organization just for kicks -- as the largest shareholder, he had a vested interest in the success of Standard Oil. When managers and employees are shareholders alongside you, they share your desire for the business to be managed for the long term.
Take a look at the cutthroat world of discount retail, where a fanatical focus on controlling costs and smart growth are crucial to long-term success. Which companies in this space have proven among the biggest winners for investors over the past 20 years? None other than Costco and Wal-Mart (NYSE: WMT). Both are known as much for their insider ownership as for their tenacious zeal for efficiency and delivering value to customers.
And, by the way, there's still plenty of alignment between Exxon's leadership and outside shareholders. The company consistently posts better margins and returns on capital than its Big Oil brethren. CEO and Chairman Rex Tillerson has plenty of incentive to keep it that way -- he owns 1.1 million Exxon shares.
2. Enduring demand
Demand for oil is strikingly consistent. For most companies, steady demand equates to steady cash generation. But just as importantly for Exxon as the consistent demand for oil is the lasting nature of that demand. Constant doubt over the staying power of oil has helped keep Exxon's shares perpetually undervalued, allowing Exxon and dividend reinvestors to consistently gobble up shares at attractive prices.
Back to the importance of demand. Consider Procter & Gamble (NYSE: PG), which I recently recommended to our Income Investor members. P&G's core products (razor blades, toilet paper, disposable diapers, etc.) all face little chance of technological obsolescence. Even better, demand is regular and firmly entrenched. Maybe I'm just a pretty boy, but I'd be living in my car before I stopped buying razors.
Now consider a company whose fate hinges on innovation: Apple (Nasdaq: AAPL). Sure, there's a lot to love about Apple, but long-term demand for its products is downright unknowable, if for no other reason than we've no idea what Apple will even be selling years from now.
