Where are the Buying Oppurtunities - Continued ...

          Continuing from my previous post, I would like to draw attention towards some other mid caps carrying huge potential to multiply. Among the shipyard companies, Bharati Shipyard is very attractive buy at current valuations currently quoting @PE of less than 4 whereas its peers like ABG & Pipavav are trading at much higher valuations. I find worth mentioning Jindal Poly Films - another giant in PET films especially BOPET films. Jindal Poly is currently quoting just @PE of 2.6 with an EPS of 128 in FY11 and needless to mention, this firm is backed up by the giant JINDAL Business house.
            Moving on to aviation sector, I strongly support & see Spicejet Limited as next rising force in Indian aviation. Please do notice that Spicejet is the 3rd private international air carrier in India after Jet Airways & Kingfisher. Leaving apart the Dayanidhi Maran"" controversy, Spicejet seems to be a value pick @current valuations or on slight dips. Well, last 2 years we saw a boom in housing finance firms like LIC housing finance & GRUH finance (HDFC is the maestro here) - still we have GIC housing finance & Dewan Housing Finance which are looking a compelling buy owing to their progressive earnings YoY. People who may have missed on LIC housing finance or GRUH finance can still grab GIC housing finance which seems to be a growing force in this segment. I find another oppurtunity, in construction sector - Shriram EPC - part of Shriram business empire which is posting very healthy earnings YoY. Keep a watch on this counter currently corrected a lot in last 6 months and placed dirt cheap - a buy from all angles.
         To conclude, I see Suzlon as another value pick @current prices but may be with a long term prospective. The worst days of Suzlon seems now gone & company seems ready to post progressive earnings in coming quarters. I would be covering the mentioned picks in details with quantitative data in posts to come… keep tuned..
             
Enjoy Reading …..

FY11 Results - Hits & Flops

Hello friends,

             Most of my recommended scripts have come out with strong FY11 results. Lets have a comparative YoY earnings comparision of these scripts:-

Scrip	Full year FY 11 EPS	Audited FY10 EPS	Proposed Dividend (if any)	Comment
Rama Phosphates	22.35	20.29	Nil	Strong hold – will rally
Liberty Phosphates	22.64	3.84	Nil	Strong hold – will rally
Sree Rayalaseema Hi-Strength Hypo Limited	19.49	3.35	Dividend of Rs. 1.5/- (15%)	Buy – rerating on cards
Sathavahana Ispat	16.91	7.73	Dividend of Rs. 1.8/- (18%)	Strong hold – will rally
Manjushree Technopack	10.92	7.8	Dividend of Rs. 1/- (10%)	Strong Hold - will gain pace
Dujodwala Products	11.1	8.36	Nil	Strong hold – will rally
TT limited	7.35	4.87	Dividend of Rs. 1/- (10%)	Hold – will consolidate & rise
Simran farms	10.52	9	Dividend of Rs. 1/- (10%)	Square and offload
Orient Ceramics	9.27	10.88	Dividend of Rs. 2/- (20%)	Square and offload
Poddar Pigments	9	12.1	Dividend of Rs. 0.75/- (7.5%)	Square and offload

                 The Phosphates stocks especially Liberty Phosphates seems handsomely placed to steer ahead since it is focusing on expanding at multiple locations nationwide hence, lowering backward input costs continuously. Manjushree Technopack looks to be next Gen packaging firm to be in line with biggies like Uflex, Polyplex & Jindal Poly Films - watch this counter grow. Please continue holdings in Sathvahana too as it has come out excellent FY earnings & future looks bright.
                  Coming on to the flops, Simran farms has never come up with any corporate website of its own and is now questionable about its visibility on business plans & future expansions. Poddar has a tough fight with lot of other listed pigment players in market & is not able to match up. Orient Ceramics too seems to be fighting with other organized competitors and seems to be badly lagging behind. I will suggest to square these scripts (please do not average these ones) whenever you find an opportunity.
                   Like I hinted in my previous posts, small caps are a bit different and I would focus more on emerging mid & blue chips. Keep reading ...

Happy investing :)

Where are the Buying Oppurtunities

             As I stated in my previous post, I analyzed a lot of mid & large caps very cheaply placed in current times carrying huge upside potential in coming 3-4 years. Also, I shifted my mindset on the more stable blue chips from the micro market capped small caps which always carry a risk of manipulations & operator control. From my research I found that there are lot of sectors and high value industries ready to explode revenue-wise where one could invest for multibagger returns.
             To start with, I would talk about a high profit margin sector dealing with packaging films- Bi-axially Oriented Poly-Ethylene Terephthalate (BOPET) films & BOPP films - serving the recession free Packaging industry which is growing exponentially with time. Yes, I am talking about top rated companies like SRF, Uflex & Polyplex. Please note that these synthetic resin or engineering plastic industry is still not government regulated and hence, enjoy very high profit margins yr by yr. SRF & Polyplex are looking very attractive with a time range of next 2-3 years - looking at the growth chart on Sensex in last 3 years.
              Well, there are lot of other market proven sectors - Banking & Infrastructure scrips (not to forget Infrastructure growth is on top in Government todo list in current 5 year plan). Some of the blue stocks like Punjab & Sind Bank (listed on bourses last December), Petronet LNG (will be a FIIs favorite sooner or later) are in their 1st bull run & should be bought asap on any dips. Quite evident, when FIIs buy these blue chips are the one immediately benefitted & I am pretty sure these will move up with time. Another hit sector - Education - I would point @eGovernance software companies specifically EdServ Softsystems & ABM Knowledgeware. Also with the deregulation in non phosphatic fertilizers with modest subsidy I find some highly consistent scripts like Rama Phosphates & Liberty Phosphates worth accumulating. Just for information, the promoters stake in Rama Phosphates has shooted from 41% to 81% now in last 4 quarters. Both these phosphate houses have registered around FY11 EPS of 22 and are ready for the next major upswing in their prices. Then, there are some not so known market leaders we need to keep watch on - Photoquip India for example is the manufacturer of Elinchrom based flash studio lightings extremely popular throughout the world; we have Cosco India - the only known sports goods manufacturer listed in the market. Another biggie script in shoes & apparels - Cravatex growing thick & fast hosting the FILA brand in India. Watch these counters friends … they can be the next TTK Prestige or Page Industries or Titan Industries - you never know. These scrips according to me hold big promise & I see them riding on back of mass consumer consumption in India.
              On the contrary, I normally do not like companies from Government regulated sectors like sugar, cement, petroleum industries, selected food items, tea etc. Also, I keep distance to these channel analysts who advise to pick such stocks - bottomline is to do your own research rather than listening to someone. Stay tuned friends - I will be covering some of the above mentioned mid caps soon in my coming posts ..

Enjoy Reading …..

Markets in Consolidation Moods - My learnings continues ...

Continuous Learning - Lots of surprises the way FIIs go bell and hell ...
    Well, already 5 months since I wrote last here.. Apologies for that friends but I was trying to learn & analyze the recent highs & lows on Nifty whole summer. You see, the market is primarily ruled by FIIs since they are the cash rulers across global markets. I do predicted in October that FIIs will have the routine post Diwali selling bringing a modest correction which did not happened. Moreover, to my surprise they even not sold in last December - a normal FII trend across EM markets after a cumulative buying in last 18 months - to walk away & show profits to their customers & stakeholders. They sold post mid-Jan this FY which many thought should have happened before - not to ignore that Sensex PE almost reached 26 before the panic button was pressed by FIIs & DIIs too (I will talk about this magic Sensex PE range of 25-28 in depth sometime). Even when the post Jan correction was going smoothly this year when post budget rally by FIIs in a span of 3 weeks totally took me by awe. I thought FII will take Nifty to hit that magical PE range but it turned out to be a short covering when the same FIIs pulled the market down to 5400 levels in same time - definitely there was the Libyan issue, Japanese Tsunami  & European debt crisis which added fuel to fire.   

Formula 1 : Trend of small caps
    I found out that most of the stocks I recommended last year are small caps with market capital less than 200 crores. Many of my stocks got beaten badly in this recent 15% correction from 6350 Nifty levels to 5400 now this summer. Its important to understand movement patters of small caps - normally they participate in last leg of a bull rally when they can even command a PE of 12+ wrt to their earnings. Else rest of times (correction phase or consolidation times) they are tentative always for a beating & get stagnant in range of 2-5 forward PE. So its important to understand business models & revenue growth of such firms deeply. In corrections, small caps are the first to be sold out on counters and hence, an investor should sell small caps once a bull rally reaches its peak - historically, market PE of 25-28 is a signal for a U- turn on Nifty. The 2001 crash, 2008 Jan reversal and 2011 Jan corrections after peak of 26-28 PE suggest that FIIs consider this range as the boundary conditions for liquidity. It is this time one should get out of small caps firstly …. Also not to forget, many of these small caps have very small equity base and with a marginal profits they can show heavy EPS in some Qs (so beware) and small caps with market cap of less than 50 crores can shut their business too if they default...

The learning continues -
    As I said, small caps have their patterns & if traded properly in time & on specific times, they will give you fastest and maximum ROI compared to mid & large caps. All these summer I walked through several mid cap scrips and blue chips too & deduced that yes, they are FIIs paradise - reasonably too. There are lot of mid caps I see very attractive in current times in some specific industry sectors I will talk about in my coming post - stay tuned!
Additionally, I see a few large caps which got listed in recent years which are in their first bull run & quite cheaply placed on bourses.