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.

Sree Rayalaseema Hi-Strength Hypo Limited ~~ IMMEDIATE BUY

Business : Today it’s CRUDE oil; Tomorrow it will be WATER… Yes folks, the next burning issue on our planet – CLEAN & SAFE water.

Today, I introduce a pioneer in water treatment industry, a commodity chemicals player - SREE RAYALASEEMA HI-STRENGTH HYPO LTD (SRHHL) - the torchbearer of the TGV Group, is the only manufacturer & exporter of Calcium Hypochlorite in India and among a few in the world. Welcome to TGV Group, growing leap & bounds under 3 decades old versatile leadership of T G Venkatesh, this group is diversifying big time into Pharmacy & healthcare, hospitality & education, Power & infrastructure along with manufacturing & exports. Constantly raising standards in water purification, SRHHL leads others by an example. What’s the buzz about Calcium Hypochlorite - Calcium hypochlorite is arguably the best chemical disinfectant for water far better than our household bleach {sodium hypochlorite}. Besides being used for disinfection plants of drinking water, it is used heavily as a sanitizer in outdoor swimming pools, as an ingredient in our daily bleaching powder & also used in bathroom cleaners, household disinfectant sprays, moss and algae removers etc. SRHHL's Aquafit brand is very popular, high grade calcium hypochlorite which has very wide applications in swimming pools and drinking water treatment bodies.

“A 1-pound pag of calcium hypochlorite in granular form can treat up to 10,000 gallons of drinking water.”

            Apart from Calcium Hypochlorite, SRHHL manufactures other highly useful chemicals with their annual capacities listed below : 

Product	Installed Capacity (Tons per annum)
Calcium Hypochlorite	19800
Stable Bleaching Powder	14850
Monochloro Acetic Acid	5445
Sulphuric Acid	49500
Chlorosulphonic Acid	26400
Bromine	65

Financials : The company is progressively witnessing a complete turnaround this FY. For a change, this time I present the company financial figures in a tabular chart below :

SRHHL	Sept Q	June Q	Half Year FY11	Projected FY11
Revenues (crores)	55.2	53.0	109.8	200+
Net Profit (crores)	8.0	6.4	14.4	25+
EPS	7.7 (0.37)	6.1 (4.0)	13.8 (4.3)	20+ (3.2)

Looking at the prolific figures above & assuming sustained growth one can expect a target of 150 Rs in another 6-7 months. At current price of 63 Rs – SRHHL is available at a PE of around 3 anticipating a forward FY11 EPS of 20+ The stock is a IMMEDIATE BUY!!

Positives – The company has a very strong SHP which has increased from 36% to about 46% in last 3 years since its listing on BSE in 2007

-        The demand of Calcium Hypochlorite is growing fast in international market.

-        Most of the raw materials are easily available locally because of its another listed group company (Sree Rayalaseema Alkalies & Allied Chemicals Ltd) thus saving all logistic cost.

-        There are no competitors for manufacture of Calcium hypochlorite.

-        Well, water treatment chemicals are also included in the same sector as water treatment holding same kind of importance and presents same kind of growth prospects.

Negatives – It’s a non-dividend paying company so far, but if you look at the extent of expansion prospects, I feel SRHHL seems to be retaining back the entire profit so that it could be deployed for further expansion projects. This seems to be a strong point in favor of shareholders.

Conclusion : The stock is already on a rally and has reached 63-68 levels. Time to HURRY to buy SREE RAYALASEEMA HI-STRENGTH HYPO LTD at current levels before FII/DII start doing so. This stock seems to be a value pick from all perspectives & one can expect 200 – 300% returns in 1 yrs time visualizing an EPS of 20+ this FY.

Stocks Results Update - Q3 2010 ! HY FY11 Earnings Analysis

Friends,

             All my recommended scripts have come out with strong Sept Q results. Lets have a qualitative earnings comparision of these scripts so far in FY11. The figures in brackets (in table below) are corresponding values in last FY i.e. FY10. The projected figures are evaluated assuming that the stocks will continue the sustained growth curve as established in FY11 so far :)

Scrip	Sept Q EPS	June Q EPS	FY11 HY EPS	Projected full FY11 EPS	CMP	Projected price(in 6 months)	Comment
Rama Phosphates	19.9	25.9	56.6 (34.5)	50	127.5	300	Strong hold – will rally
Dujodwala Products	4.7	5.2	9.9 (4.4)	16	55.4	130	Strong hold – will rally
Liberty Phosphates	5.3	4.0	9.3 (3.0)	16	73.2	160	Hold – will rally
Manjushree Technopack	2.0	3.8	5.9 (3.67)	14	95.4	150	Hold – gain pace
Simran farms	1.2	5.0	6.2 (3.5)	12	67.8	120	Hold – will consolidate
Satvahana Ispat	4.0	3.5	7.5 (2.9)	14	60.1	120	Hold & add on dips
TT limited	2.0	2.0	4.1 (0.78)	9.0	39.6	90	Hold – will gain pace
Orient Ceramics	2.3	5.0	7.3 (3.5)	14	90.2	140	Hold – slow mover
Poddar Pigments	2.6	2.5	5.0 (4.0)	12	58.9	100	Hold – slow mover

Enjoy investing :)