Stock Ideas

2012-02-14T17:01:00.003+05:30

Gruh Finance Ltd: Currently priced at around Rs. 650/- with projected EPS of around Rs 30/- to 40/-. The stock has moved to a new price range of Rs. 600/- to Rs. 680/-in last 10 months time and has surpassed our price target of Rs. 500/- to Rs. 600/-. It is likely to be priced around Rs.700/- to Rs. 800/- in about 1.5 years time. It operates in niche area of home financing self employed people in Gujarat and moving to other states such as Karnataka etc. It is promoted by same promoters of HDFC Group. Worth buying at current price. Likely to give compounded ROR @25-30% p.a for next 3-5 years.
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2012-02-14T16:55:00.002+05:30

Munjal Auto Ltd: Since last report, the stock has been split into Rs. 2/- face value and is currently quoting Rs. 48/- as on 14.02.2012, i.e., Rs. 240/- (Rs.10/- face value). The stock has met our target of Rs. 240/- to 250/-. the stock is expected to move to Rs. 56/- to Rs. 64/- range in next six months time.

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2011-09-09T17:20:00.002+05:30

MUNJAL AUTO LTD.: Largest producer of exhaust systems for two wheelers in the world and meeting captive requirtement of Hero Motots corp. Ltd. and host of many other products is expected to achieve a EPS of Rs. 35-40 for 2011-12 and 40-45 for the year 2012-13. Currently priced at around Rs. 180-185/- is expected to move to Rs.Rs. 230-250/- in next 2-5 months to about Rs. 250-300/- by May'2012. A HERO Group Company.

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2011-09-01T12:11:00.003+05:30

Akzo Nobel India: A world leader in Paint industry is poised to grow its revenue six times by 2015. Likely to expand in premium segment / band of the value chain. Currently quoting at Rs. 925/- is likely to double in next 2-3 years time. Expected to give a compounded return of over 30-40% per annum over the next 2-5 years.

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Review of Titan Industries

2011-05-03T08:45:00.004+05:30

Titan Industries: The script was recommended @ Rs. 919/- on 6.11.2008 and currently priced at Rs. 4000/- to 4200/-. It has grown 4.5 times in about 2.5 years time. It is now quoting cum 1:1 bonus and stock split for 10:1. i.e., for one share of Rs 4000/- will be converted into 20 shares with suitable price adjustment. It is a fantastic company with a very high visibility of business model and will give compounded ROR of over 30% p.a. for the next 5-10 years. Worth buying at this rate. Bluest of blue chips and a jewel amongst the listed companies.

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It is now quoting at Rs. 205/- ex-split and ex-bonus as on 30.8.2011. the script is likely to give an annual compounded return of 25-30% per annum over a period of next 2-3 years.

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Mid Cap Stock worth buying

2011-04-26T17:11:00.005+05:30

Gruh Finance Ltd: Currently priced at around Rs. 410/- with projected EPS of around Rs 30/- to 40/-. The stock is likely to move to a new price range of Rs. 500/- to Rs. 600/- with in next 8-12 months time. It is likely to be priced around Rs. 800/- in about 2 years time. It operates in niche area of home financing self employed people in Gujarat and moving to other states such as Karnataka etc. It is promoted by same promoters of HDFC Group. Worth buying at current price. Likely to give compounded ROR @25-30% p.a for next 3-5 years.

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The market has fallen by 15% but the script has appreciated to Rs. 482/- as on 30.8.2011. it is likely to give compounded ROR of over 25% over the next 2-3 years.

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Can Fin Home Finance Ltd.

2010-07-20T13:30:00.002+05:30

Review:
Canfin Homes: Currently quoting around Rs. 148/- against the project Book Value of Rs. 160/-, the stock is a subsidiary of Canara Bank Ltd. It was recommended on 29.9.2009 at around Rs. 85/- with a price target of Rs. 110/- to 150/- in next 3-12 months time. In the longer term it is projected to go up to Rs. 180-250/- in next two years time. One may keep in mind that this stock is a slow moving stock and therefore the time frame given above may or may not be adhered.

HDFC LTD

2010-05-06T15:29:00.002+05:30

Financial Results for 2010 are very promising. EPS is Rs. 113/-. Expected market price in next 3-6 months is Rs. 3200/- to Rs. 3400/-. The script is currently quoting at Rs. 2740/-, i.e., an up side of over 25% in next 3-6 months time.
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Review of Titan Industries

2010-03-09T16:04:00.005+05:30

TITAN INDUSTRIES: The stock was earlier recommended at Rs. 919/- on 6.11.2008 and since then doubled in a matter of 16 months. Currently priced at Rs. 1810/- is likely to go up to Rs. 2300/-2400/- in about 2-3 months time frame and to about Rs. 15,000/- to 20,000/- by the year 2018. Excellent business model. Business includes Gold / diamond jewellery, watches, eye care products and engg. division. Growing at a healthy pace of over 20-25% per annum. Insaitable demond of Gold jewellery/ eye care/ watches in India and world wide, in particular.

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New Year Greetings.

2010-01-01T13:35:00.002+05:30

We wish all our esteemed readers a very Happy and prosperous New year 2010. Happy and profitable investing to all our readers in the year 2010. We shall be happy to receive your comments and or suggestions to improve our news letter.
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Review of Hotel Leela Ventures Ltd:

2009-12-24T16:31:00.002+05:30

The script was recommended on 01.12.2008 at Rs. 15-17/- is currently quoting about Rs. 46/-, i.e., a return of almost 200%.
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2009-12-24T16:15:00.003+05:30

Canfin Homes: Currently quoting around Rs. 85/- against the project Book Value of Rs. 138/-, the stock is a subsidiary of Canara Bank Ltd. It is under accumulated phase and likely to go upto Rs. 110/- to 150/- in next 3-12 months time. In the longer term it is likely to go up to Rs. 180/- in next two years time giving a return of approx. 100% or a compounded return of 42% p.a for the next two years. One may keep in mind that this stock is a slow moving stock and therefore the time frame given above may or may not be adhered to.
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Review of Stock Ideas:

2009-09-29T08:53:00.005+05:30

Indian Overseas Bank: Recommended at a price of Rs. 84/- on 17.8.09 and as predicted, it has moved to Rs. 120/- in just two months time, giving a return of almost 45% in two months time. hold on to the stock for multibagger gains in near future. It is likely to consolidate now in the range of Rs. 110/- to 130/-. and then move to Rs. 150/- to 180/- range in next six months time.
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Crisil Ltd:Current Market Price is Rs.3950/-.As recommended and predicted on 21.11.08, the stock has moved to a price range of Rs. 4000/-. The stock has given a return of over 70-80% in just 10 months period. Hold on to the stock.
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The stock is currently quoting ar Rs.7900/- as on 30.8.2011. The price has doubled in two years time. Likely to give 25-30% ROR in 2-3 years time.

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Review of Stock Ideas:

2009-09-10T13:57:00.003+05:30

Henkel India: Ever since 17.7.09 @ Rs. 19/-,we presented this idea the stock has been moving up and has recently made a new high if Rs. 33/-. It has given a return of approx. 73% in just 2 months time. The trading volume has also multiplied 9 to 10 times indicating some informed buying. We recommend to hold the stock further for longer period of time for multiple gains.
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Coal Linkages to Ultra Mega Power Projects in India.

2009-09-10T12:16:00.005+05:30

Recently, GOI has decided not to allocate coal source to new UMPP's in view of high shortage of coal supply to existing stations. Therefore, in future new UMPP may have to link coal supply from Imported coal sources only. This may further slow down the capacity addition in India and may lead to GDP growth of lower than 9-10% p.a. But, it opens up large scope for coal imports from Indonesia, Australia, Kazakhstan etc. and big business opportunities for shipping, logistics and trading organisations.
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TWO MID CAP STOCKS WORTH INVESTING:

2009-07-17T16:45:00.004+05:30

Henkel India:
Another stock in FMGC sector which is likely to give compounded growth in returns of over 26% p.a. Currently priced at Rs. 19/- at BSE which is close to its real worth of Rs. 19/- to Rs. 20/-., is likely to double in 1-2 years time and quote around Rs. 240/- to 400/- in 2018. It is a subsidiary of German co. operating in India in toiletories, personal and home care products. Making profits in last five years of its operations in India. Likely to leap frog to a higher price range of Rs. 24/- to Rs. 28/- shortly.
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Indian oversea bank:

A rock solid stock in Banking sector which is likely to give compounded growth in returns of over 30% p.a. Currently priced at Rs. 84/- which is very much below its real worth of Rs. 220/- to Rs. 230/-., is likely to double in six months to one year time and quote around Rs. 240/- to 300/- in 2011-12. Currently consolidating at around Rs. 75/- to 95/-. Likely to move to a higher price range of Rs. 120/- to Rs. 150/-in 2-3 months time.

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Review

2009-06-05T14:37:00.002+05:30

Rallis India:
Recommended at Rs.446/- on 17.9.08, the script has tocuhed 715/- in May'09 and currently quoting at Rs. 650/-, i.e., a return of about 50% in about 7 months.
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Review:

2009-06-04T15:32:00.002+05:30

Titan Ind:
Recommended @Rs. 919/- as on 6.11.08, it priced at about Rs. 1200/- as on 3.6.09, i.e., a return of approx. 30% in just seven months.
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HDFC LTD:
Recommended on 15.10.08 @Rs. 1750/- is presently priced at about Rs.2450/-, i.e., a return of about 40% in just 8 months.
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Review of our investments in the last one year

2009-05-29T09:08:00.010+05:30

SIP in India Glycols Ltd.:
As on 29.5.09, we have 665 shares invested @ Rs.82.8 per share since we started investing from june'08 onwards. The current price is Rs. 103/- approx. i.e., a return of approx. 25% in just 12 months time. We bought the script between Rs. 53/- and Rs.280/- and after 11 monthly instalments our average price is Rs. 82.8/- only and in such a volatile and recession hit markets we have been able to generate a return of over 22%. We deliberately did not invest in May'09 as we want to see the 2009 annual results berofre taking further exposure in the script.The advantage of systematic investment plan has been practically demonstrated to be very attractive and profitable as it insulates one from day to day price fluctuations.
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HOTEL LEELA VENTURES LTD.:
The script was recommended on 1.12.08 @ Rs. 15-17/. The price as on 29.5.09 is Rs. 33.50, i.e., a return of about 100% with in 6 months time.
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ICRA LTD:
The script was recommended on 14.11.08 @Rs.399/-. The price as on 29.5.09 is Rs.710/- i.e., a return of over 80% in about 6.5 months.
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We will now review our other investments regularly in future.

SIP-India Glycols Ltd.

2009-04-10T14:25:00.004+05:30

10.4.09:

Till last month we had invested Rs.50,066/- for 573 shares. Let us invest in another 92 shares for 5000/- as on 06.04.09. Now we have 665 shares for a total of Rs. 55066/-@ Rs.82.8 per share.

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SIP- India Glycols Ltd.

2009-03-09T08:45:00.003+05:30

9.3.09:

Till last month we had invested Rs. 45078/- for 457 shares @ 98.64 per share. Now let us invest further Rs.4988/- for 116 shares at the rate of Rs.43/- as on 6.3.09. Now we have 573 shares @ 87.37 for a total investment of Rs. 50,066/-.

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SIP- India Glycols Ltd.

2009-02-06T11:35:00.001+05:30

6.2.2009:
Till last month we have invested Rs. 40096/- for 363 shares @ Rs.110.46per share. Let us buy another 94 shares @ Rs.53/- per share today's opening price at NSE for a total sum of Rs.4982/-. That makes it Rs. 45078/- for 457 shares @ Rs.98.64/- per share.
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SIP-India Glycols Ltd.

2009-01-06T12:26:00.002+05:30

6.1.2009

Till last month we have invested Rs. 35128.34 for 294 shares @ Rs.119.48/- per share. Let us buy another 69 shares @ Rs.72/- per share today's opening price at NSE for a total sum of Rs.4968/-. That makes it Rs. 40096.34 for 363 shares @ Rs.110.46/- per share.
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SIP-India Glycols Ltd.

2008-12-06T08:58:00.003+05:30

6.12.08:

Till last month we have invested Rs.30152.84 for 201 shares @ Rs.150/- per share in India Glycols Ltd. stock. Let us invest this month Rs.4975.5 for 93 shares @ Rs.53.5, i.e., closing price as on 5.12.08. Now we have 294 shares @ Rs.119.48 for a total investment of Rs. 35128.34.

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Hotel Leela Venture Ltd.

2008-12-01T09:25:00.002+05:30

A small cap stock worth investing at around Rs. 15/- to 17/-, currently quoting at Rs. 17.50, below its real worth of Rs.29/-.The stock is likely to double by 2009-2010. It has finest properties among the best hotels in India. After the terriorist atack in Mumbai, Mumbai is likely to face extreme shortage of hotel rooms with the outage of two top hotels for at least a year.

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Small Cap stock worth investing:

2008-11-22T14:44:00.003+05:30

CRISIL Ltd.:

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Credit Rating Information Services of India Limited (Crisil) is one of the top five credit rating agencies in the world and it has rated over 4,500 debt instruments. Crisil continues to lead in the debt rating business with a market share exceeding 50 per cent. But rather than focus on market share, it believes that it is a leader in forming opinions. Crisil is also into infrastructure, banking and finance and corporate advisory services.

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Current Market Price is Rs.2370/- as on 21.11.08 which is very close to its real worth of Rs. 2300/-. The stock can be bought at around Rs.2200/- to 2350/- for annual compounded returns of over 30-40% over a period of 3-5 years.

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Expected price range for 2008-09 is Rs. 2000/- to 4000/- and for 2011-12 is Rs. 4000/- to 8000/-.

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Expected price range for 2016-17 is Rs.20000/- to 24000/-.

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Small cap stock worth investing: ICRA Limited:

2008-11-15T15:24:00.004+05:30

ICRA (ICRA), an associate of Moody`s Investors Service, is primarily engaged in the business of providing investment Information and rating services. The company was incorporated on Jan. 16, 1991 and got its current name on Feb. 3, 1993.

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Market price as on 14.11.08 is Rs.399/-.

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Currently close to its real worth of Rs.400/- to 360/- and close to its yearly low of Rs.325/-, the stock is likely to vary between Rs. 350/- to 500/- during the year 2008. It is likely to be priced between Rs.1200/- to 1400/- during the year 2011-12 and about Rs. 3500/- to 4200/- during 2017-18. It is likely to yield a compounded yearly returns of over @ 26% p.a during the next 5-10 years.

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Mid cap stock worth investing: TITAN INDUSTRIES LIMITED.

2008-11-08T15:37:00.005+05:30

Currently priced at Rs.919/- as on 6.11.08. This is another stock which is likely to give compounded returns of over 26% p.a. over a period of 5-10 years. It is a Tata Co. manufacturing watches, gold jewellery,Eye wear products and precision components for avionics and automotive industry. It can be bought at around Rs.800/- to 900/-.

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Likely price range for 2008-09 is between Rs.800/--1150/-. For the year 2011-12 it is likely to vary between Rs.1600/- to 2000/- and for 2014-15 it is likely to be priced between Rs. 2900/- to 3600/-.

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SIP-India Glycols Ltd.

2008-11-07T08:52:00.003+05:30

7.11.08

We have till date purchased 125 shares of India Glycols Ltd. @ 201.43 for a total value of Rs. 25178.64 till last month. Let us purchase another 76 shares on 6.11.08 at a closing price of Rs. 65.45 for a sum of Rs. 4974.2. We now have 201 shares @ 150/- per share for a total sum of Rs. 30,152.84. We can see that our average price has dropped drastically from Rs.201.43 to Rs.150/-. Also, no. of shares being bought for a fixed sum of Rs. 5000/- are also going up as the price is falling.

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Large cap stock worth investing:

2008-10-15T08:58:00.003+05:30

HDFC Ltd:

This large cap stock is worth investing at the current price of Rs.1750/- 1850/- for long term. It has recently louched a low of Rs.1640/-. The stock is likely to give compounded annual returns of over 26% over a period of 5-10 years. Lot of value unlocking is expected in the coming years.

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The likely price range for 2008-2009 is Rs. 1640/- to 2600/-.

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It is likely to be with in Rs.2200/- to 3200/- in 2009-2010.

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The stock is expected to be in Rs.15,000/- to 22,000/- during the year 2017-18.

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Review of current market situation:

2008-10-11T16:27:00.005+05:30

The stock markets, world wide are going through one of the worst crisis in the last 25 years. At least we have not seen such a turmoil in the Indian stock market in the las 25 years. Such market conditions are extreme and exceptional in nature and happen once in life time. Our advise to our esteemed readers is to stay invested for long term and do not panic in the short term. If you have noticed we have been recommending fundamentally strong business which have sustainable long term competitive advantage and, therefore,should be held for at least 10 years to generate wealth. Markets in the short term periods are speculative in nature but are slave of earnings in the long term periods.The scripts that we have been covering in our writings are very very strong businesses and have become more attractive after the substantial drop in prices. Full value of these business will be generated over a period spanning 5- 10 years. Therefore, we advice our readers to keep on adding these scripts in small lots or sips (SIP) or else wait for the market to stabilise at a certain level and then start buying. The problem is that the market bottoms cannot be predicted nor caught. When the markets recover they just do it in few sessions. Therefore, we recommend that the buying should be an ongoing process.

The current market conditions are a once in life time opportunity to buy quality stocks at such a throw away prices and one should not miss it. we can make a fortune after a year or so.

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Our bench mark returns of at least 26% p.a compounded over a period of at least 10 years is now over 30%-35% p.a. after the substaitial fall in markets. Any investment made now in our scripts shall generate returns of over 30-35% p.a on annual compounded basis and the returns over short terms of 1-2 years could be as high as 50-100%.

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India's Nuclear Power potential.

2008-10-06T10:39:00.006+05:30

India's power sector's mega picture is becoming bigger and bigger day by day. India has the potential to generate at least 50,000 to 60,000 MW of Nuclear power over the next 25 years. This will need an investment of over $100 billion. Out of this,at least a sum of Rs.2,00,000 Crore investment is expected in Nuclear Power Generation sector in next 15 years.

Nuke Deal has been cleared now, and as per Planning Commission, the deal will enable India to set up capacity of 15,960 MW by 2017 taking total capacity to around 20,000 MW.

As per estimates, around 200 medium to small companies are expected to get into the act as ancillary producers with big companies.

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SIP-India Glycols Ltd.

2008-10-06T10:30:00.006+05:30

We have been buying "India Glycols Ltd." under SIP and let us make, today the 6.10.08, our fifth investment of Rs.4958/-at today's low price of Rs.134/- per share for 37 shares. Now we will have a total of 125 shares @ Rs.201.43 share (Total investment of Rs. 25178.64/- for 125 shares till date).
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Up date on power sector:

2008-10-01T08:17:00.010+05:30

Total installed capacity of India as on 30.07.08 is as follows:

Coal- 77,198 MW-53.3%
Gas- 14,716 MW-10.5%
oil- 1,199 MW-0.9%
Hydro- 36,158 MW -24.7%
Nuclear- 4,120 MW-2.9%
Renewable- 12194 MW-7.7%
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Total- 1,45,588 MW
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There is a potential to add any thing between 10,000 MW to 30,000 MW of wind power in the country.

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A Gujarat based Co. M/s Gujarat Fluorochemicals Ltd. has decided to enter into this sector in a big way.

It is quoting at around Rs.150/- and is close to its yearly low of Rs.149/- and well below its intrinsic worth of Rs.320/- to 360/-. The stock is likely to give a compounded return of over 30-40% p.a over a period of next three years, where in the expected price range for 2008-09 is Rs.140-250/- and for 2009-2010 is Rs. 200/- to 350/- and for 2010-2011 is Rs.300/- to 400/-.

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It is the largest producer of refrigerant gases in India and also amongst the lowest cost producers in the world and exports 90% of its production to more than 75 countries across the world. It plans to establish wind power farms across Maharashtra, Rajasthan and Gujarat.

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Review: Tata Metaliks Ltd.

2008-09-24T13:30:00.000+05:30

The co. is the largest producer of foundry grade pig iron in india.It has recently entered into branded automotive castigs business and also into ductile pipe manufacturing in colleboration eith the japanese co.It expects a turn over of over Rs.2000 Cr. by 2010. The company's long term strategy is to be a complete solution provider in this business and produce more and more branded products.We hve been discussing about the co.in our earlier articles.

It is currently quoting at around Rs.125/-to 130/- and very much below its intrinsic worth of Rs.320/- to 380/- and a very close to its yearly low of Rs.108/-.

From the current levels the stock is likely to give compounded annual returns of over 30-40% for the next three years.In addition, it has an annual dividend yield of over 5.5%.

Our expected price range for 2008-09 is Rs.115/- to 190/- to 260/- and for 2010-2011 is Rs.250/- to 380/-.

BHEL to hike manufacturing capacity to 20,000 MW

2008-09-18T09:13:00.006+05:30

In our article dt.16.6.08 we had stated that the current power equipment production capacity is a major constraints for achieving the gingantic power generation capacity addition of @ 35000 MW per annum and also a big challenge and it needed to be scaled up to 35000 MW per annum immediately to achieve the terminal generating capacity of 9,62,200 MW by 2032. It is hartening to read recent news that BHEL has decided to enhance it production capacity to 20,000 MW instead of 15,000 MW.

To achieve this production capacity by 2011, BHEL needs to grow 2 to 3 times bigger in next three years from current production capacity of 7500-10,000 MW. It will require extraordinary efforts in actually achieving this capacity.

The news item is reproduced below:

NEW DELHI: Bharat Heavy Electricals on Wednesday said it will enhance its manufacturing capacity to 20,000 MW in three years from the current 10,000 MW. “BHEL will increase its manufacturing capacity from the present 10,000 MW to 20,000 MW by the year 2011,'' a company statement said.

The company expects to reach the 15,000 MW manufacturing capacity mark by this year-end. Besides capacity augmentation of existing products, other major areas of investment include facilities for higher rating nuclear sets, 765 kV transformers and other associated transmission equipment. “Attention is also being given to rebuild and retrofit existing facilities to enhance their life, accuracy and productivity through additional investment,'' said Mr K Ravi Kumar, CMD, BHEL.

On the partnership front, he said the company entered into a MoU with Tamil Nadu Electricity Board for forming a joint venture to set up a 2x800 MW supercritical thermal power project. A MoU was signed with MMTC for enhancing export of power plant equip ment and projects leveraging counter trade and bulk buying, Kumar said. Another MoU was also signed with NTPC to form a joint venture for jointly executing EPC projects and power equipment manufacturing, he added.

BHEL secured the highest-ever orders worth Rs 50,270 cr in 2007-08 and has an order book position of over Rs 85,000 cr. The company's turnover reached Rs 21,401 cr, registering a growth of 14.2 per cent and net profit soared 19 per cent over the previou s year's to Rs 2,859 cr. - PTI

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Review: Rallis India Ltd.

2008-09-17T16:33:00.003+05:30

In our article dt. 10.8.09, we had recommended to book partial profits in the script at Rs. 520/- and enter again if the price falls. Subsequently the stock went up to Rs. 600/-. It is now quoting around Rs.446/- as on 17.9.08. It is likely to consolidate around Rs. 410/- to 450/- range.

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One can enter again around this price now.

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It is quoting well below its intrinsic worth of Rs. 720/- to 1200/- and likely to give compounded returns of over 26% p.a. for the next 10 years.

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It has also entered into strategic long term alliances with research based MNC agrochem companies for bringing in new molecules and new formulation technologies for commercialization in India. Rallis has 15% stake in Pharma and agrochem contract research firm Advinus Therapeutics-Bangalore (Formerly R&D division of Rallis) which can create great value for Rallis.Rallis is having surplus assets, value of which is maybe equivalent or more than its market capitalization.

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Power Capacity addition during 2007-2012.

2008-09-15T09:13:00.005+05:30

In our article dt. 16.6.08 we had stated that GOI needs to add approx. 1,17,802 MW instead of 78577 MW planned during 11th five year plan period of 2007-12. It is heartening to read recent announcement of GOI that this figure has now being revised to 90,000 MW. News paper report is reproduced below.

NEW DELHI: 11.9.08.

The government today revised its target of power capacity addition to 90,000 MW in the 11th five-year plan (2007-12), from earlier estimate of 78,577 MW. "By the year 2012, we will add 90,000 MW of power," Power Minister Sushilkumar Shinde told reporters here.

However, this figure is still very far from our estimates of approx. 1,17,802 MW.

One Mid CAP Stock one can add to the portfolio for long term investment:

2008-09-13T09:20:00.008+05:30

Jindal Saw Ltd: The company is in the business of manufacturing Seamless Pipes for oil sector, and has recently entered into business of water,urban,shipping and rail Infrastructure,power generation, fabrication of shipyards,Ships & Railway wagons. Co.'s top line is expected to grow by approx. three to four times to Rs.27,000/- Cr. by 2012 from the current level of Rs. 7000/- Cr. The co. has recently increased its seamless pipes plant capacity to 250,000 tons from 80,000 tons. To feed this plant its plans to put up a steel plant of 300,000 tons capacity by 2009-10.

This is another stock which is likely to give a compounded annual return of over 26% for the next 10 years period. It has already risen from its yearly low of Rs. 450/- to the current level. In the falling market it has risen by about Rs. 100/- in the last 15-20 days. It is presently quoting at Rs. 619/- as on 12.9.08 and is well below its intrinsic worth of Rs. 2000/- to 2500/-.

Likely price range in 2008-09 is between Rs. 500/- to Rs. 1500/-.

Price range expected for 2011-12 is Rs. 2000/- to 3000/-.

Price range expected for 2017-2018 is Rs 5500/- to 8500/-

Review of a small cap stock being invested under Systematic Investment Plan (SIP):

2008-09-06T09:56:00.025+05:30

We had started investing Rs 5000/- approx. in "India Glycols Ltd." under SIP from 7.6.08 onwards on a monthly basis around 6th of every month. Till August'08 we have made three purchases as below:

1) 07.06.08: Let us expand this concept further through a real life example. Let us select a good growth stock first, like India Glycols Ltd. Its closing price as on 6.6.08 is Rs.280/-. Let us invest approx. Rs. 5000/- per month in this stock on 6th of every month. Let us buy 18 shares of India Glycols Ltd. on 6.6.08 @ s.280/- for a total price of Rs.5040. 2) 05.07.08:Let us buy now 22 shares of India Glycols Ltd. on 4.7.08 @ 232.50 for a total sum of Rs. 5115.Now, as on 5.7.08, we will have 18+22=40 shares @ 253.875 per share.3) 6.08.08:Let us buy 23 shares of India Glycols @ Rs. 217/- on 6.8.08 for a total sum of Rs. 4991/-.Now as on 6.8.08, we will have 18+22+23=63 shares @ 240.41.

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4) 6.9.08: Now, let us make our 4th purchase of 25 shares of India Glycols Ltd.@ Rs. 203/- as on 5.9.08 for a total consideration of Rs.5075/-. Our average price for 63+25=88 shares is Rs. 229.78.

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Our first observation of SIP is that ever since we started buying this stock it has been falling, therefore, no of shares that we are able to buy every month for about Rs.5000/- is increasing and our 2nd observation is that the average purchase price has gone down to Rs. 229.78. We, therefor, are able to average out the purchase price from a peak of Rs.280/- to Rs.229.78.

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Our expected price range for this stock for the year 2008-10 is between Rs. 200/- to 550/- to 900/- and for 2017-2018 is Rs. 2500/- to 3500/-. Stock is ruling at yearly lowest price of Rs. 203/- and expected book value of Rs. 234/- and substantially below its intrinsic worth of approx. Rs.750/-. Investment in the stock is likely to give exponential returns to the tune of 15-20 times in next 10 years time. This is one of our most preferred stocks for very long term investment which is likely to give compounded annual return of 30-35% p.a.over the next 10 years.

What Interest Rate or return on investment to expect ?:

2008-08-30T15:10:00.004+05:30

Now let us take last and the most important variable in the rule 72 formula. The “Interest Rate” or the return that can be generated from investments under different options: First, what are the options available in order of diminishing returns?

1. Direct investment in equity shares: One can expect returns in excess of 26% p.a. over a

period of >10 years in good company stocks.

2. Investment in selected mutual funds: Can expect returns of > 20% p.a. over a period of

>10 years in good funds.

3. Investment in a Company fixed deposits: Can expect returns of over 10-11% in good

companies for 1-3 years.

4. Investment in bank’s fixed deposits: Can give returns of 8-9% p.a for 3 years or more.

Our endeavor has been to look for an investment options which can be achieved over a period of 10 years or more with reasonable risk without losing our principal amount. We have, therefore, bench marked “Interest rate of at least 26% p.a.” We are, therefore, discussing in our writings only those options which are likely to generate compounded returns of 26% p.a. or more with reasonably high level of security and surety that our capital will not erode during the investment period.

Small cap stock one must invest for long term:

2008-08-29T14:17:00.013+05:30

Pidilite Industries ltd.:

M.P as on 29.8.08 is Rs. 139/-. Current EPS is Rs.9/- which is likely to grow @ 20% p.a. for the next 10 years.

The stock has given compound return of over 40% p.a. since its IPO in 1994.

The expected M.P in 2009-2010 is Rs.210/- to 260/- and in 2011-2012 is Rs.320/- to 380/-.

Expected price range in 2017-18 is Rs. 1000/- -1400/-. The stock is expected to give compounded returns of over 26% p.a.

Currently consolidating around Rs. 135/- to 140/-. Likely to move up to Rs. 150/- to 160/- range in the near term. Fairly priced around its intrinsic worth of Rs. 130/--to 140/- and also yearly low of Rs.125/-.

The company operates in niche area of speciality chemicals for construction Industry, Industrial sealants, branded consumer and bazaar products include paints, adhesives, waterproofing coatings, bioshield -anti-bacterial coatings and art material for kids. Fevicol,Fevikwik, Fevicryl, M-Seal, Roff, Dr.Fixit, Steelgrip, Fevi Stik, Pidifix and Pidiseal are its famous brands. Recently started manufacturing Heat shield -Heat reducing exterior coatings.

The company has strong in-house R&D facilities and its products are far superior than its competitors. In the recent past has acquired many companies outside India which are likely to give good returns in the near future.

Harness the Power of Compounding

2008-08-23T09:38:00.004+05:30

23.8.08:

Time as an investment ally:

Compounding is a wonder tool that lets you make the most of small investments made over long periods of time to accumulate phenomenal wealth. It works best if you start investing early, and leave the money alone. Compounding is, in fact, the single most important reason for you to start investing right now. Every day you are invested is a day that your money is working for you, helping to ensure a financially secure and stable future.
Invest regularly:

Probably the most important thing you need to know about building wealth is the power of making regular periodic investments and reinvesting rather than spending the profits.

The results you’d get following this discipline are surprising. Say you start with nothing, but decide to put Rs 1000/- of your income into an investment account every year or still better, every month, and you commit to letting your money ride. That means you can’t take withdraw any funds until you’ve reached your long-term goal.

Now let us take another variable in the rule 72 formula,

The principal sum:

We have seen in our previous article how a one time investment of Rs. 1000/- invested @26% p.a. compound rate of interest at a time when you are 20 years old can make you crore pati ( Rs.1.0347 Cr.) by the time you are 60.

Now what happens when you invest Rs. 1000/- every year @26% every year ever since you are 20 years of age till you are 60?

Can you imagine receiving little more than Rs one crore every year after attaining the age of 60 for the next 60 years non stop! Just think it over.

Now let us expand this concept to saving of Rs.1000/- per month @ 26% p.a. beginning at the age of 20 till you are 60.

You will receive over Rs one crore every month beginning the 61’st year of you life for the next 60 years non stop without having to go to office to work for some body. You can have all the time and fun in the world and can do things you always wanted to do.

Discipline Required:

The hardest part of implementing this strategy is making the regular monthly investments. It’s easy to procrastinate adding to your account if the market is down or if you could use the cash for something else.

The best way to make sure that the regular investments happen is to set up an account with a broker or mutual fund that automatically deducts a fixed amount from your bank account every month.

While you could do it with stocks, the easiest way to implement the strategy is with a portfolio of well-chosen mutual funds that are likely to produce returns at least even with the market, and if you’re lucky, beat the market. A little goes a long way in that department.

Moral of the story is to Invest regularly:

Develop the habit of adding to your mutual fund account on a regular basis, perhaps monthly. You may be able to have this done automatically by setting up a systematic investment plan with your mutual fund. By investing regularly you take advantage of a strategy called rupee-cost averaging. Regular investing, however, does not ensure a profit or protect against loss in declining markets but markets are fairly predictable in the long run.

The overall market, at least as measured by the BSE index, returned over 26%, on average, annually over the past 50 years.

Warren Buffett, the richest man in the world today, has created all the wealth from investments in stocks, has generated a return of apprx. 26% compounded on his initial investment of $ 7.6 per share in Berkshire Hathaway and is worth ove $ 1,50,000/- per share today.

Review of a small cap stock worth investing for long term.

2008-08-21T09:18:00.006+05:30

SKF India Ltd: Current Market Price as on 21.8.08 is Rs. 218/-.Recommended in our columns on 30.5.08 at Rs 264/-. The company is into manufacturing of bearings for automobiles, power transmission equipments for power, steel & cement industry, and has recentently entered into high growth niche areas such bearings for Wind Mills, aerospace & marine Industry and large size bearings where the margins are higher. Likely to double its turnover every 3.5 to 4 years , i.e., a growth of over 20% p.a. Likely EPS for f/y 2011 is Rs. 50/- to Rs. 60/-. Currently ruling well below its intrinsic worth of Rs. 401/- - 417/- and close to its recent low of Rs.202/-. Consolidating in the range 215-225/-. Likely to move up to next higher range of Rs.240/- to 280/- in the near term. This stock is likely to give compounded return of over 26% p.a for the next 10 years.

Expected price range for 2008-09 is Rs. 210/- to 300/-.

Expected price range for 2011-2012 is Rs. 750/- to 930/-.

Expected price range for 2017-2018 is Rs. 2000/- to 2200/-.

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Small cap stock worth investing for long term.

2008-08-16T17:56:00.010+05:30

Indraprastha Gas Ltd:

Sole supplier of CNG, PNG and R-LNG in Delhi and other NCR cities. Current penetration is very low. Expanding fast to Faridabad, Sonepat, panipat, Noida and Ghaziabad. Risk free, no obsolescence and recession free business model. Ever expanding consumption and Industrial and residential customer base.This stock can be held for long term. It is ruling close to its yearly low of Rs. 101/-.It also offers an annual dividend yield of almost 4% on the current price of Rs.113/-. The stock is currently ruling below its intrinsic worth which is around Rs.135/- to 155/-. This stock is likely to give compounded annual rate of return of apprx.26% -30% p.a for the next ten years privided there is no change in the business model of the company.

Current market price as on 14.8.08, Rs. 113/-. F/y 2007-08 EPS is approx.Rs 12.5. EPS is expected to move up to Rs.16/- to Rs.17/- by 2010.

Expected market price range in the year 2009-10 is Rs. 200/- to 250/-.

Expected price range in the year 2010-2011 is Rs. 280/- to 325/-.

Expected price range during the year 2017-2018 is Rs.900/- to 1200/-.
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THE Hindu Business Line

IGL to invest Rs 500 cr, add 50 outlets:

New Delhi, Sept. 5, 2008

Indraprastha Gas Ltd plans to invest Rs 500 crore over next two years to expand its retail network. The company also plans to add 50 new outlets before the 2010 Commomwealth Games.

The IGL Managing Director, Mr Rajesh Vedvyas, told newspersons “We would be investing a total of Rs 250 crore this fiscal, with an investment of Rs 10 crore earmarked a station. All would be through internal accruals.”
Currently, IGL gets a little less than 2 million standard cubic metres a day (mmscmd) of gas at the administered price of $1.9 every million British thermal unit and has allocation for an additional 0.7 mmscmd.

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2008-08-16T17:36:00.007+05:30

Let us expand the concept of compounding and the rule of 72 further:

If we observe the rule closely, we can see that it has only three variables, i.e.,

1. Time period in years;
2. Interest rate or the rate of return on the investment and
3. The Principal sum invested.

Now let us see how we can exploit this rule to our advantage for the purpose of wealth accumulation.

Let us first fix the interest rate at 26% and see what happens to our one time investment of Rs.1000/- if invested for a period of say 10, 20, 30 and 40 years. Then,

Value of Rs 1000/- , after 10 years will be Rs.10, 000/-
Value of Rs 1000/- , after 20 years will be Rs.1, 02,000/-
Value of Rs 1000/- , after 30 years will be Rs.10, 26,000/-
Value of Rs 1000/- , after 40 years will be Rs.1, 03, 47,000/-

Moral of the story is:

1. The longer the time period the better: Compounding rewards disciplined investing and works best over long tenures. In the above example, the first 30 years yield just Rs 10, 25,000/- lakh. The last 10 years show the money multiplier effect of the power of compounding yielding a massive Rs 93,21,000/-. The longer you leave your money untouched, the faster and bigger it grows. For instance, stretching the above investment pattern to 40 years will give you Rs 1.0346 Cr.

2. The earlier, the better: The earlier you begin investing, the greater your gain from the merits of compounding.

For instance, if you begin an investment plan at age 20 and invest Rs 1,000/- @ 26% p.a.until you’re 60, you’ll get Rs 1.03.47/- Cr on a total investment of Rs 1,000/-.

On the other hand, your colleague who begins saving at age 30 and invests Rs 1,000/- will only get Rs 10.26 lakh on a total investment of Rs 1000/-.

That is, by allowing your money to compound longer, you can be richer than your colleague by Rs 93.21 lakh, although both of you saved the same amount of Rs 1000/-.

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Thus, time is one big factor in accumulating the wealth and which is controllable and in the hands of every investor. One has to start investing from the day one when he starts earning his or her first salary cheque.

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The Magical Power of Compounding:

2008-08-12T10:01:00.005+05:30

It is your most powerful tool for creating financial independence by accumulating wealth slowly, safely and surely.

There are no short cuts to riches. But every investor, however small his savings is, can travel on, safely and surely in a vehicle, on a road that lets him accumulate wealth over time is run by a powerful engine called “compounding”.

Compounding is a simple concept that offers astounding returns. if you park your money in an investment with a given return, and then reinvest those earnings as you receive them, your investment grows exponentially over time. With simple interest, you earn interest only on the principal (that is, the amount you initially invested); with compounding, you earn interest on the principal and additionally earn interest on the interest. In other words, it’s a way of making your money work harder for you, and is perhaps the most powerful tool that an average investor can use to plan for many of life’s financial goals, including retirement.

Say we invest Rs 100/- @ 10% p.a. for three years. Then
After one year we have Rs. 100/- + 10% of Rs.100/- = Rs.110/-

After two years we have Rs.110/- +0.1*110= Rs.121/- and

After three years we have Rs.121/- +0.1*121 = Rs.133.1

i.e., average rate of return of (133.1-100)/3 = 33.1/3=11.03% instead of 10% simple rate of interest or approx. 1.03 % p.a higher return if invested on compounding basis.

HOW LONG TO DOUBLE YOUR MONEY?

The Rule of 72 tells you how long it will take.

If you study the compound-interest table for any rate of interest, you will find that by multiplying the number of years at which Rs 1.00 becomes Rs 2.00 by that rate of interest, the result is always approximately 72. (If you were to calculate the point mathematically using years and fractions of years, it would be precisely 72.)Knowing this trick, called the Rule of 72, you can quickly estimate the number of years it will take to double an investment -- or the rate at which your investment must grow in order to double within a stated number of years.To find the number of years, simply divide 72 by the rate. Or, to find the rate at which your investment must grow in order to double in a specified number of years, divide 72 by the number of years.

72
---------------------- =No of years
(Interest Rate)

or

72
----------------- = Interest Rate
(No of years)

Thus, if an investment is growing at a rate of 9% a year, it will double in value in 8 years.

Similarly, if you want to double your money in 4 years, you must invest it at 18%.

If you want your money to double in 3 years, you must invest it at 24%.

Similarly at 36% your money will double in 2 years.

Review of small cap recommendations

2008-08-10T11:17:00.008+05:30

10.08.2008:
Rallis India: Recommended @Rs. 320/- on 19.3.08. Price as on 08.08.2008 is Rs. 520/-, i.e., a gain of 62.5% in 5 months. One may book partial profit at this price and enter again if the price falls.

Godawari Power and ispat Ltd: Recommended @ 161/- on 19.3.08. Price as on 08.08.2008 is Rs.217/- i.e., a gain of 35% in 5 months. Accumulate more at around 200-220/-.

Tata Metalik: Recommended price Rs. 155/- as on 25.4.08. Buy more at around current price of Rs. 135/- ( as on 8.8.08). The stock is consolidating at around this price and is not going below this level. Once the accumulation phase is over it is likely to stablise at around Rs. 155/- to 175/- zone.

India Glycols: Recommended at around Rs. 237/- as on 19.3.08. The stock subsequently went up to Rs. 388/- in May'08 i.e., a price appreciation of over 64 %. Currently moving in the Rs. 215- 230/- range. Likely to move up in the range of Rs. 250/- to 350/- price range in the near term. Long term price target of Rs. 500/- and then Rs. 800/- in tact over a period of next one and a half to two years.

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Merchant power plants

2008-07-12T07:39:00.000+05:30

12.07.08:

Govt. of India plans to add 10,000 MW through merchant plants:

The power ministry has sought private sector participation in setting up merchant power plants all over the country with aggregate capacity of around 10,000 MW. Power Finance Corporation Ltd, the nodal agency, has invited expressions of interest from potential developers for establishing merchant power plants of capacity up to 1,000 MW. These prospective entities will develop, own and operate these power plants with a capacity of at least 250 MW.

The merchant power plant initiative is the next major step being taken by the power ministry to meet the growing power demand in the country.

Unlike traditional utilities, Merchant Power Plants compete for customers and absorb the full market risk. There are no guarantees that they will have a minimum off-take of their output. They must respond to market needs. Typically the risk of a Merchant Power Plant is carried on the balance sheet of the promoter. Further, these plants don't need any prior sanction from regulatory commissions to fix electricity tariffs as in the case of mega projects. This also means that these projects are not entitled for benefits accruing to mega power projects.Merchant power plants can provide the additional generating reserves that India needs now and will need in the future. They are a modern, market-based answer – at least in part – to energy challenges faced by the country.

Merchant power plants are a product of the restructuring of the electricity industry. In the past, utilities owned their own generating facilities or contracted with an independent power producer (IPP) to buy electrical output on a long-term basis. Merchant power plants fill different niches in the market; some provide steady supplies to a power grid, while others fire up only when demand is highest and meet peak loads. Merchant power plants operating competitively help assure that power is produced with efficiency and supplied to locations where it is needed most.

Considering the redundancies that are being provided in the grid to promote open access in transmission and open access in distribution in coming years, it would be reasonable to expect that merchant power plants each of capacities of 1,000 MW and below could be accommodated for being able to access transmission availability for wheeling of power to customers which are generally not pre-determined. By the year 2012, it is expected that inter-regional transmission capacity in the National Grid would rise to about 37,000 MW. Besides, intra-transmission capacities are also being augmented with required redundancies to take care of such short-term needs of transmission of power across the country from one region to another and within the region. Merchant Power Plants would be expected to have dedicated lines upto the nearest regional/national grid system.

The Electricity Act 2003 mandates non-discriminatory open access in transmission to generating companies, distribution licensees and consumers and also open access in distribution for consumers with loads above 1 mw. These provisions regarding non-discriminatory open access in transmission and distribution will also facilitate the emergence of merchant power plants

The power ministry has assured coal linkages for these power plants and for plants in the range of 500-1,000 mw capacity. The ministry might even allot captive coal blocks.Merchant Power Plants.
(a) Linkage to the plant upto a capacity of 1,000 MW; and
(b) Captive coal block allotment for plants in the range of 500 – 1000 MW capacity.

Ministry of Power in consultation with Ministry of Coal has identified 15 Coal Blocks with estimated reserves of about 3.6 Billion tones for allocation to merchant and captive power plants through the screening committee route. Out of these blocks, coal blocks of aggregate reserves of about 2.4 Billion tonnes areexpected to be considered for merchant power plants. To ensure transparent and timely development of these projects the following principles would need to be adopted:

It would be essential that certain normative criteria are laid down for eligibility for coal block allotment, particularly to merchant plants. These criteria could relate to net worth of the parent company on whose balance sheet the merchant power plant is proposed to be set up, its internal resource generation and annual turn over. Some of the suggested financial parameters on the lines of the Ultra Mega Power Projects could be

1. Internal Resource Generation: Rs. 0.30 Crore per MW equivalent of coal Block capacity applied for, computed as five times the maximum internal resources generated during any of the last five years business operations;

2. Networth: Rs. 0.50 Crore per MW equivalent of coal Block capacity applied for. The above computation shall be derived from any of the past three years annual accounts.

3. Annual Turnover: Rs. 1.20 Crore per MW equivalent of coal Block capacity applied for. The above computation shall be derived from any of the past three years annual accounts.

The agencies being allotted the coal blocks, may also be required to put in place bank guarantee of a reasonable amount which should be liable to be encashed if important milestones for development of coal mines are not achieved. The amount should be adequate enough to discourage agencies which are not serious enough for development of coal mines and power projects.

The inter-mediate milestones may include not only in relation to development of coal mines, but also with reference to the power projects, such as award of EPC contracts, commencement of construction etc.

The Central Electricity Authority is the technical partner which will coordinate preparation of the brief feasibility reports.

Indian Power Sector-The "Mega Picture"

2008-06-16T08:54:00.002+05:30

The other day, during a casual chat, one of my colleagues pointed out that, in early eighties, a 1000 MW (500 X 2) Thermal Power Project award by Indian Govt. to a UK firm had the distinction of reviving the then ailing British economy. An eye opener, at least to me, that an investment of Just Rs. 2000-2500 Cr can have such a far reaching consequences in the global economy. Any way, there can be no debate on this issue because these are some one’s personal views. But, think for a moment, if this was true. Then, the “Mega Picture” which I am going to share with you shortly can change the face of world economy in the near future. Growth rates of 3-3.5 % could become a thing of past and could put the world economy into fast track with growth rates of more than 4-4.5 % on a sustainable basis. Now some facts and figures to ponder upon.

India’s current power generation capacity is 141080 MW as on 31.01.08. The electricity demand supply imbalance is about 9 % and the peak shortage is about 16%. It means, India immediately needs about 21, 000 MW to meet its current peak shortages.

As per Integrated Energy policy, to deliver a sustained growth of 8% p.a. in GDP through 2031, India would, in the very least need to grow its electricity supply to 3,00,000 MW by the year 2017; to 4,10,000 MW by the year 2022 and to 9,62,200 MW by the year 2032.

In the short term, if the GDP is projected to grow at the rate of 8%-10% p.a on a sustainable basis, then the growth rate of demand for power is generally higher than the growth rate of GDP. For the coming decade the elasticity ratio is projected to be about 1.2. In this situation the growth in power sector is required to be about 11% on an average. Now let us project the required capacity addition for the next 5 years, i.e., upto 2012.

Current peak shortages + CAGR of 11 % for next 5 years= Net capacity addition required.

21,000 + 1, 41,080*1.685 = 21,000 + 96640 = 1, 17,802 MW.
i.e., approx. 23,560 MW per year up to the terminal year 2012.

The investment required will be Rs.5, 89,010 Cr @ Rs. 5 Cr per MW. Add another Rs. 5, 89,010 Cr. To install matching transmission system, then the total investment required is approx. Rs. 11, 78,020 Cr.

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Now, the planned Capacity addition for the period 2007-12.

Central Sector- 39865 MW

State Sector- 27952 MW

Private Sector- 10760 MW

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Total Planned addition- 78577 MW

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Planned Short fall - 39225 MW? Why and by whom? How to build this planned short fall? Is any one willing to come forward and build this capacity in next 5 years ?

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Indian Govt. has planned about 9 Ultra Mega Power Plants of about 4000 MW each. But will they be suficient to add 78577 MW in the next 5 years? In the past 61 years we have added only 2300 MW per annum @ CAGR of about 8 %. This was scaled up to 4300 MW per annum in the last 5 years.

Now the required run rate for the period 2007-2012 is 24000 MW per annum! and beyond 2012 to 2032 it is 35000 MW per annum.

A gigantic task by any means!. Any takers!.

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How to achieve this run rate? What are the options available to us? Can any one brief as to how to achieve this gigantic run rate?

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17.06.08:

The sector will need an investment of over Rs. 2,40,000/- to 3,50,000 Cr. per annum for the next 24 years to build 8,20,000 MW Capacity.

In addition, it will also need at least 7,00,000 trained personnel to man this gigantic capacity!.

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18.06.2008

Challenges:

Can the average size of each Ultra Mega Power Project be scaled up to 25,000 MW each or even more?

Can the average size of each unit be scaled up to 1200 MW or even more? In case of Nuclear power, unit size of upto 1600 MW each is available.

Production capacity of equipment manufacturing is also to be scaled up to 35,000 MW or more per annum.

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Till date there is only one Indian Pvt. co., Reliance Energy, re- named as Reliance infrastructure, who has decided to think big and put up thermal generating capacity of over 20,000 MW in next 5-6 years time, which will not be adequate to meet even one year's capacity addition. Another co., Tata Power, who has decided to put up India's largest unit size of 800 MW in near future. Still not adequate to meet gigantic targets.

India's largest equipment manufacturing Public sector Co., BHEL , has production capacity of about 7500 MW only and will be enhancing it to 15,000 MW by 2009. Another Private sector Co. L & T is building up production capacity of 4000 MW per annum. A far cry from what is required !.

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Indian power sector has entered a high growth phase and is posing great challenges to planners, EPC firms and also to the manufacturers of power equipments world wide to accept these challenges and make big gains.

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Time has come to think big and act fast or else the run rate will keep on climbing and will become un-achievable.

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Systematic Investment Plan (SIP)

2008-06-05T09:21:00.000+05:30

04.06.08

Conceptually SIP means investing a fixed sum of money at regular intervals irrespective of the market conditions. Timing the market is extremely difficult as no one can predict the market conditions, both in the short term as well as in the long term. SIP, therefore, helps in rupee averageing of day to day variations in market price of a particular script. Let us take an example and understand the concept by investing a sum of Rs.3600/- on 10th of every month.

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1st month bought 360 shares of A Co. @ Rs.10/- per share.

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2nd month bought 300 shares of A Co. @ Rs. 12 per share.

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3 rd month bought 277 shares @ Rs. 13/- per share.

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4th month bought 257 shares @ Rs.14/- per share.

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5th month bought 277 shares @ Rs.13/- per share.

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6th month bought 300 shares @ Rs. 12/- per share.

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7th month bought 327 shares @ Rs. 11/- per share.

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8th month bought 277 shares @ Rs. 13/- per share.

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9th month bought 240 shares @ Rs. 15/- per share.

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10 th month bought 225 share @ Rs. 16/- per share.

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11th month bought 240 shares @ Rs. 15/- per share.

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12 th month bought 225 shares @ Rs. 16/- per share.

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The average of

360+300+277+257+277+300+327+277+240+225+240+225=3350 shares is Rs. 13.1 as against the market price of Rs. 16/- at the end of 12 months. Therefore, the total investment of Rs. 43200/- is worth Rs. 52883/- giving an average return of 22%.

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07.06.08:

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Let us expand this concept further through a real life example. Let us select a good growth stock first, like India Glycols Ltd. Its closing price as on 6.6.08 is Rs.280/-. Let us invest approx. Rs. 5000/- per month in this stock on 6th of every month.

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Let us buy 18 shares of India Glycols Ltd. on 6.6.08 @ Rs.280/- for a total price of Rs.5040.

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05.07.08:

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Let us buy now 22 shares of India Glycols Ltd. on 4.7.08 @ 232.50 for a total sum of Rs. 5115.

Now, as on 5.7.08, we will have 18+22=40 shares @ 253.875 per share.

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6.08.08

Let us buy 23 shares of India Glycols @ Rs. 217/- on 6.8.08 for a total sum of Rs. 4991/-

Now as on 6.8.08, we will have 18+22+23=63 shares @ 240.41.

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Small cap stocks

2008-05-30T14:47:00.000+05:30

30.5.08:

Listed below are some small cap stocks which are undervalued and are likely to give substantial gains over aperiod of next two years:

Kesoram Industries: A B.K. Birla group company engaged in the business of Cement, Tyres, Rayon and pipes. Financial year 2007-08 EPS is Rs. 84/- which is likely to go up to Rs. 100/- by 2009-10. Current MP as on 30.5.08 is Rs. 330/-. The projected price is Rs. 600/- to 700/-.

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SKF India: The Co. is manufacturing automobile & Industrial bearings, and also condition monitoring equipment. Recently entered into wind turbine bearing and also large Industrial bearings.It is likely to double its turn over by 2011. Current EPS for 2007 is Rs.30/- which is likely to go upto Rs. 50 by 2011. Current MP is Rs. 264/- as on 30.5.08. The projected price is Rs. 700/- -750/-.

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Orient Paper: A Birla group Company manufactures paper, cement and electric fans. recently entered into manufacturing of CFL lamps. Current EPS FOR 2007-08 is Rs.11/- which is likely to go up to Rs. 13-14/- by 2010.

Current MP as on 30.5.08 is Rs 39/-. Projected price is Rs. 70/- to 80/-.

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Molasses Cures & Uses:

2008-05-03T11:39:00.000+05:30

Molasses Cures:
Very recently I have come across a web site wherein people have posted their experiences with the usage of Molasses as a health food having marvelous healing properties.It has been reported that blackstrap molasses cures tumors, fibroid tumors, anxiety, constipation, edema, heart palpitations, anemia, arthritic pain, joint pain, and acne, just to name a few. It has also been reported that molasses turns gray hair back to its original color and is a wonderful skin softener! Read few such experiences below:

"10/17/2007: Maureen (napsac2@yahoo.com) from Portland, ME writes: "I started taking the blackstrap molasses to slow down the white hair growth. I think that has helped to some degree. But, what I have really noticed is my menstrals....much more pleasant. Less painful and not so heavy. What a pleasant surprise. Usually my breasts hurt too...but not this time. I think I will be taking this forever. Now, if my little white hairs go away...well, this would be perfect!!"

"1/18/2008: Patty from Covina, California writes: "When I heard about molasses taking white hair off I could't believe it. But I though it was worth to try. every morning in a 8 glass of water I mix two table spoons of the blackstrap molasses, two table spoon of raw honey, and two table spoon of apple cider and drink it. I have to be honest the taste I don't like very much, but the energy i get from that is tremendous, and not only that but because of the apple cider keeps me away from any type of viruses including flu. This is a great thing I am so glad I learn about it because it been already 5 months since I started taking it and almost all my white hair is gone!!! I will take it for the rest of my life, thanks to my Health book I purchase!!!"
For more details visit the following web site:
http://www.earthclinic.com/Remedies/molasses.html
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What is Molasses:

Molasses or treacle is a thick syrup by-product from the processing of the sugarcane or sugar beet into sugar. (In some parts of the US, molasses also refers to sorghum syrup.) The word molasses comes from the Portuguese word melaço, which comes from mel, the Portuguese word for "honey". The quality of molasses depends on the maturity of the sugar cane or beet, the amount of sugar extracted, and the method of extraction. For more details please visit the following web site:

http://en.wikipedia.org/wiki/Molasses

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Uses of Molasses:

Do you know there are more than 125 uses for Molasses!

Fact & Fiction, judge for yourself!

Find below some of them:

1. Molasses is used by the Potash industry to clean up groundwater.

2. Used in the manufacture of processed tobaccos.

3. Used in beer making.

4. Added to white sugar to make 'brown' sugar.

5. To make licorice candy.

6. Used in cattle feed for taste & nutrition.

7. As a hair tonic - to darken hair.

8. To aid flowering in the growing of marijuana.

9. As an aid to plant growth.

10. As a honey substitute.

11. Mixed with water for easing pain in joints.

12. For upset stomach a mixture of molasses and ginger.

13. For hiccups a mixture of molasses and pepper.

14. To alleviate ear-ache - a mixture of molasses & vinegar.

Want to know more! Click below to read all:

http://www.molasses.ca/site/index.php?id=248

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Industry Status of Sugarcane/Ethanol and

its usage as an automobile fuel:

Some Facts to ponder on:

Brazil is the largest & lowest cost producer and also largest exporter of ethanol in the world where as India is the largest producer of sugar in the world. Both use sugarcane as the feedstock.

In terms of sugarcane production, India and Brazil are almost equally placed.But in India, about 60% of cane is utilized for the production of sugar, about 30% for alternate sweeteners, namely gur and khandsari , and the balance 10% for seeds. Where as in Brazil, out of the total cane available for crushing, 45% goes for sugar production and 55% for the production of ethanol directly from sugarcane juice.

Brazil is considered to have the world's first sustainable biofuels economy and the biofuel industry leader.

Nearly 90% of ethanol is used for fuel. In 2006 Brazil produced 16.3 billion liters which represents 33.3% of the world's total ethanol production and 42% of the world's ethanol used as fuel. Total production is predicted to reach at least 26.4 billion litres for 2008.Brazil’s 30-year-old ethanol fuel program uses cheap sugar cane, mainly bagasse (cane-waste) for process heat and power, and modern equipment, and provides a ~22% ethanol blend used nationwide, plus 100% anhydrous ethanol for five million cars. The Brazilian ethanol program cut 1975–2002 oil imports by a cumulative undiscounted total of US$50 billion.

The car manufacturing industry in Brazil developed full flexible-fuel vehicles (FFFV) that can run on any proportion of gasoline and ethanol. Introduced in the market in 2003, these vehicles became a commercial success and by March 2008, the fleet of FFFVs had reached 5 million vehicles which represents around 10% of Brazil's motor vehicle fleet.The success of FFFVs, together with the mandatory use of E25 blend of gasoline throughout the country, allowed Brazil to get more than 40% of its automobile fuels from sugar cane-based ethanol in 2007.

Due to the lower energy content of ethanol fuel, full flex-fuel vehicles get fewer miles per gallon. Ethanol price has to be between 25-30% cheaper per gallon to reach the break even point. Since 2005, ethanol price has been very competitive without any subsidies,even with gasoline prices kept constant in local currency since mid-2005,at a time when oil was just approaching USD 60 a barrel. The price ratio between gasoline and ethanol fuel has been well above 30% during this period, except during low sugar cane supply between harvests. According to Brazilian producers, ethanol can remain competitive if the price of oil does not fall below USD 30 a barrel.

To know more click on the link below:

http://en.wikipedia.org/wiki/Ethanol_fuel_in_Brazil

What it means to India and Indian economy?

Today the oil is well above USD 135 a barrel. Well! well!,with india producing almost same quantity of sugarcane as Brazil, it opens up exciting opportunities & frountiers for India and Indian enterpreneurs, in particular.

Listed below is one such indian company which has created an unique & highly profitable business model which is sustainable on long term and is based on renewable agri-based feed stock,i.e., sugarcane. It converts molasses, being bought at a price of approx. Rs.2000/- to 3500/-per tonne, into MEG,( an intermediatery product for manufacture of fibre in the textile industry), and sell it at an average price of approx.Rs.54000/- to 60,000/- per tonne. The market price of MEG is dictated by the price of crude oil. The higher the crude oil price, the costiler will be the MEG.

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Investment opportunities in steel & power sector

2008-02-09T14:34:00.000+05:30

THE INVESTMENT IN INDIAN INFRASTRUCTURE INDUSTRY IS EXPECTED TO GROW AT CAG@ OF APPROX। 20% PA FOR THE NEXT 3-5 YEARS.
ALSO, INDIAN CEMENT , STEEL & POWER CONSUMPTION IS EXPECTED TO GROW @ 9-11 % FOR THE NEXT FEW YEARS.
Few top rated mid cap Indian companies worth investing are listed below. All these companies are much below their real worth at a P/E multiples of 3-6 only andare in the middle of heavy capacity additions. Thus, these stocks are expected to give much faster returns through expansion of earnings and also P/E ratios.
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JK LAKSHMI CEMENT :
100/- as on 19.3.2008.
EPS for F/Y 2007-08 is Rs. 38/- which is expected to move up to Rs.75/- in 2011 after the expansion of its 2.7 MT new cement plant is completed.
Projected price as on 30.06.10 is Rs. 300/- to 400/-.
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JK CEMENT:
130/- as on 12.03.2008.
Financial year 2007-08 EPS is Rs.38/-, which is expected to be Rs. 70/- to 80/- by 2011.
Projected price as on 30.06.10 is 400/- To 500/- .
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Birla Corporation Ltd.:
Rs.175/- as on 19.03.2008.
Current F/Y-2007-08 EPS is Rs. 51/- which is expected to reach Rs. 70/- to 80/- two years hence. The script is quoting at just 4 times its current EPS. The company is raising its production capacity to 10 Million Tonnes in next 2-3 years time when the EPS is expected to reach Rs.100/-. Highly undervalued at current prices.
Projected price as on 30.06.10 is Rs.400/- to 500/-.
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Godawari Power and Ispat Ltd.:

Expected EPS @35-38/-FOR 2007-08.
Creating lot of value through subsidiaries and mineral resources.
Rs. 161- as on 19.03.2008
Projected price as on 30.6.10 is Rs. 500/- to 600/-.
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Monnet Ispat & Energy Ltd.:
Strong promoters group in association with Jindal's.
Has added large mineral resourse recently and also going for planned capacity addition just like M/s Jindal Steel year after year.Very similar business Model. Strategic decision to invest more in power sector in future.Trying to buy mineral resources in Indonesia.

Price as on 12.03.2008 is Rs. 465/-.
Projected price as on 30.6.09 is Rs. 700/- to 800/-.
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TATA METALIKS LTD.:

Largest & lowest cost producer of foundary gradePig Iron in India. Entering into production of value added products like ductile pipes in association with Japan. Has become a subsidiay of Tata Steel recently. Progressively scalling up the production by organic as well as inorganic route. Has recently signed up two MOU's with State Govts. for mineral resources and subsequently to set up production facilites there.
EPS for 2007-08 is Rs. 28/-. Expected EPS for 2008-09 is Rs. 35/- to 40/- Projected price range one year forward is Rs.240/- to Rs. 300/-.
Price as on 25.4.08 is Rs. 155/-.
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Investment opportunities in Indian Agrichemicals Industry.

2008-02-08T09:57:00.001+05:30

AgroChemicals Industry In India:
India’s more than Rs 6,000-crore agrochemical industry is the fourth largest in the world, after the US, China and Japan. The sector has been growing at more than 12% a year, while exports, which account for nearly half of the revenue, has been growing at about 25%.- ET-27.12.07.
See below some top notch Indian companies in this business.
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India Glycols Ltd.:
http://www.indiaglycols.com/

Very strong promoter group.

Fully integrated, Robust Recession free Business Model. A very solid growth stock to hold on to for years together and creat wealth for self and family.

First and only company in the world to produce Ethylene Oxide (EO) / Mono Ethylene Glycol (MEG) from renewable agro route based on molasses, since 1989. Leading manufacturers of Glycols, Ethoxylates, Performance Chemicals, Glycol Ethers & Acetates, Guar Gum and Potable Alcohol. Taking steps to de-risk the business model by integrating backward and forward and in the process to exploit the total value chain.

Entering into the business of manufacturing natural active pharmaceutical ingredients (API’s), standardized botanical extracts and spice extracts for the beverage, dietary supplement, functional foods, pharmaceutical and cosmeceutical industries. Have a strategic advantage of being located in Dehradun,India, which is an extremely favorable agro-climatic zone for herbal and plant cultivation in India. Also, have a strong hold over raw material supply through own cultivation in the foothills of the Himalayas and contract cultivation with farmers in the region. This assures availability of a variety of desired raw materials at competitive prices. Proposing to commence production in May 2008.

Progressively expaning capacities. Highly diversified product range. Continously developing new high value derivatives of molasses. Integrating backward to produce molasses in house to derisk price variations in molasses.

Highly diversified product range across more than 15 Industries from Agrochemicals, Automobiles, Oil & Gas,Mining, textile, Paint, Paper to Detergents, Healthcare & Foodprocessing, Personal care and Pharmaceutical. RECESSION FREE PRODUCT PROFILE.

Price Rs.237/- as on 19.03.2008.

Strong buy.

Expected EPS >Rs.80- 110/- for f/y 2008-09.
Expected P/E >10

Projected Price range as on 24.12.09 is Rs. 800/-
to 1000/- .

26.5.08:

F/y-2007-08 turnover is Rs. 1524/- Cr. The net profit is Rs. 178/- Cr and EPS is Rs.64.03/-.

Expected Turnover for f/y 2008-09 is Rs. 2000/- Cr. and expected net profit is Rs. 240/- Cr. The projected EPS is Rs. 85/- to 90/-.

Price as on 26.5.08 is Rs. 315/-.A strong buy at this price.
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Rallis India:

F/Y -2007-08 EPS is Rs. 100/-.
Price as on 19.03.2008 is Rs.320/-
Buy.
A TATA CO. Expected to reenter into Pharma Business.
Projected Price Rs. 600/- to 1000/- as on 24.12.09
Price as on 23.5.08 is Rs. 413/-.
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