CROMPTON GREAVES

CROMPTON GREAVES

For Q1FY12, despite a 6% YoY rise in net sales at Rs.2438 crore, the company reported a 58% fall in net profit at Rs.79 crore. Cost of raw material rose 35%. Contribution from power sector remained poor in the single digit but more sharp was the fall in the consumer sector, which fell from 35% to 2%. The company has blamed it all on the delays in new orders in the domestic market due to a slowdown in project finalisation by customers.International business activity in Middle East was affected by around 5-10%.

More than the poor performance, the market has probably taken other factors  - former CEO SM Trehan selling his entire holding of 1.8 lakh shares during Jun 29-July 1 at an average price of Rs.260/share. And secondly, investors continue to remain miffed with its buy of an aircraft for Rs.270 crore, which is being viewed as an extravagance. The stock has been witnessing a major sell off and for the discerning long term investor, this may be a good level to accumulate. The first half of FY12 could remain tough but second half could start seeing improvement. 

The stock has been under hammer past 3-4 days where there is a probe of insider trading management was unaware of any such thing. there is a big question whether one should bet on this company as the management itself is not bullish and in their start up guidance there was no major steps taken by them.Stock has tumbled down from 240 odd levels nearly has lost 2500 Cr M cap . As the co operations is in Europe , Libya etc and there is again a possibility of Greece Defaulting . Banks have defaulted in payment of loan. Co has failed to get orders + there is a big question mark on the management strategy .  sheer competition , rising input raw material price, another Bailout in Middle East will affect the working .In short term there can be a pull back in stock but it wont be able to sustain for a long time as its investors who are holding this counter for maore than a year have lost 40%.Institutions will not invest as a clear uncertainty. The stock can slip to Rs 165-170 . A challenge is front of the management and regain its past glory.if it breaks the 165 levels then we can see it hitting 150 levels where it can get resistance.IT IS A DEBT FREE COMPANY ...MUST BE A BUY AT EVERY DIP FOR AN INVESTORS WILLING TO HOLD THE STOCK FOR ATLEAST A YEARS AND A HALF. WE COULD BE SEEING AN UPSIDE OF 275-300 AFTER A SPAN OF 18 MONTHS

Southern Petrochemical Industires LTD

Hey! Today we are going to talk about a company which has made a turn around from a loss making company to a profit making one.We see rise in sales... and net profit consists more of income from operations... also noted that there has been a drop in other income but since the company has made profit this year we see a positive EPS as well.

SPIC is a leading name in the field of Fertilizers for more than three decades in India.

ADVISE TO BUY AT CMP 33.45--35.00 AND TARGET 40.00 WITHIN 3 MONTHS.

ANALYSTS  HAVE A TARGET FOR 44.00  AS A LONG TERM PROSPECTIVE.

UTV DELISTING NEWS

utv is proposing a delisting move @ the price of 1000 rupees per share.. current market price @ 950 per share.... a good time to buy this share..

RBI RATE HIKE

The Reserve bank of India has increased the repo rate by 50 basis points. This seems like an aggressive move ... and might impact eonomic growth. This hile will impact real estate companies as there cost of loans will increase.Banks like HDFC, SBI, Bank of India have said that they would have to pass on the rate hike to the consumers as well as increasing shot term deposit rates, they are optimistic about growth on their loan book despite rate hike but fear high NPA's(non performing assets). The RBI governor still expects the economy to grow at around 8% more or less.

Exide Industries Limited

Exide has all probability of correcting to Rs 135-140 in next one month’s time. If one has a short horizon and wants to play on the volatility one can look to exit at Rs 150 and can re-enter at Rs 140 from one year view."  As a lot of positions were built up on expectations of good nos.

Q1 results with Q3 results of FY11, at that time the share ruled in the range of Rs180 and since then it has corrected to as low as Rs120. At that time the situation was not very conducive, it was bad for all the stocks because the market had started correcting from November and the results came in the month of January.
So, the share has all probability of correcting to Rs 135-140 in next one month’s time. But one should take this Q1 results on account of the increase in the lead prices, because 70% of the lead constitutes raw material component. These kind of companies always have a lag effect, because they are not able to pass on the cost increase to the original equipment manufacturers (OEMs).
Even in case of the replacement market there is a lag effect of about one month and OEM it is about three months. So, since the caller has a view of one year he can remain invested. There is no need to worry at all. This is a blue chip company, but if he has a short horizon and he wants to play on the volatility he can exit now at Rs 150. He can look to re-enter again at about Rs 140 and take a one year view.

The stocks that are looking attractive are Mothersum Sumi, Amar raja Batteries.

L&T IPO.... WHY TO GO FOR THE IPO

With strong fundamentals, with good management of the company and high grey market premium the issue is expected to be over subscribed by the investors as this is the Golden opportunity and as an investor ,  should not miss on this one.

L&T FINANCE HOLDING LIMITED

ISSUE OPENS ON JULY 27, 2011 AND CLOSES ON JULY 29, 2011. PRICE BAND: RS 51 TO RS 59 PER EQUITY SHARE OF FACE VALUE OF RS 10 EACH. THE FLOOR PRICE IS 5.1 TIMES THE FACE VALUE AND THE CAP PRICE IS 5.9 TIMES THE FACE VALUE.    

BIDS CAN BE MADE FOR MINIMUM OF 100 EQUITY SHARES AND MULTIPLES OF 100 EQUITY SHARES THEREAFTER.

A SPECIAL DISCOUNT OF RS 2 PER EQUITY SHARE TO THE ISSUE PRICE HAS BEEN OFFERED TO THE ELIGIBLE EMPLOYEE (“ELIGIBLE EMPLOYEE DISCOUNT”).

FUNDAMENTALS

Basic EPS

PERIOD	CONSOLIDATED EPS	WEIGHTS
Year ended March 31,2009	(0.36)	1
Year ended March 31,2010	2.17	2
Year ended March 31,2011	2.87	3

 Weighted Average                              2.10

Diluted EPS

PERIOD	CONSOLIDATED EPS	WEIGHTS
Year ended March 31,2009	(0.05)	1
Year ended March 31,2010	2.17	2
Year ended March 31,2011	2.83	3
Weighted Average	2.13

           Note the face value of equity share is RS 10.

Sr.No	Particulars	Consolidated
1	P/E ratio based on basic EPS for the yr ended March 31,2011 at the floor price	17.8
2	P/E ratio based on the diluted EPS  for the yr ended March 31,2011 at the floor price	18.0
3	P/E ratio based on basic EPS for the yr ended March 31,2011 at the cap price	20.6
4	P/E ratio based on weighted average basic EPS for the yr ended March 31 ,2011 at the floor price	24.3
5	P/E ratio based on diluted EPS for the yr ended March 31,2011 at the cap price	20.8
6	P/E ratio based on weighted average basic EPS for the yr ended March 31, 2011 at the cap price	28.1
7	Industry P/E Highest Lowest                            7.5                                                                               Industry Composite     10.6	15.4

                                                                  

Return on Net worth

Period	Consolidated	Weights
Yr ended March 31,2009	0.00	1
Yr ended March 31,2010	11.21	2
Yr ended March 31,2011	13.58	3
Weighted  Average	10.53

Net Asset value per Equity Share

	NAV (Rs)
Period	Consolidated
As on March 31 ,2009	2,229.70
As on March 31 ,2010	15.31
As on March 31 ,2011	20.40
NAV After the issue	-
Issue Price	-

                                                                 

Comparison with industry peers

	Face Value (Rs)	EPS(Rs)*	P/E#	RoNW for Fiscal 2011 (%)	Book value per share for Fiscal 2011 (Rs)
L&T Finance Holdings Limited**	10	2.87	-	13.58	20.40
Shriram Transport Finance Company Limited	10	53.92	12.1	24.87	216.37
Mahindra & Mahindra Financial services	10	50.92	12.3	19.36	244.70
IDFC	10	8.77	15.4	11.39	76.97
Rural Electrification Corporation	10	26.18	7.6	20.15	129.90
Power finance Corporation	10	23.06	8.3	17.37	132.79
Sundaram Finance	10	70.01	7.7	21.53	325.22

 Note * source extract of annual reports /financial statements of the company for the fiscal yr 2011

           ** Based on consolidated and restated financial statements for the yr ended march 31,2011

           #   Based on closing market price as on july 1,2011and basic Eps for 2011.

                                                                                                                                              

THE ANCHOR INVESTORS BIDDING WILL START ON JULY 26,2011.

When the monolithic AT&T was carved up into 8 companies in 1984, the original ‘Mabell’ gave birth to 7 subsidiaries called ‘Baby Bell’. These 7 subsidiaries became more leaner , more efficient machines and went onto outperform the parent company.

On Thursday the Indian giant monolithic L&T announced its initial public offering. Expectations are the history will repeat itself. It is always good to to separate ypur son and allow him to grow in a free environment .Making it independent and helping the company to grow better. It will result in value unlocking .If we got to see Reliance before the 2 brothers split up the Mcap of Reliance was Rs 1.58 lakh cr but after the split up there was value unlocking of all the companies which got listed on the bourses and the Mcap as on today stands nearly Rs 3.64lakh cr.

L&T has 10 operating divisions and the co is becoming too big to handle and there is no fair value at this juncture can be removed.

 The company will raise Rs 1245 Cr through the issue which will result into dilution of 17% stake in the parent company. The share price of L&T includes the Rs 118-Rs 137 for L&T finance .There is a possibility that this move by the renowned corporate House will see a spike in the Price of the Parent company also. L&T Finance has already raise Rs 330 Cr by a pre IPO Placement of share with capital International at a price of Rs 55/-

With the 2 rating agencies have given the IPO 5/5 rating that means the fundamentals of the company is strong.

The total of Rs 1575 Cr is lower than the planned Rs 1750 Cr. The IPO proceed will be used to repay the Rs 345 cr debt from the parent co.

Crore (RS)	FY2011	FY2010	%Chg
Revenue	2115	1424	48.5
Expenditure	1503	1030	46.0
Operating profit	612	394	55.2
Other Income	28	18	55.4
Net Profit	393	263	49.3