Orchid Chemicals & Pharmaceuticals, is into manufacture of API and Formulations with 2 API manufacturing units, one each at Chennai and Aurangabad, 3 Dosage Formulations units at Chennai and 2 R&D centres at Chennai. The company also has a 50 : 50 JV in China for manufacturing Sterile Cephalosporin.
· The company has been in news due to its steep share price fall, due to liquidation by the promoters and their financiers. This resulted in the share price falling to a low of Rs.107 against its 52 week high of Rs.328.
· The financial performance of the company has been quite robust for FY 07. On a standalone basis, its total income was at Rs.936 crores with EBITDA of Rs.291 crores, resulting into a margin of 31-10%. PBT was placed at Rs.111 crores, while PAT at Rs.96.63 crores, resulting into an EPS of Rs.14.70, on equity of Rs.65.82 crores.
· On consolidated basis, for FY 07, total income was at Rs.985 crores with PAT of Rs.78.60 crores resulting in an EPS of Rs.11.95.
· For 9 months ending 31-12-07 the total income of the company was at Rs.919 crores with EBITDA of Rs.344 crores, resulting in a margin of 37.44%. This shows a robust 6% plus growth over FY 07. PBT was at Rs.222 crores with PAT at Rs.169 crores, giving an EPS of Rs.25.70 for the period.
· On consolidated basis, 9 months ending 31-12-07, PAT was at Rs.159 crores, giving an EPS of Rs.24.15 for the period.
· 9 months ending 31-12-07, had an exceptional gain of Rs.79.04 crores, being gain on outstanding FCCB. A tax provision of Rs.30.75 crores made on this gain, thus having a net effect of Rs.48.29. crores.
· The company issued FCCB of US $ 175 million in February 07 for a tenure of 5 years with an option to convert them at Rs.348.335 per share. Issue expenses and premium to be paid in the event FCCB are not converted of Rs.363.71 crores, were adjusted against general reserves of the company in FY 07. Apart from this, the company has a debt of Rs.700 crores having an annual interest burden of Rs.75 crores.
· FY 08, may have a topline of Rs.1,200 crores with PAT of Rs.160 crores, from core business which results in an EPS of Rs.24 plus.
· For FY 09, the topline of the company is likely to be over Rs.1,500 crores, with PAT of Rs.200 crores, giving an EPS of Rs.30 plus.
· The recent liquidation, by the lenders to the promoters against their stock, has brought down the share price to very attractive level of Rs.142 which discounts FY 08 earning by about 6 times and by less than 5 times for FY 09 earnings.
· China JV would also start contributing to the consolidated results of the company. Fresh US FDA approvals for various drugs would also help the company in marketing its products in regulated market, which is very lucrative market and presently contributes to company’s topline by 50%.
· Recent fall is a one time affair, which is not due to any adverse changes in the basic fundamentals or working of the company. So, this should be used as an opportunity to buy the stock.
· Share at Rs.142 qualifies as an excellent bet which has potential to rise to Rs.200 levels in the next 6 – 8 months with virtually no downside risk. Go for it, this is a safe prescription at Rs.142.
Saturday, March 29, 2008
Value Buy - Orchid Chemicals
Saturday, March 22, 2008
Value Buy - SAIL
Steel Authority of India Ltd. (SAIL) is a PSU, fully integrated iron & steel maker, producing both basic and special steels for construction, engineering, power, railway, automotive and defence industries.
· SAIL has 5 integrated steel plants at Bhilai, Bokaro, Durgapur, Rourkela and IISCO while 3 special steel plants are located in Karnataka, Tamil Nadu and West Bengal with 653 dealers in 527 districts spread all over the country.
· The company has joint venture power projects with NTPC as 50 : 50 JV for 314 MW captive power plants at Rourkela, Durapur and Bhilai while 50 : 50 JV with Damodar Valley for 302 MW power project and 1,880 tonne per hour steam generation at Bokaro.
· To improve its self sufficiency, SAIL has entered into a 50 : 50 coal mining JV with Tata Steel to explore 4 coal blocks in India as also a JV with Manganese Ore India Ltd. for 31,000 TPA of Ferro Manganese and 70,000 TPA of Silico Manganese to be available by 2010 for producing 24 million MT of steel.
· During FY 07, the company produced 12.26 million tonne of steel by operating at 114% capacity of which 3 million tonne was value added and special steels.
· For FY 07 the total income of the company was at Rs.35,865 crores with EBITDA of Rs.10,966 crores, resulting into a margin of 30.58% with PBT of Rs.9,422 crores and PAT of Rs.6,202 crores, resulting in an EPS of Rs.15.
· For 9 months ending 31-12-07 the total income was at Rs.27,662 crores with EBITDA of Rs.8,921 crores resulting into margin of 32.25% with PBT of Rs.7,804 crores and PAT of Rs.5.160 crores, giving an EPS of Rs.12.50 for the period.
· For FY 08, EPS of the company is likely to be Rs.18 while for FY 09 the same would be close to Rs.24 in view of better realizations and strong growth expected in the steel consumption.
· The company is planning to have production of 24 million tones of steel by 2010, for which capex of Rs.40,000 crores is planned.
· The debt equity ratio of the company as at 30-06-07 was at 0.18 : 1. The net worth of the company as at 31-03-08 would be Rs.23,000 crores and hence the debt equity ratio of the company is not likely to exceed 0.60 : 1, which is considered very healthy for such a huge steel company.
· SAIL presently has five iron ore mines which provides about 14 million tones of raw-materials to meet almost the total iron ore and about 30% of its flux (limestone and dolomite) requirement of the eastern sector steel plants. About 12 – 13 mt of coking coal is sourced from outside sources. Hence, rising cost of iron ore is not affecting its profitability, though rising cost of coal is a concern.
· Of the present equity of Rs.4,130 crores, Government holds 85.82%; Banks, Mutual Funds, FIIs and Insurance Companies hold 11.75% while only 2.43% is being held by public. This is leaving very low floating stock.
· The present market capitalization of the company is close to Rs.80,000 crores at current market price of Rs.190 per share. The present debt of the company at Rs.2,500 crores makes company virtually debt free, net off, net current asets.
· The steel prices for flat and long products have been increased by about 8% in last fortnight and rose by about 22% since January 08. Still after this rise, the product is in short supply with good offtake. This is bound to improve the working of the company for March 08 quarter.
· Share is presently ruling at Rs.190, which discounts its FY 09 EPS by about 8 times. The steel sector is likely to remain attractive at the current levels, as all the stocks have corrected by about 30% to 35% in the last couple of months.
· Share at Rs.190 makes it an excellent buy with potential to rise by about 50% in the next 12 months.
Pick of the Week: YES Bank
BUY YES BANK @ 137 / 138 TGT 149 / 150
YES BANK, India�s new age private sector Bank, is an outcome of the professional commitment of its Founder, Rana Kapoor and his highly competent top management team, to establish a high quality, customer centric, service driven, private Indian Bank catering to �Emerging India�. YES BANK is the only Greenfield license awarded by the RBI in the last 12 years, associated with the finest pedigree investors.YES BANK has adopted international best practices, the highest standards of service quality and operational excellence, and offers comprehensive banking and financial solutions to all its valued customers. A key strength and differentiating feature of YES BANK is its knowledge driven approach to banking and an unprecedented customer experience for its retail banking and wealth management clients.
It is this commitment that has earned us the distinction of being ranked India�s No. 3 Bank in a recent survey of listed banks in India, by Businessworld. The same survey also ranked YES BANK No. 1 in Safety, Efficiency & Growth. YES BANK was recently ranked No. 2 amongst New Private Sector Banks, in the Financial Express survey of India�s Best Banks for 2006, while being ranked No. 1 in Growth. Today, YES BANK is present across all major cities in India and offers a comprehensive range of banking products and financial services which include corporate and institutional banking, financial markets, investment banking, business and transactional banking, retail and private banking business lines across the country. The Bank�s constant endeavour is to provide a delightful banking experience expressed with simplicity, empathy and totality.� Sales and NP for year ended 06 � 07 were 788.3 Cr & 94.4Cr. Sales and NP for latest Quarter 443.2Cr & 54.2Cr. On YOY basis NP has increased by 71% & based on quarter latest its increased by 116 %
Saturday, March 15, 2008
Value Buy - GMDC
A mine Wealth of Profit
· Gujarat Mineral Development Corporation Ltd. (GMDC) is a Gujarat State government undertaking engaged in the business of lignite, bauxite and fluorspar mining as also power generation units based on Lignite.
· The company has been posting improved financial performance quarter on quarter of FY 08. For FY 07, the total income was at Rs.610 crores with EBITDA of Rs.310 crores, PBT of Rs.157 crores and PAT of Rs.105 crores, resulting in an EPS of Rs.6.60 (face value Rs.2).
· For 9 months ending 31-12-07, the total income of the company was Rs.700 crores with EBITDA of Rs.419 crores, PBT of Rs.270 crores and PAT of Rs.200 crores, giving an EPS of Rs.12.60 for 9 month. Hence, FY 08, is likely to have topline in excess of Rs.1,000 crores with PAT of close to Rs.300 crores, giving an EPS of close to Rs.19 on face value of Rs.2 per share.
· The present equity of the company is Rs.31.80 crores with face value of Rs.2 per share. The board of the company proposed 1 : 1 bonus shares in last week of January 08 and share is presently ruling at Rs.308 cum bonus.
· This translates into a market capitalization of close to Rs.5,000 crores for the company, which is quite low compared to rich reserves of lignite held at its various mines. Even total borrowing of less than Rs.800 crores is largely for net current assets which makes it virtually a debt free company.
· The shareholding pattern of the company as at 31-12-07 is 74% with the promoters being the Govt. of Gujarat, 12% by Mutual Funds, Banks and Financial Institutions and 14% by Public with about 47,000 shareholders.
· The company presently producing about 80 lakh MT of lignite at its three mines. New mines have been developed at the various locations at Surat to cater to South Gujarat where estimated annual production would be 10 lakh MT. 10 lakh MT of lignite production at Amod near Bharuch would fully contribute in FY 09. 30 lakh tonne of lignite production is estimated from Bhavnagar mines to cater to Saurashtra region and Central Gujarat. So, in FY 09, the production of lignite shall get increased by about 40%.
· The company also has 250 MW power plant in operation based on lignite.
· Lignite referred to as Brown Gold, is an alternative for coal which is in great demand, as natural resources are becoming scarce all over the world.
· FY 09 the company may see a topline of Rs.1,500 with PAT of Rs.600 crores which would result in an EPS of Rs.38, on pre-bonus equity. This results into a PE multiple of just 8 times for the stock, which is very cheap for any mining company.
· The share which is now ruling at Rs.308, would go ex-bonus by the end of April at Rs.155. The stock at this rate is quite cheap, which can give a conservative return of close to 50% per annum over the next two years.
· A safe and excellent bet at Rs.308 levels on cum-bonus basis.
Pick of the Week: Nagarjuna Fertilizers
Equity – 428.18 Cr BSE Code – 500075 CMP – 39.15
BUY NAGARJUNA FERT. @ 38.75 – 39 TGT 41.75 – 42.25
Nagarjuna Fertilizers and Chemicals Limited (NFCL) is the flagship
Company of the Nagarjuna Group. Its plant in the southern Indian state of
Andhra Pradesh, has an installed capacity of 500,000 MT of Urea and
300,000 MT of Ammonia.
This state-of-the-art gas based plant in the port town of Kakinada, about 550
Kms east of Hyderabad, has been built in technical collaboration with
Snamprogetti, Italy and Haldor Topsoe, Denmark.
An ISO 9002 company, NFCL is involved in marketing the full range of
farm inputs. Urea is manufactured in the company's plant, and pesticides are
produced by the Group companies. The Agri Output Division and Seeds
Division help the farmers enhance productivity.
NFCL has grown to be one of the largest fertilizer companies in India. The
fertilizer plant has the distinction of being the single largest private sector investment and is the first gas based fertilizer plant in the region. The plant has been operating at over 100% capacity with an energy consumption rate
which is among the lowest in the world.
The recent budget is favorable for agricultural sector, and fertilizer sector. In
recent correction the stock has come down drastically, and now we feel it is
a value buy for short to medium term.
Monday, March 10, 2008
Value Buy - INDIA GLYCOLS
* India Glycols is the first and only company in the world to produce Ethylene Oxide (EO) / Mono Ethylene Glycol (MEG) from renewable agro route based on molasses, which is a by-product of the sugar industry.
* MEG is used in the manufacture of polyester resins, films fibres, and is an important raw material used in the production of coolants, antifreezers, aircraft ant-icers and solvents. Thus the client base of India Glycols covers almost entire India Inc, supplying MEG to more than 1,000 customers in various end-use industries such as Textile, Agrochemical, Oil & Gas, Personal Care, Pharmaceuticals, Brake Fluids, Detergent, Emulsion Polymerisation & paints etc.
* Making MEG from ethanol is highly cost effective as against using crude, which is currently ruling at record high prices. Using crude is uneconomical and world over, companies are shifting to use of such renewable agro routes. Currently the price of ethanol has been fixed at Rs.21.50 per litre for the next three years (which is less than a dollar) and this is in no way even comparable to the over $100 per barrel of crude. So in this context, India Glycols, having the largest plant in India for making MEG from ethanol has a great advantage.
* The company is now in the midst of enhancing its MEG capacity by 20% at an investment of Rs.25 crore resulting in a very attractive payback.
* During the quarter, the company acquired a controlling stake in Shakumbari Sugar & Allied Industries at a consolidated price of Rs.47 crore, which has a crushing capacity of 3200 Tonnes Per Day(TCD) along with a modern distillery of 40 kilo litres per day(KLPD). With this acquisition, the company would be vertically integrated to captively produce additional ethanol requirements.
* The company has also established its subsidiary in Singapore to augment its activities in South Eastern Asian region and other related areas. It is already exporting to South East Asia, Middle East, Europe, Australia and USA.
* Apart from this, the company has also got into purifying Carbon Di-oxide (CO2), a by-product produced in the distillery, both at its Kashipur and Gorakhpur units which has application in food, beverage and other industrial usage. CO2 plants at both distilleries are to be commissioned in March 2008.
* Indian Glycols has had a super third quarter ending. For Q3 ended 31st December 2007, the company, on a QoQ basis reported a 26% jump in net sales at Rs.449.98 crore, which on a YoY was up by 93%.
* EBIDTA was up in Q3, on a Q0Q by 29% at Rs.113.53 crore which YoY was up by a whopping 219%. OPM improved from 15.27% in Q3 FY07 to 24.52% in Q2 FY08 and now in current Q3, it was at 25.23%.
* The best probably jump has been in its net profit. For the current Q3 it was at Rs.67.50 crore, which on a QoQ indicated a jump of 40% but YoY, it has gone by an unbelievable over 6 times. NPM rose from a meager 4% in Q3 FY07 to 13.56% in Q2 FY08 and now in Q3 FY08 it stands at a healthy 15%.
* On an equity of Rs.27.88 crore, the company, for Q3 FY08 posted an EPS of Rs.24.21. What this means is that the company will end this fiscal with an EPS of Rs.80, that’s a certainty. Also based on the present earnings, one can safely say that for FY09, the company will have an EPS of Rs.100, what with the additional capacity also expected to go on stream.
* The cash EPS for Q3 was at Rs.31 and this means that we are looking at a certain cash EPS of around Rs.100 in FY08 and Rs.120 in FY09.
* For a nine months ending 31st December 2007, though the company had forex gains of Rs.21.80 crore, the same would get added on in FY09 through improved performance and hence an EPS of Rs.100 for FY09 can be reasonably expected.
* The stock is currently quoted at Rs.247, giving us a PE of just 3 on the EPS of Rs.80 estimated for this fiscal and if we look at the expected EPS of Rs.100 in FY09, the PE works to a measly 2.50 times. Now if that isn’t good enough, nothing else will be!
* What makes India Glycol a great buy is the fact it has a unique business model which enables the company to produce petrochemicals and specialty chemicals from renewable agro route base and that too where the cost of the raw material is fixed and is available in abundant supply. Coupled with growing demand and higher margins through larger volumes, there is no way that this winner of a company can falter. The icing on the cake is that currently, looking at the future discounting, the company is quoted at a dirt-cheap price.
* One can safely buy India Glycols at the current rate of Rs.247 for a sure 50% return over the next 12 months.
Sunday, March 9, 2008
Pick of the Week - 11-Mar-08
Equity: 222.36 Cr, BSE Code: 532778, CMP: 376.20
BUY LANCO INFRATECH @ 376 / 377 TGT 400 / 402
LANCO Infratech Ltd (LITL), one of the fastest growing corporate entities in India, has more than two decades of experience operating in the core sectors of Power Generation, Power Trading, Construction & EPC, Infrastructure and Property Development.
As of now, the operating capacity of LANCO�s power projects stands at 518 MW and on the pipeline are a number of power projects to generate a total capacity of 15,000 MW by 2015.
With a proven record in integrated infrastructure development, LANCO constructs, develops and operates projects in power, roads and other infrastructure. The construction and EPC wing has so far executed Rs 2,000 crore worth projects and has an order book worth more than Rs 7,500 crore. Notably nearly all the construction and EPC works are done for LANCO's power and infrastructure projects.
The construction industry is vast and complex, calling for specialization in different sectors. It also calls for enormous skills to master the intricacies of the works in the field. LANCO Infratech Ltd (LITL), established in 1993, is one of the few companies which have developed the art of developing diverse projects and managing them. LITL, the holding company of LANCO for Power, Realty and Infrastructure sectors, intends to leverage its expertise and experience to exploit opportunities in this emerging sector by developing large infrastructure projects in highways, ports, bridges and SEZs. As part of streamlining its expanding operations, two divisions have been created to oversee and execute Infrastructure and EPC works. The two divisions are: Infrastructure & Construction Division and EPC Division. LANCO�s proven expertise in power encompasses conventional as well as non-conventional sources of energy such as gas, coal, biomass, hydro and wind. Currently generating 518 MW of power in six operational independent power projects, LANCO plans to have an installed capacity of more than 4000 MW by 2010. Sales and NP for year ended 06 � 07 were 541.7 Cr & 73.1Cr. Sales and NP for latest Quarter 382.2Cr & 38.9Cr.
On YOY basis NP has increased by 648% & based on quarter latest its increased by 92 %
Wednesday, March 5, 2008
Value Pick - NTPC
The present state of the market has brought the blue chips at much below their intrinsic worth, with many having corrected by about 30% from their recent highs. Under the present circumstances, it is thus best to pick up stocks which today offer greater value for money. National Thermal Power Corporation (NTPC) is one such stock.
* This power generating PSU currently has a power generation capacity of 27,904 MW. Of this, the company owns 26,850 MW. Of this 26,50 MW, 22,895 MW is coal based with 15 projects while 3,955MW is gas based with 7 projects. 1054 MW is under JV of which 314 MW is coal based and 740MW is gas based.
· The paid up equity of the company is at Rs.8,245 crore being 824.55 crore equity shares of Rs.10 each. Of this, the Government of India holds 89.5%, 7.55% by mutual funds, banks and insurance companies while public holds 2.95% as at 31/12/07. Such a massive power generation company with a paid up equity of just Rs.8,245 crore is beyond imagination!
· NTPC is implementing 11 projects for 10,860 MW in various states, which would take the capacity of the company to close to 40,000 MW. All these projects would be operational in next 36-42 months. The total cost of these projects is Rs.40,000 crore and are located in UP, Bihar, Assam and Maharashtra.
· NTPC has also entered into a Joint Venture with BHEL, a 50:50 JV to carry on EPC activities, including manufacturing and supply of equipments and power plants for third party power generating companies.
· For FY07, the total income of the company was at Rs.35.380 crore, with an EBIDTA of Rs.12,842 crore, giving a margin of 36.3%. PBT was at Rs.8,907 crore while PAT was at Rs.6,865 crore, giving an EPS of Rs.8.33.
· For the nine months ended 31/12/07, the total income of the company was at Rs.28,531 crore, with an EBIDTA of Rs.10,626 crore, resulting in a margin of 37.25%. This is an increase in the EBIDTA margin by 95 bps in 07-08. PBT was at Rs.8,103 crore while PAT was at Rs.6,076 crore. This gives an EPS of Rs.7.37 for the period. This implies that FY08 EPS would exceed Rs.10.
· Net worth of the company as at 31/12/07 is at Rs.55,300 crore, resulting in a book value of Rs.67. The debt of the company is less than Rs.20,000 crore, net off cash balance resulting in a debt equity ratio of just 0.35:1. Presently, all other power generation projects are going for a debt equity of 70:30.
· With huge thrust in the 11th Plan on power generating capacity of 70,000MW, the company would cross power generating capacity of 50,000 MW by the end of the 11th Plan period, viz: 2012.
· Instead of going for Ultra Mega Power Projects, the company is implementing projects of 1,000MW to 2,000 MW which can get completed in 3 years, in phases. Some of these projects are 1980 MW (660 MW ´3) in Bihar with Capex of Rs.7,341 crore; 750 MW (250 ´3) with outlay of Rs.4,375 crore in Assam; 1000MW (500 MW ´2) with outlay of Rs.5,459 crore in Maharashtra and 1320 MW (660MW ´ 2) in Allahabad. This puts the projects on a fast track thus minimizing the execution risks and cost overruns.
· Once Nuclear Power project takes off, NTPC would be a giant player in the field to increase its power generating capacity.
· For FY09, the EPS of the company would be placed close to Rs.12.50 which discounts current share price of Rs.190 by about 15 times. All other power generating companies are ruling at a PE multiple of 20 to 35 times, despite none of them having even a 10% power generating capacity of NTPC.
· Share at Rs.190 is a safe and excellent bet, which can give a consistent return of 24% over the next 3-4 years in share price. Go for this power packed stock!
Monday, March 3, 2008
Pick of the Week - 3-Mar-08
Equity : 22.82 Cr, BSE Code : 532553, CMP : 112.9
BUY MSK Projects Ltd @ 110 : 112 TGT 120 : 122
Incorporated on 20 the December, 1994 MSK Projects ( India ) Limited - MSK is in civil construction business for over a decade and the group is growing day by day with its strong commitment of timeliness, quality delivery and fair dealings. Along with road projects on BOT basis, the company has experience in versatile field of construction such as mass housing & township, multi- storied buildings, industrial projects coal mines, fertilizer plants, petrochemicals, water retaining structures, leaving no job impossible
The company entered in the field of industrial construction with prime motive of servicing reputed clients. The firm has gained various types of works such as mass housing & township, multi-storied buildings. Industrial projects for coal mines, fertilizer plants, petrochemicals, water retaining structures, and have successfully & timely executed them. he firm has independently executed projects for various large scale private & public sector giants such as G.E. Plastic Limited, Compton Greaves, Indian Petrochemicals Limited, National Thermal Power Corporation Limited, M/s Nitco Tiles Private Limited., Gujarat Chemical Port Thermal Limited, Rajasthan Industrial Investment Corporation Limited (RIICO), M/s ACP Industries Limited, M/s Hindustan Lever Limited, M/s Philips (India) Limited.
The company has diversified in the field on Infrastructure development particularly road sector on Build- Operate & Transfer (BOT) basis. Due to huge requirement of funds for upgrading maintenance and speedy development of National Highways, the Government has opened the segment for private sector. The Government and funding institutions have offered various concessions for private sector to participate road development.
Growing prospect of Infrastructure and construction industry is endless. Central and State Governments are focusing on development of infrastructure regime and opening the roads of opportunities and growth potentials before the sector. In the recent budget also, Finance Minister has concentrated over infrastructure sector. In housing sector the lower interest rate structures, tax incentives and easy access to housing loans promises good times to the construction industry.
Sales and NP for year ended 06 � 07 were 837Cr & 10.2Cr. Sales and NP for latest Quarter 58.4Cr & 4.5Cr., On YOY basis NP has increased by 31% & based on quarter latest its increased by 43%, Dividend during year ended 06 � 07 was 10 %
Daily Market Outlook
: Daily Market Outlook:
| Company Name | Recomm. | CMP | Stoploss | Target Price |
| NIFTY | Buy | 5140 | 5120 | 5200 to 5230 |
| ICICI | Buy | 1072 | 1000 | 1122 to 1150 |
| Ashok Leyland | Buy | 37.50 | 35 | 40 to 42 |
| ITC | Buy | 198 | 188 | 205 to 208 |
| DCB | Buy | 111 | 105 | 117 to 118 |
Saturday, March 1, 2008
Best Budget Buys
Mr.Chidambaram has come, announced and gone. Now we all scramble to read the fine print and figure out as to who will benefit and who will lose. Though the market has taken a beating after the Budget was announced, there are quite a few nuggets on Dalal Street which will help you tide over this Budget, infact they will help you emerge winners.
You can buy these stocks at the current market rates as they present a great opportunity for making a value buy at this juncture, in the post Budget scenario.
MARUTI SUZUKI INDIA:
The excise duty on small cars has been reduced to 12% from 16% and on Hybrid cars from 25% to 14%. This will bring down the costs by almost Rs.12,000-15,000, giving a spurt to demand. The stock has been the biggest gainer of the day and is now at Rs.870. One can get into the stock to cash in on the momentum.
Maruti Suzuki India’s net profit rose 24.1% to Rs.467.04 crore on 27% rise in sales to Rs.4,674.13 crore in Q3 December 2007.
PANACEA BIOTECH:
The Budget increased the allocation for HIV and polio drugs. Panacea is the leader in manufacture of polio vaccines. And this increased allocation will benefit the company immensely. It recently was pre-qualified by WHO for supplying its innovative combination vaccines for pediatric immunization - EasyFour (DTP + Hib) and Ecovac (DTP + Hep B). It is already a pre-qualified supplier of OPV and Hepatitis-B vacuities to UN agencies.
Now with this pre-qualification by WHO, Panacea Biotec would participate in a large global market of combination vaccines for pediatric immunization. It recently inaugurated its ultra modern, Greenfield construction, vaccine production plant at Baddi, H.P., with over Rs 100 crore investment in Sept'07, having capacity of more than 1 billion doses per annum, to cater to domestic and global markets. With this latest state-of-art facility, the total capacity to produce vaccines by Panacea Biotec would be doubled to two billion doses per annum. The commercial production is expected to commence in next financial year.
Currently quoted at Rs.318, the company is one of the best post Budget buys on the bourses today.
WEST COAST PAPER:
The Indian paper industry got a much sought-after reduction in excise duty on paper and paperboards that will help boost investments, enabling them to compete with imported paper. Exicse duty has been reduced on writing and printing paper and paperboards to 8% from 12%. The fund allocation for education has also been increased by 20% in 2008-09. Both these factors together is expected to give a major boost to the demand for paper.
The market has not fully discounted the impact of these on the paper sector and especially on West Coast Paper, which remained flat at Rs.80. For the nine months to December 31, 2007, it has reported a 34% increase in profit after tax to Rs 64 crore and 7% increase in sales to Rs.432 crore, citing a upward revision in sale prices, lower power & fuel cost on commissioning of FBC III boiler and improved working of cable division, coupled with foreign exchange gain. A great post Budget buy at the current rate.
APOLLO HOSPITALS:
Finance Minister Chidambaram proposed an allocation of Rs 16,534 crore for the healthcare sector in the Union Budget for FY 08-09. He also proposed a five year tax holiday for hospitals being set up in TierII and TierIII cities.
Surprisingly, stocks in this sector did not record too much of a gain and that in itself represents a great opportunity. Currently quoted at Rs.495, the stock presents a great potential to rise when the market reads the fine print of the Budget and comes back smarter on Monday. Buy this stock and then ride the wave of the momentum.
BHEL:
Bhel is engaged in manufacturing and distributing electrical, electronic, and mechanical and nuclear power equipment like turbines, boilers and generators. Given the thrust which the finance minister has laid on the manufacturing sector, he reduced the CENVAT rates on all goods from 16% to 14% and at the same time, gave sops for fuelling industries like power, infrastructure, all in turn are expected to lead to a spurt in orders for the BHEL. The Finance Minister urged bidding for 5 more UMPP’s and once this happens, this too will present a great opportunity for the BHEL.
On 29th Feb itself, BHEL secured an order worth Rs.1893 crore from GSPC Pipavav Power Co in western India for a 700 megawatt power plant.
The market discounted neither the advantage of the Budget nor the merit of the new order. Currently quoted at Rs.2282, it infact fell after the Budget. It presents a great post Budget buy for great gains.
GITANJALI GEMS:
The Finance Minister completely removed the customs duty on rough cubic zirconia diamonds from the present 5%. The basic customs duty on polished cubic zirconia was reduced from 10% to 5%.
Gitanjali Gems is a well known name in the jewellery and diamonds sector. Infact it was amongst the first entrants to get into aggressive retail segment and establish its brand name in diamonds and jewellery. Gitanjali's brands (own and those licensed to it by Diamond Trading Corporation — DTC) such as Gili, Asmi and Nakshatra are all well established in the market.
This move of reducing the customs duty will help the company procure the diamonds at a much reduced rate which in turn will add on to its margins. Jewellery is Gitanjali’s forte and that is where the margins are. This move will benefit the company immensely. Currently quoted at Rs.289, this stock too fell after the Budget. Pick up this gem before the others realize its worth!
NIIT:
One of the biggest beneficiaries of this Budget has been the education sector. The Finance Minister proposed higher spending for education by 20% in the union budget for 2008-09, from Rs.28,674 crore to Rs.34,4000 crore. He also proposed to set up 16 central universities in 2008-09. The thrust has been to provide more allocation for education, especially at the primary school level.
This move is expected to benefit companies like NIIT who are into providing IT enabled education not only in urban areas but also in semi-rural areas, it currently runs 200 centers all over India. NIIT has trained over 9,000 students using Microsoft's learning content, successfully in the first phase. The two Companies are now targeting at training nearly 100,000 students in the next three years on leading Microsoft Technologies.
The stock has remained virtually flat at Rs.124 post Budget. With the increased thrust on education and the growing importance of IT based knowledge, NIIT will benefit immensely from this Budget. Definitely a good pick.
NTPC:
The Union Budget, as expected has laid great stress on power and has provided many sops to this sector. The Finance Minister has urged companies to bid for five new UMPPs. He has also proposed the setting up of a National fund for transmission and distribution of power and allocated Rs.800 crore for accelerated power reform in FY09.
In this respect, NTPC could reap immense benefits from the Budget. It has today grown into the largest power utility of India. NTPC is the sixth largest thermal power generator in the World and the second most efficient utility in terms of capacity utilisation.
Currently quoted at Rs.202, the stock actually fell post Budget. A great pick for all seasons, post Budget it looks all the more attractive.