Thomas Cook:-Good times ahead for shareholders

Scripscan: Thomas Cook (India) Ltd

Cmp:88

Target:105

Return expected:20%

Duration:2-3 months

Story:

Thomas Cook Group plc has announced that it is acquiring up to 74.9% of the issued share capital in Thomas Cook India and 100% of Thomas Cook branded businesses in Egypt, as well as licences for the Thomas Cook brand in a total of 15 Middle East countries. Thomas Cook is purchasing the businesses from Dubai Financial Group LLC for total cash consideration of between €208 million and €249 million.Under the terms of the TCIL transaction, Thomas Cook has agreed through its UK subsidiary to acquire at least 61.8% and up to 74.9% of TCIL's share capital. In a private transaction with DFG Thomas Cook will acquire 54.9% of this for the equivalent of Rs 107 per TCIL share. Under local stock market rules Thomas Cook is tendering to acquire up to a further 20% of TCIL shares in an open offer at rs 107. As a result of this transaction Thomas Cook will acquire between 61.8% and 74.9% of TCIL's share capital, the price of with will range from €173 million to €214 million giving Thomas Cook control of the company.

Conclusion:

In these sort of market environment where returns are very hard to get one can bank upon in thomas cook for some cool capital appreciation.Market is in a panic driven mood and there are strong chances that market even may overlook this news.Fundamentally too the scrip has got robust long term prospects.So enter at present levels for minimum downsides but possible 20%+ returns in the short term.

Market outlook,technical point of view and india growth story

Market short term outlook:-
The markets may plunge further in monday in the morning as credit risk is increasing in the US.On thursday Thornburg Mortgage, a little known lender outside the US, could not meet $28 million margin call from JPMorgan Chase.The stock fell badly,which set off a cat among the financial pigeons, sending the Dow and nasdaq down.Its completely panic selling which has emegerd after a long gap of time.Everybody is rushing to exit stocks to opt them again at lower levels.All said and done valuations have become very attractive and scrip suggested by me on my previous notes offers a brilliant oppurtuinty to buy them at this mouth watering levels.

Technical point of view:-
By closing at 15975 on friday, the Sensex had broken the closing low of 16457 seen on February 11. Though the Sensex is still higher than the intraday level of 15332 seen on January 22, 2007, it is the lowest closing since 20th September 2007. More important than the 15332,the sensex closed below 16100 on friday.It broke the trend line that the Sensex has honoured since 2003.

Banking sector analysis in a nutshell:-
The answering of a question asked in Rajya Sabha on ICICI Bank, the countrys second largest lender, drove home the point that even if you are not dabbling in the US sub-prime debt, you can still be singed, with whats happening with the US economy. Therefore, it is more disturbing. Whats happened with ICICI can happen with other banks too with international exposure. As a result, some of the banks are likely to be painted with tainted brush for some time till they come out clean.Avoid the banking stocks for the moment.

Lets look at how india may shape up in the coming years:-
Global paucity of real investment growth for geo-political reasons will continue to lead to liquidity reflating all asset classes. Thus, capital will continue to seek real growth and entrepreneurship in countries like India. The following secular undercurrents will help India override cyclical pressures.

Domestic natural gas:
Gas supply could increase ~2.5x by '10 and shave off ~$5-10 billion from the import bill.Software exports could fetch ~$9 billion in '08, easing the pressure on current account deficit.The capital account may remain robust with strong FDI, ECBs, and NRI deposits. Complete transformation of India-scape '09+: Initiatives for infrastructure creation are morphing the larger economic environment. There is a build-up in infrastructure with changes in installed capacity, which will not only boost industry's efficiency, but also provide a global scale of operations.

Consumption story:
According to a McKinsey report, household disposable incomes will treble and aggregate consumption will quadruple over the next two decades, making India one of the largest consumer markets in the world. Income growth at 80% will be the biggest consumption driver for India. But companies will have to become more volume-driven to offset competition.

Marginal producers may under-perform in a challenging environment. So, increasing M&A opportunities are likely. The real challenge for India Inc lies in the fact that companies will have to shift from merely managing scalability to managing the global industry environment itself.

So,even while the environment remains challenging in the near term, growth necessitates end of domestic tightening cycle, and secular trends continue to override cyclical concerns.

MR greedy and his reliance power,Rnrl,adlabs,reliance capital etc

Share price of Reliance Power has again gained ground to touch its IPO price. It has happened MAINLY and ONLY due to the liberal bonus issue which can never never be justified.Its a shell company has got nothing,no profits,no sales:god knows how they can simply declare a bonus....Previously i guess it never happened in the history of indian stock markets...If cat sits on chair of Tiger, it dont transform into a real Tiger....

If promoters and merchant bankers (globally renowned who perhaps started condering themselves to be Maa-Baap of Indian investors and also Demi-Gods) had any iota of decency and morality left in them (post infliction of never-before-seen levels of losses on investing public), they should have accepted their collective mistakes that they had done wrong-pricing. Instead,promoter roared back with demand to SEBI for enquiry into fall in R Power share price that "it has been engineered by rivals". Firstly, any shareholder of a company (whether he is an ordinary investor or a deemed rival) has a business right to buy anytime and sell anytime any quantity of shares of any listed entity. There is a saying that 'If you are scared of heat, dont enter the kitchen". If Mr Ambani is afraid of selling by rivals, then pl stop plans of further IPOs and should concentrate his energies in getting his companies delisted from stock exchanges(rather than suggesting long term value to investors). Secondly, he is crying wolf when share price of R Power has come down. What about brazen rise in share price of all his group companies and He never complained that rivals were trying to Buy shares of his companies to dethrone him/hostile take-over? Just have a look:

COMPANY S H A R E P R I C E I N 2007

Low HighReliance Capital 560/ 2925/

Reliance Energy 448/ 2623/

Reliance Capital 560/ 2925/

Adlab 380/ 1940/

RNRL (Rs 5F.V.) 21/ 250/

Had proverbial Third Eye of Lord Shivji had opened which led to such unheard of rise in share prices? Definitely not. There has been hardly any improvement in financial performance of above companies. Rather, above scrips should have been underperformer. Clearly, it was a well organised gameplan to ramp share prices of each listed entity as Group had been planning to raise over 30,000 crs from public in 2008 alone.If share price of R Power had been ruling at 650, IPO of R Infratel would have hit the streets by now. However, 2nd time, God came to the rescue of pitiable state of investors. If Ant was trying to climb the mountain, it has fall sooner or later. SEBI, even if it is willing, may not be able to investigate in brazen manipulation of above companies' share prices as talks do rounds in the market that such manipulations are not possible without collusion of politicians and bureaucrats...

Jaiprakash Associates:-A gem of a star in the infrastructure sector but misunderstood.

Scripscan: Jaiprakash Associates

CMP:246
Target:350
Return expected:40%
Duration:4-6 months

Story:
The company has been hammered in the the past 40 days.From a high of 500 in january the company has cracked by more than 50% and is presently quoting at 240 odd levels.The company is also probably getting in the Ganga Expressway.They have got the Taj Expressway project, which is a very large project and as part of that project, they will get to develop close to 6,250 acres of land, 5 points across this highway that joins Agra and Noida. This is not there in the valuation as of now currently, it is not reflected and but it is something that will evolve over a period of time.According to the sources, Jaiprakash Associates will shift 45% stake in the Taj Expressway project to another company namely JP Infratech.In explanation the company stated that JP Infratech continues to be a 100 per cent subsidiary of the group.There was a need to boost the authorized capital of JP Infratech from Rs 200 crore to Rs 1,000 crore and Jaiprakash Associates subscribed the additional 35 crore shares at Rs 10 each, which represented 55 per cent of the capital.The company also clarified that it would go ahead with the initial public offering of its power subsidiary JP Power.

There lies no confusion at all and Jp associates should quote at a much higher price in the days to come.The company is also planning to double its cement capacity from 7 million tonnes to 14 million tonnes to become one of the largest players in the cement sector.Investors have panciked and exited the company compltely,buy at low sell at high mantra or even but when others are selling and sell when others are buying may work in these case now.Accumulate the counter as much as u can for limited downside but lot of upsides.

Bhagwati Banquets & Hotels Ltd:-The dark horse in the hospitality sector with multibagger potential

Scripscan:Bhagwati Banquets & Hotels Ltd
Cmp:63
Target:100
Duration:4-6 months
Traded in:Nse-Bse

Business contributor:
Bhagwati Banquets derives revenues from three major sources.Presently more than 1/3rd of its revenues comes from the banquet facility, 25% comes from club management and the rest from outdoor catering. The prime is the Banquets Hall facility and the company has also got four halls in Ahmedabad.BHagwati has been doing club management for three major clubs namely Rajpath Club, Karnavati Club, GCAC and the revolving restaurant called Patang".As these are seasonal businesses, if one of the businesses gets affected, the other two businesses can support them.The company has 1,000 people, consisting of 10 master chefs and a catering staff of 650 for Ahmedabad and 45 for Surat.

Company vision:
The company has set a target to set up 5-star hotels in Ahmedabad,Jaipur,Hyderabad,Lucknow and Mumbai in the coming 10-12 years.It is also evaluating several proposals to acquire property for its new hotel at Ahmedabad. These company dreams really big and if it can acheive its desires then Bhagwati banquets can just become one of the scrips to watch out for in the days to come.

A catering player to boost your wealth:You have been invited to a wedding ceremony or a party or say in any occasion and yup our "Bhagwati banquets" is there to satiate all your desires but at an expense.It charges from Rs 350 to Rs 900 a meal and provides personalized service.A minimum order has to be for 300 people (off-season) and 500 in season, resulting in revenue ranging from Rs 1 lakhs--4.5 lakhs on each order.It would be prudent to note that the catering business generates free cash, as it receives payments in cash and obtains credit from its suppliers. Hence, the working capital required is low.What a satisfaction folks-Just consider,You are the owner of the company and your freind has hired your company for all the meal and party arrangements.

5-star hotel at Surat:
The company is setting up a 5-star hotel at Surat with 65,000 square feet (two halls of 32,500 square feet each) a convention and banqueting hall to accommodate at Least 3,000 people at a time for any event.This hotel will have 100 rooms (deluxe, suites and a presidential suite).It will have two large banquet halls, which can be partitioned into smatter halls as required, to accommodate at Least 3,000 people.The hotel will also have a business center with boardroom, conference rooms, world-class spa, pub, discotheque, etc.The hotel is likely to commence operations in FY10.It expects Rs 50 crores in revenue and Rs 15 crs in operating profit from the Surat hotel in the first year of operation.The typical room rate in Ahmedabad is Rs 5,000 per day and average occupancy is 75-80%.Though construction project is already in process but any delay in implementing the Surat project might affect profitability.

Wow,so much,anything else its planning:-
Watch out...........
1)It has already commenced catering services in Mumbai and plans to branch out to other cities like Jaipur,Jodhpur etc.

2)It has futher plans to enter into tie-ups with clubs for providing its services.

3)It plans to serve companies and MNCs, BPO centres, shopping malls, cinema halls, etc. catering for them and providing food packs.

4)The company plans to develop a separate club adjoining the surat hotel,resulting in additional revenues and thus an increase in profits.Facts to comfort:Its global india and companies having unique business models gave tremendous capital appreciation in the last few years.Few of the notable examples being Educomp,aurion pro,mic tech,Opto circuits,country club and many more.Bhagwati is a tremendously agggresive company and it has got a monopolistic business with high operating profit margin ratio.

Very recently, Morgan Stanley Mauritius bought 467,500 shares at Rs 84 a share and The GMO Emerging Illiquid M. bought 271,000 shares at Rs 82 a share of Bhagwati Banquets and Hotels.The company is expected to find many more renowned takers because of its unique and monopolistic business.

Whats most inspiring is the main promoter of the company and the largest stake holder,Mr Narendra somani-one of the finest vision oriented man bought nearly 13 lakh 50 thousand shares of his own company from open market purchases in the last 2-3 quarters.

Conclusion:
In April '07, Bhagwati came out with a public issue of 2.3 crs shares at Rs 40 each, aggregating Rs 92 crs.Simultaneosly equity capital then rose–-from Rs 6.3crs to Rs 29 crs.The issue got decent response and was oversubscribed.The catering service has done well in the past five years. The number of meals supplied per day has jumped from 200/300 in FY03 to 1,500/2,000 in FY07.At the CMP of Rs 63,the stock trades at 8x FY09E EPS of Rs 8.A great business model backed by a very strong and ambitious pedigree,a market leader with hardly any competition,A pure play on indian consumption and growth story,anything else is required to ventitale for inspiring?To me its a great buy at the present levels.

Range Bound moves to continue.........

Sensex Technical View :

Sensex should continue to remain range bound qith 18300-18500 band as resistance on upside and 17200-17500 on the lower side. Traders will have a tough time taking directional calls for some more days. Investors should wait for dips near to 17200-17500 zone to again deploy some cash. Those who played the earlier bounce and pulled back cash can again start looking for dips.

Stocks to watchout for :

Infosys can give a nice move if it sustains above 1600 levels can toucch 1660-1750 on higher side ...

K S Oils looks good for long term as promoter buying is seen for last few months ...

http://www.bseindia.com/Insidetrade.asp

There are whole lot of stocks in the mid caps which look exciting on fundamental basis but investors will need lot of patience as they will take more time . So the strategy should be take only an initial exposure and then wait for a change in trend or reversal or stable mkt conditions as it is better to buy the stock at extreme panic levels when there is a good reversal as currently the holding period seems longer and only patient investors . Till then do ur homework find a good list of stocks with nice fundamentals , good mgmt and do ur research to shortlist a few of them and look for attractive levels.

Grabal alok impex:-The next emperor of the indian textile industry

Scripscan:-Grabal Alok Impex Ltd
Bse code:-532909
CMP:99
Target:200
Duration:9-12 months
Expected return:100%

Introduction:-
Grabal Alok Impex Limited (Grabal Alok), part of the Alok Group, is amongst the largest global manufacturers of embroidered products. Grabal Alok is a well known name in the Indian embroidery market and is mainly an export oriented company.The company has a wide product range within the embroidered fabrics segment which includes edgings, allovers on any base fabrics and embroidery designs which find usage in dresses of African & Arabian Nationals besides Indian sarees and salwar kameez.The company is also a preferred supplier to the key garment & made-ups exporters and has presence in the indian market through wholesalers & retailers.Over the past few years Grabal has established its direct presence in Africa and some EU countries .The company has created it own markets and is also benefiting from its increased participation in international fairs.Much of the companies current production is sold to the big export houses for sale to Gulf, Africa and European countries.

Assitance of Alok industry:-
Grabal Alok has close synergies with Alok Industries which currently has the best processing facilities in the country. Alok is the naturally preferred supplier of fabrics to Grabal. Besides, Grabal sends the unprocessed fabrics to Alok on jobwork basis.Grabal is uniquely placed in the international markets on accounts of its ability to manufacture the Swiss quality (of highest regard) embroidery at Indian prices. Besides the latest technology in embroidery, Grabal is also a beneficiary of the highend processing offered by Alok. The modern processing technology including the soft flow processing made available by Alok, enables Grabal to make the best quality embroidered goods.Essentially, it also has a key focus to expand on the home textiles front,thanks again to its strong pedigree in Alok Industries.The newer additions to the product portfolio serves the dual benefits of diversification as well as higher margins. Grabal certainly will be able to cater to a sizable requirements from Alok in the home textiles segment.

'QS'acquisition:-
During FY 2006, the company through its wholly owned subsidiary Grabal Alok International Ltd.(GAIL.)has taken 20.09% stake in Hamsard 2353 Ltd.,(HS) a UK based retail chain having 207 retail outlets across England,Scotland and Wales.These stores are run under the brand name 'qs'.The stores offer value for money ranges of garments for women, men, children and home ware.The stake has since increased to 75% in HS in FY 2008 at an aggregate cost of GBP 16.37 mn.HS also stands renamed as Grabal Alok (UK) Ltd(Grabal- UK).

The company has adopted a multi pronged strategy to improve the performance of Grabal-UK:
i)Change the sourcing of merchandise from UK and other European countries to India, China and other low cost Asian countries.Grabal-UK has also opened sourcing offices in Mumbai, New Delhi and Tirupur in India and also in Bangladesh China and Sri Lanka.

ii) Enhancing the management band width by inducting professionals to manage the operations.

iii)Refurbishing of the stores and improving brand image.

iv) Introduction of New Products and shift towards a profitable product mix and reduction in expenses.

Locational advantage:-
Grabal alok enjoys a noteworthy locational advantage as its manufacturing facilities are concentrated in the Navi Mumbai and Silvassa region.The raw materials requirements of the company are met from the Vapi - Silvassa textile belt.The export oriented company also gets the benefits of proximity to the ports.

Indian embroidery market:-
Indian embroidery market is growing both on the domestic and the export fronts at an estimated CAGR of 14%. India is expected to be the second largest supplier of embroidered products after China.Embroidery being a labour intensive industry, India has the competitive advantage in terms of skilled and relatively low cost labour - for Grabal Alok Impex Ltd. and most of the Asian manufacturers cost of labor is 5% of sales; for European manufacturers it would be around 30%-40% of the sales.

Prospects:-
The prospects for the domestic market are very promising with a healthy GDP growth, rapidly increasing middle income group accompanied by a rise in aspirations and purchasing power.The per capita textile consumption is expected to increase to 30 meters by 2010 from the present level of about 20 meters. The same should propel humangous growth in domestic textile market to USD 50 bn by 2010 from the present USD 33 bn(CAGR of 9% p.a).

Industry Outlook:-
The Indian textile industry after long time is again being perceived as a sunrise industry, thanks to the removal of quotas in December 2004 and the booming Indian economy.Since removal of quotas, textile manufacturing is continuing to shift from high cost western economies like USA, Europe to low cost Asian countries like China and India. This is resulting in increase in global textile trade which is expected to grow from USD 480 billion in 2005 to USD 650 billion by 2010.It should be also prudent to note that,"India's exports are expected to grow from the present level of USD 19 bn to USD 45 bn by 2010".

Expansion Projects:-
The company possesses amongst the most modern and versatile embroidery facilities consisting of 21 Schiffli machines, 14 Multihead machines and 1 Quilting machine out of its two plants situated at Mahape, Navi Mumbai and Vasona, Silvassa. Over a period, the company has developed goodwill for its superior quality, versatile product range and strong designing capabilities and has created a wide and niche customer base and enjoys an order book position of over 4-5 months.To meet the growing demand for its products and widen its market, the company has undertaken expansion of its embroidery manufacturing capacity in phased manner.
Phase I:-Under the Phase I of expansion project, the company has installed 4 Lasser make Schiffli embroidery machines and 16 Barudan make Multihead machines at its existing unit at Silvassa. This has increased the embroidery manufacturing capacity by 7015 mn stitches p.a. and total capacity to 16263 million stitches p.a. The total cost of project has been funded by a term loan of Rs. 20 crores from State Bank of India under TUFS and balance by internal accruals.

Phase II:-Under Phase II,company is increasing its embroidery manufacturing capacity by 17737 mn stitches p.a. at Silvassa taking the total embroidery capacity to 34000 mn stitches p.a.The company is installing 60 single deck Lasser maker Schiffli embroidery machines and 30 Multi head embroidery machines at an estimated cost of Rs.150 crores. The same is being financed by a term loan of Rs. 115 crores under TUFs and balance by internal accruals.

Entrance of Reliance:-
Few months back sonata investments,a subsidary of reliance capital entered the counter by buying out huge quantities(over 10 lakh shares at a price range 118-131) through numerous bulk deals.It entails tremendous confidence as we all are aware of the brand name of reliance.With reliance looking to magic again with "Vimal",i cant rule more equity participation by the large behemoth.If that happens the company should see itself in a new orbit.Given the strong prospects of the Indian textile industry and the ideal positoning of the company, the future looks extreamly bright.

Risks and the solutions:-

Risk of Competition:
The company is subject to competition both in the domestic and international market.
Solution)The company since inception focused technology, quality, innovation and attaining right size. Today it has a large and loyal customer base in domestic as well as overseas market and enjoys on an average a healthy order book position of 4-5 months.It is also geographically expanding its market reach.

Risk of Currency fluctuation:-
With increasing exports, the company is subjected to adverse fluctuations in the foreign currency.
Solution)The company relies on a combination of external advise through a reputed consultant and in house treasury department to manage the currency risks.

Risk of Interest rate hike:
The company's debt profile is primarily on a floating interest rate and hence vulnerable to interest rate hikes.
Solution)The company's long term borrowings for expansion projects are under Technology Upgradation Fund Scheme, at a concessional rate of interest. The company through suitable financial instruments like Foreign Currency packing credit, CP linked rates etc., reduces the interest cost on the working capital front.

Conclusion:-
The company ranks amongst the large embroidery players in the world.Market diversification, capacity expansions and synergies with Alok to auger well to elevate Grabal's performance over the coming years.Grabal stands tall in terms of efficiency, reduced downtimes and quality besides being the most reputed player in the industry using the most modern machineries.Also the ambitious acquisition of UK retail chain lends an ideal platform for the company to widen its global presence.I expect the company to create considerable value by turning around the performance of Grabal -UK.

Valuation&Recomendation:-
The company has de-risked its business operations over the past few years.The CMP of Rs. 99 discounts the FY09E earnings by 11x.Turnover is expected to bloster to 175-180crs in 09 from 93crs on 07.The company has been overlooked by the retail fraternity just for no reason.Textile sector on a whole never really performed over the last 2 years.But i am talking about a company which is one of the world leaders in its business.I am talking about a scrip which is doing every stuff needed to position itself in the top few league.I am recomending something which has been a institutional favourite backed by a strong pedigree with a great business model.The company has consolidated for a fairly long time in the bourses and now with things looking up,"Maybe the shareholders of grabal alok are here in for gala days".Go for it guys and enrich your lives .

Reliance power and "Chor" promoters

Has anybody ever thought why majority of brokers/promoters/punters/investment bankers wish that always, market should keep on going up and attain new high every month, every year. Like in the storm, iron cauldron also flies, in irrationally bull market, even dud scrips start flying. Dirty/dishonest operators manipulators can do business only in hyper markets. In calm markets, such elements will be out of business and unemployed because in stable market, investors will do only value buying. Similarly, in irrational bull markets, promoters can make placement of shares at highest possible premia, float IPOs at wrong prices taking advantage of bull euphoria with complete disregard to fundamentals. Ponzi game is played wherein even wrong pricing of IPO is justified because it was listed at premium and investors could make 20-40% instantly. It encourages more IPOs at more wrong/aggressive pricing and investors still flock to it as they made money in earlier/another issue. Investment bankers walk away with hefty fees and patting their backs for managing billions worth IPOs . However, nobody can fool everyone for all times or even for a long time.

IPOs of Emaar MGF and Wockhardt Hospitals bombed badly, leading to withdrawal of IPO. It is despite the fact that literally, who's who of investment banking world were involved in the process of selling chalk for the price of cheese. Now, no one is admitting the mistake of wrong pricing. Rather, they are blaming unsuitable market conditions. It clears shows the greed and collusion on part of promoters and investment bankers. Emaar has issued a statement that 'projects wont be affected as enough funding is available' .It means that they did not need more funds and were just taking advantage of investors' madness for IPOs. If so was the case, why they planned for an IPO? This community has become sort of megalomaniac who think no end of themselves and who want to leave nothing on the table for common investors. They wont reprice their IPO at realistic levels and prefer to wait for another euphoric run on the bourses to make the killing. Lion wants to eat only the meat and not grass. Excessive hype and speculation in IPOs can be partially curbed if all classes of investors (no exceptions) have to put 100% money alongwith application. Moreover, it should be made obligatory on part of promoters to subscribe at least 5% or even 10% of IPO amount at same price which promoters are planning to extract from gullible public. Many Promoters have been hooked to the thinking that public/investors' 1 rupee is worth 10 paise whereas promoters 10 paise is worth One rupee.

Investors and promoters may remember that it may be possible to hold share price to unrealistic levels for 1 hour or 1 day or few days but not for a long long time.

HBL Power Systems:-The scrip to rock in the coming days

Scripscan: HBL Power Systems Ltd

CMP:349

Target:560

Returns expected:60%

Duration:6-9 months

Traded in Bse-nse

Introduction:

HBL power is engaged in the business of making specialised batteries, electronics and DC power systems and caters to a variety of end-user requirements across industries.The customer segments include telecom, railways, defence, power, solar energy, petroleum, oil and gas, and uninterrupted power supply systems.

"10 points which justifies and favours my bullishness in the scrip".

1)A secured communications product,(a gateway encryptor) developed by HBL has passed all the tests required and is likely to be used widely by several government agencies,beginning early 2008.The product can prove to be a blockbuster for the company.

2)The company made 2 bids during early 2007 for defence electronics contracts, totaling over 500 crores. The time lines in defence are such that the final result will be known only in end of 2008.The products are already in field trials.Further, Its JV with IAI-ELTA of Israel has commenced exports recently.Two bids were made by the JV to the Ministry of Defence.Results may be known in mid 2008.

3)Railway field trials for signaling products developed by the company commenced late and has just been completed,Almost a year behind expected schedule.Orders are expected to pour in going ahead.Also,Several export enquiries have been received by the company for contract manufacturing of Power Electronics equipment.The management sounded very confident in bagging at least one of the significant orders these year.

4)The batteris market share for the company in Telecom segment continued to be about 50% and its growing all the time.New markets for Military use (Thermal, Reserve and Torpedo batteries) have emerged last year mostly in the international markets, these are ultra high specialties with very few producers in the world. The number of export customers for passenger and military aircraft batteries has also grown for the company.

5)The companys main raw material Nickel prices had gone up to unprecedented levels last year but have already declined considerably.Lead prices seem to have hit their peak in mid July 2007,and appears to be coming down.The both factors should further boost the bottomline for the company.

6)The management expects to increase its margins as each and every contracts of the company are now on variable cost and the price hike has been pass on to the clients.Last year the company faced several problems because of the high volatility of input cost prices, this fiscal they have given a decent check in managing the raw material procurements.

7)In these sort of competitive environment where most companies are struggling to grow by 20-25%,Hbl is going to double its turnover and Profit these fiscal.The company has guided a turnover of in excess of 1000crs these year vs 511crs last year.Profit after tax should touch around 70crs vs 32crs last fiscal.It should be prudent to note that the company guided 500crs revenue in 07 and ended up doing 511crs.

8)Further the company is expected to post turnover worth 1650crs in 09 and profit is expected to inch to around 120crs.Eps for 08 and 09 are expected to be 29 and 50 respectively.At present price of 349 the company is quoting at 12 times its 08 and just 7 times its fy09 earnings.

9)Reliance via its subsidary sonata investments has been holding over 7% stake in the company for quite some time now.Everyone is aware what brand relaince can prove for a company to be and it entails tremendous confidence in the mind of investors.

10)The company as on march 2007 has got over 215crs reserves in its book which is around 9 times its equity capital.Its of one"s easy assumption that HBL remains one of the primate candidates for a liberal bonus issue.If the assumptions vindicates that can certainly as a big trigger for the company.

Conclusion:

Given the many opportunities in core applications such as telecom and power, the company has huge growth prospects.At 349rs its quoting at 27 times its 07 trailing earnings,12 times its 08 earnings and just 7 times its 09 earnings.Now folks you certainly can differentiate between 7 and 27,isnt it?Take out your calculator and value the company.I have valued it at 11.2 times its 09 expected earnings and can only say its a screaming buy.

Stock market:Analysis of IT,Automobile,Textile,Fertilizer,Power,Telecom,Power equipment and Metals in short

Analysis of some important sectors in short:-

1. IT Sector:
Due to strong rupee, earnings growth of IT companies has slowed down and hence, leading IT scrips have been underperforming. Since, rupee is unlikely to weaken in near future, IT companies will not report outstanding growth.

2. Automobile sector:
This sector is already witnessing slowdown in growth. Further, rising metal prices will not allow big profit growth and hence, vauations of this sector are not compelling anymore. Further, no sharp growth is expected in this sector for next 1-2 years at least.

3. Textile Industry:
This sector is passing thruough one of the worst times. Even if Govt doles out any benefits, it wont lead to significant improvement in its dire position. In fact, textile industry may post dismal results for next 2-3 quarters.

4. Fertlizer sector:
Share price of many fertilizer stocks had been ramped up brazenly althoughthis sector has always underperformed. Even Govt is coming with some new policy for this industry, fertilizer industry should not expect any path-breaking changes and fortunes/profits of fertilizer companies may change only in a minor way.

5. Power sector:
This sector has witnessed never-before ( and i pray never-again) hype which led to mindless valuations.

6. Telecom sector:
Yes this sector continues to exhibit big growth. But companies at PE Ratio of 40-60 are not screaming buy.

7. Power equipment industry:
Valuations of this sector still appear to be attractive (comparatively).

8. Metals:
Prices of various metals have already risen steeply and further rise may be very slow and infact, there can be even reaction in metal prices. Hind zinc has already reported huge decline in its profits.

Some criticism for everyone in the stock markets !!!

So people have lost again everything what they had and as always our markets are there to be blamed.Thats the easy way out for everyone and i am even witnessing slogans of quiting markets in some of the active stock communities.Guys please admit that its because of ur mistakes that u have lost.Were u not made aware that severe price erosions can be on the cards?were you not told that investing in companies which only exists on paper would always acts as timebombs?I am no one to blow my own trumphet but its the fact.Money making was the easiest thing and stock markets were child acts for that ,isnt it?Pan walas,dabba walas even highly qualified meritorious guys opted for stock markets instead of their profesions,business:Why?Because stock markets can only go one way and thats northwards.


Whats most astonishing is,people wre banking on whtver they felt,on question of why the scrip was bot it was answered like,"Charts are promising,Promoters are holding above 90% stake in the company,its going to be a multibagger,Mere sasur ne kaha hain ki ismey reliance ka koi histedar nibesh karne wala hain(my father in law recomended it coz some reliance partners or reliance guys are going to invest in it) etc.Ths is so weird,creepy bullshit stufs that has been going on on the markets and it ended very recently as u all are well aware.Folks u are only responsible for ur losses.I am not blaming one who invested in quality stocks but my hatration is with the persons who bot 3rd class stocks at ridiculious prices.Anyway wont sound much to make ur wounds cut more but my solace are there for all of u.Try to be a bit disciplined,always be aware of what u are buying,never trade if u havent got that mentality and always make ur mindset about what you are going to do.

Remember its a lesson for u ,market would again stabelize but memories would be there.Experience is superior to precipt and with the present stuffs it cant be better.Relax folks,chill,ur day wud again come and we all will be smiling,partnering u on ur smiles.

Outlook for indian stock markets

Market outlook:-

Each Time the Sensex corrects from highs,some common questions haunts retail investors:
"Are we going to correct more?Is it the rite time to buy? Is the market going to make another top after the correction just like every other correction happened in the past?" If investors get both aspects — the framework of this bull run and its longevity backed by high conviction levels — right, it will be easier to retain equity exposure amidst high volatility. While in the long term, the market is driven by factors like economic growth, earnings, valuations, economic health etc, in the short term, only two factors work — liquidity and sentiment.India is among the 10 countries in the world to have a trillion-dollar GDP and m-cap simultaneously. It is the 14th largest country globally in terms of m-cap and 12th largest economy in terms of GDP. It is also the fourth largest market in Asia (after Tokyo, Hong Kong and Shanghai), and India's GDP growth rate (over 9%) is the second-fastest globally.The country's per capita income has risen over 8% in the past 2-3 years.Domestic entrepreneurs are ready to play the global game with the mindset of creating Indian MNCs. These factors signify that India has reached global scale and size. The economy is on its way to becoming an economic super power. There will be some speed bumps along the way, but there won't be any U-turns.

As is the case globally, when economies undergo this transformation, the equity asset class creates wealth in the economy and outperforms most asset classes.India will witness the same phenomenon; equities will outperform most asset classes over 3-5 years. From a macro perspective, India may look a bit expensive, but taking into account the growth profile and possibility of value unlocking from balance sheets, it is bound to remain expensive.The idea is to take exposure in the right sectors and stocks.Greed- and fear-driven sentiments cause market movements in the short term. What happened in February/ March '07 reflected fear among market participants. As inflationary pressures started to cool off, the fear started receding, backed by strong corporate earnings and domestic and international inflows. Though the market performed well in April/May '07, there is a lot of scepticism.

Technically, market bottoms are an outcome of panic-selling as large buying dries out, while tops are made when investors feel left out and start buying to gain market exposure without paying attention to price — a phenomenon which may be termed 'panic buying'.But now we are coming out of the greed stage and moving towards the panic selling stage.How long it will last is a function of liquidity in the short term, global markets and news flows. There can be some bounceback before another correction sets in. Macro level concerns like the rupee's appreciation, interest rate pressures, US recessions,Fii selling will remain and may create an overhang.At the same time, there's enough appetite for corrections to buy Indian paper.The Sensex may remain in the 18300-20500 range in these jan-april quarter.

Caution and Cash are good things to have !!!

Sensex Technical view :

There is a whole lot of support around the 19500 zone. The different trendlines and channel come in a zone of 19500 + or - 250 points . Possibly the bottom could be near about that and a gap down fall 2 days back suggests it can be filled up in days to come. As we had advised some time back about a whole article on portfolio , mid caps etc to generate cash. The strategy continues to be same be cautious and hold the cash to keep u flexible to utilize opportunities possible.


Some thoughts :
Why do small investors get problems in investing....

Some lines :
Intra - Day trading stocks become investments when they go down .

Short term dabba stocks are never booked partially also when they double or triple in greed of more. These remain in the portfolio in hopes of seeing previous highs.

Investment stocks are booked on 20% gains as movements are slow and steady .....later they rue about the fact i had that stock at such a low price....

All in all there are many mistakes all of us make but there is one thing we shud take care as one cant afford do the same mistakes again ..........

Booking losses is what people are afraid of .....Businesses are bound to have risks and losses....So do review ur strategies as there is a long way for the markets in India ... Improvize , Optimize with every mistake as markets can create wealth for u only if u want to !!!

Sayaji hotels:-The next big star in the hotel industry

Scrip scan:-Sayaji hotels

Code:-523710

cmp:-112

Introduction:-

Booming tourism industry and higher business travel has led to insufficient rooms in indian hotel industry. As a result,most hotels in all categories are enjoying best ever occupancy as well as arpu.Hotel industry is expected to do much better for next 2-3 years.

In such a scenario, sayaji hotels appears a good pick.Promoted by dhanani family of indore, company has hotels in baroda and indore.In fact,indore property enjoys dominant position in indore city with its central location.Sayaji faces very little competition in indore.Indore hotel offers full marriage package which is very popular and big money spinner for the company.

Future prospects:
Company has been performing exceedingly well.It is estimated that sayaji should earn revenue of rs. 80 crs. And net profit of rs. 7 crs for fy08. The company has set up a 350 room hotel in pune.Company is also planning to set up another hotel in one of the major prime cities. These 2 projects will catapult sayaji into bigger league.
The company has up chain of restaurants called 'kabab ville'.These restaurants offer high quality speciality food at reasonable prices.

Sayaji Hotels:-
The company is planning to capitalise the hospitality boom by opening 100 Barbeque Nation restaurants in the next 3 years.

Conclusion:-
The scrip is presently quoting at 112 rs and has been moving up up after a long gap of time.Though valuations are not dirt cheap but numbers should speak in the coming quarters.Prospects looks good.Management is ambitious and they are doing all the rite things needed to make a name for themselves

Discipline saves u from the pain and unexpected.....

Hope people took caution well to cut down their leverage , margin and penny positions . Whole lot of pennies and small stocks have taken a good beating after that and can take some more in coming days.Discipline is the word being mentioned in the last few days because there is quick money in certain pennies but u need to be swift enough to conserve it and optimism can take a good part of it back . If u want to stay in for longer run with stability be disciplined in this serious business.

Certain sayings :

• When in doubt stay out.
• Its not necessary to trade everyday.
• If you are not in the market all you can lose is an opportunity.
• More trading doesnt imply more money :)

Stocks review :

Sobha developers moved up 10% in the day after taking a beating with the market. Those who have booked partial quantity can hold. Compact does 4 upper freeze and bhuruka did lowers. Avoid weird ideas for some times book whether its profit or losses. HPCL at 338 to 320 and BPCL at 435 or below looks good for accumulation for patient players.

Remember the following points when investing in the market

Remember the following points when investing in the market:-

1)Sentiments change overnight as people are emotional.

2)If analysis really workd all the time market would have become very boring.They are interesting because we cannot predict human behaviour.

3)When you get information on a stock find out if market already knows it.Know your level ofinformation ladder

4)Life is never fair.You may find incompetent people being highly successful.Dont feel bad,they are reaping the rewards of their past karma,lolz……

5)You cannot get investment opportunities everyday.5-6 of them in a quarter would be great.

6)Patience is always rewarded.The law of firm is applicable in walks of life.

7)Control your emotions.Do not follow the herd blindly.

8)You never miss the buss in the markets.If you have the money opportunities would always come.Preserve your money and don't forget "cash is the king"

9)Bear markets offer better investment opportunities than bull markets.

10)Avoid margin trading.You are only enriching your broker.Ask your margin trading friends how they are treated in the present market situation.

11)Derivatines are good hedging instruments.Unfortunately they are used as speculative instruments.They only enrich the intermediary at the expense of the investor.Avoid them.

ITL Industry:-The undervalued smallcap for your portfolio

Scripscan=ITL Industry

BSE code:522183

CMP=63

Target=96

Return expected:52%+

Duration=5-7 months.

Introduction-
ITL is an established leading metal cutting solution provider offering wide range of machines,tools and cuting lubricants.ITL has been the pioneer in introducing India;s first double column type metal cutting machinein the year 1990 and since then, ITL has supplied more than 2000 machines across the country and global markets.

ITL has started designing and manufacturing of complete turnkey projects as well as equipments for production of tube and pipes which includes tubes mills, draw benches,straightning machines etc, Which are neccesary for production of ERW, Seamless pipes and stainless pipes.ITL developed and manufactured India's first high speed CNC circular sawing machines and the same has been well accepted by most of the engineering industries.It is a perfect solution for cutting requirements of most of the automotive component manufactures and its expected that in times to come, they will shift from conventional cutting machines to circular sawing machines because of their higher productivity and high degree of automotion along with quality cuts.

For FY07, Company had acheived sales of 22 CRS with a NP of 1.32crs. On equity of 3.30 CRS., EPS stood at 4.ITL's profits were not high because steel prices had gone up substantially over last 2 years.The company had undertaken export orders based on the then prevailing steel prices at low margins to enter the export market. With surge in steel prices, Its margins were effected.Now the company has been succesful in putting price escalation clause into its contracts resulting in better margins.

Future Prospects-

The engineetring industry in India is on an upswing on the back of huge demand from the contruction,infrastructure and capital goods sector. This has resulted in an increase in the demand for metal cutting machines.

ITL is well placed to take advantage ofthis oppurtunity as its a leader in high speed sawing technology and is in the process of establishing itself in the domestic and global markets as an innovative and reliable "Cutting solution provider".It would be prudent to note that there are 9 Engineering,2 Polytechnic and 3 ITI colleges at Indore, Thereby giving the company a locational advantage to attract new talent.

Wide Product Range:
Itl has a wide product range in metal cutting solutions.The company offers 60 different models of brandsaw machines ranging from 100 MM TO 1,500 MM cutting capacity with Manual, Semi Automatic, Automatic and fourth generation CNC machines. On the back of its technical tie up with a German company ,ITL manufactures 3 models of Kato Sawing machines with cutting capacities of 250 MM and 400 MM diameter in India as per KLasto technology.

Further, ITL is the hub fortube technology for leading manufactures.With technical know-how from varios Mnc, Itl offers state of art equipment crafted by a highly experienced technical team.Its tube mills have acapacity of making 20 inch diameter tubes/pipes.

All this makes ITL a Pioneer in cutting technology and also places it at an advantage over it peers,Thus ITL is best positioned to capitalize on the demand arising from the tube and pipe manufacturing sector.

The company has represntatives in U.S.A. and Germany, which helps it to maintain relationship with its exisiting customers and also acquire new customers.It is beleived that ITL has appointed dealers in some of european as well as african countries to capture a larger pie of the export market.It completed its modernisation and expansion project with a capex of Rs.2.5 cr. and has also acquired land in the SEZ in Pithampur for meeting global opportunities.Notably,its orders in hand is at a historic high with more than Rs.20 crs. due to the good demand for tube & pipe manufacturing machines along with its recently launched circular saw machine.

For H1FY08, ITL has acheived sales of rs 15.5 CRS. and the PAT stands at 1.05 lakhs.Due to nature of its business,Company reports higher performance in H2. ITL IS EXPECTED TO ACHIEVE SALES OF RS. 40-42 CRS. AND NP OF RS. 2.65 CRS. WHICH WILL TRANSLATE INTO EPS OF 8.

The company has got a good dividend payout ratio and over the last 6 years it has consistently rewarded the shareholders with rich dividends.With the company expected to come out with much higher profits the company may just put a hike in its dividend ratio.

ITL is available at extremly low valuations.Considering high valuations enjoyed by engineering companies these days.The scrips like Gei Hamon, Petron eng, International Combustion E.t.c. are quoting at PE ratio of 12-25 times.With growth in size, ITL IS BOUND TO HAVE MUCH HIGHER VALUATIONS.The stock is currently traded at 17x FY2007 earnings.I strongly recommend BUY on the stock with target price of Rs 96 for the stock,at 12x FY2008E earnings (EPS Rs 8x12).

Garnet construction:-High risk high gain bet

High risk-return bet:-Only go for it if you have got a very high risk apetite.

SCRIPSCAN:Garnet construction

Cmp:91

BSE code:-526727

Present turnover=35crs(2007)
Expected turnover in 08=125crsExpected turnover in 09=240crs

Introduction=

Garnet Construction Limited (GCL is engaged in the business of Industrial and residential construction.The company promoted by Kishan Kumar Kedia and Arun Kumar Kedia has has already acquired about 280 acre of land at Express Highway near Panvel in Navi Mumbai for Residential and Industrial project, which will require a total of 400 acre.Presently the company is involved in a 117 bunglows project at Lonavala.Now what has interested me to recomend the company is the fact that it is having a huge landbank of over 400 acres with company having a mere equity capital of 8crs.With projected revenues of 125cr in 08 its sure to give a huge boost to its earnings and i expect a EPS of around 16 rs.The scrip at rs 90 quotes just a odd 5.5 times its 1 year forward exrnings.With real estate and deleloping companies attracting huge valuation garnet may well continue its journey in the northwards.

Interworld Digital:-The 2rs penny stock with multibagger potential

Scripscan - Interworld Digital Ltd

Code-532072

CMP-2 (FV-1)

Target-4

Duration-12 months.

Introduction-

Interworld Digital is in the business of development of end-to-end distribution technology and support services for the delivery of digital cinema to theaters worldwide.It provides a complete range of capabilities to serve the emerging digital distribution needs for the motion picture industry based on an open standard that covers all of the stages for taking a movie from a studio master to a theater's digital projection system. This includes compressing, encrypting, and transferring the master onto a deliverable media, delivering the content to the theater-either by physical media or via satellite-for storage scheduling and playback.


Positives of Digital cinema -

One of the major revenue-streams for D-Cinema can be in the form of advertisements.It is expensive to copy advertisements to 35mm, and the distribution costs are high. This will limit the market to only large national/international advertisers. By using digital format, it is only necessary to hand in a disc, or down load the content. Distribution can take place centrally from a hub, which will control the running of each individual advertisement for each cinema through a large server, or it can be done by each individual cinema. The reduced cost of distribution, will reduce the advertising costs, and make cinema advertisement more competitive against other media.

Apart from advertising potentially Interworld Digital will enable new revenue opportunities for theater owners by extending their revenue base to include corporate presentations, live events, large-scale training and seminars, and multi-location interactive conferences. But the biggest advantage will come for distribution. Making and distributing copies is a lot easier with digital files than with physical film. Digital copies of a movie save millions by eliminating the cost of creating 100 or 1,000 odd movie prints. A film print can cost up to Rs 600,00 per print so making 100 prints or for a wide-release movie can cost up to Rs 60 lakh.By distributing them electronically,the cost savings on the distribution to the theater and back alone saves millions of rupees.Apart from this, D-Cinema will be of great benefit to B and C cities where 70% movies are of poor quality (B-grade, C Grade and X movies) or are movies that were released a couple of years back. With D-Cinema, they will able to view A-grade movies simultaneously along with their counterparts in cities.

Negatives -

On the downside, the upfront costs for converting theaters to digital are high: up to $150,000. Theatres may be reluctant to switch without a cost-sharing arrangement with distributors.

Prospect -
Interworld Digital Ltd is in the market with the first digital movies that will be transmitted to theatres through satellite. In the first phase, Interworld Digital plans to digitise 50 theatres across the country.Movies transported in encoded format, which would have the highest quality of print, would be shown in these theatres. Digitising of movies would render piracy practically impossible for two reasons. One, the quality of the pirated version would be pathetic. And two, a watermark on the theatre screen would show the place and date on which the pirated copy was made.One big gain for producers would be that they would save huge amounts on prints as each print costs about Rs 8000 and they need to make scores of prints to distribute across the country and abroad.

Outlook-
To achieve its object of setting up fully featured Digital Cinema Model, the Company has engaged famous film Director, Mr. Partho Ghosh, for producing and directing various feature film under consideration and M/s Cyberlogy (India) Pvt. Ltd. for setting up a Network Operating Centre in Mumbai for the Company and for also arranging various other activities.

As the Indian economy grows and merges further with the global economy, the focus of demand for IT and entertainment services will shift from large deals signed by the large enterprises to increasing number of mid-size and small enterprises signing IT and entertainment services which is expected to be the next phase of growth in the Indian IT and entertainment services market.

Conclusion-

Digital technology is already taking over a big chunk of the home entertainment market. Movies might not be able to escape the digital onslaught for long. While digital cinema is yet to take off in a big way in India, it is surely showing prospects of cinema without reels.For viewers, digital projection offers crisp pictures that don't fade or scratch, no matter how many times they are shown. Create the content once and deliver to millions without any generational loss or image degradation.

"Interworld looks to have a bright future ahead.Its quoting at a mere 2rs and upsides can be huge from these level.The promoters too realising the huge potential has been increasing their stakes in the counter.Digital cinema is set to be the next boom for sure and the company having the first mover advantage deserves a better valuation.Interworld basically is following the business model of a Belgium-based company called EVS Belgium.In the US,Dolby Digital is the leader in this industry segment.Being a 2rs counter there is not much to loose but chances are always there that the scrip may just turn out to be the next multibagger."So watch out for it".