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.