Stocks crash between 20-90% as market falls
Saturday, June 28, 2008
Various stocks have crashed between 20 to 80% in the current fall. Here is a list of front line stocks that have faced massive selling pressure as if there is no tomorrow.Stocks down by up to 20% [PDF]
Stocks down by up to 40% [PDF]
Stocks down by up to 60% [PDF]
Stocks down by up to 80% [PDF]
Stocks down by up to 96% [PDF] The fall has to be always less than or equal to 100%, point at which it hits 0 ;-) See where your stocks are lying.
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Published by Webmaster @ 6:44 AM IST.
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Reliance Power - JPM Initiates Coverage
Wednesday, June 25, 2008
Finally, we have a brave soul [JP Morgan] initiating coverage on Anil Ambani's yet to take off shell company - Reliance Power Ltd [RPL].
RPL aspires to emerge as India's leading private generation utility with 28.2 GW by 2015. Reliance Power is a play on India's looming power deficit and needs to step up private investments. The backing of the ADAG group with strong execution / funding capabilities and a headstart in tying up equity funds place RPL at a sound position to attain its targets.
JPM is expecting Reliance Power to execute in a sunny day scenario. According to JPM's estimates, Reliance Power should report revenues of Rs 118 cr and Rs 2,192 cr. EBITDA of Rs 57.6 cr and Rs 1,031 cr for FY2010 and FY2011 respectively.
JPM Values RPL based on DCF for individual project SPVs [Sasan, Dadri, etc]. JPM has set a price target of Rs 190.
However, most of Reliance Power's energy is Dirty and the long gestation for the company's projects to commence and generate earnings/cash flows may restrain the stock performance.
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Published by Sunil K @ 6:10 PM IST.
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Neyveli Lignite Corporation - The Mining Saga
Thursday, June 19, 2008
Neyveli Lignite Corporation Ltd [NLC] owns the largest mines in India. It is a a 93.6% government owned company, was incorporated in 1956. It is engaged in lignite mining and power generation. The company owns the largest open cast mechanised mines in India, all situated around Neyveli in Tamil Nadu.
ENAM Direct has initiated coverage on NLC with a BUY Rating. NLC holds the maximum reserves of lignite in the country, handling as much as 90% of the total reserves. It currently has a mining capacity of 24 million tonnes of lignite, which is used to fuel its 2,490 MW of power generating capacity. It also sells about 10% of the raw lignite it mines to small-scale industries.
The cash-rich NLC plans to expand its power capacity by almost 5 times to 11,990 MW and its lignite mining capacity by two and a half times to 61.9 million tonnes by the end of the XII Plan (FY15-FY17).
Lignite, also known as 'brown coal,' is a cheaper alternative to coal. Considering the current global shortage of coal and the surge in coal prices, and the huge capex planned for thermal power plants in India, we expect lignite to emerge as the most cost-effective alternate fuel in India.
NLC is better placed to consistently expand its power capacity by sourcing scarce fuel captively without any uncertainty in the long run. It is also well positioned to reap the benefits of higher realizations from merchant sales of lignite.
Banking on the twin benefits of availability of scarce fuel for its power generation for decades to come and significant rise in realisation from merchant sales of lignite, we consider NLC as a stock worth preserving for the next generation. ENAM has a BUY recommendation on Neyveli Lignite Corporation for long-term investors at CMP of Rs 113, which is 12.8x FY10 EPS, with a price target (for medium term) of Rs 250.
We recommend investors not to rush and can BUY around Rs 100 levels.
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Published by Sunil K @ 12:41 PM IST.
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SREI Infrastructure Finance + Patel Engineering Coverage
Tuesday, June 17, 2008
Kotak has initiated coverage on SREI Infrastructure Finance and Patel Engineering with a BUY rating.SREI Infrastructure Finance:
Srei caters to SME project developers. SREI as an NBFC has created a niche for itself in the infrastructure financing segment. This has helped Srei in capturing a share of around 30% of the infrastructure equipment financing space. Recently, SREI sold its asset financing business to a 50:50 JV with BNP Paribas which will help ramp up its other businesses.
Following the Government's thrust on infrastructure development, demand for construction equipment is expected to increase fivefold by 2015 from the current US$2.3 bn to about US$12-13 bn. Around 85-90% of the SREI's orders are repeat orders, which has helped the company create a niche for itself.
In the JV, BNP Paribas has invested Rs.7.8 bn while Srei has invested close to Rs.250 mn - SREI Infrastructure Development Finance. The new JV has commenced its operations from April 2008. With the 50% holding in the JV, Srei (the parent company) would get additional funds worth Rs.4 bn to capitalize on.
SREI is expected to report an EPS of Rs 11.5 and Rs 16.4 for FY09 and FY10 respectively. Kotak recommends a BUY with a target price of Rs 200.
Patel Engineering:
Patel Engineering's Order inflow has been fairly robust. In a unique business model, company is protected against significant increase in the commodity prices since it gets raw materials from its clients in most of its contracts. However, expect the volatility in realty market to impact Patel Engineering to some extent.
Patel engineering has an order book close to Rs 60bn and company is L1 in another Rs 10bn worth of orders. Bulk of the order book is comprised of hydro power related projects (58-59%), followed by irrigation (17-18%) and remaining is spread across transportation and micro-tunnelling.
Hydro Power project in Arunachal and Thermal power project in Gujarat are still on drawing board though MoUs have been signed. Patel engineering has a land bank of 1000 acres and is currently carrying out development work in Mumbai, Hyderabad and Bangalore for its first phase. The Corporate IT Park in Mumbai will open for business in next month.
Based on the sum of the parts valuation:
Core business valuation 386
Subsidiary valuation 14
Land valuation 327
Kotak has set a target price of Rs 727 for Patel Engineering.
Labels: Patel-Engineering, SREI-Infrastructure-Finance
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Published by Sunil K @ 12:08 PM IST.
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Godawari Power Ispat + Nav Bharat Ventures initiating coverage
Saturday, June 14, 2008
SBI Cap Securities has initiated coverage on Godawari Power & Ispat Ltd [GPIL] and Nav Bharat Ventures with a BUY recommendation.
GPIL:
GPIL's manufacturing plant is located closer to the main raw material source and the main market for its wires. Further the company also owns a railway siding for its captive use. GPIL has received sales tax exemption for a period of 11 years (starting April 2001), with an upper limit amounting to 150 percent of capital investment in production facilities up to March 2006.
GPIL is moving up the value chain, its focus being to increase the share of value added products (carbon steel wires, power transmission wires, railway slippers) thereby increasing operating margins.
GPIL's power plant is registered with the CDM Executive Board for the carbon credits under the Kyoto protocol. It recently installed 25 MW capacities are under the registration process. Carbon credits are an additional source of revenue, at no major incremental cost, thereby affecting the margins positively.
SBI Caps expects the top line and bottom line to increase at a CAGR of 21.47% and 41.80% over the next three years on account increased production capacity and volume growth. At CMP of 186 INR GPIL is quoting at a P/Ex of 6.99x, 4.85x & 3.51x of FY2008E, FY2009E and FY2010E earnings. One can buy the stock with a long term view and a price target of Rs 280.
Nav Bharat Ventures Ltd: NBVL
NBVL is a leading Ferro Alloy manufacturer, has diversified business interests including Power, Sugar, down stream products and infrastructure. The company is the second largest manufacturer of Ferro alloy with installed capacity of 200000 MT and market share of over 15 percent.
NBVL has further plans to integrate its Ferro alloy business through acquisition of manganese ore mines in South Africa and Indonesia. Post manganese ore linkage from mines, the material cost is expected to go down by 30-35 percent.
The company has decided to de-risk the cyclical nature of Ferro Alloy business through capacity ramp-up in its power generation business from current 144 MW to 237 MW by second quarter 2008. With this, NBVL would be able to sell around 100 MW (700 million units) of merchant power at 4.90 per unit. The company is also setting up a 2250 MW coal based power plant in Orissa in a phased manner.
Landbank Saga:NBVL has received in-principle approval for the development of IT/ITES SEZ on 250 acres through an SPV with Mantri Developers, where it has economic interest of around 2 Mn sqft. The total net present value of its land as on date is approximately Rs 840 crore.
NBVL is expected to report an EPS of Rs 54.17 and Rs 65.39 for FY2009 and FY2010 respectively. SBI Caps recommends a BUY with a target price of Rs 361.
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Published by Sunil K @ 6:20 PM IST.
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Apollo Hospitals vs Fortis Healthcare
Friday, June 13, 2008
Apollo Hospitals which pioneered the concept of private hospitals in India along with Manipal healthcare [unlisted] is unable to expand beyond Tier-I cities and is facing saturation in its growth momentum. Apollo' s revenue growth in the past 10 years has been steady with sales CAGR of 32% over FY2000-FY2007, and its number of beds has increased to around 8000 from 1500.Apollo, which contains mostly steady state mature hospitals, has limited upside in terms of growth from existing units. As such, we think the newer hospitals should dilute EBITDA margins in the near term, and hence its expansion plans could impede returns. Apollo plans to add 2164 beds by the end of CY2010, primarily in Tier-2 and Tier 3 cities as the company believes these areas will be the next growth areas. This expansion will dilute EBITDA margins as the new hospitals will take a longer time to turn profitable.
Expect 3-year EPS CAGR of only 3%, although topline CAGR could be 17% over FY2008E - 2011E. On the basis of DCF, Apollo Hospitals should trade a fair value of Rs 458 over the next 12 months.
Fortis Healthcare:
Fortis Healthcare is one of India's largest healthcare providers, with 14 hospitals and 2450 beds primarily in northern India. It has delivered sales growth of 110% CAGR over the past five years.
Fortis plans to expand aggressively, and by CY2011 aims to have 40 hospitals and 6000 beds. To support this expansion plan, the company also intends to increase the number of its doctors to 3500 from 900 and the number of nurses to 15,000 from 3000. Two of its hospitals - Escorts Heart Institute & Research Centre in New Delhi EHIRC), and Escorts Heart Centre (EHCR) in Raipur, Chhattisgarh - focus primarily on cardiac patients are the best known hospitals for cardiac treatment.
Fortis aims to focus its expansion on super-specialty and multispecialty hospitals which typically generate higher revenues per bed and deliver greater operating profits. Fortis may deliver an EBITDA CAGR of 52% over FY2008E-FY2011E on 30% sales CAGR.
Fortis may seem expensive on one-year forward EV/EBITDA of 38.4X vs. global average of 9.6X. DCF based 12 months price target for Fortis is Rs 93.
By 2011 Fortis plans to have 40 hospitals in 15 Indian states with a revenue of $1 bn employing 3,500 doctors and 15,000 nurses with 6,000 beds and ARPB to be at $89,000.
By 2010, Apollo plans to have 10,000 beds with ARPB of $51,000.
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Published by Komal M @ 12:40 PM IST.
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Add BHEL on decline
Wednesday, June 11, 2008
BHEL won India's largest gas turbine order worth Rs35bn (US$815mn), thanks to its new advance class gas turbine (ACGT) from GE. BHEL offers a play on the likely increase in India's gas availability led by Reliance, GSPC and Petronet LNG as this is its third ACGT order in one year. Order inflows from new products and capacity expansion should be the key +ve drivers, with metal prices being a concern.Pragati Power has placed Rs35bn turnkey order on BHEL for 1,500MW gasbased Pragati III combined cycle project at Bawana. The plant is expected to be commissioned before the Commonwealth Games in 2010.
BHEL had 4 set orders on ACGT Frame 9FA technology - 1x345MW from Reliance Industries & 1050 MW (3x350MW) order from Gujarat Urja Vikas Nigam. With this 1500MW, 4 GT order, BHEL has now doubled its GT orders to 8 sets, improving its economies of scale.
Valuations:BHEL's order book reaches Rs 915bn, +11%YTD. BHEL is expected to report an EPS of Rs 79 for FY09 and Rs 103 for FY10. BHEL currently trades at 20x FY09E PER vs BSE Sensex at 16x. However, the premium valuation is justified given BHEL's superior market position, earnings growth (34pct for BHEL vs Market 18pct) and RoE (31pct v/s market 21pct).
Merill Lynch has set a Target Price of Rs 2,250
Lehman Brothers has set a Target Price of Rs 1,818
Citigroup has set a Target Price of Rs 2,529
JP Morgan has set a Target Price of Rs 2,200
CLSA has set a target Price of Rs 2,000
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Published by Webmaster @ 10:19 AM IST.
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GDP growth under various Governments
Monday, June 09, 2008
India's gates of liberalization were opened in 1991 with the rise of Congress government under the leadership of late P.V.Narsimha Rao and Dr. Manmohan Singh. Political stability is very important as it will influence major policy decisions and the country's economic growth story. The following chart presents GDP Growth in India from 1991-2008.
Red Marker - 1991 to 1994 - Congress
Green Marker - 1995 to 1997 - United Front
Blue Marker - 1998 to 2003 - BJP
Red Marker - 2004 to 2008 - Congress
It is clearly evident that under the Congress regime, the GDP growth has been terrific. Policy decisions during their regime in early 90s also pushed the pace of reforms between 1995 to 1997 as well. It is a matter of great concern that during BJP regime the GDP growth slowed down substantially 1998 to 2003. Congress once again revived the economy between 2004 and 2008.
Political Stability and the will to push reforms are an important factor in our Investment Strategy. Can India maintain its GDP growth ? Your views :-)
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Published by Sunil K @ 12:28 PM IST.
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Stocks that can Double - ENAM
Friday, June 06, 2008
The days of Multibaggers are behind us now. Analysts are looking for stocks that can potentially double on FY-2011 earnings estimate i.e within a time frame of 24-36 months. ENAM has researched some based on, imputed EPS FY 2011 calculated to achieve a stock price doubling. They have covered only stocks with Market Cap greater than $2bn who have reasonable chance :-)
The Top 5 candidates based on Market cap are - Reliance Industries, ICICI Bank, SAIL, Sterlite Industries and Gas Authority. You can see the rest of the list of stocks here.
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Published by Sunil K @ 3:07 PM IST.
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Lupin Laboratories in Top 5 Pharma Companies
Thursday, June 05, 2008
Lehman Brothers has initiated coverage on Lupin Laboratories as the company enters the big 5 league in Indian pharmaceuticals. Lupin has successfully scaled up operations in India and the US and has now attained critical size and hopes to be a $1bn company in Fy2008-09.Lupin has reduced its dependence on anti-tuberculosis and cephalosporin products over the years. It has enhanced its presence in the chronic segment instead, with cardiovascular and respiratory segments being the growth divers. Its anti-infectives therapy, which accounts for 22% of domestic formulation sales.
Lupin's sales from the US were $178 mn within 3 years of operations. Lupin has been gaining market share in very competitive products. On the R&D front, Lupin is developing NCEs and NDDS-based products. It is currently conducting additional clinical trials for anti-psoriasis molecules.
Lehman is OVERWEIGHT on Lupin with a 12 month target price of Rs 936 at FY10 P/E of 16x based on DCF Model. CAGR for Lupin is expected to be 25% between FY08 and FY10.
We recommend investors to add the stock around Rs 625 levels.
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Published by Komal M @ 12:48 PM IST.
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Punj Lloyd hammered on loss expectations in legacy project
Tuesday, June 03, 2008
Punj Lloyd (PLL) announced its FY08 result with consolidated revenue up 51% to INR 77.5bn (in line with estimates) and PAT of INR 3.2bn . EBIDTA margin improved by 100bps. The order book of INR 196bn, or 2.5xFY08 sales, provides revenue visibility. PLL maintains its focus in the oil and gas sector and has increased upstream capex in the India and Caspian region.Now you are wondering inspite of the good results why is the stock hammered on the bourses ?
Simon-Carve is executing a USD300m LDPE plant project for SABIC in the UK. This is a legacy order (ie acquired by Simon-Carve, before PLL acquired Simon-Carve). The project is expected to be completed by October 2008 and c10% of the project is remaining. In 3Q08, PLL reversed INR670m of profit booked on this contract. The auditor, in their annual report, commented that PLL has not provided for expected losses of INR 3.05bn from this contract.
Punj Lloyd Management's take on Expected Losses
They are confident of recovering these losses, once the negotiations are completed. The losses, as per PLL, are due to a) change of scope already executed by the company b) change of scope yet to be executed by Simon-Carve and c) losses due to design change and delays from the customer end. The management indicated they have reached a settlement of INR1.15bn relating to items a and b. Compensation for item c is based on estimates by an independent surveyor, the final amount to be paid to Simon-Carve. PLL has provided a performance guarantee of GBP14m for this project
This will keep pressure on the stock in the short-term.
Labels: Punj Lloyd
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Published by Komal M @ 10:56 AM IST.
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