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A TIME COMMUNICATIONS PUBLICATION VOL. XX No.43 Monday, September 5 - 11, 2011 Pages 17 Rs.12

Global cues to influence markets

By Sanjay R. Bhatia The markets witnessed a smart recovery during the truncated trading last week. Positive global market cues along with the end of Anna Hazares movement against government Lokpal bill added to the positives. Surprisingly, the US Federal Reserves move not to announce fresh QE measures and use other stimulus measures to boost the sagging US economy also perked up the sentiment. The volumes recorded remained low due to the festive holidays amidst a positive market breadth. Incidentally, the FIIs were net buyers in the cash as well as the derivatives segments. Domestic institutional investors, too, were net buyers and were seen supporting the markets at lower levels. The global economic environment continued to paint a bleak picture as the White House cut the US economic growth outlook for the next two years. Technically, the Nifty has taken support around the 4757 level managed to bounce back above the psychologically important 5000 level. The MACD, RSI, KST and Stochastic are placed above their respective averages on daily charts while, the RSI and Stochastic are placed above their respective averages on weekly charts too. This would lead to further buying support. The DI line and ADX continue to move downwards but are still placed above the 30 level, while the DI line has started moving higher. However, a few technical negatives continue to hold good and would lead to selling pressure and profit taking at higher levels. The Stochastic is placed in the overbought zone on the daily charts, which would result in profit booking and selling pressure at regular intervals. The Nifty continues to trade below its 200day SMA. Further, the 50-day SMA is placed below the 100-day SMA. Hence the market will display occasional bouts of volatility as it tries to sustain above the psychologically important 5000 level. Now, it is important that the Nifty continues to sustain above the 5000 level for at least four trading days for it to test the 5150-5200 levels. Meanwhile, the markets would take cues from the global markets, the news flow on the progress of monsoon and crude oil prices. Technically, on the upside the Sensex faces resistance at the 17506 and 18314 levels but seeks support at the, 16650, 15790 and 15400 levels. The support levels for the Nifty are placed at 4987, 4757 and 4563 but faces resistance at the 5161, 5200 and 5325 levels. Traders and speculators can buy Sun Pharma with a target price of Rs.540 and a stop loss of Rs.490.

A Time Communications Publication

BAZAR.COM
By Fakhri H. Sabuwala A nearly 800 point rally on the Sensex in the first two days of the week was due to more than one upside trigger. First, a victory of sorts to Anna Hazares crusade against corruption was a great relief to the markets. The voice of the common man will now be heard and governance is on its way with positive policy announcements. US Federal chief, Ben Bernankes firm no to QE3 also came as a great relief to the Indian markets. Last but not the least, the covering of excessive short positions created sparked this rally. The Intra-day gain of 600 points and the upside closure by 568 Sensex points on Monday, 29 August 2011 will go down as the single largest gain in a day in the last 100 weeks. This rally made investors richer by Rs.1,70,000 crore on paper. Considering the gains on Monday and Tuesday, the market cap may have touched Rs.62 lakh crore. Despite this rise, the FIIs support was mute while domestic players were a cautious lot. This creates doubts about the sustainability of the rally. The average daily cash market turnover, however, was much, much lower at Rs.9000 crore compared to last months daily average of Rs.11000 crore. Information technology majors gained some grounds after being beaten down last week. The likes of Jaiprakash, Jindal Steel, Tata Steel, Larsen & Toubro gained alongwith some select NBFCs which gained grounds on the announcement of the RBI guidelines on the rally, however, in the NBFC counters was short-lived as some stringent conditions for eligibility led to second thoughts among those aspiring for a banking licence. In view of the tighter capital norms like lending to real estate players and capital market intermediaries, the condition of the former worsened and for brokers, it triggered unwinding of margin trading positions. The proposal for NBFCs to compulsorily have Tier 1 capital equivalent to 12% of risk weighted assets may also weigh heavily on this segment. For the first time, the RBI has proposed that NBFCs must have a minimum cash holding and investment in government securities (G. Secs) to meet the gap in its cash flows. In the coming days, attention, therefore, needs to be paid to scrips like Bajaj Finserv, IFCI, Reliance Capital, India Bulls Financials, ABNuvo Finance, etc. RBIs strict guidelines have come in the wake of the serious problems it encountered in the last two decades when several banks bit the dust and needed to be rescued. The winding of Global Trust Bank, Sikkim Bank, Centurion Bank, United Western Bank, Bank of Rajasthan are some prominent examples. Once bitten is twice shy but the RBI having been bitten more than once is always shy and rightly so. The slowdown in the economy is evident with the GDP growth at 7.7% for the April-June 2011 quarter. This underscores the need for a proactive policy to shore up growth. The way ahead, therefore, is to boost investments, domestic as well as foreign, through long pending reforms in sectors like retail, insurance and pensions revamping norms for mining and road projects and improving business confidence by rationalising both direct and indirect taxes as soon as possible. There is a sharp slowdown in segments like construction & mining, and industrial production is negatively affected, with weak sales of durable and non-durable consumer goods. The higher cost of funds is clearly choking demand and food inflation and commodity prices remain high. In September 2011, the central bank should not hike policy rates, and further dampen growth prospects even as food and commodity inflation remains buoyant. Will the RBI oblige? This question remains uppermost in investors minds and this alone may make the rally unsustainable at higher levels. Times are indeed difficult in the wake of inflation and shrinking margins. It may call for one more shake out before the pain goes away for now.

Will the rally sustain?

TRADING ON TECHNICALS

Sustainability at higher range may be an issue

By Hitendra Vasudeo Last week, the Sensex opened at 16080.74 with a gap and maintained the same as the low for the week. Further, it moved to a high of 16989.86 and closed the week at 16821.45 and thereby showed a net gain of 972 points on a week-to-week basis. Cover short positions for the time being as a pullback may be witnessed. Weaker opening or initial correction during the week to 16263 or below can be used to cover short position. Expect a rise towards 17184-18106. Resistance will be seen in the gap which is left at the higher range of 17358-17664. Therefore, sustainability of the pullback is questionable.

A Time Communications Publication

The earlier support of 17295 and 17314 will act as a resistance prior to the gap of 17358 and 17664. A relative strong rise to cross the resistance of 17295-17314 and 17358-17664 will be required. Failure to sustain at the higher range will result into a slide back below 15765 in due course of time. The RSI indicator on the weekly chart was in oversold and exits at the same last week. The Stochastic is in the oversold zone and needs to exit the oversold zone to generate momentum. The MACD is yet to show any reversal indication for a near-term bottom formation. Candlestick indicates that a near time pullback may be seen. Therefore a weaker opening should be used to cover short position. Whenever the 2 weeks low of 15764 downside momentum may continue towards the desired level of 13000. Wave Tree:
Wave Tree Wave I Wave II Wave III Wave IV Wave IV Wave IV Wave IV Wave IV Wave IV Wave IV Wave IV Wave IV Wave IV Wave A Wave B Wave C Wave C Wave C Wave C Wave C Wave C Wave C a b c x a b Month Dec Feb March Jan Jan March 11-Nov 11-Nov Nov Jan Feb August August Year 1979 1986 1998 2008 2008 2009 2010 2010 2010 2011 2011 2011 2011 Sensex 113 656 390 21206 21206 8047 21108 21108 18954 20664 17295 19132 15764 Month Feb March Jan Sept March 11-Nov Sept Nov Jan Feb August August Sept Year 1986 1998 2008 2011 2009 2010 2011 2011 2011 2011 2011 2011 2011 Sensex 656 390 21206 16989 8047 21108 16989 18954 20664 17295 19132 15764 16989 In Progress Remark In Progress In Progress -

Conclusion A minor pull back may be seen in an overall down trend of lower top and lower bottom formation. The rise if at all comes to existence may create lower top at the resistance of 17295-17314 or at the gap of 17358-17664. The strength of the pullback may be evaluated at the end of the week. Strategy for the week Traders who are short can keep the stop loss at 17310. Cover short position at 16626 or below as the opportunity arises. Sell on fall below 15764 with high of the week as the stop loss or 17310 whichever is higher.

WEEKLY UP TREND STOCKS Let the price move below Center Point or Level 2 and when it move back above Center Point or Level 2 then buy with what ever low registered below Center Point or Level 2 as the stop loss. After buying if the price moves to Level 3 or above then look to book profits as the opportunity arises. If the close is below Weekly Reversal Value then the trend will change from Up Trend to Down Trend. Check on Friday after 3.pm to confirm weekly reversal of the up Trend.
Scrips Last Close Stop Loss Level 2 Buy Price
IDEA CELLULAR INDRAPRASTHA GAS 100.20 438.05 96.0 418.2 97.0 423.6

Center Point Buy Price

99.2 432.7

Level 3 Book Profit

102.5 447.2

Level 4 Book Profit

108.0 470.8

Weekly Relative Reversal Strength Value

Up Trend Date

72.9 67.6

95.5 423.2

26-08-11 02-09-11

A Time Communications Publication

GUJ.MINER. DEV.COR CRISIL PETRONET LNG

186.00 7990.00 177.75

174.3 7851.0 168.5

177.7 7867.3 170.9

182.6 7973.7 175.4

190.9 8096.3 182.2

204.0 8325.3 193.5

67.4 66.2 66.1

171.9 7907.8 170.9

05-08-11 02-09-11 02-09-11

WEEKLY DOWN TREND STOCKS Let the price move above Center Point or Level 3 and when it move back below Center Point or Level 3 then sell with what ever high registered above Center Point or Level 3 as the stop loss. After selling if the prices moves to Level 2 or below then look to cover short positions as the opportunity arises. If the close is above Weekly Reversal Value then the trend will change from Down Trend to Up Trend. Check on Friday after 3.pm to confirm weekly reversal of the Down Trend.
Scrips Last Close Level 1 Cover Short
RELIGARE ENTERPR THERMAX TATA POWER CO. PUNJAB NATL. BNK AMTEK AUTO 415.10 487.85 1021.0 913.00 128.85 342.5 453.8 927.0 860.3 113.3

Level 2 Cover Short

393.4 478.6 995.0 898.3 124.4

Center Point Sell Price

422.7 494.3 1037.0 921.7 131.0

Level 3 Sell Price

444.3 503.5 1063.0 936.3 135.5

Stop Loss

Weekly Relative Reversal Strength Value

Down Trend Date

451.9 509.9 1079 945.0 137.6

27.33 33.53 34.64 34.73 37.27

428.02 491.14 1043.5 975.00 138.29

05-08-11 22-07-11 05-08-11 29-07-11 15-07-11

PUNTER'S PICKS
Note: Positional trade and exit at stop loss or target which ever is earlier. Not an intra-day trade. A delivery based trade for a possible time frame of 1-7 trading days. Exit at first target or above.
Scrips
SJVN

BSE Code
533206

Last Close
22.90

Buy Price
22.35

Buy On Rise
23.50

Stop Loss
22.00

Target 1 Target 2
24.4 25.9

Risk Reward
1.70

BUY LIST
Scrip
BAJAJ AUTO CHAMBAL FERTILISER GUJ.MINERAL DEV.COR

Last Close
1623.55 112.90 186.00

Buy Price
111.08 184.52

Buy Price
110.07 183.62

Buy Price

Stop Loss

Target 1
119.6 192.1

Target 2
1701.8 128.2 199.6

1613.06 1607.82 1602.59 1585.65 1657.4 109.07 105.80 182.73 179.85

EXIT LIST
Scrip
APOLLO HOSPITALS ENT

Last Close
521.80

Sell Price
522.62

Sell Price
524.97

Sell Price

Stop Loss

Target 1
502.7

Target 2
482.7

527.33 534.95

TOWER TALK
* The scare about another interest rate hike by 50 bps is being spread by interested quarters. Growth is already hit and the government can ill afford to compromise on growth any further. * Last weeks hat-trick of positive close was a great relief to punters, traders and investors. Call it a bear cover up or whatever bhaav is bhagwaan. * The market bravely fought the US slump and European crisis on Friday and managed to close in the positive. Believe it or not, FIIs were net buyers while DIIs were sellers on this day. * Future Ventures is announcing a new tie-up every week. Last week, it was Amar Chitra Katha; this week it is Clarks. Watch this stock. * Although the market shot up dramatically last week, investors are advised to be cautious and keep booking profits at every rise. The medium-term outlook is still not very optimistic. * At a market cap of Rs.50 crore, MPS Ltd - Macmillan Printing Solutions, a well-known MNC, is available grossly cheap. Just buy it. * Even in the current market sentiment, Insecticides (India) Ltd. is hitting new highs. Fundamentally, the scrip appears overvalued at a market cap of over Rs.500 crore. Investors should book profit. * Aurbindo Pharma is a victim of the CBI raids because of which its share price has fallen significantly. Long-term investors can start accumulating this scrip at sharp declines.

A Time Communications Publication

BEST BETS

Dena Bank (Code: 532121)

Rs.82.70

Banking is back in favour as corporates make a beeline to the RBI for a banking licence. As the sector catches fancy again, one banking stock that merits attention is Dena Bank to its improved working. Nationalized along with 13 major banks in July 1989, Dena Bank is a Public Sector Bank (PSB) constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970. It is among the first nationalised banks to enter the equity markets in November 1996. Today, out of its equity capital of Rs.333.39 crore, 58.01% is held by the Government of India. During FY11, its net profit surged by 20% to Rs.612 crore on 21% higher operating revenue of Rs.5567 crore. The EPS was Rs.18.3 and a dividend of 22% was paid. During Q1FY12, net profit shot up by 21% to Rs.168 crore on 35% higher operating revenue of Rs.1652 crore. Net interest income for FY11 rose 60% to Rs.1763.37 crore from Rs.1100.03 crore in FY10. Total Deposits shot up 25% to Rs.64210 crore and advances grew 26% at Rs.45163 crore in FY11. CASA deposits grew by 24% to Rs.22743 crore in FY11 as compared to Rs.18320 crore in FY10. Retail Credit has been identified as one of the growth engines for enhancing the credit portfolio of the Bank. The Bank has 10 Retail Banking Schemes catering to various needs of a customer. The Bank repeated its commendable performance in maintaining asset quality and NPA management during the year 2010-11 also, irrespective of the unprecedented slippages experienced by the banking industry in general. The Bank's performance in NPA management is directly attributed to the concerted efforts made for upgradation of recently slipped NPAs, recovery through compromise settlements, action under SARFAESI Act etc., which resulted in improving cash recovery and upgradations to a considerable extent. The proactive steps taken by the Bank in NPA reduction ensured that level of NPAs is restricted to the minimum possible. The Bank has identified Agriculture, MSME and Retail as thrust areas for lending. Through ATM sharing agreements, the Bank has over 70,000 access points. Dena Bank has a network of 1297 branches with 12 extension counters and 507 ATMs as at 30 June 2011. During FY11, it opened 68 new branches and the branch network rose to 1291. It opened another 6 branches during Q1FY12 and proposes to open 155 new branches in FY12. Of these, 55 branches will be especially opened for the financial inclusion plan and all RBI approvals are in place. It is also targeting to have 757 ATMs by 31 March 2012. Dena Banks net interest income (NII) (the difference between interest earned and interest paid was up 24% at Rs.447 crore in Q1FY12 from Rs.360 crore in Q1FY11. The total non-interest income rose 16% to Rs.124 crore in Q1FY12 from Rs.107 crore in Q1FY11. The bank reported 29% higher operating profit at Rs.308 crore in Q1FY12 from Rs.239 crore in Q1FY11. Net interest margin improved to 2.90% as of 30 June 2011 against 2.82% as of 30 June 2010. Its thrust on low-cost current account and savings accounts (CASA) deposit, coupled with higher lending to the micro, small and medium enterprises (MSME) boosted its net profit. Dena Bank has maintained its CASA ratio at a healthy 35%+ level given the higher concentration of its branches in the urban, semi-urban and rural areas of Gujarat and Maharashtra. Over the last two years, it has maintained a CASA market share of 1.1% despite the stiff competition from the private sector banks. While total Deposits shot up by 18.33% Y-o-Y to Rs.61103.13 crore in Q1FY12 as compared to Rs.51638.03 crore in Q1FY11. CASA deposits grew by 16.91% Y-o-Y to Rs.22243.28 crore accounting for 35.17% of the total deposits. The Bank targets a deposit growth of 18% for FY12. This structural advantage is reflected in the bank's cost of funds at 6.7% in Q1FY12 vs 5.9% in FY10, which is quite reasonable compared to other banks and the constant ratio hikes by the RBI. Dena Banks Gross NPAs as on 30 June 2011 declined to Rs.797 crore from Rs.801 crore as on 30 June 2010 and Rs.842 crore as on 31 March 2011. Addition to net NPAs has declined sharply to Rs.148 crore in Q1FY12 from Rs.240 crore in Q1FY11. Net NPAs stood at Rs.458 crore as on 30 June 2011 against Rs.561 crore a year ago, and Rs.549 crore as on 31 March 2011. The Gross NPA Ratio stood at 1.86% and Net NPA ratio at 1.08% as on 30 June 2011 compared to 2.11% and 1.49% as on 30 June 2010. The Net NPA ratio was 1.22% on 31 March 2011. The provision coverage ratio including technical write-off is currently at 77.90%. The net interest margin (NIM) of the bank has improved marginally to 2.90% during the quarter ended 30 June 2011 from 2.82% in Q1FY11 despite the rising interest rates. The Bank is targeting to maintain NIM above 3.0% for FY12. Advances have risen by 13.16% to Rs.42871 crore in Q1FY12 as compared to Rs.37884 crore in Q1FY11. The Bank has targeted a credit growth of 20% for FY2012.

A Time Communications Publication

Dena Bank received Rs.540 crore in the form of equity share capital from the Government of India (GOI). After this capital infusion, the GOIs holding has risen to 58% and the bank's Tier-I ratio has improved by 250 bps to 9.8%, which will enable it to grow its advances more-or-less in line with its peers in the medium-term. Yield on advances improved to 11.32% in Q1FY12 from 9.66% in Q1FY11. Cost of Deposits surged to 6.71% in Q1FY12 from 5.67% in Q1FY11 and 5.76% for FY2011 due to rising interest rates. Cost to Income Ratio has decreased to 46.10% in Q1FY12 from 48.97% in Q1FY11. The Banks Capital Adequacy Ratio (CAR) as per Basel II stood at 13.14% as on 30 June 2011 from 11.87% as on 30 June 2010 on account of the Rs.540 crore capital infusion by GOI. The bank seeks another capital infusion of Rs.700 crore from GOI in FY13 and Rs.800 crore in FY14. During the quarter, Dena Banks CAR stood at a healthy 13.4% with Tier-I capital at 9.8% forming 72.9% of the total CAR. The business mix per employee at Dena Bank rose to Rs.10.83 crore in Q1FY12 from Rs.8.76 crore in Q1FY11 while the business mix per branch rose to Rs.88.44 crore in Q1FY12 from Rs.79.86 crore in Q1FY11. Dena Banks equity capital is Rs.333.4 crore and with reserves of Rs.3322 crore, book value of its share works out to Rs.110. During FY11, the Banks investments rose to Rs.18679 crore from Rs.15694 crore in FY10 and the return on equity stood at 21.05%. The Promoters (GOI) holds 58%, foreign holding is 13.4%, domestic institutions hold 8.6%, PCBs holds 4.6% while the investing public holds 15.4% equity stake. The Bank has been allotted 757 villages with a population above 2,000 for providing banking services through an outlet by 31 March 2012 and targets opening 11,00,000 No Frills accounts. As of 30 June 2011, the total number of No Frills accounts opened by the Bank was 9,55,000. During Q1FY12, 1,64,000 No Frills Accounts have been opened. In FY11, the Bank covered 310 villages under the Financial Inclusion Plan against the target of 299 villages. The remaining 457 villages will be covered by March 2012. The banking facilities will be provided in these villages by encouraging Business Correspondents (BCs) through smart card based technology. Dena Bank is on the path of transformation through effective use of technology and has already achieved 100% CBS (core banking solution) the constitution of a centralized back (for the busy investor) office function has relieved its frontline staff for business development. The bank will PROFITRAK is pleased to announce the launch of Fresh One Buy - Daily (formerly Daily Fresh Buy) for investors/ traders who are keen to focus and continue to make intense efforts for 25% gain from a single stock every trading day. CASA growth targeting high value customers. With just one daily recommendation selected from stocks in an uptrend, During FY12, Dena Bank is expected to post you can now book profit the same day or carry over the trade if the target an EPS of Rs.23, which would further rise to is not met. Rs.26 in FY13. At the current market price of Our review over the next four days will provide new exit levels while the Rs.82.40, the share is trading at a P/E multiple stock is still in an uptrend. of 3.7 on FY12 estimated earnings and P/BV This low risk, high return product for the busy investor is available for (FY12) of 0.63. subscription at Rs.2500 per month. For details contact A conservative P/E ratio of even 5 will take moneytimes@vsnl.com or phone on 022-22616970/ 22654805. its share price to Rs.115 in the medium-term and fetch a gain of about 37%.

Fresh One Buy - Daily

STOCK ANALYSIS

Borosil Glass Works: For the medium-term

By Devdas Mogili Borosil Glass Works Ltd. (BGWL) is a 49-year old Mumbai based glass manufacturing company incorporated in 1962. The companys business can be broadly classified into two divisions viz: Scientific and Industrial Products (SIP) and Consumer Products division. Its manufacturing facility spread over 110 acres is equipped with top-of-the-line equipment from Germany and other West European countries and is located at a fully integrated campus in Bharuch, Gujarat. B. L. Kheruka is the chairman of the company. BGWLs Scientific and Industrial Products (SIP) division sells laboratory glassware, instruments, disposable plastics, liquid handling systems and explosion proof lighting glassware through its network of 150 dealers spread across the country. Its Consumer Products division sells microwavable and flameproof kitchenware, glass tumblers, lantern chimneys and solar thermal systems through 5000+ retail outlets. The companys glass is extensively used in over 2000 different products and applications in areas as diverse as Microbiology, Biotechnology, Photo Printing, Process Systems and Lighting.
A Time Communications Publication 6

In 1995-96, as a part of the modernization programme, BGWL ventured into the manufacture of boro-silicate glass tubings at its Marol plant. As a part of its diversification programme, the company has envisaged a new project at its Marai Malai Nagar plant for the manufacture of heat resistant borosilicate opal tableware. The SIP Division has witnessed growth of 34% over the last financial year whereas the growth of the laboratory consumables industry has been at around 15%. This means that the company has improved its market share from around 43% to 47% this year. Its long-term goal is to achieve a market share of around 55-60% in the glassware portion of the laboratory consumables industry. The Consumer Products Division has seen a growth of 43% in the last fiscal. Owing to several unorganized players in the segment, BGWL was unable to determine the accurate growth rate of this industry. However, compared to the growth of its organized peers, the company has done well. Export Division: Borosil glassware is exported to about 29 countries across the world. Exports during the year were 26% higher at Rs.3.16 crore compared to Rs.2.51 core in the previous year. Property Sale: During 2010-11, the company sold its property at Marol in Andheri East in Mumbai, for a sum of Rs.830 crore and is on the lookout for new business opportunities in India and abroad and may acquire some companies in Europe as well as in India. Till such time that suitable opportunity emerges, the company has invested the funds to ensure a reasonable return with a low degree of risk. Performance: BGWL posted net sales income of Rs.119.10 crore with a net profit of Rs.647.80 crore posting an EPS before extraordinary item of Rs.46.45 and after extraordinary item Rs.1634.24. Financial Highlights: (Rs. in lakh) Particulars Q1FY12 Q1FY11 FY11 Latest Results: During Q1FY12, the companys sales Net Sales/Income 2450 2477 11910 declined 1.09% to Rs.24.50 crore as against Rs.24.77 crore in Other Operating Income 11 6 38 Q1FY11. However, net profit rose 119.81% to Rs.4.66 crore Total Income 2461 2483 11948 in Q1FY12 from Rs.2.12 crore in Q1FY11 posting a Total Expenditure 2349 2181 10958 Other Income 573 51 3093 quarterly EPS of Rs.11.76. Interest 5 130 235 Financials: It has a tiny equity base of Rs.3.96 crore with a Exceptional Items (249) hefty book value of Rs.1684.14. The company has a low Tax Exp (net) 139 11 (385) debt:equity ratio of 0.06 with RoCE of 9.69% and RoNW of Extraordinary Items (62931) Net Profit 466 212 64780 10.19%. Equity (FV: Rs.10) 396 396 396 Share Profile: BGWLs share with a face value of Rs.10 is Res Ex Rev Reserves 66296 listed on the BSE under the B group. Its share price hit a EPS bef Extr Item 11.76 5.35 46.65 EPS aft EXtr Item 11.76 5.35 1634.24 52-week high of Rs.947.85 and a low of Rs.537. At its current market price of Rs.780, it has a market capitalization of Rs.309.19 crore. Dividends: The company paid an interim dividend of Rs.25 per share and a final dividend of Rs.15 per share of Rs.10 for FY11. Its dividend payout has been as follows: FY11 - 400%, FY10 - 0%, FY09 - 0%, FY08 - 0%, FY07 - 30%, FY06 - 20%, FY05 - 10%. Shareholding Pattern: The promoters holding is 44.52% while the balance of 55.48% is with non corporate promoters and the investing public. Prospects: The outlook for BGWL continues to be encouraging given the increased investments being made by the pharmaceutical industry with research & development acting as the drivers of growth for laboratory glassware. The addition of new product ranges will also help the company serve its customers better and result in higher sales and profitability. The outlook for the Consumer Products Division is also strong in view of the increased consumer spending given the increased purchasing power of the middle class. The addition of new product lines as well as the new marketing campaign that the company intends to undertake, will ensure its strong growth trajectory. Conclusion: BGWLs products are synonymous with elegance, dependability, safety and ease of use. In the kitchenware segment in India, Borosil is a generic term for microwavable glassware. The Borosil brand represents quality, accuracy and dependability, and all leading pharmaceutical companies, R&D labs, scientific, health and educational institutions have been its loyal customers for the last 48 years. At its current market price of Rs.780, the BGWL share price discounts less than 16 times its earnings of Rs.46.65 for FY11. The company is likely to post better result in days to come as evident from the Q1FY12 results. The share of BGWL can, therefore, be added to ones portfolio on declines as short-to-medium-term investment.

MARKET REVIEW

Market posts a sharp rally

A Time Communications Publication 7

By Ashok D. Singh The BSE Sensex advanced 972.63 points or 6.14% to settle at 16,821.46 for the week ended Friday, 2 September 2011. The CNX Nifty rose 292.20 points or 6.15% to end at 5,040. The BSE Small-Cap index rose 3.22% and the BSE Mid-Cap index climbed 4.80%. Both these indices underperformed the Sensex. In the three trading sessions last week, the benchmarks gained in all. The market spurted last week after the intense sell-off last month triggered bargain hunting. Investor sentiment got a boost after fears of recession in the world's largest economy receded following an optimistic assessment of the US economy by the Federal Reserve Chairman, Ben Bernanke on Friday 26 August 2011. Consolidated Q1FY12 GDP growth data also strengthened the confidence of investors. The latest data shows that the Indian economy expanded 7.7% in Q1FY12 from a year earlier helped by strong growth in the services sector. The manufacturing sector grew an annual 7.2% in Q1FY12 while farm output rose an annual 3.9%. The RBI had said in its report that there is a need to rebalance the demand from consumption to investment by stepping up savings in the economy. In order to achieve 9% growth in Twelfth Five Year Plan (2012-17), an investment rate of 40.5% would be required if the incremental capital output ratio (ICOR) remains unchanged from 4.5% during the Eleventh Plan. This requires augmenting savings as well as bringing about technological and institutional improvements to lower ICOR. Food inflation firmed up at 10.05% for the week ended 20 August 2011 the highest in nearly 6 months from 9.80% rise in the previous week. Meanwhile, finance minister Pranab Mukherjee described this as really disturbing and raised the possibility of yet another 0.5% rate hike by Reserve Bank of India in coming weeks. The near term prospects for the agricultural sector remains good. Farm secretary, P. Basu on 30 August 2011 said improved rainfall in August 2011 will result in record farm output in the crop year from that began on 1 July 2011. Rice output is expected to hit 86 million to 87 million metric tonnes (MMT) this year a significant increase from the 80.65 MMT produced last year. Sufficient rainfall now will also leave enough soil moisture for the winter sown crop such as wheat, he said. Good rains could help boost rural income and may help bring down food inflation. Exports surged 81.79% to $29.3 billion while imports jumped 51.5% to $40.4 billion in July 2011 over July 2010 leaving a trade deficit of $11 billion data released on Thursday showed. Indian companies relying on European and USA markets are worried about a likely economic slowdown in the USA and Europe. Bilateral trade between India and the USA stood at $36.5 billion in 2010. Trading for the week began on an optimistic note. An optimistic assessment of the US economy by the Federal Reserve Chairman, Ben Bernanke, on Friday, 26 August 2011 boosted stocks across the globe and Indian shares were no exception on Monday, 29 August 2011. The Sensex gained 567.50 points or 3.58% to close at 16,416.33 and the Nifty was up 171.80 points or 3.62% to end at 4,919.60. The key indices rallied as strong Q1FY12 GDP growth data helped Indian shares extend Monday's rally on Tuesday, 30 August 2011. The Sensex rose 260.42 points or 1.59% to 16,676.75 and the Nifty was up 81.40 points or 1.65% to end at 5,001. The key indices logged gains for the third consecutive session on Friday, 2 September 2011 as domestic bourses played a catch up with its global peers as they reopened after a 2 day closure on account of two festival holidays. Resumed buying by foreign funds also boosted the sentiment. The Sensex rose 144.71 points or 0.87% finally to settle at 16,821.46 and the Nifty was up 39 points or 0.78% to end at 5,040. The Sensex advanced 972.63 points to settle at 16,821.46 last week. On Monday, 5 September 2011 Indian stocks will react to US employment report for August 2011 due on Friday, 2 September 2011. Economists expect US non-farm payrolls to rise by a paltry 46,000 after a less than impressive 1,17,000 rise in July 2011. The unemployment rate is forecast to remain unchanged at 9.1%. The US market remains closed on Monday, 5 September 2011 for the Labour Day holiday. India's consolidated Q1FY12 GDP growth data could prompt the Reserve Bank of India (RBI) to continue raising interest rates when it undertakes mid quarter policy review on Friday, 16 September 2011 to control inflation, which remains well above the central bank's perceived comfort level of 5% to 6%.

GURU SPEAK

Market bounces back

By G. S. Roongta It is indeed unfortunate that market analysts and the media consistently issue negative guidelines without caring to look deeply into the problem or realize that the market has overreacted and needs to correct technically. In August 2011, the bears exercised their stranglehold on the markets that began with the RBI raising the repo and reverse repo
A Time Communications Publication

Mr. Roongta had submitted this article on Monday, 29 August 2011, before he left outstation for a week.
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rates by 50 basis points followed by the S&P downgrading of USAs credit rating and finally Anna Hazares nationwide anti-corruption drive that put the Centre into a tight corner. The bears could not have asked for more. As a result, the market that peaked last Diwali in November 2010 at BSE Sensex 21005 has fallen below 16K to close at 15848.80 on 26 August 2011. It declined 5157 points despite corporate India having registered an average 15-20% growth in 2010-11 and enhanced dividend distribution. Market analysts, brokerages and fund houses pointed to further weakness ahead as if there is no end to the bottom and the sky is about to fall on earth! Last week, I had lamented that one of the top business dailies had reported that the market will fall below 15K based on an opinion poll of few brokerages and fund houses without any consideration of the countrys economic strength and ranking to achieve the second highest GDP growth with 50% growth in exports in 2011-12. The media and analysts have been repeatedly advocating about the G. S. Roongta ghost of rising inflation and interest rates without realizing that both inflation and interest rate was ruling much higher a decade or so back. Yet Indian corporates could sustain it just as they have done in the first quarter of 2011-12. The second most important factor from the investors point of view is the economic slowdown, the debt crisis and unemployment plaguing Europe & USA, which is far more serious. Yet, their stock markets after the recent fall have started stabilizing or improving whereas our markets continue to fall. And to think that just two months back, our markets were performing better than the USA or UK! Can the experts enlighten us as to why we are being victimized on account of the faults or problems of other nations? Is it not ironical that our markets turn weak (as a thumb rule) on weak global cues but still remain weak when global market turn positive? In the week before last ending Friday, 26 August 2011, all global markets closed in a positive territory but both the BSE Sensex and the CNX Nifty were in the red on a week-to-week basis hitting a fresh new bottom from their high attained in November 2010. How did this happen? This was because while the bears had hammered the market and built up excessive short positions in the F&O segment, the FIIs had sold in the cash market and aggravated the situation. This double assault left little choice for the bulls or investors and the market had no option but to decline further to touch new lows. Thirdly, hedge funds who were quite active earlier started withdrawing monies on account of the debt crisis in their home markets and banks in India started calling back their loans against shares or seeking extra margins against the fall in prices of the securities pledged. These three factors created the panic in the market, which was purely technical in nature and had nothing to do with the economic fundamentals or corporate earnings to justify the panic. Was it not, therefore, strange that some analysts started talking about a collapse in the markets like in 2008 when prominent business dailies headlined articles as Are the ghosts of 2008 back to spook investors? or The going gets tough on 28 August 2011 after Anna Hazares agitation had been peacefully resolved as both Houses of Parliament accepting his three demands. Was it not deliberate considering that Anna had already emerged victorious and the US economy showed signs of improvement leading the US Federal Reserve Chief to forego any fresh stimulus to the US economy? Any technical imbalance or huge speculative positions built up either by bulls or bears have to be squared up for want of deliveries. Otherwise, the market becomes either overbought or oversold as the case may be. During the trading week ended 26 August 2011, the market stood heavily oversold and was the headline of this column in the last issue. We had clearly spelt out that the heavy short positions would need to be covered up sooner than later on the back of any positive trigger. There were two of them already in the form of Anna Hazares demands being met, the US economy shaping out better as made out from the actions of the US Federal Reserve Chief, Ben Bernanke. The US markets immediately shot up from being in the red prior to his speech. But our markets were closed for the weekend by then and appeared to have discounted the Anna factor or the US Federals move while closing in the red on Friday, 26 August 2011. How can the market entities overlook or ignore the size and strength of Indian economy, our strong banking systems and strong monetary policy? With the stupendous rise of over 50% in the growth potential for exports, why are our markets led to suffer compared to the US, UK and other Asian markets? It is crystal clear that the FIIs are the sole deciders of our faith and can either boost it or bust it by their investment or disinvestment policies regardless of Indias strong economic fundamentals or growth prospects. And the FIIs are invariably backed by speculators who have a very short-term view and are keen to book profits on either side. Earlier, the FIIs had deployed just US $2 billion or Rs.9000 crore a month when the Sensex was up by 2000 points. And now, when they divested nearly Rs.1700 crore in August 2011, the Sensex has crashed by nearly 3000 points from its high of 18800 to 15800, which clearly establishes that the FIIs are the godfathers of the Indian markets.

A Time Communications Publication

The domestic financial institutions and mutual funds despite being large entities are just silent spectators as if they do not have their own research and logic about the market to arrest its freefall. The massacre of stocks that took place is something that needs to be seen to be believed. Market leader, Infosys, tumbled from a high of Rs.3499 to Rs.2161 within three weeks after announcing the Q1 results as if it had slipped into the red! Hindalco, which was a hot counter two months back at above Rs.250, tumbled to a low of Rs.140. Tata Motors lost nearly 50% from Rs.1382 to Rs.690. Other market leaders like SBI, ICICI Bank, PNB, Tata Steel, SAIL, Jindal Steel, JP Associates, Jindal Steel & Power met a similar fate as they nosedived. The fate of the other mid caps and small caps that were recommended in this column because of their fundamentals was even worse. Thus while it took these stocks 10-12 months to rise and reach their respective highs, they tumbled to such low levels within just 3-4 weeks. How can fund managers assure rewarding investors in the medium or long-term when there is no surety of gains over the next one or two Investment Advisory Service months? As repeatedly expressed in this by G.S. Roongta column, the high speculation in Nifty Futures is the culprit as the market turns Money Times is pleased to introduce Investment Advisory Service riskier by the day while the deliveries are (IAS) by our renowned columnist Mr. G. S. Roongta, who has over 25 rapidly falling. This makes the market years of experience and is well-know for his accurate forecasts since unhealthy and vulnerable to scams as has 1986. happened in the past and both the SEBI and Interested investors can visit Money Times office between 4 p.m. to 6 exchange authorities must act to bring p.m. on Tuesday or Thursday every week after prior appointment down this unbridled speculation. with our office. Outstation readers can consult him by e-mail or This column has been written on Monday, phone. 29 August 2011, as I leave Mumbai for a A minimum one time charge of Rs.1000 has to be paid in advance week but expect the market to bounce back favouring Time Communications (India) Ltd. against which a as: (a) the Anna Hazare agitation has been maximum of 5 scrips will be recommended for investment and settled, (b) the US markets are stabilizing reviewed up to a period of three months. and the US economy is improving, and (c) Other services like portfolios analysis/restructuring will be charged bears will have no choice but to cover up extra depending on the size of the portfolio & service. their short positions all of which will Contact Money Times on 022-22654805 or combine to boost the market and bring Telefax: 022-22616970 or email us at moneytimes@vsnl.com. some cheer to investors.

STOCK WATCH
Barely a year ago, the promoters held 29% stake i.e. nearly 81 lakh shares of Surya Roshni (Code: 500336) (Rs.62.70) as on 30 September 2010. But thanks to conversion of warrants and the recent open offer, they now hold 62% stake i.e. around 2.70 crore shares in the company. Importantly, the promoters opted to convert 1.14 crore warrants, which were allotted to them in May 2010 at Rs.83 per warrant. Hence as per SEBI guidelines, they had to come out with an open offer in February 2011 to acquire an additional 20% stake i.e. 88 lakh shares from the general public at Rs.111 per share. But only 30 lakh shares were tendered in the open offer, which means that investors were not ready to sell their holdings even at Rs.111 per share. Now, five months after the offer, the scrip finds no buyer at half that price! The Company operates in two diverse business segments namely lighting (35%) and steel tubes & pipes (65%). However, the lighting division contributes much higher than the steel division as far as the bottomline is concerned. From its two plants one in Uttarakhand and the other in MP, it manufactures a wide range of lighting products including fluorescent tube lights, GLS lamps, CFL lamps, HPSV Lamps, HPMV Lamps and Metal Halide Lamps, Luminaires and Accessories, High Mast Lighting Systems, Lighting Poles, Decorative Poles and MCBs. It claims to the only lighting company in India with 100% backward integration and the single largest manufacturer of Lamps in the country and owning Asias largest ribbon glass plant. Over the years, it has built up a strong sales network of 30 branch offices, over 1,500 dealers with more than 100,000 retailers. On the other hand, it boasts of having the largest ERW (Electric Resistance Welded) pipe manufacturing plant in India, a large cold rolling strip mill at Bahadurgarh (Haryana) where it manufactures all types of steel tubes & pipes, C.R. strips and PVC tubes. During 2010-11, its 54% subsidiary Surya Global Steel Tubes Ltd, completed the project to set up a spiral mill with an installed capacity of 2,00,000 TPA plant of 1,00,000 TPA capacity of ERW pipes at Bhuj, Gujarat. Commercial production has already begun and will boost its topline and bottomline of the company on a consolidated basis. For FY11, it posted the highest ever sales of Rs.2442 crore net profit of Rs.67 crore and it registered an EPS of Rs.15 on its expanded equity of Rs.43.80 crore. Recently, the company further allotted 54.75 lakh warrants to promoters at Rs.111 per warrant, which if converted will hike the promoters holding to 66.50% from 62% currently. Although its Q1FY12 performance was not as good as Q4FY11, still the company is expected to clock a turnover of
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Rs.2750 crore with PAT of Rs.55 crore on a consolidated basis for FY12. At current market cap of Rs.250 crore, the scrip is trading relatively cheap. ****** On the back of hardening of interest rates, the share prices of most construction & infrastructure companies have fallen sharply in the recent past. But KNR Constructions (Code: 532942) (Rs.99.05) is holding strong as it is one of the under leveraged companies with a comparatively low debt:equity ratio of 0.45:1. It is the only company in the construction space whose interest outgo has actually come down despite sales & profit registering a CAGR of 30% in the last 5 years and it was able to maintain its OPM & NPM consistently around 14% & 7% respectively in the last 4-5 years. For FY11, it posted a muted growth of 10% in revenue to Rs.783 crore while profit improved marginally to Rs.53 crore posting an EPS of Rs.19 on its equity of Rs.28.10 crore. However, it has declared encouraging results for the last two quarters reporting a PAT of around Rs.18 crore each quarter. Couple of months ago, it bagged a huge order of Rs.580 crore from Sadbhav Engineering for the rehabilitation & upgradation of 186 km of highway & roads in Madhya Pradesh and Maharashtra. As of now, it has an estimated unexecuted order book position of over Rs.2000 crore, which is 2.5 times its FY12 revenue. The company is a multi-domain infrastructure project development entity with execution strength primarily in road transportation engineering projects, wherein it undertakes construction of technically complex & high value projects including expressways, national highways, state highways, rural roads, flyovers, bridges, viaducts & civic amenities under urban development. Apart from domestic operations, it is now looking to bag international projects and has formed a subsidiary in Oman in the Middle East. To accelerate its growth momentum in the near future, it intends to diversify its scope of activities to include hydel power and pipeline projects. Further, it is open to experiment with real estate development of commercial, residential and retail projects and is looking for the right opportunity. As per unconfirmed reports, the company holds 90-acre freehold land in key South Indian cities. At the current market cap of less than Rs.300 crore, the share is trading relatively cheap and can be bought at declines. ****** Sanghvi Movers (Code: 530073) (Rs.123.50) has reported a very healthy PAT of Rs.38 crore for Q1FY12 as it gained an extraordinary income of Rs.14 crore on sale of old cranes. Even if the extraordinary income is ignored, it has posted a decent performance with over 20% improvement in sales to Rs.105 crore with almost a flat bottomline of Rs.24 crore. For FY11, its revenue stood at Rs.361 crore with net profit of Rs.86 crore i.e. an EPS of Rs.20. The company provides hydraulic and crawler cranes to various industries in the infrastructure and core sectors like power, cement, steel, aluminium, wind energy, oil refineries etc. It is the largest crane hiring company in India, 3rd largest in Asia and the 9th largest in the world and boasts of a diversified fleet of 360 medium to large sized Hydraulic Truck Mounted Telescopic & Lattice Boom Cranes and Crawler Cranes with lifting capacity ranging from 20 tonnes to 800 tonnes. With pan India presence, it has a dominant market share of over 80% of the domestic crane hiring business of heavy duty 250 MT plus segment and approximately 65% market share in 100-150 MT segment. It has an extensive service network all over India with over 40 depots located at Pune, Vadgaon, Chakan, Nagpur, Jamnagar, Bharuch, Delhi, Ghaziabad, Cuttack, Bangalore, Gadag, Chennai, etc. for parking & overhauling the cranes. To enhance its market share and cater to bigger power projects requiring very heavy duty cranes, it is continuously expanding its fleet size and adding cranes with capacities of 400, 600 to 1600 tonnes. In 2010-11 it invested around Rs.300 crore and placed orders with Terex, Germany, for 30 large crawler cranes. As these cranes command higher rental charges, the profit margin of the company is expected to improve going forward. Moreover, the company intends to invest another Rs.300 crore in the next two years of which Rs.50 crore has been spent till date in the current fiscal. For Q1FY12, the company derived almost 70% of its revenue from the power sector including 38% from the windmill segment. The management is optimistic about the future prospects and expects the power industry and oil refineries to be the major growth drvier for the company. It is expected to maintain its OPM of over 70% and NPM of 20%-25% in coming quarters. For FY12, it may register a topline of Rs.425 with net profit of Rs.100 crore excluding extraordinary item i.e. EPS of Rs.23 on its equity of Rs.8.66 crore having face value of Rs.2 per share. Importantly, due to the nature of its business, the company provides for huge depreciation to the extent of Rs.100 crore, which means its Cash profit is more than double its net profit. A solid bet at current levels. ****** The share price of Confidence Petroleum (Code: 526829) (Rs.11.89) has fallen drastically over the last few months providing a golden opportunity for long-term investors to buy now and add more on declines. The company is the largest manufacturer of LPG cylinders, bottler and provides bottling assistance to oil majors like BPCL, HPCL, Indian Oil, Reliance etc. Besides, it is also manufactures CNG and high pressure cylinders, Auto LPG Dispensing Stations, integrated engineering solutions and LPG logistics. The company has also set foot overseas and has a business presence in Indonesia. It also has strategic tie-ups with companies related to the petroleum business in China and Israel for redistribution of products & services in LPG and other gas segments. It boasts of 49 LPG bottling plants across India and 3 plants in Indonesia, which contribute almost 65% of its total revenue. Another 25% of revenue is derived from LPG/CNG
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cylinder manufacturing at 10 units in India and one in Indonesia. With the recent commissioning of its state-of-the-art CNG & Hi Pressure cylinder manufacturing unit at SEZ at Vizag in Andhra Pradesh, the company plans to aggressively expand the CNG gas and allied businesses. The balance 10% revenue comes from other allied activity. In 2010, it also ventured into auto LPG dispensing stations has till date established 80 stations across India under the brand name GoGas. It has also chalked out an aggressive expansion plan to set up 500 stations by March 2013. Fundamentally, the company is doing well as its sales have grown at a CAGR of 95% and profit at CAGR of 65% over the last five years. For FY11, its revenue grew by 85% to Rs.648 crore while PAT increased by 90% to Rs.46 crore posting an EPS of Rs.1.80 on its equity of Rs.25.90 having a face value of Re.1 per share. For Q1FY12, the company posted a satisfactory performance but not very encouraging. However the industry in which it operates has phenomenal growth potential and the stock at a market cap of Rs.225 crore is available reasonably cheap. A strong buy.

FIFTY FIFTY
By Kukku * Polyplex Corporation (Rs.185.85) company has performed extremely well in Q1FY12, as net profit rose 60.03% to Rs.29.67 crore as against Rs.18.54 crore in Q1FY11. Sales rose 60.85% to Rs.261.62 crore in the quarter as against Rs.162.65 crore during the previous corresponding quarter. There are indications that the current price realisation in polyfilms has improved by 10-12% over last few weeks and raw material prices have come down at the same time. The book value of the share is Rs.99 and the stock is trading cum 70% dividend at current levels. Investors can keep watch on this stock for accumulation on dips as the worst seems to be over for this sector. * Everest Industries (Rs.139.25) offers the complete range of world-class building solutions: roofing, ceiling, wall, flooring, cladding, door and pre-engineered steel buildings for the industrial, commercial and residential sectors. It has posted a 69% increase in net profit at Rs.26 crore (Rs.15 crore) during the first quarter of this fiscal largely due to the jump in contribution from pre-engineered steel business. Income was up 22% at Rs.244 crore (Rs.200 crore). The company also recorded other income of Rs.11 crore from sale of land. Its steel building division has shown a major improvement in implementation of projects. The pre-engineered steel business revenue registered a growth of 51% with an order book position at Rs.160 crore. The building products division revenue grew by 16% only during the quarter. The company has an equity capital of Rs.15.09 crore, with the face value per share of Rs.10. If the current trend is any indication, it may report an EPS of Rs.26/27 for FY12 on a conservative basis. Book value of its share is Rs.138 and the stock is available around the book value. Investors can keep a watch to accumulate this stock on dips for decent long term growth. * Relaxo Footwear (Rs.321) commenced its journey with the manufacture of Hawaii slippers. It has now grown into a large company catering to the footwear needs of the Indian citizen. From a modest sale of Rs.1 million in 1977 to over Rs.5000 million (Rs.500 crore) last year, the company has experienced a record-breaking growth since inception. Today, the company manufactures over 3 lakh pairs of footwear per day, which approximately adds up to over 10 million pairs per year. For FY11, sales of the company has grown to Rs.686 crore from Rs.235 crore in FY10 and net profit has jumped to Rs.27.71 crore from Rs.6.11 crore in FY10 while the equity has remained at Rs.6 crore while the ROCE is 18.62% For Q1FY12, net profit shot up 23.88% to Rs.10.79 crore as against Rs.8.71 crore in Q1FY11 while sales rose 39.53% to Rs.214.73 crore in the quarter from Rs.153.89 crore in Q1FY11. Since rubber prices have fallen in the second quarter, it is expected that Q2FY12 results will be even better. Investors can continue to hold this stock or keep a watch to add below Rs.300 mark with a long-term point of view. * Karma Energy (Rs.11), investors can keep a watch on this stock it is a demerged company from Weizman Financials and was recommended in this column long back. The book value of the share is Rs.36. It is in the power sector with current capacity of around 30 MW and plans to add around 12 to 15MW every year over the next two years. Stock is trading cum 5% dividend at the current price. Investors can keep a watch to add it on dips around Rs.10 level.

EXPERT EYE

Kiri Industries: Acquisition to boost profits

By Vihari

A Time Communications Publication

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The shares of Kiri Industries Ltd. (KIL) (Code: 532967) (Rs.161), formerly known as Kiri Dyes & Chemicals, are strongly recommended for decent gains in the medium-to-long term going by its improving results and bright future prospects after taking over Germany based DyStar. KIL manufactures reactive dyes and dye intermediates. Promoted by Mr. Pravin A. Kiri and incorporated on 14 May 1998, the companys plants are located in Gujarat: three units in Ahmedabad and one in Vadodara. Its product range comprises over 120 dyestuffs used by the textiles, leather, paints and printing-ink industries with a production capacity totalling 10,800 TPA. Integrating backward, KIL commenced manufacturing vinyl sulphone (VS) in April 2006 with a capacity of 3,600 tonnes and H-acid from March 2007, with capacity of 3,600 tonnes, marking its presence in the dye intermediates business. KIL tapped the capital market in April 2008 raising Rs.56.3 crore at a price of Rs.150 per share. With plans of further backward integration, the IPO was to fund its capital expenditure to set up a plant to manufacture sulphuric acid, oleum and chloro sulphonic acid with a combined capacity of 1,80,000 TPA and a dyes and intermediates unit. A power plant that can run on the steam generated by the sulphuric acid plant is also on the anvil. The electricity thus generated will be sufficient not only to run the sulphuric acid plant but also the intermediate plants of VS and HAcid. In FY10, KIL commenced the commercial production of another backward integrated plant for manufacturing basic chemicals like Sulphuric Acid, Oleum and Chloro Sulphonic Acid with a combined capacity of 500 MT/day. It also commenced 3.5 MW co-generation steam based power plant at village Dudhwada, Taluka Padra, District Vadodara. It also commenced the commercial production of it 12,000 TPA Acetanilide at the same place, which is required for manufacturing Vinyl Sulphone. Following the expansion, its capacity to manufacture sulphuric acid stands at 1,00,000 TPA, for oleum at 43,200 TPA and 36,000 TPA chloro sulphonoic acid. Around 25% of the capacity of sulphuric acid, oleum and chlorosulphonic acid is used to produce dye-intermediates H-Acid and VS. The remaining produce is marketed directly to bulk end-users in the detergent and chemical industry and other large consumers. Its capacity to produce dyestuff rose by 3,000 MT to 15,000

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TPA in FY10. Its capacity to manufacture dye intermediates Vinyl Sulphate rose to 4,200 MT in FY09 and then rose further to 5,400 MT in FY10. The capacity to produce H-acid rose to 4,200 MT in FY10. KIL through its special purpose vehicle (SPV) Kiri Holding Singapore has completed the acquisition of Germany based multinational Dystar along with its subsidiaries. Kiri Holding Singapore a joint venture between Kiri Dyes and Chinabased Longsheng Group (Kiri Dyes has 81.26% share in this JV), raised about 100 million to fund this acquisition. It raised 65 million as debt and 35 million by way of equity. Dystar is the global market leader for dyes, dye solutions, leather solutions, performance chemicals, new technologies and custom manufacturing of special dyes/pigments with about 21% market share globally having sales of 800 million in CY2008. Dystar has technical support in all key markets, agencies in 50 countries and 18 production facilities in 12 countries but had been incurring losses since 2005 primarily due to high conversion costs, employee expenses and environmental issues. The entire funds which KIL has raised via QIP are being used to enhance capacities in India. These capacities are mainly intermediate capacities and some of the speciality dye plants, which it is putting up in India. During FY11, net profit rose 33% to Rs.33.1 crore on 66% higher sales of Rs.566 crore and the EPS stood at Rs.17.4 on its enhanced equity capital of Rs.19 crore. During Q1FY12, net profit rose 64% to Rs.12 crore on 19% higher sales of Rs.152 crore and the quarterly EPS stood at Rs.6.3. However on a consolidated basis, KIL posted a net loss of Rs.57 crore on sales of Rs.801 crore due to several costs attached with the acquisition. KILs equity capital rose to Rs.19 crore from Rs.15 crore consequent on allotment of shares to QIBs at a price of Rs.597 in November 2010. With reserves of Rs.383.8 crore, the book value of its share works out to Rs.212. The value of its gross block as on 31 March 2010 stood at a whopping Rs.2018 crore. The promoters hold 58.2% in its equity capital, foreign holding is 10.8%, institutional holding is 10.8% and with PCBs holding 8.6%, leaves 9.3% with the investing public. KIL has also entered into a joint venture with China-based Zhejiang Longsheng group to form Lonsen Kiri Chemical Company Ltd. KILs stake in this JV is 40%, which is consolidated in KILs books. In July 2010, this JV started commercial production and is the worlds second largest dyestuff manufacturing facility. It is a 100% export oriented unit (EOU) and this company exports to over 35 countries globally. It uses the platform of Kiri as well as the platform of Lonsen Kiri, with their established clientele base with agents and distributors all over the world. KIL is setting up a plant at Vadodara for manufacturing a speciality intermediate, named Levafix, with a capacity of 3,000 TPA at an investment of Rs.115.4 crore, which will significantly boost the companys bottomline. Other capacities, too, are being enhanced at about Rs.135 crore. The expanded capacities will be sufficient to meet the requirements of KIL, LKCIL and DyStar, which has shut down its German facilities. With the acquisition of DyStar, KIL is in the league as a total textile solutions provider across the entire value chain. With its 1500 odd live patents, world proven technology, R & D set up of DyStar, KIL will leap forward across various countries where DyStar has its presence. The size of the global market for dyes, dye- intermediates and pigments is estimated at $23 billion. Asia is the largest market for dyes with 44% share of aggregate global sales, followed by the USA, which has a 24% share and the balance 32% is accounted for by Europe and countries in other parts of the world. CY12 would be the first year in which KIL will realise the full value of the DyStar acquisition. During FY12, KIL is expected to generate consolidated sales of Rs.1500 crore with net profit of Rs.60 crore and fetch an EPS of Rs.32. At the current market price of Rs.161, the share is trading at a P/E of just 5 against the industry average P/E of 8. The share has all the potential to touch Rs.225 in the medium-to-short-term and fetch a gain of over 40%. The 52week high/low of the share has been Rs.681/115. ******

Twilight Litaka: Undervalued pharma stock

The share of Twilight Litaka Pharmaceuticals Ltd. (TLPL) (Code: 506985) (Rs.34.95) (FV: Rs.5) is recommended for decent gains based on its strong fundamentals. The share had declined as a large chunk of the promoters pledged shares were offloaded in the market. However, the stock is expected to bounce back soon on its improving fundamentals. Incorporated in 1974, TLPL has its plants at Pimpri, Vadgaon, Vasai, Baddi (Himachal Pradesh). It manufactures Anti-TB formulations, Dietary food supplements, Veterinary products, Nutraceuticals and General Medicines. TLPL was promoted by Gopal Ramourti who is the managing director. TCPL markets over 60 products through its five divisions - Gyneacology, Dermatology, Cardiology, General Physicians and Surgeons. It exports nearly 10% of its products to over 40 countries and plans to register its products in 10 more countries. It has special facilities for the manufacture of anti TB range of formulations, dietary food supplements, veterinary products and neutraceuticals. It is a strong Contract Research and Manufacturing Services (CRAMS) company serving leading pharma companies. Its products Almacid, Azicin, Cafola, Camol, Dolex, Fludar, Laripod, Larixin, Litacal, Richfer, Litacef, Litapraz and Prolita are well accepted by the medical fraternity. It has also received approvals from Sri Lanka and Malawi for the facility in
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Baddi factory and the HACCP certification, which is an International certification parallel to WHO/GMP certification, for its food facility. This will help it obtain approvals for food exports. TLPL has made its entry into the UK market and plans to enter the US market through its range of nutraceuticals. Last year, TLPL full acquired Briocia Pharma (India) Pvt. Ltd. for Rs.25 crore. Briocia has a large plant of around 32 acres near Jejuri, Pune. TLPL has carried out contract manufacturing operations for large companies like Novartis, Pfizer, Wockhardt, Cipla, Lupin, Herbalife, L'Oral, Ruchi Soya etc. at its four WHO GMP facilities and the 5th facility recently acquired at Jejuri, which services customers like Abott, Inventia, Emcure, etc. It has a customer base of over 1,00,000 doctors for 145 formulations that it reaches with a field force of over 1,200 in the domestic market. For FY11, TLPLs consolidated sales rose by 34% to Rs.670 crore and net profit by 59% to Rs.51.9 crore and the EPS stood at Rs.24.5 on its then equity capital of Rs.10.6 crore. During Q1FY12, net profit on a standalone basis was stagnant at Rs.12.8 crore due to higher provision of tax. However, PBT rose 14% to Rs.17.4 crore on 20% higher sales of Rs.183.6 crore. The Q1FY12 EPS was Rs.5.2 on its enhanced equity of Rs.12.4 crore. With reserves of Rs.159 crore, the book value of its share works out to Rs.69. The promoters hold 21% in the equity capital while the balance is widely held by PCBs and the investing public. With an eye on the South African pharmaceuticals market, which is projected to touch $3 billion by 2012, TLPL has picked up 26% equity in South Africa's Interpro Healthcare, which will exclusively market its products in South Africa. According to industry analysts, IMS Health and BCC Research, the global pharmaceutical market grew by a CAGR of about 5-5.5% to US $825 billion in 2010 and can touch over US $950 billion by 2013. The Indian pharma market is projected to grow to about US $20 billion by 2015 at 12.3% CAGR, growing more than 300% from US $6 billion in 2005. The Indian pharmaceutical market has seen a CAGR of about 14% in the last five years. In terms of scale, the India pharmaceutical market is ranked 14th in the world. According to a McKinsey report, India will emerge as the 10th largest pharmaceutical market by 2015 overtaking Brazil, Mexico, South Korea and Turkey. The industry continues to be highly fragmented and dominated by Indian companies. The promoters group held 40% in the equity capital of TLPL until 31th March 2011, which came down to 20.4% in June 2011. The promoters had pledged their sizable holding in the company, which has reportedly been liquidated in the market as a result of which, its share price has tumbled. The company has come out with good quarterly results for Q1FY12 as its EPS stood at Rs.5.2 on the face value of Rs.5 per share. Although its working fundamentals are intact, investors investment newsletter seemed to have lost faith in the counter as the promoters holding has come down. Seize profitable investment opportunities before the herd! However on its strong earnings and Over 50 low-risk, sure gain potential, off-beat stock picks in one improving fundamentals, the TLPL share is year by the experts at Money Times expected to bounce back in the mediumNear Term, Mid Term and Long Term recommendations with bookterm. Promoters, too, may increase their profit prices stake through market operations. Regular updates on earlier recommendations For FY12, TLPL is expected to clock sales of Only for those serious about seeking investment profits Rs.750 crore with net profit of Rs.52 crore, For private circulation via the internet or by courier only which would fetch an EPS of Rs.20 on its Other relevant market information from time to time enhanced equity capital. At the current market price of Rs.31, the share is traded at a Subscription Rates: 6 months: Rs.4000, 1 year: Rs.7000, 2 years: P/E of just 1.7 on FY12 estimated earnings. Rs.12000, 3 years: Rs.15000 A conservative P/E multiple of 3 will take its Contact Money Times on 022-22654805 or moneytimes@vsnl.com for a free share price to Rs.60 in the medium-term. The sample today! 52-week high/low of the share has been Rs.204/30.

Early Bird Gains

TECHNO FUNDA
By Nayan Patel

Gujarat Gas Co. Ltd.

BSE Code: 523477 NSE Symbol: GUJRATGAS Last Close: Rs.459.50

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Gujarat Gas Company Ltd. (GGCL) is India's largest private sector player in the natural gas transmission and distribution business. The company operates as the main distributor of natural gas in the industrial, commercial, domestic and automobile (CNG) segments. Its corporate office is in Ahmedabad and its area of operation is spread across various districts of Gujarat, including Surat, Bharuch and Valsad. In 1980, with the primary objective to procure, distribute and utilize natural gas and allied technology, GGCL pioneered the concept of combined natural gas distribution to the industrial, commercial and domestic customers. Today, it supplies gas to over 3,17,000 domestic, commercial and industrial customers and serves over 1,44,000 compressed natural gas users. GGCLs pipeline network is spread over 3700 kms. GGCL has an equity base of Rs.25.65 crore that is supported by reserves of around Rs.791.16 crore. The promoters hold 65.12%, non-promoter corporate bodies hold 1.62%, foreign investors hold 16.14%, institutions hold 7.52% while the investing public holds 9.60% stake in the company. Due to its 31 December year ending, for Q2CY11, it posted net sales of Rs.585.89 crore with net profit of Rs.96.58 crore against net sales of Rs.416.33 crore with net profit of Rs.57.81 crore in Q2CY10. For FY10, it had recorded net sales of Rs.1846.03 crore with net profit of Rs.258.73 crore against net sales of Rs.1417.64 crore with net profit of Rs.175.12 crore in FY09. The Q2CY11 EPS is Rs.7.51 while the FY10 EPS was Rs.20.08. At the current level, the stock is available at a forward P/E multiple of just 14.40. The company declared 600% dividend for FY10. Investors can buy this scrip with a stop loss of Rs.420. On the upper side, the stock will cross Rs.500 level soon.

Plastene India plans IPO

MARKET FOLIO

Plastene India Ltd. manufacturer of flexible intermediate bulk containers, woven sacks, flexible packaging, woven fabric, tarpaulin, masterbatches, fillers, granules, multifilament yarns and webbings, plans to enter the capital market with an IPO of 1,05,00,000 equity shares in September 2011.

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Disclaimer: Investment recommendations made in Money Times are for information purposes only and derived from sources that are deemed to be reliable but their accuracy and completeness are not guaranteed. Money Times or the analyst/writer does not accept any liability for the use of this column for the buying or selling of securities. Readers of this column who buy or sell securities based on the information in this column are solely responsible for their actions. The author, his company or his acquaintances may/may not have positions in the above mentioned scrip.

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