Sensex reveals 10-year trend
NEW DELHI: For the last 10 years, the Sensex declined in the second half of the calendar year only when it fell in the first half of the year, an
analysis by
SundayET reveals. And if that 10- year trend holds out,
investors who took positions on the BSE Sensex during the early days of the second half of the current calendar year need not worry about losing money as the market appreciated by over 46% during the first half of CY09.
The analysis reveals that on average the performance of the Sensex has been better in the second half of the year. The average returns of the Sensex since 1999 (excluding 2009) for the second half of the year was 17% whereas it was -2% for the first half of the year.
Also, between 1999 and 2008, the Sensex fell five times — 2000, 2001, 2002, 2004 and 2008 — in the first half of the year, while it declined only thrice — 2000, 2001 and 2008 — in the second half of the year. During the first half of CY2000, CY2001 and CY2008, the Sensex posted a negative return of around 12%, 13% and 34%. Consequently, in the second half it declined by 18%, 5% and 26% in the second half during these years.
Also, between CY1999 and CY2008, there were only two instances, CY1999 and CY2000, when the return in the first half was better in than the second half of the year. In CY1999, during the first half the Sensex posted a return of 35% as against just 19% in the second half.
Similarly, in CY2000, the Sensex declined by only 12% during the first half whereas in the second half it lost as much as 18%.
Explaining the reasons for the markets doing better during the second half of the year, Deena Mehta, MD, Asit C Mehta
Investment said that usually foreign institutional investors start buying during January, and hence local investors and punters start building up their positions from November and December.
According to Aseem Dhru, MD & CEO of HDFC
Securities, during the second half of the year, demand in sectors such as auto, textile, hotels, FMCG and consumer durables is usually high. “Even today large parts of the population buy clothes only once a year and that is during Diwali. Even foreign tourists start visiting the country during the second half of the year as the climate is good. Given the composition of economy, this pattern is likely to continue,” he said.
The Sensex posted better returns in the second half 80% of the time. During the current calendar year, it posted around 46% return in the first half. However, it is to be seen whether in the second half the Sensex outperforms the return of first half. Till now during the second half of the current calendar year, the Sensex has posted a return of 17%, but there is just over a fortnight left for this year to end.
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Stock Reports:
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Incorporated in 1995, D B Corp Ltd is one of the leading print media companies in India, publishing 7 newspapers, 48 newspaper editions and 128 sub-editions in three languages (Hindi, Gujarati and English) in 11 statesin India.
Company's flagship newspapers are Dainik Bhaskar, Divya Bhaskar and Saurashtra Samachar have a combined average daily readership of 15.5 million readers making them one of the most widely read newspaper groupsin India.
DB Corp Ltd. IPO Information
Issue Open: Dec 11, 2009
Issue Close: Dec 15, 2009
Price Range: Rs. 185 - Rs. 212 Per Equity Share
Minimum Bid Size: 30 Equity Shares
Issue Size: 18,175,000 Equity Shares of Rs. 10
Face Value: Rs. 10 Per Equity Share
Issue Type: 100% Book Building
Maximum Subscription Amountfor Retail Investors: Rs.1,00,000
IPO Grading / Rating:
CARE has assigned an IPO Grade 4 to D B Corp Ltd IPO. This means as per CARE, company has above average fundamentals.
KR Choksey Securities IPO report on DB Corp IPO:
The company needs to be compared with the listed peers, with similar size and reach, and on these parameters, HT Media and Deccan chronicle are the fit peers to compare. The company is bit weak on financials when compared with its peers but has certain advantages over those two, in respect toface value of share at Rs 10 of the company as against Rs 2 of those two and second being high promoters’ stake at 86% against 64% of Deccan and 69% of HT Media.
Considering the presence of the company with 7 newspapers, 48 newspaper editions, 128 sub- editions, as also, 31 facilities spread across 31 cities, with combined average daily readership of 1.55 crore readers, the company would get placed in the upper league of print media with other listed peers. Even the debt burden of the company is comparable with other two listed peers.
Keeping all these facts in mind, issue at Rs 185, being its lower band, looks attractive while at Rs 212, being its upper band, does not leave anything on the table for the prospective investors, as better alternatives are available in the secondary market
IPO investors may bid at lower band of Rs. 185 for some listing gains.
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NSEMumbaibull, independent equity research group has recommended to buy stocks of Visa steel limited (BSE Stock code: 532721) for short term investment for good returns.
The short term target for shares of Visa steel in coming days could be at Rs. 45.
Looking at the charts, Rs. 36 level seems to be providing a strong support for stock and the upward move can be up to Rs. 44 - 45 Levels where one should sellstocks.
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Incorporated in 1990, Godrej Properties Limited (GPL) is one of the leading real estate development companies in India based in Mumbai, Maharashtra.
Issue Open: Dec 09, 2009. - Dec 11, 2009.
Price Band: Rs. 490 - Rs. 530 Per Equity Share
Minimum Bid Size: 13 Equity Shares
Issue Size: 9429750 equity shares
Issue Size (Rs Crore): Rs. 462.06 - 499.78 Crore
Face Value: Rs 10 Per Equity Share
Issue Type: 100% Book Built Issue IPO
Listing At: BSE, NSE
Maximum Subscription
Amount for Retail Investor: Rs.100000
Incorporated in 1990, Godrej Properties Limited (GPL) is one of the leading real estate development companies in India based in Mumbai, Maharashtra. Godrej Properties currently have real estate development projects in 10 cities in India, which are at various stages of development. Company's business focuses on residential, commercial and township developments.
IPO Grading / Rating
ICRA has assigned a 'ICRA IPO Grade 4' [Grade Four] to the proposed IPO issue of Godrej Properties Ltd (GPL). 'ICRA IPO Grade 4' indicates above average fundamentals. ICRA assigns IPO grades on a scale of Grade 5 to Grade 1, with Grade 5 indicating strong fundamentals and Grade 1 indicating poor fundamentals.
To invest in IPO or not?
Angel Broking has come out with a research report on Godrej Properties (GPL) IPO (initial public offering). The research firm believes that the IPO is fairly priced and keep a neutral view on it.
Fair NAV for GPL (based on its existing land bank) works out to Rs 469/share. Around 50% of the NAV is derived from its township project in Ahmedabad. We have factored in a 5% price escalation from FY2011E onwards in the construction and capital value for all its residential projects from the current levels, and a 5% correction in Rentals in FY2011E, but a 5% increase from FY2012E onwards for all its commercial and retail projects. We believe that the IPO is fairly priced and keep a neutral view on it. However, investors can look at alternate, existing listed players like Anant Raj, which have a debt-free balance sheet, land at prime locations and is trading at a significant discount to one-year forward NAV", says Angel Stock Broking Trader.
Many stock market broker firms have rated the Godrej properties IPO as expensive and advised to avoid th IPO.
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The recent recovery in Indian economy has once again increased the demand for steel products. There has been significant rise in auto sales and other consumer goods in last few months. All these factors have led to a rise in sales of flat steel products. Bhushan Steel, a leading producer of flat products, is set to benefit from all these.
This stock was recommended in Economic Times Investors’ Guide earlier. At that time the stock was trading at around Rs 1,000 per share and is up 30% since then. There is still lot of juice left in the stock and we recommend investors to stay invested. The gains will be driven by faster topline growth coupled with backward integration, which will lead to significant improvement in operating margins. Investors with a mid-term horizon of 2-3 years can add this stock to their portfolio kitty.
BUSINESS:
Bhushan Steel is a secondary steel producer and mainly produces value added flat products. It gets more than twothird of its revenue from cold rolled and galvanized steel products. Bulk of its revenue comes from the automobile and white goods sector, which uses the flat products predominantly.
It has three plants, located strategically in different parts of the country. The Dhenkanal plant in Orissa is close to the raw material source and manufacturers sponge iron and billets, the primary steel products. The Khopoli plant in Maharashtra and Sahibabad plant in Uttar Pradesh are close to the two auto hubsin India namely Pune and Gurgaon. These two plants primarily manufacture cold rolled and galvanized products used by the auto companies. It has a close to one million ton capacity for cold rolled products, which is used as a key input for other value added products.
FINANCIALS:
The company’s topline has almost doubled in last four years to Rs 5,000 crore in FY 2008-09. The net profit, however, grew at a faster rate during the same time period.
For last four years, the company has been making significant capex to link its operations backwards and to become more integrated. Bulk of this capex program is being financed through debt. As a result, its debt-equity ratio has increased close to four, from the two earlier. This is not a major concern given its higher interest coverage ratio (more than 5). The company has expanded its operating margin by around 500 basis points over last two years to 20.4% in FY 2008-09. In fact, its operating margin in September 2009 quarter increased to around 26%, thus reflecting the partial impact of backward integration. Its return on capital employed (ROCE) of 10% for last several years appear to be lower. But this is a result of higher capital expenditure made during the same time period.
GROWTH DRIVERS:
The company plans to make a structural change in its business model to become an integrated steel company. The management feels that at a time when primary steel producers are planning to produce more value added products, it is imperative for the company to integrate itself backwards to remain competitive in secondary market.
The integration process itself will be completed in two steps. In first step, the company will set up around 2 million tons of hot rolled coil (HRC) and 0.3 million tons of slab capacity by this year-end. The HRC capacity will be further augmented to 5 million tons by FY ‘13. In second step, the company will start mining iron ore and coal from the mines allocated to it. This process will take around 4-5 years.
Hence, the full impact of integration, from mining to value added steel products, can be seen from FY ‘14 onwards. The company has already spent 50% of total capex required for all these expansion programs.
VALUATION:
The full impact of first phase of expansion will start flowing into the financials of the company from FY ‘11 onwards. As a result of this backward integration, its net profit margin is expected to rise to 15-16%, from the current 9%. This will also boost the company’s operating cash flow significantly.
The earning per share (EPS) for FY ‘10 and FY ‘11 is estimated to be Rs 171 and Rs 243 respectively. At the current price level, the forward price-earning multiple works out to be 7.9x and 5.6x for FY ‘10 and FY ‘11 respectively. The company’s scrip has always traded at a P/E multiple in the range of 13-17 during good times. This provides significant upside potential for investors with a horizon of 2-3 years.
Source : Economic Times
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After dismal performance in the last fiscal, Alphageo India’s business improved in FY2010 (the current fiscal) and the growth momentum continued in Q2FY2010 despite it being a seasonally weak quarter.
The spectacular performance in Q2FY2010 was largely on the back of execution of Rs39 crore order from the Oil and Natural Gas Corporation (ONGC) in Cauvery basin (the same was highlighted in the stock update dated September 24, 2009).
What’s more, the outlook for the second half is also encouraging. Though the ONGC order worth Rs43 crore has still not commenced and could get delayed to the next fiscal, the company is likely to show robust growth in H2FY2010 on the back of execution of orders from private operators like Essar group (Rs9.4 crore), Adani group (Rs17 crore) and Selan Exploration Technology (Rs12 crore).
The order pipeline from fresh tenders is also healthy and the company hopes to announce more new orders from private operators in the coming months. The efforts to reduce the company’s dependence on public sector oil companies (like ONGC and Oil India) are yielding results now both in terms of better revenue growth outlook and improved utilisation of resources (seismic crews).
Stock Valuations
Given its strong performance in Q2FY2010, healthy order book position and improving client profile, we have significantly upgraded the estimates for FY2010 and FY2011. Consequently, we have upgraded our recommendation to Buy stocks with the price target of Rs. 297 (12x FY2011 earnings).
Source: Sharekhan stock trading broker
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Incorporated in 1994, JSW Energy Limited (JSWEL) is a group company of Jindal South West (JSW) group headed by Mr.Sajjan Jindal. The JSW Group has a presence in the steel, power, cement, software, and infrastructure sectors.
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