Stock Reports and Recommendations

Steel stocks to watch for

Jindal Steel & Power 10 Jan 2010, 1052 hrs IST

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Latest Quotes | Charts | News/Announcements | Quarterly Results | P&L | Price History CMP: Rs 711 JSPL reported Q2 results which are 1% ahead on an operating level but 5% ahead on a net profit level against our estimates. We just marvel at the flexibility of the product mix, which allows the company to maintain steady 35% operating margins even with a 36% drop in steel realisation. We are pushing JSPL as our top pick ahead of our earlier referred Sterlite Ind due to its better visibility of resource backed growth profile making it a less riskier investment. Analyst: Macquarie Securities

Tata Steel 10 Jan 2010, 1049 hrs IST

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Latest Quotes | Charts | News/Announcements | Quarterly Results | P&L | Price History CMP: Rs 650 Tata Steel reported Q2 consolidated results in line with our operating line estimates. Of $346m, 15% is of our full year estimate of $2.2bn. However, there is a good chance of it achieving the remaining $1.8bn as we expect volumes to improve by about 11% in H2 to 13.9mt and coking coal costs to reduce by about $100/t. Tata Steel is the best stock to play the rebound. Its Indian operations benefit from rising raw materials costs due to its integrated nature. Analyst: Macquarie Securities

Adhunik Metaliks 10 Jan 2010, 1045 hrs IST

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Latest Quotes | Charts | News/Announcements | Quarterly Results | P&L | Price History CMP: Rs 121 ADML is an integrated special steel producer and iron ore miner. Consolidated earnings are expected to grow at a compounded annual growth rate (CAGR) of 76% over FY09-12 on account of growth in steel production and iron ore mining. However, EPS growth over the period is likely to grow at a little lower CAGR of 58% due to capital is-sue and merger of group companies. Analyst: Motilal Oswal Financial Services

More @ Steel stocks to watch for

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Analyst's Pick: SMALL CAP: ICICI Securities
10 Jan 2010, 0312 hrs IST

Though the order book of the company is very strong at Rs 2500 crore, concerns remain on profitability due to higher interest costs and unending realised forex losses.

Analyst's Pick: MID CAP: Motilal Oswal Financial Services
10 Jan 2010, 0311 hrs IST

Consolidated earnings are expected to grow at a compounded annual growth rate (CAGR) of 76% over FY09-12 on account of growth in steel production and iron ore mining.

Analyst's Pick: MID CAP: Motilal Oswal Financial Services
10 Jan 2010, 0308 hrs IST

Jai Balaji Industries (JBIL) has built capacities aggressively in the last two-three years at a capex of Rs 16 b. Earnings to quadruple over FY10-12.

Analyst's Pick: LARGE CAP: Macquarie Securities
10 Jan 2010, 0302 hrs IST

The company managed to maintain steady 35% operating margins even with a 36% drop in steel realisation. So, JSPL stands as the top pick

Analyst's Pick: LARGE CAP: Macquarie Securities
10 Jan 2010, 0301 hrs IST

Tata Steel is the best stock to play the rebound. Its Indian operations benefit from rising raw materials costs due to its integrated nature.

Analyst's Pick: SMALL CAP: ICICI Securities
10 Jan 2010, 0313 hrs IST

GPIL had reported a topline of Rs 1,092 crore in FY09 on a consolidated basis, showing a compounded annual growth rate (CAGR) of 37% since FY06.

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Mark Mobius sees a bull market correction ahead



Emerging market guru Mark Mobius, Chairman of Templeton Asset Management, said shares globally should brace for a correction though he said it would be part of the bull market run taking place.

“We are in a secular bull market and you see corrections, which can be to the tune of 15–20% but we shouldn’t be concerned that it represents a bear market,” Mobius said, urging investors to participate in it by buying more if the correction came along.

The US’ easy monetary policy and printing of dollars to boost growth — “which feeds markets around the world,” he said — is expected to continue till the year end and the beginning of the next year as unemployment in the developed world was still to come down.

“Policymakers in Washington, London and other parts of the world are still very concerned and are not going to pull the plug on liquidity anytime soon because they want to see unemployment coming down,” Mobius said. “There are different projections of whether it will be the first quarter, third quarter or last quarter. The bottom line is they are not ready to pull that plug.”

See: How global markets are faring currently

However, if a correction took place, it would affect emerging markets as they “have become integrated”, according to Mobius.

On the issue of initial public offers, Mobius said investors have to pick them on a case-to-case basis. “The IPOs last year gave about 10% average return, which is not spectacular. Individual issues did very well and some of them tanked. So we have to be very careful with these IPOs.”

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Src: Economictimes, Moneycontrol, Deadpresident Blog, Valuenotes and etc

Top 3 News

Heard on the Street

Broking firms on hiring spree to strengthen teams With institutional activity on the rise, many broking houses are strengthening their teams in the hope of getting a share of the pie. Networth Stock Broking is one such firm. The broking firm has hired two dozen professionals in sales, dealing and research over the past month. Buzz is that 10-12 more people are set to join over the next few weeks. Apart from Prakash Divan, who has joined as sales head, others have been hired from Centrum, Quantum, Merrill Lynch, Reliance Securities and Asit C Mehta, among others. Talk is that the boutique broking house is trying to create a presence in the derivative and quantitative space, in addition to fundamental research. HNIs lap up RCom shares despite weak sentiment Even as the wider section of the market paints a gloomy picture for telecom companies over the year or so, a few contrarians are seeing value in them. But they are avoiding the stock considered the best in the pack — Bharti Airtel. Instead, they are going for Reliance Communications despite all the controversy surrounding it, of late. It is rumoured that some leading HNIs have aggressively bought RCom in the Rs 160-175 range. The thinking in the contrarian camp is that Bharti is ‘overowned’, as many institutions have been mopping up its shares amid its sharp decline over the past few month. Contributed by Apurv Gupta & Nishanth Vasudevan

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Is China's economy headed for a crash?

SHANGHAI: James Chanos built one of the largest fortunes on Wall Street by foreseeing the collapse of Enron and other highflying companies whose stories were too good to be true. Now Chanos, a wealthy hedge fund investor, is working to bust the myth of the biggest conglomerate of all: China Inc. As most of the world bets on China to help lift the global economy out of recession, Chanos is warning that China's hyperstimulated economy is headed for a crash, rather than the sustained boom that most economists predict. Its surging real estate sector, buoyed by a flood of speculative capital, looks like "Dubai times 1,000 — or worse", he frets. He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8%. "Bubbles are best identified by credit excesses, not valuation excesses," he said in a recent appearance on CNBC. "And there's no bigger credit excess than in China." He is planning a speech later this month at the University of Oxford to drive home his point. As America's pre-eminent short-seller — he bets big money that companies' strategies will fail — Chanos's narrative runs counter to the prevailing wisdom on China. Economists and governments expect Chinese growth momentum to continue this year, buoyed by what remains of a $586 billion government stimulus program that began last year, meant to lift exports and consumption among Chinese consumers. Still, betting against China will not be easy. Because foreigners are restricted from investing in stocks listed inside China, Chanos has said he is searching for other ways to make his bets, including focusing on construction- and infrastructure-related companies that sell cement, coal and steel. Chanos, whose hedge fund, Kynikos Associates, has $6 billion under management, is hardly the only skeptic on China. But he is certainly the most prominent and vocal. He has been spreading the view that the China miracle is blinding investors to the risk that the country is producing far too much.

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India sets new lot sizes for stocks derivatives


MUMBAI: Indian markets regulator said on Friday it would standardize lot size for stock derivatives based on their value from March 31.

Under the new guideline, stock derivatives priced above 1,600 rupees ($35) will have a lot size of 125 units, while those priced above 800 rupees but below 1,600 would be tradeable in lots of 250 and for above 400 rupees in 500 units.

Share derivatives priced between 201 to 400 rupees would have a lot of 1,000 units; between 101 and 200 rupees in lots of 2,000 units; 51 to 100 rupees at 4,000 units and 25 to 50 rupees in lots of 8,000.

All derivatives priced below 25 rupees will be tradeable in multiples of 1,000, the Securities and Exchange Board of India said in a statement.

The regulator said stock exchanges would review lot sizes every six months, based on the average closing price of the underlying for the last one month. Any revision in lots would be done after at least a two-week notice and any higher lot would be applicable only to new contracts.



Src: ET