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Simran Kaur

Simran Kaur

City: Bangalore


Last Login: 10:06 PM - 02 Sep , 2012
IP Address of Last Login - 122.178.202.xxx

Reply for: Buy or Cry This Stock Will Fire.

Simran at 05:07 PM - Sep 07, 2008 ( )

well rakesh jhunhunwala have a good stake in this counter.. around 5percent .. just check yourself..

Reply for: gmr infra

Simran at 01:59 PM - Aug 30, 2008 ( )

hey amit post your message in appropriate discussion forum.. like for posting for gmr ..post it in gmr thread..

Reply for:

Simran at 02:40 AM - Nov 11, 2007 ( )

Script                       CMP      Target
TTK Prestige              126         180
Henkel India                21            40
Mid-Day                       40           56

HAPPY DIWALI

Reply for: Penny stocks run

Simran at 07:39 PM - Oct 04, 2007 ( )

In a bull market speculators tend to turn penny wise and this is evident in the sudden interest in stocks of relatively unknown companies.

In the past one month, at least 20 stocks with ‘not-so’ inspiring background have climbed from below-par levels to achieve a ‘double-digit’ status. Analysts fear the movement may have been triggered by operator-driven activity and thus advise caution. In their view, investors, particularly retail, should carefully study company background and trading patterns before dealing in such shares.

ET tracked the movement of BSE-listed stocks across groups and found that many low-priced stocks have shot up to new highs, piggybacking on an euphoric Sensex. Brokers warn of getting carried away by the frenzy, especially when the gains are not supported by good fundamentals or any kind of development that would bring about a change in business prospects of companies.

Major gainers among the low-priced stocks include IEC Softwares, where the share price jumped 156% in over a month. The scrip, in fact, hit the 5% upper circuit on Wednesday when it closed at Rs 17.2.

The volumes, however, remained low with 300 to 27,645 shares changing hands during the period.

Yet the financials of IEC Softwares do not support the spurt in stock price. It posted a small net profit of Rs 8 lakh on sales of Rs 1.2 crore in the quarter ended June 30, 2007. The company, in fact, made a loss of Rs 30 lakh on a turnover of Rs 4.3 crore for the year ended March 31, 2007.

Media Matrix Worldwide (MMW) is another example where the share price has zoomed 155% over the past month to Rs 13.4. While the company has posted some profit in the past quarter and also in 2006-07, there has been no significant development for the share price to drive up. MMW posted a net profit of Rs 33 lakh on sales of Rs 8.1 crore in the past quarter.

The figures stood at Rs 20 lakh and Rs 22 crore, respectively, in 2006-07. The company board is meeting on October 10 to consider raising funds through a preferential allotment or any other route.

The share price of LN Polyesters has risen 113% to Rs 26.3 from Rs 12.3 a month ago. The rally is not backed by sound fundamentals as the company posted a loss of Rs 48 lakh on sales of Rs 6.8 crore for the April-June quarter. In 2006-07, it recorded a sharp fall in net profit at Rs 3 lakh from Rs 1.5 crore in the previous year.

Reply for: Rakesh Jhunjhunwala - bull market thoughts

Simran at 07:36 PM - Oct 04, 2007 ( )

It is difficult to believe that the largest holder of the US treasury bonds is China. To me, I think it is geo-politically very sensitive issue and if I were to be the President of America I would redeem them the next day. They have forgotten where Hindi-Chini bhai-bhai led (Indians) to.

Having said that, the US economy was the engine of economic growth worldwide. It was an unsustainable methodology of growth, where you borrow, borrow,borrow and consume, consume, consume. Also we had a 25-year bull market in America and all bull markets, regardless of regulators, always produce excesses. Excesses are not products of loose regulations but more products of bull markets because then markets make people lose their sense and they become absolutely greedy.

I personally believe that the US housing market is not going to bottom in the next 36 months; because you built 21 million houses in 2 years as against 16 million every year. So you build one million extra and at least out of those 16 million normal ones, 40% of the houses in the last two years have been sold to subprime and allied alternatives.

In Miami, you have a building boom amongst the housing bust. So I think the world is underestimating the consequences of this subprime or the meltdown of the US housing. There was a vicious cycle in America where you gave money to people on credit to people who could not afford USD 50,000 - you gave them half million dollars; not based on their ability to pay, but on the value of their capital assets. They primarily drove the buying of houses in the last 24 months.

On interest rates:

It is not the question of interest rates. No one in his right sense now is going to give loans to sub-prime mortgages again. The resets are just starting.

So I foresee a few things.

One, the problem in the housing market problem is going to get worse because there will be a lot of foreclosures. Two, there is lot of housing under construction which cannot be stopped immediately. And third, people say there is full employment in America. But housing is 70% of America’s GDP and that itself would lead to a slowdown in America.

This slowdown in the housing industry is going to lead to a slowdown in the US economy. This again, would mean lower wages and lower employment, which could result in greater housing loan repayments defaults.

I read an economist saying that Europe has had faster increases in housing prices than America. There is a very large subprime market even in Britain. So I think this will continue to transfer itself even to Europe.

I believe there have been great excesses in the US bull market. That bull market, in my opinion, is coming to an end and the real excesses will be exposed only after the bull market is over.

Though at the moment we are all very happy and feeling that this is something like long-term capital management or the Russian debt crisis, where the Fed reduces interest rates and all problems go away. I do not believe that because credit is not only available on cost; it is also a question of risk appetite to borrow and risk appetite to lend.

So I think that credit is no longer going to be available in America or if it is, it is going to be available in a measured manner. There is going to be a slowdown in America.

There are various opinions that if US interest rates comes down money will flow into emerging markets. Let us put the impact in two parts – one, how they will affect economic activity and how they will affect asset prices.

On India:

As far as India is concerned, I personally foresee a big slowdown for the software industry. I do not think that if America slows down; more work will come to us. I think if America slows down, more work could come 36 months later. I think 25%-30% IT budgets are discretionary and there will be big cuts in IT budgets.

As far as other Indian exports are concerned, I do not think they are going to be affected very substantially. As far as commodity prices go, I think they will come down. Interest rates also will be down, which is good for India.

US is a very dynamic economy; it has great self-correcting measures. This recession in America depends on factors like whether it is going to be orderly, or create a lot of disequilibrium etc. If it is an orderly one, I think Indian markets will be not be affected to a very large extent. But if it is a huge disequilibrium, then things are going to be quite unpredictable.

Reply for: Facor Alloys : Turn Around Story

Simran at 10:40 PM - Aug 28, 2007 ( )

FACOR was founded in 1956 which put the new industrial town of Shreeramnagar on the world map of Ferro Alloys.

Shreeramnagar, situated about 100 kms North of Vishakapatnam fort, on the east coast of India, became the first major producer of bulk Ferro Alloys in the country. It began with a production capacity of 45,000 tonnes per annum that met the requirement of the growing iron and steel industry in India.


Then in 1968, two more furnaces were added for Low Carbon & High Carbon Ferro Chrome products and in 1981 a 16 MVA furnace was put up for production of Ferro Silicon or additional quantities of High Carbon Ferro Chrome.

In the meanwhile, FACOR was keenly developing indigeneous technology, through its research and development department, to utilise low grade chrome ores, from its own mining leases to produce Charge Chrome. Based on its in-house technology adopted and proved to an experts committee of Government of India, in the 7.5 MVA plant at Shreeramnagar, it set up a 100% Export Oriented 50,000 tonnes per annum Charge Chrome Plant in 1983 at DP Nagar, Randia, in Bhadrak District in Orissa. Having established this base FACOR decided to add value to its own output by getting into forward integration. A sophisticated steel plant was set up at Nagpur to produce Carbon Steel, Manganese Steel, Alloy Steel and Stainless Steel.

In order to meet part of their power requirements FACOR has established two power plants of capacity 3x10 MW and 2x10 MW at Shreeramnagar and Randia respectively in 1989-90. These diesel power plants are supplied by MAN B&W Germany and are operating with heavy fuel oil (Furnace Oil or LSHS).

This of course, is not the only high point of achievement of the R&D Department. The department has for long enjoyed the recognition of the Department of Science and Technology, Council of Scientific and Industrial Research, Ministry of Steel for having developed and established processes for:

Beneficiation of low grade chrome ore
* Agglomeration of ore fines and concentrates by way of briquetting and sintering
* Production of intermediate Carbon Ferro Chrome
* Production of Magnesium Ferro Silicon
* Metal Recovery Plant of 20 T/Hr capacity established in 1994 to recover metal entrapped in slag


News Item 1:
New Delhi, Aug 12 (UNI) Ferro Alloys Corporation (FACOR) Group has said it is planning to invest Rs 2,500 crore in a phased manner by 2010 on a major expansion plan.

The expansion plan includes setting up a stainless steel plant of 0.5 million tonnes per annum and a coal-based power plant of 250 MW, as may be decided by the company later.
The company is negotiating for entering into a fresh joint venture agreement with a foreign company for exploration and mining of platinum group of elements in the company's mine in Orissa, said a statement.

For the above purpose, the Group companies are taking shareholders approval in the ensuing AGM for altering objects clause of Memorandum of Association/commencement of new business as well as for making investments.

The above proposals are currently on the Planning Board and may take time, it added.

FACOR Group of companies consist of Ferro Alloys Corporation Ltd (FACOR), FACOR Alloys Ltd (FAL), FACOR Steels Ltd (FSL) and FACOR Power Ltd (FPL).

News Item 2:
Facor Alloys Ltd has informed BSE that the members of the Company have passed the following Resolutions by way of Postal Ballot, with requisite majority:

1. Ordinary Resolution under Section 293(1)(a) of the Companies Act, 1956 for:

a) mortgaging and / or charging the whole or substantially the whole of the Company's any one or more undertaking(s) to or in favour of all or any of the Financial Institution(s) or Bank(s) for securing Loans or Financial Assistance / Working Capital Facilities granted or to be granted.

b) selling the Power Plant Unit comprising of 30 MW Diesel based Power Plant consisting of 3 nos D.G. Sets of 10 MW each located at Garividi, Dist. Vizianagaram, Andhra Pradesh on "as is where is basis" to M/s. Volta Impex Pvt Ltd, Hyderabad for a total consideration of Rs 12.20 crores subject to the receipt of any consents, approvals and permissions as may be required.

2. Special Resolution under Section 17 of the Companies Act, 1956 for alteration of the Objects Clause of Memorandum of Association of the Company by adding new sub-clauses 8A, 8B, 8C, 8D, 8E & 8F after the existing sub-clause 8 of other objects.

3. Special Resolution under Section 372-A of the Companies Act, 1956 for giving guarantees and / or to continue the guarantees already given to the consortium banks for Term Loans and other fund based and non-fund based Working Capital Facilities availed / to be availed by Ferro Alloys Corpn Ltd. (FACOR) and Facor Steels Ltd (FSL) other group Companies subject to a maximum limit of Rs 150 crores in respect of FACOR and Rs 100 crores in respect of FSL respectively.
Arun at 07:24 PM - Oct 04, 2007 ( )
yeah i also feel that is a concern

Reply for: Signs of cooling down

Simran at 11:47 AM - Aug 19, 2007 ( )

“Hot money" is one of those phrases that can mean many things. Sometimes it's earnings from illegal activity. It could be counterfeit. Most of the time however, it means cash deployed by traders; heavily leveraged and liable to switch direction at moment's notice. Nobody quite knows how much of the cash in Indian markets is "hot". You cannot get a complete picture. All one can say with confidence is that there is lots of it.

One indicator could be the delivery ratio - that is, the volume of delivery as a percent of the total trading volume. This varies. Delivery ratios range from 5 per cent to over 50 per cent in different stocks.

Obviously all non-delivery trading is done with "hot money". But quite a lot of deliveries are "hot" as well. Some deliveries are on borrowed cash. At other times, delivery is offered by somebody who has borrowed stock. There is no means of checking.

Then again, there are the Foreign Institutional Investors (FIIs). All FIIs take delivery, including the hedge funds and participatory note (PN) players. But the hedge-funds and PNites will exit at a moment's notice. Their cash is borrowed overseas. Nobody has a break up of hot versus "cold" FII funding. The RBI and the Ministry of Finance steadfastly avoids calculating and releasing such details for fear of spooking PN players - not that it would be easy to make such calculations in any event.

Hot money is usually deployed in tandem with the prevailing trend,whatever that may be. It tends to emphasise and underscore directional movements. If the market or given scrip is up, it attracts momentum traders. When they book profits or losses and head for the next fashionable trade that too, lends emphasis to bearishness .

The hot money is obviously exiting Indian stocks at the moment. In fact, it's exiting every global stock market. That's because the hot money depends on leverage and leverage depends on willing lenders. Given a crisis of confidence in US mortgages, lenders are extremely conservative at the moment. They need to know the butchers' bill in US subprimes before they regain a measure of confidence. That means highly-leveraged hot money must cut its exposures.

We saw a similar scenario during the Asian Flu of 1997-98. Last year as well, the crash in the global metals market caused a stampede out of stocks. The good thing about hot money is that it moves fast. We won't know the dimensions of the FII selling until it's actually over but the bulk of exits may be complete by end-August.

We can have an inkling of FII mindsets by examining gross derivative exposures. FII derivative exposures have shot up. They have a vast number of open short positions in stock futures and a very large number of open short positions in index futures as well. In index options, they have bought a massive number of calls. The long calls are presumably hedges against the market jumping. The shorts are Texas Hedges whose positions shot on top of net sales in the spot market, under the assumption that prices will drop because of spot-selling. If that mix of FII exposure changes, either before the August settlement is through, or early into September, there will be reason to believe that all the hot FII money is out.

The stocks that will be hit hardest during this exit-phase will be the F&O group and top-ranked mid caps. These are the counters where FII positions are close to limits. The mid caps are high-beta counters where hedgers have pumped up the prices over the past two years and also neared the FII-limit.

Post-exits, only the "cold" money of non-leveraged, long-term investors will be left in the stock market. The rupee will probably soften quite a lot as FII flows reverse. There is also likely to be a large fall in liquidity across the entire spot and F&O markets. That will retard fast price recovery in most counters. However, there will be little downside left and that is a perfect situation for long-term players.

The stocks that get hit hardest by hot money exits are also some of the best businesses available. Valuations would be very attractive if the Nifty dropped to say, 3500. That would be roughly 25-30 per cent correction. It happened in 2006, it could likely happen again. If you start buying now for the long-term, stagger purchases to ensure averaging down. If you use "hot money" yourself, wait till the FII derivative exposure mix changes and the rupee drops before you go long.

Reply for: View on CMC

Simran at 11:37 AM - Aug 19, 2007 ( )


The stock trades at 20 times its trailing 12 -month earnings on the current equity base. This is at a premium to its peer, HCL Infosystems, but CMC’s operating profit margin of 11 per cent is significantly higher than the former. This may indicate better cost-management and operating efficiency. It also shows that the company’s dependence on low-margin equipment sales is decreasing and the services contribution to revenues is on an uptrend.

CMC is an IT solutions company and manages turnkey projects by providing solutions and services across the entire gamut of infrastructure components — computers, servers, routers and systems and application software. Its customer services and system integration SBUs (strategic business units) handle most of these activities and are also the highest revenue contributors (85 per cent of revenues).

CMC also, has an ITES division, which handles back-office processes, call-centre services and an education and training division, which provides IT education services to college graduates and corporates.
Business Analysis

Solid Partnership: CMC has been able to partner with some of the finest names in the IT space — Microsoft, IBM, Cisco, HP, Sun Microsystems and Oracle. This has helped it gain expertise over a wide range of IT products and servic es enabling it to serve as a value-adding entity for clientele with diverse requirements. This association has also helped CMC secure more business, in addition to client mining from its US subsidiary.

Strong client base: The company has, over the years, been increasingly engaging itself in turnkey projects rather than in small projects. It has won large-sized deals, some on its own, others in partnership with Tata Consultancy Servi ces.

Providing the entire spectrum of IT services not only ensures revenues upon completion of a project, but also locks in future revenue streams by way of services such as maintenance and support. Another favourable factor for the company is that it has been able to tap big public sector undertakings (PSU) as clients, helped by its previous status as a PSU . Indian Railways, ONGC, GAIL, IOC are some of CMC’s clients. Increasing IT spends by the government is likely to translate into business opportunities for CMC. It has significant private sector clientele as well; thus ensuring a healthy mix of PSU and private sector clients.
broad-basing offerings

The company is increasing its focus on education and training business. CMC has been able to tailor its programs to corporate needs and has gained significant presence in the IT education space, partly due to its own expertise developed over the years and partly due to synergies created by the TCS association.

The company is working out an interesting business model with Reliance Money as a client, wherein the latter would be allowed to open outlets at CMC’s franchisee units. Here, CMC would handle the IT infrastructure and management and provide education and training services to Reliance Money’s personnel at these outlets.

This would provide it with twin revenue streams from IT infrastructure support and training services. CMC’s ITES revenues have also grown significantly with an increasing overseas client base. It appears well-placed to provide technical support services through its call-centre units. Both are relatively high-margin services and higher growth and contribution to revenues from these services could augur well for earnings.
Risks

With prominent PSUs in its client base, CMC’s debt recovery cycle tends to be long and may expand its working-capital requirements. The company’s increasing overseas client base also exposes it to currency appreciation risks.

These are key realisation risks. Wage increases, estimated to be about 10 per cent annually, may also affect margins. Finally, competition from other players such as Wipro Infotech, HCL Infosystems and Datacraft are also potential challenges.

Reply for: A good opportunity to take exposure

Simran at 11:30 AM - Aug 19, 2007 ( )

The sharp decline in the broad markets over the past week offers a good opportunity to take exposures to the stock of Bharti Airtel – the market leader in the Indian mobile telephony market. Strong subscriber additions, substantial investments in capex and possible capex revenue streams from overseas forays and bisinesses such as broadband and IPTV, suggest strong earnings growth prospects for the company over the next few years. The stock trades at about 32 times twelve months earnings, after declines linked to broad market weakness and lower-than-expected first quarter results. Investors can accumulate the stock at current levels as well as at any further declines.

Bharti Airtel continues to dominate the mobile telephony space in the country, with 1.9 million subscribers a month, at least half a million ahead of its nearest competitor. Bharti’s average revenue per user (ARPU), at Rs 390, is much higher than the national average of Rs 298, indicating a continued ability to command a premium over other operators. There also appears to be scope for offsetting any decline in ARPUs through value added services. The recent tariff hike effected by the company for SMS and local calls, may also help realisations.

Over $3-billion worth of capex rollout over the next few years, including components like next generation networks (NGN) and 3G-ready networks, will enable Bharti to service a rapidly increasing subscriber base and start 3G services, as and when policy clarity emerges. International calling cards, a thrust area, may also open up revenue streams with relatively higher margins. With the company winning licenses to deliver 2G as well as 3G services in Sri Lanka and committing $200 million towards expansion, Bharti appears well placed to position itself strongly in the Sri Lankan market, which has reasonable untapped potential.

Mobile telephony apart, Bharti’s Broadband and Telephone (landline) division has also been making headway, and garnering an ARPU of Rs 1,120, much higher than the national average. The impending rollout of new services such as IPTV (Internet protocol television), DTH (direct to home) may help revenues and margins. Key risks to the earnings outlook arise from any inordinate delay in release of 2G spectrum. A delay in the 3G policy announcement could mean loss of potential opportunity. Regulatory intervention on tariff increases and heightened competition in national and international long distance services, are risks as well.

New Thread: 2200 A good level to enter financial Technologies

Simran at 11:35 PM - Aug 02, 2007 ( )

Hi..
i am holding this stock from quite a long time.. and now feel if somebody want to enter then 2200 is a good level to enter this stock..

Reply for: Emkay Report on Jyoti Structures

Simran at 10:41 PM - Jul 02, 2007 ( )

    Jyoti Structures Ltd (JSL) is a leading player in power transmission lines and we expect it to be one of the biggest beneficiaries of the huge investment expected in power transmission sector. Government of India’s ambitious plan to add 100,000MW capacity by 2012 from the present level of 132,000MW and similar trend of investments in transmission and distribution would drive top line and profitability growth for JSL. With an expected CAGR of 35% in top line and 59% in net profit over FY07A- 09E, we remain positive on the stock. We also estimate JSL to report strong ROCE and ROE of 46% and 33% respectively in FY09E. We believe JSL is one of the best picks in transmission lines business and recommend a BUY on the stock with a target price of Rs.253.

Investment Rationale
Huge opportunity in power transmission lines business – Power deficit in India has been considered as one of the major bottlenecks for growthof Indian economy. Government of India under its mission of ‘power for all’ has
set a grand target to achieve total capacity of around 200,000MW by 2012. Total estimated investment outlay of Rs.8,000bn in generation, transmission and distribution is required to achieve the additional power capacity of 100,000MW and out of which at least Rs3,000bn would be invested in transmission and distribution. The estimated market opportunity only in transmission lines is to the tune of Rs2,000bn. India’s transmission perspective plan for Xth and XIth plan also focuses on the creation of National grid in a phased manner by adding over 60,000 circuit kms of transmission network by 2012 which would require an additional investment outlay of Rs710bn. We believe companies which operate in power transmission lines business would be the biggest beneficiaries due to these investments.

JSL is an established player in power transmission lines industry
- JSL has proven capabilities and a track record of 27 years in transmission lines business. The company has executed more than 15,000 circuit kms of high voltage transmission lines since inception. JSL is one of the largest players in transmission line business and we expect it to be one of the biggest beneficiaries of investment in power transmission lines business. JSL’s current order book position of Rs20bn, which is 2.1x of FY07 revenue, gives the visibility of revenue for next 1-2 years and considering the investment plans in transmission lines in near future we expect the order book of JSL to swell further. Further JSL, to support the execution of its order book has increased its total installed capacity for manufacturing of power transmission lines to 94,000MT from 76,000MT in FY07. JSL is one of the few companies in the world which undertakes total turnkey projects on a global scale and offers a complete range of services ranging from design, engineering consulting, tower testing, manufacturing, construction and project management which would facilitate the company to execute the rising demand for power transmission lines and we estimate it would drive top line growth of JSL at a CAGR of 35% over the period of FY07A-FY09E.

New JV in Dubai with Gulf Investment Corporation to boost bottom line further –
JSL has formed a 30:70 JV (Gulf Jyoti International LLC, Dubai) with Gulf Investment Corporation and it is likely to become operational from September 2007. Gulf Jyoti is installing the power transmission lines capacity of 33,000MT and it can be extended up to 50,000MT. Apart from the profit sharing, JSL will also get 15% management fees for transferring the technology and other assistance to Gulf Jyoti. Gulf Jyoti would focus mainly on the upcoming potential markets like Middle East and North Africa. According to international studies, Middle East and North African markets may witness investments in power transmission lines to the tune of $73bn and $29bn respectively over the period of 2005-2030. We expect Gulf Jyoti will witness good order inflow due to proven background of JSL in
terms of technology and implementation of projects and it would drive its top line and bottom line in coming years. We estimate Gulf Jyoti’s net profit contribution to PBT of JSL to go up to 5% and 14% for FY08E and FY09E respectively.
Return ratios to improve over FY07A-09E – With the strong order book position and robust demand growth, we estimate JSL’s top line and bottom line to grow at a CAGR of 35% and 59% over the period of FY07A-09E. We assess JSL’s ROCE and ROE to improve to 46% and 33% respectively in FY09E mainly due to higher profitability and lower capital expenditure of Rs170mn and Rs200mn in FY08E and FY09E.
Risks and Concerns
Any slowdown or delay in investment in power transmission segment could impact the growth of the company.
With the rising competition, the strike rate for order inflow may witness a decline and could impact the top line growth.
Valuation After the amendment in Electricity Act 2003, the power transmission sector has witnessed impressive growth for last 3-4 years. JSL has reported top line growth at a CAGR of 48% and bottom line growth at a CAGR of 116% over a period of FY04-07A. We estimate JSL to report net profit jump of 153% over the period of FY07A-FY09E mainly because of robust demand outlook on the sector, incremental profitability from JV and stable EBITDA margins. JSL stock at current market price of Rs.189 trades at attractive valuations of 17x and 11x on FY08E and FY09E EPS earnings of Rs.10.9 and Rs.17.3 respectively and at EV/EBITDA of 9x on FY08E and 6x on FY09E. We initiate coverage on the stock with BUY rating and target price of Rs.253 based on DCF approach.

Reply for: SSKI Research report on Ipca Labs

Simran at 10:20 PM - Jul 02, 2007 ( )

SSKI Research report on Ipca Labs:

Ipca Labs (Ipca) is a formulation-focused and vertically integrated mid-sized generics company with a multi-pronged and geographically diversified business model. Ipca uses superior API development capabilities to attain global leadership in select APIs and is leveraging it to create strong formulation businesses in high profit branded formulation markets like CIS, Asia and Africa as also generic markets like USA and UK. With very strong product pipelines across geographies, we expect 22% CAGR in earnings over FY07-10. At 12.2x FY08E and 10.1x FY09E earnings, valuations are compelling given the upside possibilities. Initiating coverage with Outperformer and a price target of Rs 1013 (14x FY09E earnings).

Firing on all cylinders:

We expect 22% CAGR in Ipca’s consolidated revenues over FY07-10 driven by 27% CAGR in exports and 16% CAGR in domestic business. More profitable branded formulation exports are expected to register 32% CAGR while generic exports could clock 33% CAGR driven by scale-up in US sales. Ipca’s focus on chronic segments and brand building would drive branded formulations sales in international markets as well in India. Ipca’s ability to generate such strong organic growth momentum clearly reflects the effectiveness of its model.

Expect steady margins:

We estimate Ipca’s operating margin to remain steady at 20- 21% over FY07-10. While we expect margin improvements given faster growth in higher margin international branded formulations and scale-up in regulated market, we have conservatively built in steady gross margins to factor in rupee appreciation.

Attractive business model; Outperformer:

Leveraging its strong presence in chronic segment and brand building focus along with a 500 sales people network across multiple non-regulated markets (excluding India), Ipca is aiming at the USD 77 billion (by 2010) generics opportunity in non-US markets. Further Ipca’s US strategy of leveraging its lowest cost API production capabilities to launch select products and partnering with Ranbaxy would be a winner. At 10.1x FY09E earnings and 26.3% RoCE, Ipca is at sharp discount to peers and deserves to be re-rated.

Investment Argument:

Ipca’s initiatives for building a strong international business have started to pay off, as reflected in the 100% yoy profit growth in FY07 following two soft years. We believe Ipca’s focus on vertical integration and competencies in building successful branded businesses, combined with tight operational control, would continue to drive growth. Ipca has invested significantly in building sales networks in multiple non-regulated markets, which will start paying off handsomely with expanding product portfolios. We are positive on Ipca’s product selection strategy for the US market, which leverages its lowest cost producer status for multiple APIs. Likely deals with innovators for large scale manufacture of off patent APIs has opened yet another growth avenue for Ipca.

Financial Analysis:

We expect 22% CAGR in Ipca’s revenues and profits over FY07-10, driven by continued strong growth across business segments. Topline is expected to be driven by 27% CAGR in exports on the back of continued momentum in international formulations, initiation of US generic sales and strong scale-up in API exports. Domestic business would remain steady (16% CAGR expected). A consistently improving revenue mix, along with scale effect, would drive a 50bp EBITDA improvement over FY07-10. We expect Ipca to maintain strong return ratios (25-26%) over the period. Incremental API supply contracts with innovators and scale-up in malaria tender business will be upside triggers.

Valuations

With its geographically diversified business and strong emphasis on vertical integration as also branded formulations, Ipca is a strong business model to play the global generics opportunity. In our view, Ipca’s judicious investments in API development capabilities and for building sales front end have built a strong platform for sustained steady growth in its exports business. We remain confident of Ipca’s ability to deliver 20-25% CAGR in profit in the medium term. At 12.2x FY08E and 10.1x FY09E earnings, high growth visibility and 25%+ RoCE, Ipca is one of the cheapest stocks in the Indian pharma industry and deserves a higher rating. Initiating coverage with an Outperformer rating and a 12-month price target of Rs 1013 (16.9x FY08E and 14x FY09E earnings).

New Thread: Enter with a Stop Loss of 1950

Simran at 09:56 PM - Mar 13, 2007 ( )

@Sumit

Hi Sumit.. if you want to enter this stock for a short term then have a stop loss of 1950 or may be lower at 1930 on closing basis.. and you can have target of 2300.. if you are looking for safe play then let it give some confirmation on chart like double bottom

New Thread: No signals for bottoming out...

Simran at 10:22 PM - Mar 12, 2007 ( )

Grasim Industries in the current scenario is not showing any signals of bottoming out.. but it's on its 62% fibbonacci support levels of 2000.. so wait for some time.. and keep close eyes...

New Thread: TVS Motar is at its support levels..

Simran at 07:07 PM - Mar 10, 2007 ( )

@Ankit
yeah it's a definite hold... when it was near 71-72 that time some people asked me about this stock and i told no.. you can see the reply below... that time i gave a support figure of 50.. now it's near its major support level so i'll recommend you for hold.

New Thread: Wait and Watch for TVS Motors

Simran at 12:05 PM - Feb 21, 2007 ( )

tvs is having good support at 67.. so hoping it will act otherwise other support level is at 50... so at present don't buy TVS motors just wait and watch till it's not showing some reversal pattern... otherwise situation may become like sugar stocks.. most people baught sugar stocks thinking already they have corrected so much and now they will not correct but still sugar stocks chart patterns are negative...
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