My View On Tata Motors

About The Company

The stock has been fancied among the investor and traders being the leading stock in the automobile segment and leaded by the dignified corporate TATA Group.Though the stock has not been an exception to the severe correction in the market and the stock has been butchered as others.

About The Financials

The company has posted results for the second quarter ended 30^th September 2008, the marginal rise in sales and the sale of long term investments which helped shore up ‘other income’, to some extent, helped contain the fall in net profit due to the huge MTM forex loss of Rs.285 crore.

YoY, the net sales of the company for Q2FY09 showed a marginal 6% rise at Rs.7078.85 crore. Tata Motors’ total vehicle sales saw a decline of one per cent to 1.35 lakh units in current Q2. Volumes in passenger cars and utility vehicles slid from 51,618 units to 47870 units and this was on account of phasing out of old models of Indica. Its other income shot up by over 5 times and this was because the company had sold part of its long term investments, on which it made a profit of Rs.358.81 crore and this forms the chunk of the other income component. Its operating expenses rose 16% and interest outgo rose by 54%. Net profit was down 34% at Rs.346.99 crore.

Main Cues In the Stock

1. The slowdown in the automobile sector has been the sharpest and the financial performance of Tata Motors.

2. The coming quarters are expected to be tougher. After the September quarter, the going has only got tougher. Sales, which are usually at their peak during Diwali were no where near even normal. The pile of inventory had been so much that it had to shut down its commercial plant at Jamshedpur for 3 days and those in Pune and Lucknow for 6 days.

3. The company is grappling with the huge bill of the Jaguar, Land Rover takeover. The vehicle maker's plans to raise Rs.4150 crore via two rights issues in October were hit by a stock market slump, with the promoters themselves covering for most of the issue. Now their stake stands raised to 42% from 33%. Post-rights, the public shareholding in the company has come down to 45.8% from 51.75%.

4. Life Insurance Corporation, one of the large shareholders of Tata Motors, and Daimler did not participate in the rights issue. Post rights, LIC’s stake has come down to 9%, while Daimler’s has dipped to 4.5%.

5. There is also the issue of the shifting of the Nano from Kolkatta to Gujarat. Though the Gujarat Govt has bent over backwards to accommodate Tata Motors, the company itself will have to bear a huge cost on account of the shifting and the subsequent delay in launching the small car. The Tata group will invest Rs.2,000 crore to manufacture the Nano and its variants including an electric car and a CNG car. Naturally, the cost of all this will get reflected in the balance sheet on this fiscal.

About The Stock.

Though the long story remains intact but no good returns could be expected in near term.any buying should be made with long term prospective only.

Disclaimer : I do not have any personal holding in this stock.

My View On Gujarat NRE Coke

About The Company

The Company was incorporated on the 29th 1986 and was subsequently converted into a public limited company on 5th July, 1993. The Company was involved in trading activity after incorporation. The main object of the company is to manufacture and sell Low Ash Metallurgical Coke. However after taking up the project to manufacture Low Ash Metallurgical Coke with a capacity of one lac TPA, the company discontinued the trading activities. Gujarat NRE Coke, country’s largest independent producer of met coke.The promoters have hiked their holding in the company by 4.8% through creeping acquisition route during April-October 2008 and it now stands increased at over 45%. It is also going ahead with its plans for the rights issue with differential voting rights (DVR) to the existing shareholders of the company in the ratio of 1 DVR share for 450 existing equity shares at a price of Rs 1,000 per DVR share.

About The Financials

The company has posted results for the second quarter ended 30^th September 2008. The second quarter continues to reflect the boom it had in the prices of coke and coal but the coming months would not start reflecting the fall in their prices.For Q2FY09, total Income has shown a jump of 4.86 times from Rs.102.07 crores to Rs.496.05 crores, resulting in a surge of 8.19 times in the Net Profit, from Rs.12.55 crores to Rs.102.75 crores. This performance has been a foregone conclusion but what is important now is the coming months.

Like the fall in prices in almost all commodities, right across the board, coke prices have also seen a meltdown. With demand from steel and power units coming down, and globally also prices coming down, realizations for the company too have gone down. Coke prices have gone down by 21% from $700 a tonne in July-August to $500 levels now. And the fall in prices is expected to continue. This means that in the coming months, margins will come pressure and the earnings it has posted for Q2 would remain as history.

Positive cues in the stock

The main positive cue in the stock is that the company has sheer size and have its operations in Australia. The company’s present coke production capacity of 1.006 million tonne is being expanded in a phased manner to 1.254 million tonne and 2.254 million by 31st March 2009 and 31st December 2010. It is also the only company owning and operating coking coal mines in Australia and both mines are now in production. During the current fiscal the ROM coking coal production from its two mines is expected to be in excess of 1million tonne and brownfield developments are underway to ramp up the production to beyond 7 million tones by 2012/13.

About The Stock

The stock is sound and a very good investment opportunity.

Disclaimer : I Do not have any personal holding in this stock.My clients may have some position.

My View On Wockhardt

About The Company

One of the most renowned and fancied counter among the Health Care division.Its growth in USA has been good. It grew by 222% in the quarter backed by a 123% growth in the base US operations and the balance from Morton Grove. More than 60 products are now marketed in US. In European markets, UK leads the way with a 20% growth.

The management have serious concerns for research & development.During the quarter, the company spent Rs.13.90 crore on R&D, which was an increase on 19% on a YoY. The company for now, has postponed the demerger of R&D division into a separate unit.

About The Financials

The Company has posted results for the period ended 30th September 2008.Net revenue rose on a YoY for Q3 by 25% to Rs. 923.50 crore. Business in India grew 11% while international by 31%. Formulations grew by 26% while bulk by 11%. EBIDTA was up 17% at Rs.210.80 crore. OPM was at 22.8%. But the good story ends here. PAT was down 43% at Rs.62.20 crore. This was mainly on account of a MTM forex loss of Rs.55.30 crore. Interest outgo was also very high at Rs.48.59 crore as against Rs.26.80 crore in last Q3.

About The Stock

The stock touched a new low at Rs.100 and even now, it remains subdued at Rs.108.The stock doesn't seems to be attractive for a good investment opportunity.

Disclaimer : I do not have any personal holding in this stock.

Bad Deepawali For Automobile Industry

Negative Impact On Automobile Sales

This festive season was not good enough for the automobile industry to celebrate , instead they would like to have such Deepwali ever again whereby the sales figure went down breaking a 8 years records. Sale of cars fell 14.42% in October. According to the Society of Indian Automobile Manufacturers (SIAM), car sales in the domestic market went into reverse gear in October with a 6.59% fall to 98,900 cars against 1.05 lakh in the same month last year. Motorcycles sales were down 18.17% to 5.38 lakh against 6.57 lakh last year. Similarly,Trucks and buses sales fell 50% to 11,786 vehicles from 23,352 during the same period. The negative sales in October pulled down the cumulative sales growth in the current fiscal to 5.64% for the April-October period from 10.07% growth in the April-September period.

Positive Growth Sector

Scooters and passenger three-wheelers were the only two segments that posted positive growth of 4.4% and 16%, respectively. Exports also grew 41.16% to 1.44 lakh in October against 1.02 lakh the same month last year.

Companies Participating In Fall Of Sales Figure

Market leaders has posted a significant fall in sales including Maruti Suzuki India, whose sales fell 6.4% in, while sales of Tata motors the second-largest passenger car maker, declined 6%.

Companies Shown Growth In Sales figures

Hyundia Motors India has posted a rise in sales by 9.91% in October while GM also posted 25.33% increase in sales.Toyota Kirloskar Motor increased sales on the back of its new premium sedan ‘Corolla Altis’ to 1,110 vehicles in October over 526 sold in the same month last year.

Reason Behind decline in Sales

1. Rise In interest Rate Of Auto Loans

2. Fall In Capital Market.

3. Overall Slowdown In All business sectors including metals , Plastic etc.

4. Rise in Rate of unemployment by increasing termination of employee from corporates.

5. Higher Inflation Rates.

Future Of Automobile Stocks

There is bit tough time ahead for market leaders of this sector but we had to see the steps taken to overcome the situation. Meanwhile any such stock should not be traded in excessive quantity for investment or for delivery trading.

Disclaimer : I do not have any personal holding in this sector.

My View On SESA GOA

About The Company

The company is a part of the Vedanta group and the largest private sector iron ore exporter of India.With the application of the Companies Act 1956, to Goa, it was incorporated under the Act on 25th June 1965, as a Private Limited Company under the name Sesa Goa Pvt. Ltd. It was wholly owned subsidiary of Istututo per la Recostruzion Industriale, an Italian Govt. controlled company.

In April,1979 another wholly owned subsidiary of Finsider S.P.A., Italy was also engaged in the mining and export of iron ore. Mingoa Pvt. Ltd., was amalgamated with the company. As per the Scheme of Amalgamation, 38,500 No. of equity shares of Rs 500 each were allotted to Finsider S.P.A., Italy without payment in cash.

The Company was converted into a public limited company on 25th March 1981.

About The Financials

The company has posted results for the quarter ended 30^th September 2008, its consolidated net sales was up 129% at Rs.875.7 crore on YoY. OPM had improved to 48% as against 33% in Q2FY08. PAT was up by a jaw dropping 262% at Rs.336.6 crore. This is a very good performance as traditionally, Q2 is the lean period for the company as monsoon affects volumes. Yet it managed a very good show, indicating that demand was high and the sector was yet to cool off.

During current Q2, iron ore sales were 1,389 million tonnes which was 74% higher than Q2FY08 while saleable ore production was up 39% at257 million tonnes. Metallurgical coke sales price realization increased substantially. Pig iron production was higher but sales volume took a hit due to price volatility. The positive impact of higher volumes and price on profit margins was partly offset by increase in logistics costs and export levy duty.

The sector has now started signs of cooling down and the company is bound to see this reflected in its profit margins in coming quarters. Iron ore prices are falling everyday and the bounty, which the company reaped in the first half will not get repeated in the second half.

About Company Plans of Expansions

Over the next 7-8 years, the company hopes to have a capacity build up of 100 million tonnes but it hopes to build it to 25 million tonnes over the next 2-3 years. Though the company is not expecting major demand contractions in the current fiscal, it’s realizations are sure to come down,so some fall in margins in H2 is expected.

About the Stock

The stock has been available at attractive price and could be accumulated at every fall for medium to long term prospective.

Disclaimer : My clients may have some position in this stock.

A Big Merger : HDFC WITH HDFC BANK

The current economical position in India & world wide has forced the big corporates to take necessary actions immediately in order to protect there survival and at least maintain its existence. Different modes are being adopted to encounter the problem among which we are seeing the merger being one of the fancied option , which helps to reduce the cost remarkable and provide support for both individual entity agreed to be merged.

Deepak Parekh, chairman, Housing Development Finance Corporation (HDFC) has indicated a possibility of merger of HDFC & HDFC Bank in near future. Though he has not given any time frame, the very fact that he is even considering this in itself is very big news.

HDFC is the leading home loan provider of India and hence it becoming a part of HDFC Bank seems far fetched now. But if HDFC becomes a part of HDFC Bank, then it will make HDFC Bank the largest private sector bank of India, surpassing ICICI Bank. If that is the objective, then probably we could see HDFC Bank emerging from the merged entity.

We need to see how do the stock of both HDFC & HDFC Bank react to it.

My View On Automobile Sector

About The Current Scenario

The current slowdown in Indian economy is affecting one sector after another. Recently we have noted the significant fall and problems in Aviation and cement sector .The next sector which has come up with major difficulties is automobile sector with a remarkable fall in sales figure due to higher interest rate, reducing IIP numbers , and slowdown in overall business.

The slump in the auto sector seems to be getting tougher. The lack of auto financing, which is how 95% of the people buy vehicles has been one of the biggest reasons why auto companies are in the state in which they are today. Fall in demand is leading to a huge build up in inventories and this is exerting further pressure on the already harassed companies.

Impact Of slowdown

1. The big corporates find difficult ways ahead at least for there survival.

2. Huge job cuts are increasing the figures of unemployment. Most of the workers under temporary placement has been terminated while new admission has paused.

Measures Adopted By Companies for Survival

The companies are opting to reduce there manufacturing capacity of plant to balance the sales figure with production and to avoid any overproduction. Either they are reducing the manufacturing capacity or they opt for keeping there plant close for a specified period of time to control the variable cost.

Ashok Leyland is planning to reduce monthly production target for November to 1,500 units from the average of 6,800 units it clocked each month in the first six months of this fiscal. In November, the company will also work fewer days to match with the production schedule.

Tata Motors is also not unaffected. It has shut down its Jamshedpur unit, the mother plant for its commercial vehicles, for three days, starting from today till Nov 8, 2008. Both the companies hope that by using these tactics, it will be able to avoid building up of inventory – both with the company and also with the dealers.Tata Motors in October reported a 29% fall in commercial vehicles sales at 19,154 units. HCV and MCV sales were most hit with a 48% fall as they are mostly always financed with loans. It also 'disengaged' 700 temporary workers from the Jamshedpur plant. For the common man on the street, survival is becoming a task.

My View On Hero Honda

About The Company

The Company was Incorporated on 19th January,1984 at New Delhi. The Company Manufacture motor cycles upto 100 cc capacity. The Company was promoted by Hero Cycles (P) Ltd. (HCPL).

The Company entered into a technical-cum-financial collaboration agreement with Honda Motor Co. Ltd., Japan (HML). As per this collaboration agreement, HML was to furnish complete technical information and know-how and trade secrets and other relevant data.Thereafter the company was titled as Hero Honda.

- Hero Honda CD-100 is the first four stroke motorcycle to be introduced in India in 100cc range. Its most attractive features are fuel efficiency and its light weight. CD-100 will be equipped with electronic ignition system, illuminated speedometer, 4 speed gear box, neutral and flasher indicators, etc.

About the Financials

The company has posted a very good result for the quarter. Its total turnover (Net sales & Other Operating income), YoY, grew 36% at Rs.3202 crore. Total sales for Q2 stands at 9,72,095 units, growth of 28.5%. Net profit showed a healthy growth of 50% at Rs.306.30 crore. It currently has an enviable market share of 55% in the Indian domestic two wheeler industry. This improvement in performance comes on the back of falling demand, rising interest rates and overall negative sentiments. Hence the improvement, despite all this, comes as a shock more than a surprise.

Hero Honda's cumulative sales for the first six months (H1) stands at 18, 66,339 units of two-wheelers compared to 15, 59,486 units sold in H1 in the last FY – reflecting a consistent 19.7 per cent growth in cumulative sales.

The Highlights of the Counter

1. The company has completed 25 years of excellence in the Indian Markets.

2. The company plans to double production to 4,000 units at its Haridwar plant beginning next fiscal.

3. The 100 cc bike market comprises two third of the two-wheeler motorcycles sales of Hero Honda’s, reflecting the trend of the industry.

About The Stock

Though the stock has been badly hit in this extreme fall but as the fundamentals remains good so one can hold on this counter and could opt for partial fresh investment.

Disclaimer : I do not have any personal holding in this stock.

Impact On Cement Industry In India

About The sector

All sectors are interlinked to each other , they have relationship such that effect in one sector has an immediate and appropriate reaction to the linked sector. As we see fuel price has inverse relation with the sale of cars.Any significant rise in fuel price will slowdown the figure of sale in automobile sector. Likewise cement sector has direct relation with the real estate, which has taken the worst hit and the way prices have tumbled and yet, there being no buyers is an indication of the plight of the sector. This fall in realty has led to fall in the demand for cement, which is expected. And the inability of the cement companies to now pass on any input cost rise to the consumers is expected to take a further toll on their bottom lines. Though net realizations were up in the second quarter, it is expected to come down sharply in the current quarter.

No Immediate Solution

The way to cope up with the reducing demand in domestic market due to slowdown in reality sector by shifting there concentration towards export would also not go through as this time we had a global slowdown.

Other problems.

1. The cement sector is expected to face a situation of oversupply as most of the expanded capacities.

2. New facilities would all go on stream by next fiscal.So apart from falling demand which has softened the prices, the situation of glut could further exert pressure on the prices. So the bottomline – tough times ahead for cement companies.

About The Cement Stocks

As we see a tough time for the sector ahead , so any better expectation from the cement companies would be a bad idea.

My View On Areva

About The Company

The company is a well managed with balanced plans and system of expansion. Instead of global weakness and shortage of liquidity the company has managed to maintain a balanced growth and has good expansion plans

About The Financials

Areva T&D India Ltd for the third quarter ended 30th September 2008 . The company's net sales rose 35.57% on a YoY to Rs 586.46 crore. Operating profit grew by 11% at rs.85 crore. Profit after tax of Rs 52.31 crore for the quarter was up by 8.89%.During the third quarter, the company made significant additions to its customer list and secured major contracts from Bhilai Steel Plant worth Rs.221 crore.

Cues On the Stock.

1. Areva will provide the transmission and distribution services to the steel plant.

2. The power company will also supply substations to the steel plant and revamp its existing substations. The company expects to complete the project by October 2010.

3.It also got an order from RRVPNL Hybrid substation and distribution transformers for wind energy segment, a first for the company.

4. Expansions, with six new factories at three greenfield sites at Baroda, Hosur and Chennai Padappai ready for production by March 2009.

About The Stock.

The company is good for medium to long term prospective as its planning of expansion and future development remains good.

Disclaimer : I do not have any personal holding in this stock.

How To Make Money Now ?

The upcoming time would be worse then what we had faced right from the beginning of 2008.In the new year there would be more bad news with greater pace arriving without any solution for short to medium term.

We are busy with our losses in capital market but a bigger curse is left out to come , which is ultimately the effects of severe fall in Indices. Lets focus on them :

1. There would be overselling in reality sector leading to extreme fall in prices of property. Though the prices of constructed flats and offices would be more effected then open lands.This fall would be backed by two reasons namely, first The investor to pay off there debts due to loss in stock market would sell out there investments in property. Second There would be no new buyers for upcoming residential complex as investor ould not be left with surplus to invest there money.As the need user consumption in reality sector is limited so it will lead to oversupply and ultimate fall in prices.We should not be shocked to see the repetition of prices before 1-2 years ahead.

2. The Luxury products sale figure will fall drastically including Diamond Jewellery , Luxury Cars ( Sedan) expensive and luxurious products. High rent hotels , Electricals good will be also under its coverage.

The ultimate solution at present times for investor with cash in hand:

Being a stock advisor and financial advisor I would suggest to be in cash or invested in segment which is as good as cash like Gold , Silver & Fixed Deposit , which is offering a handsome & assured return. Though due to RBI policies these rate may cut in upcoming times.

We will have to click to the opportunity to get the best deal. If you are with cash at that time you will be able to en cash the opportunity without facing any financial difficulties. I would guide to pick the best stock among the variants at the time market is going to bounce back to get the maximum revenue enough to make up our recent losses and attain average gains for the period we had spent
without any profits.

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