DUE TO SOME UNAVOIDABLE REASONS , THE BLOG WILL REMAIN UN-OPERATIVE.
Analysis of JSW Steel Ltd.
About The Company
of Business was received on July 8. The Company is engaged in the business of integrated steel.
It was promoted by the assisted sector by Jindal Iron & Steel Co. Ltd. and
Industrial Investment and Development Corporation Ltd.
Main Stories In the Company
1.FY11 seems to be a excellent year for the company. It expects to operate 11.390 Mw by 2015 from its current 995 Mw capacity.
3.It acquired 70% in another South Africa-based coal company, Indian Ocean Mining (IOM) from Osho Venture FZCO of Dubai.
7.The ministry has asked the company to set up a flue gas desulfurisation (FGD) technology to keep the emissions of sulphur dioxide in check. JSW has to do so at a cost of Rs.527 crore.It was followed after objection raised by mango growers in the Ratnagiri area, who had expressed concerns that toxic gases emitted by the thermal power plant would hamper the production of Alphonso mangoes.
Analysis of Walchandnagar Industries Limited
About The Company
The company was incorporated on 25th November 1908 , at Mumbai with 2,500 No. of equity shares issued without
payment in cash.In 2008
from Rs10/- to Rs2/- About The Financials
For the second quarter ended
- Walchandnanagr has signed a MoU with French naval shipbuilder DCNS, to manufacture critical
equipment for Scorpene submarines to be used by the Indian Navy.
- It shortly expoected to have a second contract P75i project, advanced submarines with DCNS.
My Recommendation
Factors to consider before selcting an IPO for Investment
Get answers for the following questions to determine whether or not you should invest in a particular IPO ?
1. Is this an IPO or an FPO?
- In IPOs, initial public offers, company decides the price and the collective secondary market discovers the true price post-listing after more information inflows/analysis.
- In FPOs, follow on public offers, the price is already discovered; gains/losses can only be marginal; no new information for the market to analyze/process.
2.Is this a fixed-price or a book-building issue?
- The methodology, classes of investors and issue pricing are totally different.
- There is no book or price discovery in a fixed-price issue.
- There are no reservations for FIIs/HNIs in a fixed-price issue; 50% of the issue is reserved for small investors (in book building, it is 35%).
- Fixed-price issues are typically small.
| Issues in 2004-05 (Rs in crore) Source: Prime Database | |||
| Issue | No. of | Issue | Average size |
| Fixed Price | 10 | 378.82 | 37.88 |
| Book Building | 19 | 21,052.74 | 1,108.04 |
3. Is this a “good” promoter?
- Get to “know” the promoter – that’s the key.
- If the promoter is okay, almost all other factors will automatically get taken care of.
- If there is any foreign collaboration of repute, it helps.
4. What is the promoters’ background and experience?
- Experience in the same business/industry (promoting individuals/ promoting companies)
- Are there any material defaults/ litigations against the company or its promoters?
- Persons/Companies that have not been compliant with laws of the land reflect a worrisome mindset.
- If you find too many defaults/litigations of a material nature or even one of a very serious nature, a the issue.
– Criminal proceedings against the promoters.
6. What is the status of the issuing company?
- Holding company
- Main company
7. How has been the performance of the company?
- Number of years in the business
- Size of the company
- Growth rate
- Market share and growth
8. Are the financials, specially the recent ones, reliable?
- Many resort to window dressing; high sales often lie in sundry debtors, profits could be because of a very high “other income” or “unusual income”.
- Beware of bloated previous year’s financials; amazing how almost every company performs so exceedingly well in the year and quarter preceding the issue!
- Look at aging of sundry debtors (and earlier write-offs).
- Look for changes in accounting policies (depreciation etc.), in financial year.
- Look if there are any significant Notes to the Accounts.
- Look if there are any significant qualifications by the auditors.
9. What to look for in the Balance Sheet?
- Fixed assets
- Investments
- Loan and advances
10. What are the key financial parameters/ ratios to look at?
Earnings per share (EPS)
- EPS measures the earnings a company makes for each share in existence. It is calculated by taking a company’s net earnings and dividing them by the number of shares in issue.
- A higher EPS is regarded as better than a low EPS as it means investors are earning bigger profits for every share they own.
- Investors look not only at the current EPS but also at estimates of future EPS to get an idea of the profits they will earn in future years.
Price Earnings ratio (P/E)
- The ratio you will see mentioned more than any other is the Price Earnings Ratio, which you will often see represented as P/E.
- The P/E measures whether a company is cheap or expensive. It is calculated by dividing a company’s share price by its earnings per share (profits after tax divided by the number of shares in issue). As a rule, the higher the P/E, the faster its earnings are growing but if the P/E is high compared with other companies in the same sector, it could also mean the shares are overvalued.
- This ratio enables any business to be compared with another, although in reality investors tend to compare companies against those in the same industry sector or against the P/E on the entire market.
- Investors look not only at P/Es based on the past year’s earnings but also at estimates of future P/Es, also known as prospective P/Es. This gives investors an idea as to how fast a company’s earnings are expected to grow in the future and, therefore, whether their shares are worth buying or not.
PEG ratio
- If you are investing in growth companies it is worth looking at a company’s PEG ratio. This ratio, which shows a company’s P/E relative to its earnings growth rate, is worked out by taking the prospective P/E ratio and dividing this number by the prospective EPS growth.
- The lower the PEG ratio, the better value a company’s shares are.
Return on capital
- This ratio helps investors assess how hard a company is making its assets work. It is calculated by taking profits before interest and tax are removed and dividing this figure by the capital employed.
- Broadly speaking, the higher the return on capital, the more successful a company is.
EBITDA and EV
- EBITDA is a profit key ratio that looks at the Earnings Before Interest, Tax, Depreciation and Amortisation. It is used to assess the operative profitability of a company.
- You can use this ratio to analyse companies that reinvest heavily in their businesses by taking the Enterprise Value and dividing it by EBITDA.
11. How are the cash flows?
- Is it negative?
12. What is the dividend track record?
- No relevance in the case of IPOs
13. What is the promoter’s attitude towards shareholder rewards, in case of listed group companies?
- Dividend policy
- Bonus issues
- Rights issues
- De-listing of group companies
- Past public issue pricing
14. How has been the performance of the group companies?
- Number of years in the business
- Size of the companies
- Growth rates
- Market shares and growth
- Financials
15. How significant are the related party transactions?
- Is it a family business?
- Do group companies constitute the main clientele?
- Is most raw materials sourced from group companies?
- Extent of related party financial transactions?
- Is there any conflict of interest among group companies?
- Are there companies in the group doing the same business?
16. Who is on the Board of Directors?
- Family-controlled or broad-based
- Independent directors
- Key directors-in terms of experience and “connections”
- Compliance of Clause 49 of the Listing Agreement on Corporate Governance
16. What are the products/ services of the company?
- Old economy/ new economy?
- Cyclical?
- “Flavour of the season”?
- Upstream/ downstream?
- Market outlook?
- Be concerned about your own exposure to a particular industry.
17. What about technology?
- Do not bother too much about this.
18. What about customers?
- Over dependence on one or a few customers?
- Too many fixed priced, long-term contracts etc?
19. What is the size of the issue?
- A large issue ensures better allotment as also better liquidity.
20. What will be the public float after the issue?
- This is critical as public float finally determines the liquidity.
21. What is the promoter’s holding after the issue?
- A small post-issue stake does not inspire much confidence
22. Is the price justified?
- Do not be guided by ‘par’ ‘premium’ parameters
- In “Justification of Issue Price”, look whether P/E has been calculated on recent period EPS or on weighted average of 2-3 years.
- Look at the peer group prices, but do not rely entirely on it.
- Industry low/ average/ high figures of P/E are deceptive; there are no two similar companies, each is unique.
23. What has been the capital build up?
- Previous public issues/rights issues/overseas issues/preferential issues.
- To whom, when, at what price?
- Is there any venture capital/private equity fund investment in the company?
- Who invested, when, at what price, for what stake?
- How does the offer price compare with price of allotments made to them?
- Are these now funds exiting fully or partially in this offer?
- Partial exit or no exit is more confidence building; VCs are expecting a higher secondary market exit price. In 2004-05, there were two such companies where VCs exited partially, NDTV and UTV.
24. What are the objects of the issue?
- Finance a new project (new/diversification)?
- Undertake expansion
- Augment working capital?
- Repay debt? (to promoters?)
- Do acquisitions?
- Fund subsidiaries?
- Open branches?
- For general corporate purposes?
- Exit to promoters/others (offer for sale); No fund inflows into the company?
25. What are the components of the project cost?
- Any oddities in the components of the project cost?
- Comparison of cost of projects of two “similar” companies difficult as there would rarely be two exactly similar projects.
26. What has been the utilisation of existing capacity?
- Is the present capacity fully/ substantially being used?
PSU Boom Study at a Glance
Recently, we have seen a major spurt in all PSU stocks , whether it's a listed company or not. There is great news of IPO & FPO of the PSU units in the stock market. The Govt. has recently announced the proposal of reducing the promoter stake to maximum of 75% of the total equity or else the public participation in any company has been settled to a minimum of 25%. This cowers not only private units but also all PSU stocks. Govt. has been carrying a fiscal deficit in budget due to prolonged carried forward balance and also due to waiver of farmer loan in last budget. The recovery of such deficit will be done by either making initial public offer of unlisted stock or by divesting the stake in already listed stocks to get reasonable amount of funds to settle the deficit.
Now we are expecting IPO of the following PSU stocks :- BSNL , VSNL , COAL INDIA , KUDREMUKH , SATLUJ JAL VIDYUT NIGAM.
We can expect divestment in those PSU stocks , where the govt. stake is reasonably high. Like wise NMDC , MMTC , STC , HINDUSTAN COPPER , REC , NTPC , NEYVELI LIGNITE , SAIL , ENGINEERS INDIA , RCF , HMT , ANDREW YULE ETC
NOTE :
All registered members are hereby informed that they may email me mentioning there date of registration with us to claim for the detail study of the divestment in public sector and the gem stock stock to be bought , the price level for best buy and target expectation.
Mandatory Rules to have Safe Return In Stock Market
Some of the major mandatory rules to be kept in mind to have safe and steady return in capital market :
Being a trader or investor in stock market , we need to keep some of the basic concept in mind while trading or working in stock market to avoid any sort of major uncertainty and to have steady and stable return of the hard invested funds with less or no risk engagement.
- Proper Allocation of Funds
The most crucial point while investing in stock market is to allocate the funds in proper counter and in the ratio as required to maintain stability and to expect reasonable return of the invested funds within proper time.
- Diversification of Investment
On macro basis , diversification is a tool where investment of funds is done in various aspects or opportunity available in market in proper ratio to avoid any risk of a particular field and to enjoy the benefit of all sort of available options with the available funds.
Likewise in equity market we must diversified the amount or funds available with us , say we can invest 50% of the fund in long term stocks with allocation of fund in designed portfolio , 25% is invested in medium and short term stocks to get regular return and balance 25% to be invested in mutual funds through proper channels or via Systematic Investment Plan (S.I.P).
This will reduce the risk involved while investing the funds in stock market as if one of the option fails to give you proper return , you need not apologize to miss the other one. Though practically it is found a investor who goes with this theory is gainer in long term as the average return from all aspect from time to time is excellent.
- Proper Time of Entry & Proper Exit
This is one of the most essential element while investing as we need to maintain the time factor here proper time of entry will get you invested in the proper counter as correct time , while if we are not informed about the time of exit we will be greatest looser by not only loosing the deemed and accumulated unrealized gain but a handsome part of the invested fund will get washed away with our wait to get the repetition of levels.
The ultimate gainer of the stock market is one who has not been able to accumulate heavy gain by investing in the stock and watching it on screen but one who has not only earned but also has realized the same and taken the entire pr hand some part home.
- Strong Decision at Tough time
The other part to be kept in mind is that if we do not have the capacity to take strong decision at tough time else we will be left out with only feeling of apologize.
In case, market shows the extreme reverse trend at any time when all our expected stop loss in mind are broken , then at that point we should not be stubborn and wait endlessly to get the targets revised to exit , we must makeup our mind and take a wise decision at per practical situation , though at some times we may be proved wrong but as we had exit with gain so it would be better instead to loose the entire left out residual gain with expectation to get the revision of previous high levels.
- Average Buying
Averaging is the most wisest mode of investment in stock market , as we enjoy buying at all levels of the market and do not have left out feeling in case the market goes reverse.
Say, if we are interested to buy 100 shares of a stock we should buy it 50:25:25 ratio i.e buy 50 shares at the most expected lowest level as per your expectation and later if the market and stock slides further buy 25 and remainder to be bought at further lower level , though some times it may be bought at little higher levels but never mind it happens occasionally. This theory is always better then emotional buying of the entire stocks at a single point.
Analysis Of Shivani Oil For Investment
About The CompanyShiv-Vani Oil is
About The Financials
It has posted a good performance for the second quarter ended
The improvement in the performance has been mainly on the back of deployment of five new onshore rigs. Depreciation of the rupee has also helped as it has posted a currency fluctuation gain of Rs.3.69 crore as against a loss of Rs.3.66 crore in Q1FY10.
The company is sitting on a debt of around Rs1,400 crore , payable in about six years. The huge interest outgo, which in Q2FY10 was at Rs.40.80 crore v/s Rs.17.51 crore in Q2FY09, is the effect of this debt burden. Taking the recourse which many others have taken, the company is looking at the option of raising funds to the tune of Rs.600 crore, either via QIP or private placement to be used to retire debt and fund its future capex.
The current fiscal will remain good for the company, notwithstanding the ONGC fracas. Infact ONGC has stated that it will go ahead with Shiv Vani as it has already made expenditures in facilitating the delivery of rigs by Shiv-Vani and it is difficult for ONGC to scrap the contract at this juncture. ONGC had already imposed on Shiv-Vani a 5% penalty on the Rs 1,610-crore contract value for failure to meet the time schedule. It has also given the company its sixth extension for the completion of the 8th rig.
About The Stock
Disclosure : I do not feel any need of giving any disclosure over here , my personal portfolio are always shared with the members.
Notice
Visitors may now log on to www.financeandstockadvice.blogspot.com to have detail analysis on the following essential financial subject matter:
1. Refinancing.
2. Auto Loan.
3. Credit Cards.
4. Debt Consolidation.
5. Mortgage Loans.
6. Equity line of Credit.
7. Home Loans.
8. Personal Loans.
9. Equity Finance.
An Outlook on India Credit Policy
RBI Credit policy has been announced and it has revised the inflation targets upwards from 5% to 6.5% for FY10. RBI has said that it will ‘watch inflation like a hawk’. This clearly means that RBI is concerned about the spiralling prices and this could be the prime issue which would dictate the policy decisions in the coming months.
Apart from that, the RBI Monetary Policy was just another non-event.Interest rates were kept unchanged.Major announcement could be summarized as below:-
1. CRR was unchanged at 5%.
2. Repo rates unchanged at 4.75%.
3. Reverse repo rates unchanged at 3.25%.
4. SLR rate was hiked to 25% from 24% and this, the RBI says would not affect liquidity.
And at the same time, the policy has said that it expects to see a modest decline in agriculture. The RBI does not seem to be overtly worried about the decline in agri growth as it is feels this fall is seasonal and once the monsoons, hopefully, improves in the next year, things would fall back in place. It expects robust growth in industrial sector to more than make up for the decline in agri and that, RBI hopes, would keep the GDP buoyant.
RBI is also equally worried about the present situation of liquidity. And knowing this, it has pointed out that there is enough evidence pointing to excess liquidity feeding into asset prices. FY10 money supply growth projection has also been lowered to 17%.
Loans to real estate companies are to become more expensive as realty provisions have been hiked to 1% from 0.4%. The immediate fallout of this would be that some developers who are already having a huge interest cost would now have to pay more. This would mean, costs for realty companies would go up and in all probability, developers would pass on this cost to the consumers, meaning realty prices would go up.
Collateral borrowings are to now attract CRR. So this is more like a back door entry of the hike in CRR which seems like a surety in Jan 2010, or even before that.
Indian Markets Reaction to the Policy
Markets were down 110 points just few minutes before the RBI Monetary Policy came in. And it continued to remain in the red, with realty companies slipping fast. Though a non-event, the market is now worried about the hawkish stance taken by RBI. It clearly sends out the signal that in the coming months, when the next policy is out in January 2010 or even before that, screws will get tightened.
Calculation Of Inflation Figure in India
Weekly inflation figure is a big joke.
The rate which was given by the Govt and the actual rates which a man on the street had, had no co-relation. Inflation is currently at below one percent but we are paying over Rs.100 for a kilo of toor dal. And though we all in the media and economists have been screaming themselves hoarse, urging the Govt to relook at the way in which it was looking at inflation, unfortunately, which till two days ago, fell on deaf ears. But finally some noise seems to have reached and the Govt has actually changed the way we calculate inflation. Yet, the sad part is that this new change would in no way once again reflect the true picture.
Amendments made for Calculation of Inflation Figures
Inflation for the week ended
Why did this sudden light dawn on the Govt?
Weekly figures were not giving a true picture of the change in prices, especially from the manufacturing sector. But once the Govt goes with a monthly calculation, there would be a much better reflection of the correct picture. One month is a good enough time to take into account price changes over various sectors and that in the real sense, would give a more correct picture of inflation.
The decision to change the base year to 2004 is also a good one as it is considered to be a more stable year, with respect to economic activities like production, trade and their prices. This 2004 base year will ensure more consistency. The monthly data and 2004 as base year is good but what would be a more apt reflection of the true prices would be a change in the weightage of goods on the Wholesale Price Index (WPI). This, the Govt says would also be changed and we will have to wait till November.
WPI was used a method of calculation way back in 1902 and we have shrugged off most of the old ways of life, but this continues. In WPI, a total of 435 commodities data on price level is tracked and of this over 100 commodities have no relevance when it comes to giving an indication of price levels. The last time, the WPI was updated to ‘current’ times was in 1993-94. In the computation of WPI, the 3 major variables are Primary articles, fuel, power, light and lubricants and manufactured products. The receipt of input on weekly prices in manufactured products is very low. Services form no part of the WPI at all though its share in the calculation of GDP is over 50%.
Why can’t we shift to CPI like the rest of the world?
CPI tracks the prices of a specified basket of consumer goods and services. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. In
Conclusion –
we will get a new set of inflation rate but once again it may not be a 100% reflection of the picture on the ground.
Analysis Of Mundra Port For Investments
About The Company
Mundra Port and SEZ, an Adani group company, is currently the only listed non-captive private sector port. It is engaged in developing, operating and maintaining the Port and port based related infrastructure facilities, including multi-product SEZ. The company recently bagged Mormugao Port coal terminal development on a design build, finance, operate and transfer (DBFOT) basis. With this expansion into Western coast ports with good presence in coal and gas terminals, it will vastly improve the potential of the company.
About The Results
The company has done very well for the first quarter ended 30th June 2009. It posted a net sales of Rs.298.04 crore, rising 18% on a YoY. EBIDTA was up 22% at Rs.220.11 crore. Net profit was up by a healthy 76% at Rs.170.75 crore.
This strong performance has been on the back of strong growth in cargo volumes. While major Indian ports have together shown a growth of 1.9%, Mundra Port has shown a rise of 24% in cargo volumes in Q1 June 2009.
In Q1FY10, there was a 23% (YoY) rise in the number of vessles, which called at the port. There was a 24% rise in total cargo handled at the port at 9.89 mmt. Of this 24% came from coal, 20% from crude, 165 from vegetable oil and chemicals, 26% from container, 5% from fertilizer, 5% from steel and 45 from mineral and others.
About The Stock
Subscribe to:
Posts (Atom)