My View On Corporation Bank

About the bank

The bank is very rarely traded counter and not a fancied stock in banking counter.Regarding the banking performance the bank is not being much popular.The Bank is now in the process of raising its Tier I Bond / perpetual Bonds to the extent of Rs 600 crore and upper Tier-II Bond to the extent of Rs 1000 crore. These are in addition to raising of Lower Tier-II Bond to the tune of Rs 1200 crore.The Tier I ratio was at 10.13%.This is being done to mainly fund business growth this fiscal.The total number of branches at end of Q1FY09 stood at 999. It recently opened its first representative office in Dubai.

Financial Of the Company

The Capital Adequacy Ratio was at 12.43%.For quarter ended 30^th June 2008, the total business of the Bank stood at Rs.93,694 crore, a growth of 27.33 % on a YoY. Total deposits grew 26.62% at Rs.54,742 crore. The bank added 9.27 lakhs new accounts under deposits as at the end of June 2008. Advances grew 28.34% at Rs.38,952 crore.The Total Income of the Bank for the 3 months ended 30^th June 2008 increased to Rs.1,446.28 crore registering a growth of 16.75% on a YoY.

Return on Average Assets of the Bank was at 1.19%. The net worth of the Bank stood at Rs.4,413 crore compared to Rs.3,519 crore as on 30th June 2007.

The Gross NPA has come down to 1.46% compared to 2.07% as on 30th June 2007 and Net NPA to 0.36% as at 30th June 2008 compared to 0.46% on 30th June 2007.

The Net Profit of the Bank for the 3 months ended 30th June 2008 registered a growth rate of 4.06% at Rs.184.30 crore. But for the heavy depreciation on investment portfolio, the Q1 Net Profit growth would have been about 40% higher. For the period under review, the bank had provided Rs 63 crore as depreciation in securities portfolio.

Stock Counter

Corporation Bank is currently near about its 52 week low of Rs.230.I do not recommend to stay invested in this counter or to make any fresh holding.

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

My view on Voltas Limited

About The company

Voltas limited is a entity of TATA group ,the company is engaged in export to turnkey electro-mechanical projects for built environment. It is the biggest exporter of the same in the country. It is also the largest air conditioning company of India.It is a trusted name in mining and construction equipment, having executed the world’s single largest order of Rs.1,000 crore from Coal India.

Some of worth mentioning projects

1.The new Hong Kong Airport.

2. Mall of Emirates in Dubai.

3. Emirates Palace Hotel in Abu Dhabi.

4. Provided air conditioning for the new Hyderabad and Mumbai airport.

About the financial of the compnay

Financial position of the company for the first quarter ended 30th June 2008. YoY, net sales of the company rose 22% at Rs.1006.73 crore and despite a 205 rise in operating expenses, EBIDTA was up 58%. The over three times rise in other income also helped the operating margins. PBT was up 61% at Rs.126.18 crore and tax outgo was up 53%. PAT was up 63% at Rs.85.13 crore. The OPM was up at 12.88% from 9.94% and NPM at 8.46% from 6.32%. The Electro-mechanical projects & services division contributed Rs.463.16 crore, cooling products Rs.400.77 crore and the engineering products and services division contributed Rs.136.42 crore. The overall high sales for Q1FY09 was mainly on account of the cooling division which is seasonal and almost always, is the highest in first quarter. The company had an exceptional gain of Rs.23.21 crore which also boosted the profits and this was due to assignment of leasehold rights at Rs.23.24 crore, of which Rs.30 lakhs was deducted on account of VRS expenses.

Subsidary & Acquisitions

Voltas has acquired a 51% stake in Rohini Industrial Electricals for a consideration of Rs.62 crore. Prior to this, on June 17, 2008 the company purchased a subsidiary of Fedders Corporation, which is now a subsidiary of Voltas.

Shareholding pattern of promoters

A trait of Tata group, the promoter’s shareholding remains low at 27.57% and institutions hold 44.03%. LIC holds a 7.74% stake.

About the stock

In the meltdown of last week, it touched a new low at Rs.112.For long term prospective stock is a good buy.

Disclaimer : I do have any personal holding in this stock.

My View On DLF

The grand grand IPO , after a postponement enter the capital market being one of the biggest IPO ever of the time and received a overwhelmed response from the domestic as well the investors from abroad.The company has been no doubt and yet at present too is the leading company of its field.Unitech is another of its kind,whose shares has rewarded the shareholders in a significant manner and being titled as a multi multi bagger stock.
The entry of DLF was late in the market & as well as the recession in reality market thereafter did not provide a chance to the stock to perform or we would have seen a similar pattern of return.


The real estate slow down seems to be catching up with the big time realtor's too. DLF too is now feeling the pinch of the slowdown in the realty sector. Falling demand has forced the company to give the termination to 300 of its employees across India. And in big cities, where it is developing huge and prestigious projects, it cannot afford to slowdown despite the slowdown. Hence it has decided to go slow on its project executions in tier II cities.

But despite the slowdown, having purchased land at exorbitant rates, the company cannot simply afford to bring the prices down. So though there are no takers for many of its office and retail spaces, DLF is adamant about not bringing down the prices. Instead of bringing down the rates, it has decided to build less, stagger projects and thus spread the costs.

The company is trying its best to over come the problem , which is time being. The company was , is and will probably be the best and one of it's kind. No need to care about the fundamentals of the company. Once the stock market gets improved , the reality sector will get recover and hence both negative points will be solved out and the stock will be able to show its sub due performance.

Disclaimer : I have no personal holding in this stock.

Alternative To Equity (Stock Market) Investment

As we know the stock market has been butchered including domestic as well as the international market. The mutual funds are also performing very bad with constant reducing NAV.As the clues in the market remain such that immediate or bull run in short to medium term could not be expected.In such case we must focus on the alternatives present in the market , who are the best substitute for investment of our hard earned money.

1. Fixed Deposit
The first best alternative to equity market would be certainly Fixed Deposit , as the rate of return in the F.D is attractive and rising constantly.We should focus on the cause of rising interest rate:

1. If we look at the market inflation rate , which is near about 12% (appx.) ,whereby the interest rate on deposits at banks were about 8.5% to 9% , which is giving a negative revenue for us to meet or give a match to the inflation. In other words due to rising inflation our expense is rising by 12% p.a while our income on deposit is generated @9% making a deficit of 3% (appx.) .
thereby forcing the bank to offer there customer higher rate of interest to prevent premature redemptions.


2. In order to check inflation RBI under its credit policy issued from time to time is adopting measure to control liquidity in the market thereby hiking the lending rates and thus automatically the deposit rate get hiked.


2. Gold & Silver

It would be great to accumulate raw gold and silver in this festive season. The prices are going to soar in near to medium-long term.These metals are going to break there high in short term and will make new highs one after another , making it out of reach of general person and rewarding the investors generously.

These two alternative are the best amongst the various variants available in the market and would help investor to get generous return out of there investment.One can allocate there funds among the various options considering the two above as per there needs , funds , time of investment etc.

STOCKS TO FOCUS.

Present Scenario

At present times when the market is volatile , inflation is breaking records , interest rate are high , U.S economy is
under recession heading towards bankruptcy , Indian elections ahead , Soaring Crude Prices are all a matter of great concern.

In such unstable and volatile market , it becomes very difficult to decide the sector and the counter to enter.

Negative Counters

Reality sector will not get response soon.Among them the worst hit would be Unitech & DLF. Though Unitech has been under performing and was beaten up from long time due to sale of stake from Lehman Brothers. The counter is not expected to get well soon.

Regarding Banks , if a fresh entry is needed then preference should be given to Axis Bank. Sound company with minimum exposure in U.S market and is building up well.

INDIAN STOCK MARKETS AHEAD

A small rally is expected very recently near about the festive season , especially Deepawali.
But the rally will be for very short period where investors will get a chance to get out of the stocks , in which they have been stuck for long period of time.

Soon after this rally a severe fall is awaiting ahead , which will provide a wonderful opportunity for the traders & investors with cash in hand to invest there accumulated funds.

Technicals

In case of Nifty there is strong resistance at 4400 , 4600 and 4800 respectively. In order to cross 4400 levels it must close for atleast 4 trading session to confirm its stability. Though there may be an intra day achievements of targets but unless the stability is confirmed it is not going to cross next resistance levels.

Regarding Sensex a strong resistance at 15000 level is waiting ,so highest levels for sensex in near term is about 15000 levels and 16000, 17000 thereafter respectively.

Positive Clues To cause Rally

1. Finalization of Nuclear deal with India.

2. Sanction of 700 million dollars loan for U.S from world bank will improve liquidity and help the US govt to overcome the crisis problem in the economy for intermediate term.

MY VIEW ON GRASIM

Introduction of the company

Grasim Industries is one of the favorite stock of the traders. The brand is under the leadership of Adity Birla Group.

Financials

The financial performance of Grasim for the first quarter ended 30^th June 2008 has been flat. The high cost of raw materials and the overall slowdown in the economy seems to have taken a toll.The company’s revenues for the quarter were at Rs. 4,430 crore (Rs. 4,060 crore). Net profit was marginally higher at Rs. 672 crore (Rs. 670 crore).

Caustic soda volumes were higher by 11% and realizations were up by 30% at Rs. 22,352 per ton. Though the production and sales of cement was up at an average of 3%, margins were under pressure due to continuous rise in coal prices along with higher freight, employee and packing costs. Cement production and dispatches for the month of August 2008 stood at 21.19 lakh mt and 21.88 lakh mt, registering a decline of 8.87% and 5.39% on a YoY basis.

The Viscose Staple fibre (VSF) performance during the quarter was muted. Production was curtailed due to lower off-take. The liquidation of accumulated inventory in the value chain, substitution of VSF with other fibres on account of high VSF prices and general slowdown of the economy impacted the performance. Margins were depressed due to the record increase in sulphur prices and higher prices of other key inputs like pulp and caustic. Margins are likely to remain under pressure in the short to medium term.

Subsidiary

The performance of UltraTech Cement Limited, a subsidiary of Grasim, improved marginally. Domestic cement sales were higher by 4% but exports were affected due to the ban imposed by the Govt for six months.Though Profit margin was flat.

The production of sponge iron was lower by 27% due to planned maintenance shutdown and sales volumes declined by 35%. Realizations were high by 62%. The company is planning to hive off this division on a slump sale basis.

In current Q2, margins are expected to remain under pressure but if the company manages to sell off its sponge iron business, this one time gain would help bolster the performance.

My view

From above discussion I found the stock fundamentally strong and would advice the readers to stay invested.

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

Diversification

The Problem

The major problem our people of the country facing is the concentration of there savings and hard earned money.Their investment is too concentrated in one option, exposing them to the risks from lack of diversification. If for some reason, the business faces a downturn, many businessmen could run the risk of losing all that they had earned so far and redeployed into the business. This is particularly true of small sized enterprises that are closely held, that do not have an investment portfolio or a professionally managed treasury. It is also true of a number of small businesses run by individuals. Many of these wealthy individuals, who run a successful business, may be running the risk of concentrated investments, without being aware of it.They increase the risk of losing money, if the chosen investment goes bad.

Segment Facing The Problem

1. Businessman tend to invest most of their money back into their successful business with a justification that why seek another investment, when your own business provides a high return on capital and is also in need of funds?

2. Many investor have highest stock holding is in the stocks of their own companies. In these days of stock options and preferential allotments, many people tend to have a big chunk of their own company shares in their portfolio.

3. Many young professionals today invest a large sum of money in buying themselves a house. They save tax, and also get a house of their dreams.

4. Investors who made money in one stock, tend to like it so much, that they shift a large chunk to invest more in the same stock. These are some of the known ways in which portfolios are concentrated. Studies show that many small investors who indeed have a large number of stocks, tend to have some "dead" investments – those that were picked up on poor advice, gone sour and languish in the portfolios. Otherwise they have on an average about 6 stocks in which they have their money – not a very diversified portfolio

Solution To The Problem

Diversification is the key to keeping risks balanced. Good for your portfolio. Make sure that you don’t have more than 10% of your saving in any one asset – your business, your favourite theme or your favourite stock and perhaps not over 20% in your home. It can be painful when markets move up, but your wisdom will see you through when the markets move down. Moral of the story – make sure you diversify. It is the simplest way to make sure your portfolio is protected from risks it can do without.

ECB NORMS RELAXED

The Govt. of India has relaxed norms for External Commerical Borrowings (ECBs) for infrastructure projects. The companies engaged in building ports, airports, roads, bridges, power and telecom which could borrow only upto $100 million a year for rupee spending in India till yesterday can now borrow 5 times more ,the limit has been increased to $500 million per year.Projects with long gestation periods, mainly infra projects would be able to access these ECBs as these ECBs would have a minimum repayment period of seven years

For ECBs of three to seven years tenure, the borrowing rate has been left unchanged at 200 to 350 bps plus LIBOR. For borrowings between five-seven years, the all-in-cost ceiling has also been left unchanged at 350 bps while for those above seven years; the rate has been relaxed from 350 to 450 bps above LIBOR.

The news indicates that the Govt is going ahead with a good focus on reforms. Maybe in the current situation, where even companies with a strong balance sheet might find it difficult to get funding, for the long term, this is a positive move. The relaxation of the ECB norm, as experts say, might help bring down the dollar vis-à-vis the rupee. But probably, another way to look at it is that Govt is seeing the rupee at stronger levels in the months to come. So maybe right now, this news may not make much sense given the volatile rupee and dollar tussle. This, run up on the dollar, many say, is an aberration and once things settle down a bit, the rupee would also stabilize at better rates. So once that happens, this ECB relaxation will make a lot of sense.

Interest rates on the overseas markets would come at a much cheaper rate for large borrowings and for such long tenures would make more sense to borrow abroad than to borrow in India, where the interest rates would be higher.

The growth of India is still driven by the core sector, and with the impetus now being given to the Govt, the infra sector, which is expected to need around $500 billion by 2012 would find many takers for the ECBs.

The realty sector does not qualify for this increased ECB limit. The ECB ceiling for companies other than infrastructure companies stays unchanged at the previous $50 million. And taking a lesson or two from US, the Govt would not be in a hurry to relax this limit for realty companies any time soon.

This relaxation of the ECBs limit for infra is a step in the right direction but it will take some time to get to the desired destination.

My view On Pantaloon Retail

Financial Aspect

On a consolidated basis, the company reported a 64% rise in net sales at Rs.5840.54 crore, and despite a 66% rise in operating expense, the company managed to show a 43% rise in EBITDA at Rs.326.49 crore. But after this, it has been all downhill. Interest outgo rose 123% and depreciation was up 145%, with the company posting a loss before tax of Rs.15.30 crore as against a PBT of Rs.79.82 crore in June 07’ year ending. It posted a net loss of Rs.28.39 crore as against a net profit of Rs.79.90 crore last fiscal. This net loss would have been much higher at Rs.62.59 crore but for prior period adjustments added back at Rs.1.04 crore, goodwill written back at Rs.3.39 crore and the profit which it earned from sale of subsidiary at Rs.29.77 crore.

Then the company added back the minority interest earnings to the tune of Rs.51.22 crore and this catapulted the company back into the black, It ended 2007-08 with a net profit of Rs.21.93 crore , down 38% when compared with net profit of Rs.35.54 crore in 2006-07.

Apart from all these adjustments, during the fourth quarter ended 30^th June 2008, it changed its method of valuation of finished goods from "Retail Price less Mark up" to "At lower of cost and Net Realizable Value". Consequent to this change, the value of inventories was lower by Rs.74.37 crore. The same has been adjusted (net of tax of Rs.25.28 crore) against brought forward balance in Profit & Loss Account.

No doubt the sales have increased but the bottomlines have shown pressure. Its retail space has increased from around 7.30 million square feet to around 7.90 million square feet during the quarter. And its aim is to increase it to 15-16 million sq-ft in the current fiscal from 11 million sq.ft last fiscal.

Regarding Stock

The stock has a low at Rs.283 and currently it is hovering in the range of Rs.300-305. The great Indian retail bazaar is undergoing a change but Pantaloon has the advantage of being amongst the first in the sector and is today too big.This is a good stock to invest in.