PRESENT INVESTOR AND TRADER

At Present the trader has to be agile as in pic 1- and an investor has to wait and watch with a gymnastic difficulty as in pic 2 :)

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CAPITA TELE FRIDAY RECOMMENDATION

CAPITA TELE RECOMMENDATION DT:27.7.07





Maruti Udyog

Moving in all directions

A series of new launches in the hitherto untapped segments will help it to outperform the sustained growth in the Indian car industry

Buy
Maruti Udyog

BSE Code
532500

NSE Code
MARUTI

Bloomberg
MUL@IN

Reuter
MRTI.BO

52-week High/Low
Rs 990 / Rs 715

Current Price
Rs 830 (as on 27th July 2007)


Indian car industry is set to grow consistently in future. Rising income levels due to strong economic growth and outsourcing and service sector booms and increased availability of better roads will increase car penetration in India. Currently car penetration of 7 vehicles per 1000 individuals is one of the lowest in the world. It’s even lower than Pakistan and Sri Lanka (both around 12 per 1000). China’s car penetration was only marginally higher than India’s a few years ago, but due to CAGR of 80% its now at 14 per 1000, almost double India’s. Suzuki, Japan’s 54% subsidiary Maruti Udyog (MUL), which is to be renamed Maruti Suzuki India, is best placed to ride the expected increase in penetration.

Records a swift 26% sales growth (on 17% volume growth) and 35% PAT growth

For the quarter ended June 2007 MUL registered a healthy 26% growth in its net sales (inclusive of its service income) to Rs 3930.82 crore. (net sales from car sales grew by 26% to Rs 3913.67 crore). It was backed by growth of 17% amounting to 169669 units in its total sales volume. Its domestic sales that represent 95% of the total sales volume rose by 17% to 1,60,604 units. Its exports grew by 16% to 9,065 units. Its income from services grew by robust 50% to Rs 17.15 crore.

In spite of rise in metal prices, discounts and higher promotional spends operating margin has been maintained around 14.6% due to benefits of rupee appreciation on imported components and richer product mix. Thus the operating profit surged by 26% to Rs 574.79 crore. The other income grew by healthy 56% to Rs 223.25 crore. However commisiioning of new plant lead to spurt of 365% to Rs 15.10 crore in its interest expense and depreciation cost rose by 28% to Rs 82.20 crore. Thus the PBT growth was restricted at 32% to Rs 700.74 crore.

Though the effective tax rate declined by 200 bps to 29%, the tax provisions rose by 23% to Rs 201.14 crore owing to the increased profit base. The PAT rose by 35% to Rs 499.60 crore.

Improved product-mix

While maintaining its lead in A segment small cars, the company is moving more towards premium B segment cars, diesel cars and C segment cars, which fetch more margins and bring additional volume, hitherto not catered to by Maruti.

Well-placed to capitalize on growth opportunities

In order to make India a small car hub, Government’s initiatives like reducing excise duty on small cars and investing in port infrastructure to support automobile exports, is now paying off as Suzuki Motor Corp has initiated to make India as its hub for sourcing small and compact cars for its global markets. Exports are expected to boost from FY09. Thus, the story of India being a small-car hub is seen to be materializing. Export is likely to contribute 11.1% of total volumes in FY09, up from 5.8% in FY07.

Huge capex at the most opportune time to sustain growth

MUL’s rising share in Suzuki’s profitability has prompted the Japanese company to invest Rs 9,000 crore in India, which is divided among the new car plant, diesel engine plant and modernization of the existing facilities.

Capex Amount
Purpose
Investment by MUL

Rs 2500 cr
4th Car Plant at Manesar
Rs 2500 cr

Rs 4000 cr
Modernization of existing facility
Rs 4000 cr

Rs 2500 cr
Diesel engine plant (30:70 JV)
Rs 750 cr (30%)

Rs 9000 cr
Total
Rs 7250 cr


The 4th car plant at Manesar would entail an investment of Rs 2,500 crore, in phases until 2010. Currently this plant is rolling out 1 lakh units p.a. Further, the capacity is expected to reach 3 lakh units p.a. by 2010. Besides manufacturing the premium hatchback Swift, the new plant will also manufacture a new export model expected to be launched in 2008-09. As per the company’s strategy, the new platform will also tie in new engine series to cover both Euro4 and Euro5 compatibility in order to realize unhindered export boom.

Rs 4000 crore for modernization of existing facilities would mainly be utilized for upgrading the existing facilities coupled with marginal expansion of capacities. This will include investment towards R&D facilities, designing facilities, building a test track, etc.

Suzuki’s only Diesel engine Plant at Manesar would entail an investment of Rs 2,500 crore, in phases until 2010. The diesel engine plant has been set up by Suzuki Powertrain India Ltd, a 30:70 JV between MUL and its parent Suzuki Motor Corp. The total capacity will be 3,00,000 diesel engines per annum to be developed in phases. The initial annual capacity will be 1,00,000 diesel engines, 20,000 petrol engines and 1,40,000 transmission assemblies. The diesel engines manufactured at this plant will be used captively for its diesel models and will also be exported to Suzuki’s group companies across the world.

Diesel cars to strengthen its position further

The launch of Swift Diesel has marked MUL’s entry in the diesel car segment, which has further strengthened its position. MUL will no longer remain aloof from the diesel car market, which currently forms 27% of the car market and is expected to increase to 35% by 2010. With the petrol prices on an up move, globally there has been an increasing preference for diesel cars. The diesel engine plant established at Manesar will take care of the growing requirement of diesel engines as well. The timely entry in the alternate fuel car segment will help MUL in consolidating its position and benefit from the potential growth in this segment.

SX4 AND Grand Vitara makes it one-stop shop for all kinds of cars

Till now MUL was weak in the C-segment car and SUVs. However in the quarter ended Jun ’07, the company launched SX4 sedan. It also launched Grand Vitara, a latest geenration SUV in Jul ’07. It now offers a complete range of cars. Both the new launches have met with encouraging response.

Grand Vitara happens to be the fifth model in less than 12 months. The WagonR Duo, Zen Estilo, Swift Diesel and SX4, while being successful, also showcase the diversity of models that Maruti has been able to offer in the past year. And the new launches have bee successful.

Suzuki Motor Corporation' s R & D hub for Asia
In recent years, Maruti has made major strides towards its goal of becoming Suzuki Motor Corporation' s R & D hub for Asia. It has introduced upgraded versions of WagonR, Zen and Esteem, completely designed and styled in-house.

The company's quality systems and practices have been rated as a "benchmark for the automotive industry world-wide" by A V Belgium, global auditors for International Organisation for Standardisation.

Outlook is bright

Car is the only segment of the auto industry which we believe is far away from the cyclical peak and has the potential of a consistent growth of at least 10-12% on the back of higher disposable income and improving road infrastructure in spite of higher interest rates and fuel prices.

Due to MUL's acknowledged strengths like widespread sales and service network, consistent high customer satisfaction record, affordable spares, fuel efficiency, reliable quality and trust and goodwill associated with the Maruti brand and a complete range of products will ensure that in spite of it being the market leader, it will grow faster than the market.

Valuations are attractive

We expect MUL to register sales and net profit of Rs 18170.82 crore and Rs 1889.97 crore in FY 2008. On equity of Rs 144.46 crore and face value of Rs 5 per share, EPS works out to Rs 65.4. By then the book value will also inch very close to Rs 300 mark. The share price trades at Rs 830. P/E works out to just 12.7. The scrip should outperform the market going forward.

Maruti Udyog: Financials





0403(12)
0503(12)
0603 (12)
0703 (12)
0803 (12P)

Sales
9108.97
10962.41
12052.20
14653.89
18170.82

OPM (%)
10.2
12.8
13.5
13.6
13.7

OP
930.53
1406.27
1626.61
1990.41
2488.01

Other Income
334.45
391.43
429.19
598.41
650.00

PBIDT
1264.98
1797.7
2055.80
2588.82
3138.01

Interest (Net)
43.39
36.01
20.39
37.63
61.91

PBDT
1221.59
1761.69
2035.41
2551.19
3076.10

Depreciation
494.92
456.83
285.42
271.36
337.02

PBT
726.67
1304.86
1749.99
2279.83
2739.08

EO
43.2
0.00
0.00
0.00
0.00

PBT
769.87
1304.86
1749.99
2279.83
2739.08

Provision for tax
227.69
451.26
560.94
705.36
849.12

PAT
542.18
853.60
1189.05
1574.47
1889.97

EPS*
17.7
29.5
41.2
54.5
65.4

*Annualised on current equity of Rs 144.46
Face Value of Rs 5; (P): Projections
EO: Extraordinary item
EPS is calculated after excluding EO and relevant tax
Figures in Rs crore
Source: Capitaline Corporate Databases




Maruti Udyog: Results





0706 (3)
0606 (3)
Var. (%)
0703 (12)
0603 (12)
Var. (%)

Net Sales
3930.82
3125.47
26
14653.89
12052.20
22

OPM (%)
14.6
14.6

13.6
13.5


OP
574.79
456.60
26
1990.41
1626.61
22

Other Income
223.25
143.30
56
598.41
429.19
39

PBDIT
798.04
599.90
33
2588.82
2055.80
26

Interest
15.10
3.25
365
37.63
20.39
85

PBDT
782.94
596.65
31
2551.19
2035.41
25

Depreciation / Amortization
82.20
64.07
28
271.36
285.42
-5

PBT Before EO
700.74
532.58
32
2279.83
1749.99
30

EO
0.00
0.00
0
0.00
0.00
0

PBT After EO
700.74
532.58
32
2279.83
1749.99
30

Tax^
201.14
163.01
23
705.36
560.94
26

PAT before PPA
499.60
369.57
35
1574.47
1189.05
32

PPA
0.00
0.00
0
12.49
0
0

PAT after PPA
499.60
369.57
35
1561.98
1189.05
31

EPS *
69.2
51.2

54.5
41.2


*Annualised on current equity of Rs 144.46
Face Value of Rs 5
EO: Extraordinary item
EPS is calculated after excluding EO and relevant tax
Figures in Rs crore
Source: Capitaline Corporate Databases

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CAPITA TELE RECOMMENDATION DT:25.7.07

CAPITA TELE RECOMMENDATION



Eimco Elecon (India)

Treasure mine

With investments in coal mining gathering steam the company will enter a new growth orbit

Buy
Eimco Elecon (India)

BSE Code
523708

NSE Code
EIMCOELECO

Bloomberg
EEI@IN

Reuter
EIMC.BO

52-week High/Low
Rs 417 / Rs 222

Current Price
Rs 385 (as on 25th July 2007)


Eimco Elecon (India) (EEIL) is a manufacturer of mining machines. The company manufactures and supplies machines to sectors such as coal, copper, lead & zinc, gold, rock, phosphate, etc. for underground and opencast mining, construction, and tunneling projects.

Tamrock OY, Finland holds 25% equity stake in the company, while Elecon Engineering Company, India, and its associates hold 48%. Thus total promoter’s stake is 73% out of the tiny equity capital of Rs 5.77 crore.

Very wide range of underground mining machinery products

EEIL produces a very wide range of underground mining machinery Viz. Air Powered Rocker Shovels, Electro hydraulic Side Dump Loaders and Electro Hydraulic and Air Powered Load Gaul Dumpers used as loading machines in both the underground Coal mines and Metalliferous mines. It also manufactures Air Motors for captive consumption and other OEM manufacturers, company also manufactures hydraulic Drilling and Roof bolting jumbos and Auger-cum-Drills and Tugger Hoists. Side Dump Loaders, Load Haul Dumpers and Auger-cum-Drills forms backbone of the mechanization system of underground coal mines.

Subsidiary of a strong foreign parent

Eimco Group of Companies (subsidiaries of Environtech USA) are the world leaders in production of underground mining machinery having plants in U.K., USA, Canada, France and Australia. EEIL and Eimco Group of Companies entered into collaboration under which EEIL received necessary technical know-how from Eimco Group of Companies for production of underground mining machineries.

In 1989, Eimco Group of companies were acquired by Tamrock OY., a world leader in technology and manufacturing of rock excavation and breaking equipments for surface and underground mines and civil engineering construction with production and assembly facilities in various parts of the world backed by world wide sales and distribution net work.

Internationally, Tamrock holdes close to 40% market share in the mining machinery business. It is a leading supplier of drilling and loading equipments for hard rock applications.

Usage and demand of coal in India is huge

The Indian coal mining industry is a gigantic operation and occupies the third place in the world in terms of output.

Coal accounts for 55% of the country's energy need. The country's industrial heritage is built upon indigenous coal. The current per capita commercial primary energy consumption in India is about 350 kgoe/year. Driven by the rising population, expanding economy and a quest for improved quality of life, energy usage in India is expected to rise around 450 kgoe/year in 2010. Considering the limited reserve potentiality of petroleum & natural gas, eco-conservation restriction on hydel project and geo-political perception of nuclear power, coal will continue to occupy centre-stage of India's energy scenario.

The annual production of coal in the country has reached at a level of 430 MT, indicating an increase of 8% over the previous year. However, the share of production from the non Public Sector coal mines has remained small.

Coal has been recognized as most important fuel source for thermal power generation in India. About 80% of domestic production is being used for power generation. In addition other industries like steel, cement, fertilizers, chemicals, paper & thousands of medium and small-scale industries are also dependent on coal for their process and energy requirements.

From various government reports it is amply clear that the next 2 years will be years of pronounced coal shortage in India as the delayed Xth plan power projects get commissioned along side the XIth plan projects already under construction. It is expected that in 2007-08, coal requirement for the country would reach a level of 530 MT out of which 424 MT will be consumed for power generation.

The projected demand for coal is expected to reach 730.10 MT by 2011-2012 the last year of the XIth five year plan. However, the production is likely to fall short of demand at 680MT, registering a compound annual growth of 9.47%, according to official data.

The incremental production of coal during this period is estimated to be 247.5 MT against 104.04 MT in the Xth five year plan. Coal India Limited (CIL) is likely to produce 525.50 MT while Singarheni Collieries Company Limited (SCCL) would produce 40 MT and others, including private sector, 118.70 MT during 2011-2012.

Infrastructure status for the coal sector

The government is considering the possibilities of granting infrastructure status to the coal sector it the XIth plan. To give a boost in investment in coal mining, the sector is also likely to get tax holidays and duty exemptions.

The financials of Coal India (CIL), the company’s largest customer has also improved over the years which is reflected in their payments of Rupees 1500 crore to Govt. of India as dividend in 2006-2007. The four profit making subsidiaries have also been conferred with Mini Ratna, which will reduce the dependency of these subsidiaries on Government of India for budgetary allocation of fund.

CIL has also announced an ‘Emergency Coal Production Plan’. Under this plan, 16 opencast mines have been identified, where the production from existing mines will be enhanced to a higher level yielding an additional 71.3 MT of coal annually after attaining full production potential in an eight year period.

Underground mining for coal production will take the company to a new growth orbit

On an all India basis, about 80% coal production comes from opencast mines. But underground mining have advantages of making mass production possible and it is possible to induct proven international technology for underground mining.

Thus, it is believed that, given the growing gap between production and demand for coal, there is an urgent need to plan and execute large underground coal mining projects.

For underground mining, at present intermediate technology of SDLs / LHDs is being used but they have reached their peek productivity level. The alternative mining methods such as continuous mining equipment, which return higher productivity, are being explored for future. CIL has launched a drive to revive its underground mining division and scale up output from underground mines using new technology.

EEIL being pioneer in underground mining equipment, is also a first to introduce intermediate technology in Indian mines long back, with established market for present range of products, is also poised to commission its first continuous miner technology.

The company is adding various state-of-the- art mining equipments such as continuous miners, face & roof drills, coal haulers, 160mm & 250mm self propelled crawler mounted blast hole drills to enhance production of coal to meet demand of future. It is expected that the new products would result in increased business commensurate with the growth of related segment.

In FY 2008, the company’s first continuous miner model ACM 10 operations are expected to stabilize. This will open up a new range of applications for the company’s products. The 160mm drill is likely to get approval for regular use in opencast coal mines. The field trial of Face & Roof drills and new Models 621 & 635 Side Discharge Loaders is also likely to be completed soon. This will further add to the growth of the company.

The implementation of the company’s Welding Robot and Lesser Cutting machines and most modern manufacturing processes have reduced the company’s throughput time, generated additional machining capacity. Along with this, the alternate source of procurement for brought-out items has resulted in optimizing manufacturing cost of some of the company’s products.

De-risking the business model

Eimco Elecon's major clients are the subsidiaries of Coal India Limited Viz. Bharat Cooking Coal Limited. Eastern Coalfield Limited etc. Other clients include Singanery Collieries Co. Ltd., Uranium Corporation of India. Bharat Gold Mines, Hindustan Copper Limited, Hindustan Zinc Limited, Larsen & Toubro Ltd., Ferro Alloys Corporation Limited etc.

With private players also entering coal mining, the company’s client-profile will widen and reduce its dependence on Coal India as iys major client.

In a bid to further derisk its business model, the company has already entered into a collaboration agreement with Ahlmann, Germany to manufacture wheel loaders, who are among world leaders, to diversify in construction equipment business. This will add a new product range and open a new revenue stream for the company.

After consolidating for many years, financials are all set to soar to new heights

Eimco Elecon has managed to increase its sales every year since FY 9803 till FY 2007, except in FY 2006. It has also kept its profit after tax at the Rs 8-crore levels till FY2002. It, however, dropped to Rs 4.97 crore in FY 2003, but bounced back to Rs 7.43 crore in FY 2004, Rs 8.75 crore in FY 2005, Rs 8.24 crore in FY 2006 and Rs 8.68 crore in FY 2007. The consistent performance was despite no major improvement in the coal mining industry.

However, with investments in coal mining gathering steam financials will enter a new growth orbit.

During the quarter ended June 2007, the company registered huge sales growth of 58% to Rs 33.13 crore. PAT grew 43% to Rs 4.09 crore.

Will benefit from rupee appreciation

About 50% of the company’s raw material is imported. The recent strengthening of Indian Rupee against the dollar, will thus be beneficial to the company.

Outlook for the next many years is bright

With the all-round revival of coal companies, expected demand of coal in years to come and introduction of the new Products for mining sector as-well-as for construction sector, the management of the company expects to do better in the coming years.

The Ministry of Coal (MOC) has projected sharp increase in demand in 11th plan. This is primarily because all the delayed power projects of 10th plan will also get commissioned during this period apart from projects of 11th plan. In order to narrow the demand - supply gap and augment the coal production, MOC is awarding 138 Coal Blocks to various industries for their captive use. Apart from this CIL have also identified coal-mining blocks for private investments.

The management is confident that all these activities will provide the company’s business opportunities to cater to the requirements of private companies who will get involved in coal mining, and to enhance its customer base.

Valuation

In FY 2008, we expect the company to register sales and net profit of Rs 134.67 crore and Rs 13.89 crore. On a small equity of Rs 5.77 crore and face value of Rs 10 per share, EPS works out to Rs 24.1. Book value then is expected to touch Rs 185 per share. The share price trades at Rs 385, P/E works out to just 16. This is low considering that the huge growth in demand is expected from the coal sector for many years to come and the company is well-positioned to capitalize on it.

Eimco Elecon (India): Financials





0403 (3)
0503 (12)
0603 (12)
0703 (12)
0803 (12P)

Sales
83.85
97.22
91.17
95.93
134.67

OPM (%)
17.7
19.3
21.8
21.1
19.8

OP
14.88
18.74
19.86
20.25
26.72

Other inc.
3.11
3.60
2.00
3.04
4.05

PBIDT
17.99
22.34
21.86
23.29
30.77

Interest
1.25
2.42
2.74
2.73
1.84

PBDT
16.74
19.92
19.12
20.56
28.93

Dep.
4.65
5.93
6.70
7.65
8.22

PBT
12.09
13.99
12.42
12.91
20.72

Tax
4.48
5.24
4.18
4.23
6.83

PAT
7.61
8.75
8.24
8.68
13.89

EPS* (Rs)
13.2
15.2
14.3
15.0
24.1

* Annualised on current paid up equity of Rs 5.77 crore,
Face value of Rs 10
Figures in Rs crore
Source: Capitaline Corporate Databases




Eimco Elecon (India): Results





0706 (3)
0606 (3)
Var. (%)
0703 (12)
0603 (12)
Var. (%)

Sales
33.13
20.94
58
95.93
91.17
5

OPM (%)
22.3
25.9

21.1
21.8


OP
7.39
5.43
36
20.25
19.86
2

Other inc.
0.70
0.47
49
3.04
2.00
52

PBIDT
8.09
5.90
37
23.29
21.86
7

Interest
0.34
0.75
-55
2.73
2.74
0

PBDT
7.75
5.15
50
20.56
19.12
8

Dep.
1.88
1.89
-1
7.65
6.70
14

PBT
5.87
3.26
80
12.91
12.42
4

Tax
2.26
0.51
343
5.22
3.35
56

Deferred Tax
-0.48
-0.11
336
-0.99
0.83
-219

PAT
4.09
2.86
43
8.68
8.24
5

EPS* (Rs)
#
#

15.0
14.3


* Annualised on current paid up equity of Rs 5.77 crore,
Face value of Rs 10
# EPS is not annualised due to seasonality of business
Figures in Rs crore
Source: Capitaline Corporate Databases


Terms & Disclaimer :
Keep all our advice strictly confidential. It should not be shared in any form with others.
Though all care is taken in arriving at recommendations, the equity shares may rise or fall in a manner not foreseen.
Hence Capital Market or any of its employees will not be liable for any loss suffered.
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Marg const. BSE-530543

Marg construction highlights.... Total income for the 12 months, ended March 2007, stood at Rs. 141.85 Crores

· Profit After Tax for the 12 months, ended March 2007, at Rs. 29.91 Crores

· EPS for the 12 months ending March 2007 grows by 146 percent to Rs. 28.76

· Current Land Bank at 1,095 Acres

Marg Constructions’s forthcoming projects include development of a Port in Karaikal, a Mall and Serviced apartments on the IT Corridor in Chennai and SEZs in Tamil Nadu. The company’s SPV has recently received approval for establishment of two SEZs in Tamil Nadu on 612 acres of land.

COURTESY:-DR.UDAYBHASKAR SANA UAE
DISCLOSER:- I AM HOLDING THIS SCRIPT Read more!

MIC

MIC looks good to enter now. The consolidation looks to be over. The stock is 5% up today.Buy in the range of 390-400 and hold with a comfortable stoploss for a week to 10 days- All the best.(disclaimer- This is only a view. Trades are risky. So please consult your financial advisor before any taking any action)

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SENSEX MAY CORRECT 500 POINT

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ITC .....its one among index heavy weight

ITC which is one among the heavy weightsis now almost on floor maximum down side can be 145.....upside difficult to predict... unless one can see the results..but few things one can keep in mind to take entry is that ITC is launching new products like soap and shampoo....its allready with new items like chips and light eats which is not reflacted in price may be result may reflact that....results are on friday so one can take entry on thursday for short term holding

Courtasy:-Dr.udayabhaskar sana UAE

Discloser:-i have no holding in this but waiting for right entry and will post the update soon
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ANNOUNCING THE BLUE CHIP TOLD TO U ALL ON FRIDAY NIGHT

Kavveri Telecom Products Ltd
Industry:-Telecommunications - Equipment CEO Mr.C Shivakumar Reddy
Face Value 10
KAVERI TELECOM IS A BANGALORE BASED COMPANY Factory located at suragajakkhanalli a village near Jigani, bangalore district ,manufacturer of antennas, repeaters, RF products and solar photo voltaic systems , manufacturers 3G telephony equipments and supplies the same for BEL, Airtel, Reliance infocom, BSNL, MTNL etc CMP 109.85 BSE CODE NO:599041 the ceo Mr.C shivakumar Reddy of this kaveri tele was
the relation of astra micro(Fave value :2 market cap :10.69cr) ceo:Mr.M.balareddy and we have received a strong information on this , that a big bull who is interested in telecom sector going to acquire this company or taking some stake in this company, and operators of astra micro also interested in this company and they already accumulating slowly,.Those who are in markets from very long period ie.,10 years can know the story of astra microwave performance. So, one can look into this scrip for heavy returns in 1 - 2 year span for investment, i have ve received a news from a reliable source its going to touch 4 digit mark very in 2 year time frame so, keep a look into this counter and add to urs portfolio as a coming blue chip. Disclosure : i am holding some shares in this counter Read more!