EQUITY -----16.29 CR
BOOK VALUE-----199 RS
LAST EPS -----53 RS. NG
Last div -----175%
EXPECTING 60 EPS AND 250 % DIV OR 1-1 BONUS
CURRENT MARKET PRICE 285 RS AND EXPECTING 500 IN EXT 6 MONTHS
Sunday, May 10, 2009
Wednesday, April 29, 2009
Flag this message INVESTMENT STRATEGIES OF SWISS WEALTHY
Switzerland is famous for its wealth. Much of this is attributed to the clever burghers who run its many banks - the so-called Gnomes of Zurich. The investment strategies of the Swiss wealthy are now available to all, thanks to the work of Max Heinrich, who has studied their principles of making money. He has called these principles the Zurich Axioms and most of them make a lot of sense.
Here they are:
On Risk
- Worry is not a sickness but a sign of health - if you are not worried, you are not risking enough.
- Always play for meaningful stakes - if an amount is so small that its loss won't make any significant difference, then it isn't likely to bring any significant gains either.
- Resist the allure of diversification.
On Greed
- Always take your profit too soon.
- Decide in advance what gain you want from a venture, and when you get it, get out.
On Hope
- When the ship starts sinking, don't pray. Jump.
- Accept small losses cheerfully as a fact of life. Expect to experience several while awaiting a large gain.
On Forecasts
- Human behaviour cannot be predicted. Distrust anyone who claims to know the future, however dimly.
On Patterns
- Chaos is not dangerous until it starts to look orderly.
- Beware the historian's trap - it is based on the age-old but entirely unwarranted belief that the orderly repetition of history allows for accurate forecasting in certain situations.
- Beware the chartist's illusion - it is characteristic of human minds to perceive links of cause and effect where none exist.
- Beware the gambler's fallacy - there's no such thing as "Today's my lucky day" or "I'm hot tonight".
On Mobility
- Avoid putting down roots. They impede motion.
- Do not become trapped in a souring venture because of sentiments like loyalty and nostalgia.
- Never hesitate to abandon a venture if something more attractive comes into view.
On Intuition
- A hunch can be trusted if it can be explained.
- Never confuse a hunch with a hope.
On the Occult
- If astrology worked, all astrologers would be rich.
- A superstition need not be exorcised. It can be enjoyed, provided it is kept in its place.
On Optimism & Pessimism
- Optimism means expecting the best, but confidence mean knowing how you will handle the worst. Never make a move if you are merely optimistic.
On Consensus
- Disregard the majority opinion. It is probably wrong.
- Never follow speculative fads. Often, the best time to buy something is when nobody else wants it.
On Stubbornness
- If it doesn't pay off the first time, forget it.
- Never try to save a bad investment by "averaging down".
On Planning
- Long-range plans engender the dangerous belief that the future is under control. It is important never to take your own long-range plans or other people's seriously.
In essence these axioms point to the benefit of having an investment strategy and sticking to it, regardless of what other investors say or do. If you don't have an investment strategy, you could do worse than adopt these principles. However, don't be afraid to add or subtract ones according to what works for you.
Sarve Jana Sukhino Bhavanthu !
May all be happy, May none suffer !
Here they are:
On Risk
- Worry is not a sickness but a sign of health - if you are not worried, you are not risking enough.
- Always play for meaningful stakes - if an amount is so small that its loss won't make any significant difference, then it isn't likely to bring any significant gains either.
- Resist the allure of diversification.
On Greed
- Always take your profit too soon.
- Decide in advance what gain you want from a venture, and when you get it, get out.
On Hope
- When the ship starts sinking, don't pray. Jump.
- Accept small losses cheerfully as a fact of life. Expect to experience several while awaiting a large gain.
On Forecasts
- Human behaviour cannot be predicted. Distrust anyone who claims to know the future, however dimly.
On Patterns
- Chaos is not dangerous until it starts to look orderly.
- Beware the historian's trap - it is based on the age-old but entirely unwarranted belief that the orderly repetition of history allows for accurate forecasting in certain situations.
- Beware the chartist's illusion - it is characteristic of human minds to perceive links of cause and effect where none exist.
- Beware the gambler's fallacy - there's no such thing as "Today's my lucky day" or "I'm hot tonight".
On Mobility
- Avoid putting down roots. They impede motion.
- Do not become trapped in a souring venture because of sentiments like loyalty and nostalgia.
- Never hesitate to abandon a venture if something more attractive comes into view.
On Intuition
- A hunch can be trusted if it can be explained.
- Never confuse a hunch with a hope.
On the Occult
- If astrology worked, all astrologers would be rich.
- A superstition need not be exorcised. It can be enjoyed, provided it is kept in its place.
On Optimism & Pessimism
- Optimism means expecting the best, but confidence mean knowing how you will handle the worst. Never make a move if you are merely optimistic.
On Consensus
- Disregard the majority opinion. It is probably wrong.
- Never follow speculative fads. Often, the best time to buy something is when nobody else wants it.
On Stubbornness
- If it doesn't pay off the first time, forget it.
- Never try to save a bad investment by "averaging down".
On Planning
- Long-range plans engender the dangerous belief that the future is under control. It is important never to take your own long-range plans or other people's seriously.
In essence these axioms point to the benefit of having an investment strategy and sticking to it, regardless of what other investors say or do. If you don't have an investment strategy, you could do worse than adopt these principles. However, don't be afraid to add or subtract ones according to what works for you.
Sarve Jana Sukhino Bhavanthu !
May all be happy, May none suffer !
Flag this message INVESTMENT STRATEGIES OF SWISS WEALTHY
Switzerland is famous for its wealth. Much of this is attributed to the clever burghers who run its many banks - the so-called Gnomes of Zurich. The investment strategies of the Swiss wealthy are now available to all, thanks to the work of Max Heinrich, who has studied their principles of making money. He has called these principles the Zurich Axioms and most of them make a lot of sense.
Here they are:
On Risk
- Worry is not a sickness but a sign of health - if you are not worried, you are not risking enough.
- Always play for meaningful stakes - if an amount is so small that its loss won't make any significant difference, then it isn't likely to bring any significant gains either.
- Resist the allure of diversification.
On Greed
- Always take your profit too soon.
- Decide in advance what gain you want from a venture, and when you get it, get out.
On Hope
- When the ship starts sinking, don't pray. Jump.
- Accept small losses cheerfully as a fact of life. Expect to experience several while awaiting a large gain.
On Forecasts
- Human behaviour cannot be predicted. Distrust anyone who claims to know the future, however dimly.
On Patterns
- Chaos is not dangerous until it starts to look orderly.
- Beware the historian's trap - it is based on the age-old but entirely unwarranted belief that the orderly repetition of history allows for accurate forecasting in certain situations.
- Beware the chartist's illusion - it is characteristic of human minds to perceive links of cause and effect where none exist.
- Beware the gambler's fallacy - there's no such thing as "Today's my lucky day" or "I'm hot tonight".
On Mobility
- Avoid putting down roots. They impede motion.
- Do not become trapped in a souring venture because of sentiments like loyalty and nostalgia.
- Never hesitate to abandon a venture if something more attractive comes into view.
On Intuition
- A hunch can be trusted if it can be explained.
- Never confuse a hunch with a hope.
On the Occult
- If astrology worked, all astrologers would be rich.
- A superstition need not be exorcised. It can be enjoyed, provided it is kept in its place.
On Optimism & Pessimism
- Optimism means expecting the best, but confidence mean knowing how you will handle the worst. Never make a move if you are merely optimistic.
On Consensus
- Disregard the majority opinion. It is probably wrong.
- Never follow speculative fads. Often, the best time to buy something is when nobody else wants it.
On Stubbornness
- If it doesn't pay off the first time, forget it.
- Never try to save a bad investment by "averaging down".
On Planning
- Long-range plans engender the dangerous belief that the future is under control. It is important never to take your own long-range plans or other people's seriously.
In essence these axioms point to the benefit of having an investment strategy and sticking to it, regardless of what other investors say or do. If you don't have an investment strategy, you could do worse than adopt these principles. However, don't be afraid to add or subtract ones according to what works for you.
Sarve Jana Sukhino Bhavanthu !
May all be happy, May none suffer !
Here they are:
On Risk
- Worry is not a sickness but a sign of health - if you are not worried, you are not risking enough.
- Always play for meaningful stakes - if an amount is so small that its loss won't make any significant difference, then it isn't likely to bring any significant gains either.
- Resist the allure of diversification.
On Greed
- Always take your profit too soon.
- Decide in advance what gain you want from a venture, and when you get it, get out.
On Hope
- When the ship starts sinking, don't pray. Jump.
- Accept small losses cheerfully as a fact of life. Expect to experience several while awaiting a large gain.
On Forecasts
- Human behaviour cannot be predicted. Distrust anyone who claims to know the future, however dimly.
On Patterns
- Chaos is not dangerous until it starts to look orderly.
- Beware the historian's trap - it is based on the age-old but entirely unwarranted belief that the orderly repetition of history allows for accurate forecasting in certain situations.
- Beware the chartist's illusion - it is characteristic of human minds to perceive links of cause and effect where none exist.
- Beware the gambler's fallacy - there's no such thing as "Today's my lucky day" or "I'm hot tonight".
On Mobility
- Avoid putting down roots. They impede motion.
- Do not become trapped in a souring venture because of sentiments like loyalty and nostalgia.
- Never hesitate to abandon a venture if something more attractive comes into view.
On Intuition
- A hunch can be trusted if it can be explained.
- Never confuse a hunch with a hope.
On the Occult
- If astrology worked, all astrologers would be rich.
- A superstition need not be exorcised. It can be enjoyed, provided it is kept in its place.
On Optimism & Pessimism
- Optimism means expecting the best, but confidence mean knowing how you will handle the worst. Never make a move if you are merely optimistic.
On Consensus
- Disregard the majority opinion. It is probably wrong.
- Never follow speculative fads. Often, the best time to buy something is when nobody else wants it.
On Stubbornness
- If it doesn't pay off the first time, forget it.
- Never try to save a bad investment by "averaging down".
On Planning
- Long-range plans engender the dangerous belief that the future is under control. It is important never to take your own long-range plans or other people's seriously.
In essence these axioms point to the benefit of having an investment strategy and sticking to it, regardless of what other investors say or do. If you don't have an investment strategy, you could do worse than adopt these principles. However, don't be afraid to add or subtract ones according to what works for you.
Sarve Jana Sukhino Bhavanthu !
May all be happy, May none suffer !
Monday, April 27, 2009
GEODESIC LTD -JUST BUY
Equity Share Capital: - 18.44CR
Book Value: - 46Rs
FACE VALUE: - 2Rs
INTERIAM DIV: - 40%
LAST CONSO LIDATED E.P.S:- 16.25 Rs (148.63Cr) ----on 2F.v
9 MONTHS CONSOLIDATED E.P.S:- 23.97 Rs (217.31Cr) ---- on 2F.v
ABOUT:-Geodesic operates in the high-growth areas of instant messaging and VoIP. The
company has a large roster of well-established clients. Geodesic derives most of its revenues from
developing instant messaging platforms/services and licensing them to enterprises as well as retail
users (directly or indirectly) under the ‘Mundu’ brand. The company’s products (Mundu ICE
stack) cater to clients ranging from portals and publishers to telecom operators, mobile handset
manufacturers, system integrators and even retail consumers. Geodesic also licenses its instant
messaging platform to mobile handset manufacturers and telecom operators, thus providing it with
sustainable revenue streams, with scope for expanding margins.
Geodesic won a deal from Idea Cellular in India, for Internet radio services on a revenue sharing
basis. This makes for better risk-sharing as downloads or logins to access Internet radio on the
mobile would be clearly measurable.
The company has also launched its messaging services in Nokia and Sony Ericsson Smartphone
handsets and has an agreement with players such as BenQ. Mio Digi-walker, a key player in the
mobile GPS navigation space, is another client. The company also recently joined the Blackberry
ISV alliance to offer its services on smart phones. This should provide further revenue
opportunities.
The client base for Geodesic also includes portals such as Naukri, bigadda.com, Edelweiss Capital
Ltd, First Global Stock Broking, Business Standard and Dialog Telekom. As players constantly
upgrade their Web sites and offer more cutting edge-services, this client base offers long-term
revenue visibility for Geodesic.
The company has launched an instant messaging platform for the iPhone and may be well-placed to
capture a share as and when Apple allows third-party software platforms on its phones.
The company has also developed voice over Internet protocol (VoIP) products to work mobile
phones and desktops, for PC-to-PC calls. VoIP is also an ever expanding market providing for
cheap communications. It already averages 60,000 minutes a day.
Agreement with ITI Ltd to promote Geodesic’s products (such as its Amada 10k Simputer) to cater
to various State Government E-Governance projects in India and with Glodyne Technoserve as
part of Glodyne’s solution for Public Distribution System for various States in India have also been
recently signed. The Simputer has an integrated Smartcard reader/writer which can be used for
identification, sharing and security.
The company has also forayed into publishing by acquiring the Chandamama children’s magazine
brand. The subscriptions have doubled in the last two years after the acquisition.
With its Telugu, Hindi and Tamil versions available online, this may help capture regional audience
as well. An increased subscription may lead to increased ad revenues. Plans are also afoot to launch
a full length animation film.
Key risks to this recommendation are technological obsolescence and competition from entrenched
platforms such as IBM’s Lotus Same time.
The Board has approved the proposal of buy back Company's USD denominated Zero Coupon
Convertible Bonds.
Chandamama has signed MOU with Techno park based Toonz Animation Indi Pvt. Ltd. for
producing a 70 minute, full-length animated feature film
Geodesic has announced a buyback of up to 25 per cent of the paid-up equity share capital
(maximum of Rs 109.8 cr) from the open market, at a maximum price of Rs 75.
Book Value: - 46Rs
FACE VALUE: - 2Rs
INTERIAM DIV: - 40%
LAST CONSO LIDATED E.P.S:- 16.25 Rs (148.63Cr) ----on 2F.v
9 MONTHS CONSOLIDATED E.P.S:- 23.97 Rs (217.31Cr) ---- on 2F.v
Expecting 85Cr in Q4. FOR FULL YEAR 290-310Cr (33.50e.p.s)AND 100 %DIV OR 1.1BONUS
Currently it is trading at 78Rs. EXPECTING 125 Rs IN 20DAYS.
Currently it is trading at 78Rs. EXPECTING 125 Rs IN 20DAYS.
ABOUT:-Geodesic operates in the high-growth areas of instant messaging and VoIP. The
company has a large roster of well-established clients. Geodesic derives most of its revenues from
developing instant messaging platforms/services and licensing them to enterprises as well as retail
users (directly or indirectly) under the ‘Mundu’ brand. The company’s products (Mundu ICE
stack) cater to clients ranging from portals and publishers to telecom operators, mobile handset
manufacturers, system integrators and even retail consumers. Geodesic also licenses its instant
messaging platform to mobile handset manufacturers and telecom operators, thus providing it with
sustainable revenue streams, with scope for expanding margins.
Geodesic won a deal from Idea Cellular in India, for Internet radio services on a revenue sharing
basis. This makes for better risk-sharing as downloads or logins to access Internet radio on the
mobile would be clearly measurable.
The company has also launched its messaging services in Nokia and Sony Ericsson Smartphone
handsets and has an agreement with players such as BenQ. Mio Digi-walker, a key player in the
mobile GPS navigation space, is another client. The company also recently joined the Blackberry
ISV alliance to offer its services on smart phones. This should provide further revenue
opportunities.
The client base for Geodesic also includes portals such as Naukri, bigadda.com, Edelweiss Capital
Ltd, First Global Stock Broking, Business Standard and Dialog Telekom. As players constantly
upgrade their Web sites and offer more cutting edge-services, this client base offers long-term
revenue visibility for Geodesic.
The company has launched an instant messaging platform for the iPhone and may be well-placed to
capture a share as and when Apple allows third-party software platforms on its phones.
The company has also developed voice over Internet protocol (VoIP) products to work mobile
phones and desktops, for PC-to-PC calls. VoIP is also an ever expanding market providing for
cheap communications. It already averages 60,000 minutes a day.
Agreement with ITI Ltd to promote Geodesic’s products (such as its Amada 10k Simputer) to cater
to various State Government E-Governance projects in India and with Glodyne Technoserve as
part of Glodyne’s solution for Public Distribution System for various States in India have also been
recently signed. The Simputer has an integrated Smartcard reader/writer which can be used for
identification, sharing and security.
The company has also forayed into publishing by acquiring the Chandamama children’s magazine
brand. The subscriptions have doubled in the last two years after the acquisition.
With its Telugu, Hindi and Tamil versions available online, this may help capture regional audience
as well. An increased subscription may lead to increased ad revenues. Plans are also afoot to launch
a full length animation film.
Key risks to this recommendation are technological obsolescence and competition from entrenched
platforms such as IBM’s Lotus Same time.
The Board has approved the proposal of buy back Company's USD denominated Zero Coupon
Convertible Bonds.
Chandamama has signed MOU with Techno park based Toonz Animation Indi Pvt. Ltd. for
producing a 70 minute, full-length animated feature film
Geodesic has announced a buyback of up to 25 per cent of the paid-up equity share capital
(maximum of Rs 109.8 cr) from the open market, at a maximum price of Rs 75.
Shift in balance?
Vishal Chhabria & Jitendra Kumar GuptaWhile the markets have rallied substantially in the recent past, macroeconomic indicators and corporate earnings need to improve further for the rally to sustain.
After a forgettable 2008, a year which saw markets falling a whopping 52.4 per cent—it fell by another 15.4 per cent between January 1, 2009 and March 9, the day when the BSE Sensex reported its lowest close of 2009– the recent rally has brought some cheer. The BSE Sensex is up 38.83 per cent since the low on March 9 till date, reporting gains for seven weeks in a row. While the rally in Indian markets is led by various factors including robust inflow of foreign (FII) money and surge in global markets, there are a few key questions that need to be answered.
It is all the more important given that fundamental indicators have not improved meaningfully and there are visible risks ahead. The Street, too, looks divided on the future course of the market as well as earnings outlook for India. Among other key questions are whether the current rally signifies a beginning of a new bull phase or it is just a part of the bear-market, is the worst over and what investing strategies one should adopt. The answers are all the more tricky. The Smart Investor spoke to a host of experts, both domestic and foreign, on what they read into the current rally and the way ahead. To know more, read on.
On high octane
The rally has been substantial and swift. The 30-share BSE Sensex has risen by 33.5 per cent in just six weeks (from March 9 till April 21) and another 2.84 per cent over the next week, taking total gains to nearly 39 per cent over seven weeks. This performance is the second best among key global markets (Click for table How markets compare). Interestingly, all the 15 popular global markets have reported gains, with eight of them up between 20 and 30 per cent during the six weeks. Thus by far, the domestic market rally is driven by and reflects improved global sentiments.
In other words, it also suggests that even as India is economically dependent (by about 85 per cent) on domestic consumption in terms of GDP growth, its financial markets to a large extent are influenced by global sentiments. Additional proof: FIIs have invested $1.08 billion (since April 1) or $1.4 billion (since March 9) till April 21—domestic institutions have pumped in about Rs 750 crore – as compared to $1.65 billion of sales between January 1, 2009 and March 9. The case is not significantly different for others markets.
This change in global sentiment is led by positive news flow in the recent past including the new Geithner plan (in US), the G-20 meet (committing a $1 trillion boost), US President Barack Obama talking about things getting better, the stimulus packages and monetary measures undertaken earlier by various governments and central banks.
Additionally, says Raamdeo Agrawal, MD, Motilal Oswal Securities, “With Q1 results of Citibank and some others in the US somewhat better, there is a hope that the worst is over in the US itself. The combination of these events and the purchase by FIIs is what has changed sentiment. Lack of fresh negatives and some positive developments led to the US rally, which world markets tagged on to. Because, in synchronised market place, relative valuations do come into play.”
Nilesh Shah, CIO, ICICI Prudential Mutual Fund says, “The Indian markets were beaten the most and today, we are seeing that we are recovering fast as well.” In India, too, figures from sectors like auto, cement and steel have shown some improvement in recent months. And, at lower levels, the valuation of the Indian market was also compelling with the BSE Sensex as well as many companies trading in single-digit PEs.
However, some believe that there are technical and others factors that have led to this rally. Says Andrew Holland, CEO-equities, Ambit Capital, “Initially, I think it was short-covering; globally as well. The risk appetite has increased a bit, but it is like if people see markets go up they need to get performance so they put money to work as quickly as possible. I don’t see the retail investors rushing back to buy.” He adds, “There are funds sitting on cash, and some of this is flowing into the market.”
Bulls, bears or in-between?
Even as this rally has brought some cheer, there is a difference of opinion regarding its sustainability and future course. While a few term the current rally as the beginning of a new bull market, others are sceptical and believe that markets may decline and test their lows made earlier. Some others feel that markets are in consolidation phase.(Click for Expert Views)
Says Anthony Bolton, president-Investments, Fidelity International, “I believe that a new bull market has started and will last several years, although the exact trajectory is very difficult to predict. There is lots of cash on the sidelines. Once people feel left out and deploy it, we could see a big up move.” On the economic recovery, although some of the forward economic indicators are improving as compared to last year, he does not expect a fast recovery.
On the flip side viz. a few believe that we are still in a bear phase. Says Andrew Holland, “We are by no means in a bull market.” The reason for believing so is that the demand scenario may remain weak and the recovery is likely to be prolonged. He says, “The consumer savings rate in the US is now going up to 4 per cent from negative 2 per cent. Almost 70 per cent of the US GDP is consumer spending. If they started to save, then the recovery is going to prolong. I am expecting data and earnings to get worse and therefore we go back to where we were, which is in a deep recession.” Little wonder that Holland expects the markets to come down again.
Naval Bir, CIO, IDFC Mutual Fund, believes that we are in between. “At this point in time we are in the consolidation phase where the markets are expected to be range bound and hence, we will witness corrections and recoveries from the low levels for some time.”
What next?
While experts share divergent views, the opinion is not majorly different on the fact that the pain has lessened as compared to 4-6 months back. Many also believe that there are signs of the some stability in economic indicators. Says Hemendra Aran, CEO, Aranca, “Confidence levels in economic rebound that can put markets on a growth path seem to be returning slowly. Like in March 2009, the growth in jobless claims slowed to 14,800 after surging to 59,800 in the previous month. Even the consumer expectation index in US rose to 53.5 in March from 50.5 in February, clearly indicating that consumers' outlook on the nation’s economy has improved in March.”
And, this is what the markets have reacted to – anticipating an economic recovery in advance. But, if markets have to recover in any meaningful manner, globally as well as in India, economic growth and corporate earnings have to improve visibly. While India Inc earnings were in bad shape in Q3 FY09 (net profit of Sensex companies fell by 5 per cent), Q4 expectations are even worse with earnings expected to fall by 9-15 per cent year-on-year. Positively, some believe that the trend of decline in earnings should reverse or at least show signs of stabilising post-Q1 FY10. While Raamdeo Agrawal believes that the phase, wherein downgrades for FY10 were continuously happening, seems to be over, Bala Subramanian, CIO, Birla Sun Life Mutual Fund, believes that earnings are stabilising.
In March 2008, analysts were projecting the BSE Sensex earnings for FY10 at about Rs 1,200, which was later downgraded to Rs 800-850 due to the economic conditions deteriorating. Most analysts believe that earnings could now range a bit higher at Rs 850-870. Should this prove true, it will provide a cushion to markets on the downside, making valuations further attractive at lower levels.There is a flip side here too. Andrew Holland believes that earnings will have to be downgraded, and expects Sensex FY10 EPS to be Rs 750.
While the good news is that monsoons are expected to be near normal, the biggest near-term risk is the outcome of national elections. Foreign investors, too, will be closely watching this event given its implications for reforms and policies. Thus, the belief that before and a month after the elections, the markets will be volatile.
What should investors do?
Amid the expectations of volatility and range bound markets, experts believe that this is the right time to build a good long-term portfolio. The ultimate advice to nail into one’s head is whether you make money. Explains Marc Faber, “Whether it is a bear market rally or bull market, it is an academic question. Assuming the Sensex rallies to 16,000 and then falls to 7,500 levels, this would have been a bear market rally, but one that produces a 100 per cent gain. What counts is to make money.” On how global markets are likely to move, Faber says that following a rally until April we would have a correction. This would be followed by renewed strength until July and then weakness again, but the March 6 lows on the S&P 500 at 666 may hold. He believes that for the next few months India should continue to trade up, but interrupted by corrections.
So, if the markets are to go up, then there is a lot to be made. Notably, the Indian market is the second best in terms of growth, next only to China, which provides comfort given that 11 of the 15 markets (mentioned in the table) are expected to report a decline in their GDP growth in CY2009.
On the flip side, an unfavourable outcome in domestic elections may prevent the markets from rising, if not fall, should global markets look up. In the context of the current situation, taking a call on investing may look all the more tricky. What is compelling now, says Gul Teckchandani, investment consultant, “You are getting the price advantage. But, buy with at least a one-year perspective.” He adds, “Apart from the basic checks (management, track record, earnings growth), one can buy stocks with PE with 3-4 in the B-group and 7-8 PE in A-group. Avoid businesses that you don’t understand and ones from export-oriented sectors (excluding IT) where there is a slowdown.”
Among the most common advice by experts, for investors who are already invested and aim to make use of the expected near-term volatility, is to book profits on sharp rallies and hold some cash in the portfolio to take the advantage of the expected volatility. Using the cash to invest on dips (particularly during elections) in a phased manner is also advised. Investors can look at the companies, which are relatively stable and are leaders in their respective segments. Stick to domestic-consumption led stories.
Regarding the sectors and themes that could reap good returns are FMCG, telecom and pharma besides, interest rates sensitive like banking and auto. Selectively investing in infrastructure-related companies (less leveraged and well-diversified) is seen as a good strategy, as irrespective of which party forms the government, infrastructure development will remain a focus area. But, avoid cyclicals and real estate.
source :business-standard
Sunday, April 26, 2009
SEAMEC LTD. (RS. 88/-)
SEAMEC LTD. (RS. 88/-)
Seamec is 78.2% subsidiary of Technip-France and is leading sub-sea contractor providing support services to offshore oil fields in India and abroad. Seamec has 4 vessels and is debt-free. Technip is very optimistic about India and Seamec is an important part of Technip's global scheme of things. In last 2 years, its performance was erratic due to various difficulties. However, now company is on a solid footing and hence the recommendation.
Financial Performance: Rs. in Crs.
| . | Q1 | YEAR ENDED | Q4 |
| . | CY 09 | DEC. '08 | CY 08 |
| Net Income | 100.12 | 269.00 | 104.41 |
| PBIT | 62.71 | 53.47 | 55.17 |
| Interest | 0.15 | 0.35 | 0.80 |
| Net Profit | 62.56 | 47.12 | 54.57 |
| Equity | 33.90 | 33.90 | 33.90 |
| EPS Rs. | 18.45 | 13.90 | 16.10 |
For Year Ended Dec. '08, Company had reported EPS of Rs. 13.90. However, profits would have been much higher but for some unexpected difficulties:
a) Last year, company had acquired a new vessel which was sent to Singapore for retrofitting/refurbishing. This process took longer time. As a result, flow of revenues from this new acquisition was delayed. Moreover, Seamec spent Rs. 28.57 crs. on refurbishing this vessel (otherwise profit would have been higher by 28.57 crs.).
b) Its other vessel Seamec-II suffered an accident. Company is likely to receive claim of more than Rs. 20 crs. on this account.
c) Company had incurred 33.44 crs. as Dry Dock expenditure during the year which was unusually high and Dry Dock expenses in current year are likely to be very very low.
d) Twice Prematured termination of contract.
For the first time, all 4 vessels were fully deployed in Q4 and company earned PAT of 54.47 crs. in Q4 alone. Q4 EPS is Rs. 16.10 which is more than EPS of entire CY08.
Future Prospects: Rs. in Crs.
| . | YEAR ENDED |
| . | 31/12/2009 |
| Net Income | 370.00 |
| Net Profit | 170.00 |
| Equity | 33.90 |
| EPS Rs. | 50.15 |
| P. E. Ratio | 1.75 |
Seamec has already reported bumper profits for Q1 with EPS of 18.45. CY09 performance is expected to be very good as all 4 vessels will remain deployed fully (barring intermittent idling before redeployment). It has already entered into an agreement with M/s. Dulam of Dubai for deployment of 1 vessel from 16th May for 2 months which will fetch nearly Rs. 22 cr. revenues. It has also chartered another vessel with Condux, Mexico for a period of 6 months from Feb 3, 2009 which will fetch it revenue of around Rs. 55 crs. Seamec has also signed an agreement to charter its other vessel Seamec-II from June 2009 for 1 year which will give revenues of Rs. 81 crs. Seamec is slated to report all time high performance in current year.
Valuations:
Stock is trading at just 1.75 x CY09E EPS. Even in bear market, such valuation will be considered unreasonably low. An MNC which is debt-free and is proxy to high profile oil drilling industry deserves much higher valuations. Its current market cap is just Rs. 300 crs. which is 30% of replacement value of its fleet of USD 210 mn. Seamec is going extremely cheap. Company is bound to get much higher valuations. Our price target:
a) Rs. 125/- in less than 8 weeks.
b) Rs. 225/- in 12 months.
b) Rs. 225/- in 12 months.
Investors can buy big quantity.
By - Hemant K. Gupta
Saturday, April 25, 2009
Major concern about market now-Select good Stock-A.K.Prabhakar
Dear all,
It is pleasure writing to everyone after a long time on few issues which is of major concern about market now. Now Pyramid Saimira forgery case is hitting headline and we would not go in detail of the case; our concern is safety of the investor.
Jim Rogers famously said; Get inside information from the president and you will probably lose half your money. If you get it from the chairman of the board, you will lose all of your money.
Many times I have advised not to take investment decision based Rumors or Tips as many call it, as many time vested interest is always there. Many branches wanted to know about some operated stock where I have normally warned them not to follow or at least not to ask me. Many say I have inside information that market is going to fall or rise Indian market is like an ocean and can’t be controlled by few big people and we have seen this over many years as many have failed.
There are few stock with low floating stock or small market cap where it can be operated, that is where we have cautioned many times. I never believed in Multi bagger as I have no brilliance in finding one, and I never wished to waste hard earned money in experimenting as 1 out of 100 or 1000 stock have become multi bagger.
Playing market volatility in a simple, tried and tested way reasonable returns has been earned and till now in 2years and 6month, 6list was introduced VALUE-24, CONTRAINAN-24, QUICK15+6, ARG30, COMPACT-15 and FANTASTIC-15 and only ARG-30 didn’t perform well. Where we have used simple method of buying good stocks in bad time as correction has been part and parcel of market, most of the time we were in top 200 stocks for 80% of our investment.
Our objective has been simple as worldwide interest rate is again near zero and any returns above 20% P.A would be reasonable, never try to double you money in short time, as saying goes only by folding the currency only it can be possible. Equity as an investment avenue has been always better if risk is understood and if informed decision has been taken.
The "Bigger Fool" Theory (This has been send before just a reminder now).
Small investors fall prey to day trading practices in a manifestation of the "bigger fool" theory: This is the financial market version of "jumping on the bandwagon" -- without examining the actual worth of the stock or the company, traders blindly buy whichever stocks other traders are buying, building the illusion of a "hot" stock through rumor and day trader behavior.
While large investors tend to have experience and a better appreciation for the fundamentals of the businesses in which they trade, poorly based decisions can affect the stocks of entire industries when large numbers of small investors get together to form a "medium-sized shark. Because of the "Bigger Fool" theory, this can work until the market runs out of bigger fools, at which point an overvalued stock will come crashing down.
There is a widely held theory in economics called the Bigger Fool Theory, which states: Buy a stock and you'll make money as long as some other fool is willing to buy the stock from you at a higher price in order to sell it to an even bigger fool at an even higher price. (Crash, p. 15) Day traders and others who ignore the business behind a stock, focusing instead upon rumors, hunches and trends, make their money because of this principle. It doesn't matter how overvalued a stock is as long as there are enough people who think they can still make a profit off of it. Networks of day traders who follow the same strategies and listen to the same rumors often provide each other with the bigger fools necessary to make their profits.
But what will happen when reality catches up?
Investor and trader lose their hard earned money and stocks which they had thought would help them in future financial planning would erode the plan.
What would be best investment advice?
Always divide risk have more than 15-20 stock as minimum, we are not Warren Buffet to part own a company and impose our rules. Invest in best management practiced companies.
Never try to catch a top or bottom (Bottom is always dirty) invest specified amount on regular basis on good growth companies. If you are an investor never hedge your position (Option are ice-cream it always melt). In case of fear increase your cash position so that you can average in case of correction.
Important point I noticed is many withdrew money from market around 8000-10000 Point in Sensex fearing market would come to 6000-5000, and we never said this is bottom you buy, recollect buy 50% now if market goes down to 5000 we will buy another 50%. Time spent in the market is more important than timing the market, so always try to manage your cash position as per trend but always be invested minimum 20% at any given point of time.
Indian stock market has made many transformation, and now handling of SATYAM & Investigation of PYRAMID SAIMIRA point to better handling of crisis, still we have long way to go.
To conclude investor should understand “Buyer Beware” is always better than to repent latter, there are so much information available today, use that to maximum before any investment decision is made.
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