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A TIME COMMUNICATIONS PUBLICATION VOL. XX No.47 Monday, October 3 9, 2011 Pages 18 Rs.12

By Sanjay R. Bhatia Positive global market cues helped the domestic markets move higher but selling pressure and profit booking was visible at higher levels. The breadth of the market remained negative amidst lower volumes. FIIs were net sellers in the cash segment but were net buyers in the derivatives segment. Domestic institutional investors, however, remained net buyers and were seen supporting the markets. Inflation continued to move higher and remains a cause of concern along with the increased government borrowing. The RBI may raise interest rates again in its forthcoming policy announcement in the last week of October if the inflationary trend continues. On the global economy front, although the German Parliament has passed the Greece bailout package, the Euro zone worries remain a matter of concern for global markets. Technically, the Stochastic and KST are placed above their respective averages on the daily charts, which is a positive sign for the markets and would fuel buying support. However, the prevalent technical negatives would continue to weigh on the markets and would cap the upside gains. The RSI and MACD are placed below their respective averages. Moreover, the MACD and KST are placed in the negative territory, which would fuel profit taking and selling pressure at higher levels. The Stochastic, MACD, RSI and KST are placed below their respective averages on weekly charts. The Nifty continues to trade below its 200-day SMA. Further the 50-day SMA is placed below the 100-day SMA. The ADX, +DI line and -DI line are moving sideways and indicate a range bound trend. The market sentiment remains cautious as the Nifty has once again breached the 4987 support level. Now, it is important that the Nifty moves up and sustains above the 4987 level for it to test the 4161-4211 resistance zone. If Nifty fails to sustain above the 4987 level, then the markets could drift lower for the Nifty to test the 4757 level. The overall trend is likely to remain range bound. Broadly, the range of the market this month would be 4757-5211. The next domestic trigger for the markets would be the forthcoming Q2 results and would set the pace for the markets. In the meanwhile, the markets would take cues from the dollar index, Rupee value, crude prices and global markets.

Q2 results to set the pace

A Time Communications Publication

Technically, on the upside the Sensex faces resistance at the 16650, 16934, 17506 and 18314 levels but seeks support at the, 16000, 15848, 15790 and 15400 levels. The support levels for the Nifty are placed at 4757, 4563 and 4387 but it faces resistance at the 4957, 5161, 5211 and 5325 levels. Investors should avoid long positions.

BAZAR.COM
By Fakhri H. Sabuwala A statement by Prime Minister (PM), Manmohan Singh last week could well find a place in the column of Thought for the day. It reads as follows: A fast growing India can expand the boundaries for the global economy.' Well said Mr. PM, but the key of this engine is with you and till you don't take action, its just inertia. Stock indices the world over indicate bad weather everywhere. In fact, the panic is worldwide. IMF felt that the world economy is in a dangerous terrain and our PM, Manmohan Singh, warned at the UN General Assembly against the threat of protectionism. The US Federal Reserve is raising concerns about the health of the worlds largest economy. Europe is on the global radar and the whole of Eurozone is seen fast morphing into epicentre of renewed global tremors. China, on whose progress the world has pointed hopes, of pulling the world out of this mess, shows no meaningful signs of revival. The G20 countries tried to reassure the world markets of their coordinated action as seen in the post Lehman days. Finance Minister, Pranab Mukherjee, recommended investments flowing into the infrastructure segment of the developing world. This will help provide avenues for floating funds besides buoying the global economy. The main worry of investors the world over is in the way the developed economies tackle indebtedness and the sputtering growth despite near zero interest rates and growing joblessness. The G20 nations are aware of this difficulty and feel the decisive action is as much political as economical. Last but not the least, Europe's dispute on the bailout mechanisms raise doubts about Eurozone's survival. While India can boast of comparatively enviable growth rates, it is on a far lower base. As now aspirations have surfaced, complacency is a strict no-no. An economic slowdown and lack of demand in USA and Europe will surely hit us unless new export destinations are found. High inflation in painful conjunction with a creeping slowdown and poor fiscal consolidation on the back of a high interest rate regime has raised the cost of borrowing and stalling the expansion plans of companies. Worse, there is policy inertia leading to capital flight and a declining rupee! Mr. PM, India's high growth cannot be sustained any longer without kickstarting the choked up reforms process. Right and timely moves on FDI participation in retail, insurance, infrastructure and other key areas is the need of the hour. The government needs to bite the bullet and cut wasteful subsidies to garner resources in education and health programmes. An urgent need is also felt in building capacity in the manufacturing sector. A new manufacturing policy needs to be urgently introduced and it needs to be supported by tax and labour reforms. Renewed discussion on introduction of a direct tax code and GST has to be in place for implementation from the new fiscal. All important bills pertaining to trade and commerce must be passed in this winter session. Such positive steps alone can win the confidence of industry and ease direct transaction costs and help generate higher revenues while boosting factory output and employment. An overall optimism shall prevail and lift India from the gloom of a global slowdown. There is evidence that the inflationary pressure has resulted in higher wages in China, which will raise their cost of production there and minimise the advantage that it long enjoyed. This will provide India an opportunity to catch up and we need to prepare ourselves for it. Government need not boost investors confidence by reducing the STT and stamp duty on secondary market contracts but there is a strong need to woo investors back to Dalal Street by some meaningful incentives on equity investments. 'The elephant has awakened' the world had said about the Indian economy. Let us, therefore, demonstrate our sharp and sensitive regulatory systems. Rules governing land acquisitions and environmental clearances should not delay the projects and make them unviable. Dear PM, let us not make the global gloom an excuse for domestic lethargy. Instead, let us rise in these dark days with hope and a firm resolve. Let this Dassera be the celebration of killing the modern Ravanic demon called complacency and Government inertia. Manmohan Singh, please get going.

Manmohan, please get going

TRADING ON TECHNICALS

Support cluster at 15765-15330

By Hitendra Vasudeo Last week, the BSE Sensex opened at 16209.19 attained a low at 15801.01 and moved up to 16756.08 before it closed the week at 16453.76 and thereby showed a net rise of 292 points on a week-to-week basis.
A Time Communications Publication 2

In the strategy for the week, we had indicated to hold short positions with a stop loss of 17212. The same has not been violated yet. Alternatively, we had suggested selling on the rise to 16468-16884. The high registered last week was 16756.08 and closed at 16453.76. Volatility between 17212-15700 is being witnessed for the past 5 weeks. The breakdown from the support range of 1731417295 was witnessed in the week ended on 5 August 2011. Since then, the Sensex has not crossed 17314 and continues to remain below it. It tested the support cluster of 15960, 15651 and 15330. Till now, the low is 15765. The broad defined range is 1731415765 for about 8 weeks since the breakdown in the week mentioned above. The RSI has moved up a bit after hitting the oversold zone. If the resistance of 17314 is crossed strongly with a weekly positive candle, we may find the rise getting extended towards the falling trend line. The falling trend line is taken from the lower high of 2064 and 19131. The current value of the trend-line is around 18000 approximately. Similarly, the low made in the past few weeks is 15765 and the same was tested last week as it made a low of 15801. Even if it breaks 15700, recovery could be witnessed from the lower range of 15650-15330, which makes it unclear whether to go short on violation of support. On the daily chart, on Friday, 30 September 2011, we saw an In Day pattern. Therefore, a rise and close above 2 days high or 2 days low may decide the course of movement this week. The 2 days high and low is at 16756 and 16316. On the weekly charts, the lower band of the Bollinger Bands is being tested and if the resistance of 17314 is crossed, then we may see an extended pullback. But when we see daily charts, we have too many gaps in the higher range, which does not impart confidence about its sustainability in the higher range. We may, therefore, witness a prolonged sideways volatility before it actually cracks down or spikes up. On the wave structure, we may find that Wave b of Wave C may not have ended as the support of 15765 is not yet violated. Alternately, we may find Wave a of Wave C ended at 15764 may not have actually ended if the fall below 15765 becomes vertical. The support cluster of 15765-15330 may hold the fall unless the crack is vertically below the support level. Weekly resistance will be at 16872-17212-17314 while the weekly support will be at 16336-15917. A strong weekly close above 17314 with a weekly positive candle may mark a near term to short term reversal for a pullback of the fall from 19132 to 15764. Wave Tree:
Wave Tree Wave I Wave II Wave III Wave IV Wave IV Wave IV Wave IV Wave IV Wave IV Wave IV Wave IV Wave IV Wave IV Wave A Wave B Wave C Wave C Wave C Wave C Wave C Wave C Wave C a b c x a b Month Dec Feb March Jan Jan March 11-Nov 11-Nov Nov Jan Feb August August Year 1979 1986 1998 2008 2008 2009 2010 2010 2010 2011 2011 2011 2011 Sensex 113 656 390 21206 21206 8047 21108 21108 18954 20664 17295 19132 15764 Month Feb March Jan Sept March 11-Nov Sept Nov Jan Feb August August Sept Year 1986 1998 2008 2011 2009 2010 2011 2011 2011 2011 2011 2011 2011 Sensex 656 390 21206 17211 8047 21108 17211 18954 20664 17295 19132 15764 17211 In Progress May have ended confirmed below 15764 Remark In Progress In Progress -

A Time Communications Publication

Conclusion The band movement spells uncertainty and only another round of decisive moves will decide the course of price action. Strategy for the week Traders who are short can keep the stop loss at 17314. Cover short positions at 16336-15917-15650-15330 as the opportunity arises.
WEEKLY UP TREND STOCKS Let the price move below Center Point or Level 2 and when it move back above Center Point or Level 2 then buy with what ever low registered below Center Point or Level 2 as the stop loss. After buying if the price moves to Level 3 or above then look to book profits as the opportunity arises. If the close is below Weekly Reversal Value then the trend will change from Up Trend to Down Trend. Check on Friday after 3.pm to confirm weekly reversal of the up Trend.
Scrips Last Close Stop Loss Level 2 Buy Price
IDEA CELLULER A.C.C. ARVIND HINDUSTAN UNILEV AMBUJA CEMENT 98.80 1098.00 98.30 340.25 148.60 93.0 1061.0 90.5 325.1 140.7 94.0 1071.3 92.0 328.2 142.5

Center Point Buy Price

97.8 1087.7 96.8 337.1 146.7

Level 3 Book Profit

102.6 1114.3 103.2 349.2 152.8

Level 4 Book Profit

111.1 1157.3 114.4 370.1 163.0

Weekly Relative Reversal Strength Value

Up Trend Date

62.6 60.1 58.9 58.7 57.7

96.8 1059.5 94.0 336.1 144.0

30-09-11 19-08-11 02-09-11 26-08-11 12-08-11

WEEKLY DOWN TREND STOCKS Let the price move above Center Point or Level 3 and when it move back below Center Point or Level 3 then sell with what ever high registered above Center Point or Level 3 as the stop loss. After selling if the prices moves to Level 2 or below then look to cover short positions as the opportunity arises. If the close is above Weekly Reversal Value then the trend will change from Down Trend to Up Trend. Check on Friday after 3.pm to confirm weekly reversal of the Down Trend.
Scrips Last Close Level 1 Cover Short
INDIABULL POWER INDIAN OVERSEA BN MMTC IFCI JET AIRWAYS 12.68 92.65 656.00 30.70 235.00 10.5 87.1 617.3 26.8 187.1

Level 2 Cover Short

12.1 91.1 645.3 29.6 222.5

Center Point Sell Price

13.1 93.6 662.7 31.2 245.5

Level 3 Sell Price

13.7 95.1 673.3 32.3 258.0

Stop Loss

Weekly Relative Reversal Strength Value

Down Trend Date

14.2 96.0 680.0 32.8 268.5

21.90 22.46 24.08 24.64 25.13

14.11 99.22 690.50 33.70 264.46

23-09-11 08-07-11 23-09-11 16-09-11 23-09-11

PUNTER'S PICKS
Note: Positional trade and exit at stop loss or target which ever is earlier. Not an intra-day trade. A delivery based trade for a possible time frame of 1-7 trading days. Exit at first target or above.
Scrips
JAMNA AUTO

BSE Code
520051

Last Close
140.30

Buy Price
126.65

Buy On Rise
144.80

Stop Loss
123.40

Target 1 Target 2
158.0 179.4

Risk Reward
1.05

BUY LIST
Scrip
ARVIND EICHER MOTORS

Last Close
98.30 1600.00

Buy Price
92.51

Buy Price
89.68

Buy Price
86.84

Stop Loss
77.65

Target 1
116.6

Target 2
140.6 2172.2

1524.23 1486.00 1447.77 1324.00 1848.2

EXIT LIST
Scrip
GODREJ CONS. PROD GUJARAT GAS CO. PETRONET LNG

Last Close
400.70 432.75 159.30

Sell Price
412.37 434.70 163.36

Sell Price
416.50 440.10 167.18

Sell Price

Stop Loss

Target 1
377.4 388.9 131.0

Target 2
342.4 343.1 98.7

420.63 434.00 445.50 463.00 170.99 183.35

A Time Communications Publication

TOWER TALK
* Reliance Capital was down 12.3% on Friday as it may face problems in getting a banking licence in the wake of the R
Com problem in 2G allotments and buyouts. * The Mining Act is doing more harm to mining companies. Coal India, which was considered as the next ONGC, stands sharply downgraded. Its fall may accelerate the fall of the benchmarks. * Portfolio management schemes are picking cement shares like Ultratech, ACC, Ambuja Cement. No wonder, they are gaining ground. * Sidhee baat ..... baaki sab bakwaas! In case you don't understand, just buy the large caps and leaders of sectors which are available at or near their 52-week lows. * FMCGs and foreign pharma scrips are safe bets in such torrid times. * PG Electroplast Ltd, a new listed share, surely needs a scrutiny of volumes and identities of buyers and sellers. A lot of skeletons will emerge from its cupboard. Over Rs.1000-crore turnover is generated daily with lot of ills and cunning trading strategies. * Tata Metaliks is selling its 300,000 TPA of pig iron Redi unit to Goa based Fomento Resources for Rs.180 crore and will be left with 350,000 TPA of pig iron capacity. Hold on to your position. * Eveready Industries plans to dispose off 60-70 acres in Delhi, Hyderabad and Bangalore, to pay its debts. Remain invested. * Geodesic is a value buy at current market cap of Rs.460 crore. An IT expert advises to buy it at current levels and add more on declines. * Rama Paper is once again making new highs and has crossed a market cap of Rs.100 crore. Book profit & stay away. * The shares of DIC India, an affiliate of Japanese MNC Dai Nippon Chemicals, can be bought for decent gains in the medium-term as it may clock an EPS of Rs.35 in CY11. * An analyst with a reputed brokerage has come out with a buy report on Morganite Crucible (India) with a target price of Rs.595 in the medium-term as it may post an EPS of Rs.34 in FY12 and Rs.40+ in FY13. * Shree Ganesh Jewellery is the cheapest share in the diamond industry with a likely EPS of Rs.55 in FY12. The share may appreciate by 40% in the medium-term. * Fairfield Atlas, in which its MNC parent holds 85% stake, is an excellent buy as it may post an EPS of Rs.9 in FY12. Major expansion will boost its prospects further. * Leather major, Superhouse Ltd., is likely to announce an EPS of Rs.18 for FY12. The share is going cheap. * KPIT Cummins Info is on the radar of funds and HNIs as it is doing well and can post an EPS of Rs.13 in FY12 and Rs.18 in FY13 and touch the Rs.180 mark. * The shares of Ambika Cotton Mills can be accumulated for decent killing in the medium-term with a likely EPS of Rs.70-75 in FY12. * A fertilizer analyst strongly recommends Rama Phosphate and Liberty Phosphate two low priced bargains for 50% gain. Both are doing well in FY12.

BEST BETS

Microsec Financial Services Ltd. (Code: 533259)

(Rs.29.20)

Incorporated in 1989, Microsec Financial Services Ltd. (MFSL) is a non-banking finance company registered with the RBI. It is engaged in financing loans against shares and making investments. However, it is the holding company of the Microsec Group, which operates as an integrated group and offers various financial products and services to its target client base of retail investors, high net worth individuals, companies and institutions. Under investment banking, business it offers a range of merchant banking services like IPO, private equity, institutional placement, corporate advisory services like M&A, restructuring, tax management and corporate finance service likes debt syndication, credit appraisals, interest swaps etc. Under brokerage, it executes third-party trades for its clients in equities and derivatives, on stock exchanges commodities on currencies on stock exchanges and commodity exchanges as well as depository services. Further, the group also distributes third party insurance and mutual fund products and offers wealth management and financial planning services such as portfolio management, asset management etc. Recently, it started a research based retail distribution channel namely Club Kautilya. Importantly, the groups integrated service platform allows it to leverage relationships across different lines of business by providing multi-channel delivery systems to its clients, thereby enhancing its ability to cross-sell its products and services. Presently, company operates through following 6 subsidiaries and step-down subsidiaries:

A Time Communications Publication

Microsec Capital Ltd: engaged in investment banking, brokerage (equity and currency), wealth management, financial planning and related services Microsec Resource Pvt Ltd: deals in financing Microsec Technologies Ltd: offers consultancy in equity research and technology support services Microsec Commerze Ltd: involved in commodities broking Microsec Insurance Brokers Ltd: engaged in Insurance broking PRP Techonlogies Ltd: provides support services to distribution, financial planning and other related services With principal offices in Kolkata, Mumbai and Delhi, MFSL is present in around 250 locations in 65 cities in 19 States with a strong presence in eastern India as over 50% of its centres are located in West Bengal of which over 100 centres are in Kolkata city alone. Backed by extensive branch network and an employee strength of about 650, MFSL services nearly 28,000 individuals, 450 corporate clients such as Greenply, Manaksia, Core Projects, Rupa & Co, Emami, Tantia, Ramsarup Industries, Titagarh Wagons, etc and over 16 institutional clients. Among corporate clients, it focuses on mid size companies and believes in serving them throughout the course of their growth. But in the case of institutional and high net-worth individual clients, it focuses on full client coverage providing ongoing and innovative solutions. These strategies have paid off well and today Microsec is a well-recognized brand especially in eastern India. After creating a sound business model and establishing a good brand image, MFSL is on a strong growth trajectory and has chalked out some expansion plans. It plans to expand its branch network and establish a pan-India presence with operations into smaller cities and towns that are under-serviced by financial services companies. In the first phase of this expansion, it will focus on western India followed by the northern and southern regions. Simultaneously, it also plans to set up 200 exclusive outlets of Club Kautilya within the next two years. In addition, the company wants to set up a network of Microsec Enterprises a network of entrepreneurs as channel partners for distribution of financial products) and Microsec Network Services (a network of professionals such as Chartered Accountants as channel partners for distribution of multiple financial products) throughout India. Besides, it plans to develop its research division as a separate profit centre and a knowledge process outsourcing (KPO) unit to provide research services to its clients, including brokerage clients. Currently, its in the midst of enlarging its team of research analysts and advisors and dealers to strengthen its relationships with clients. The company has been allotted a plot of land by WBHIDCO, a Government enterprise in the Knowledge Corridor at Rajarhat in Kolkata, which it wants to develop as a hub for its centralized operations including research. To add to its

A Time Communications Publication

institutional clients, it has set up an institutional desk to cater them and has even filed applications for empanelment with several foreign institutional investors. On the other hand, it is in the process of setting up an internet-based platform to establish online trading capabilities to complement its products and services. For this, it has acquired PRP Technologies Ltd., a company that launched an internet-based personal resource planning application software to provide information management services to individuals. Moreover, it may also consider growth opportunities through the inorganic route from time to time. In fact, it is about to make a strategic investment in a company called MYJOY Fun & Food Pvt. Ltd., a food processing company as it foresees tremendous potential in the integrated food processing business and expects the investment to yield good returns in the long run. It is also looking at the education space for some investments. To fund its growth plans, the company had come out with an IPO in September 2010 and raised nearly Rs.150 crore at Rs.118 per share. Incidentally, the issue received an overwhelming response and was oversubscribed by about 12 times. Although MFSL is in an expansion mode and the future looks promising, it is expected to report muted performance in short-term considering the current economic scenario. The participation of retail investors in secondary market has dried up, the volume of IPOs, QIPs has also come down significantly and interest rates have hardened considerably and have affected the companys business one way or the other. However under the leadership of veterans like Mr. Banwari Lal Mittal & Mr. Ravi Kant Sharma, the group is slated to overcome all external and internal challenges and come out as a winner. Fundamentally, the group has done well in FY11 as its consolidated revenue and PAT grew by 35% to Rs.78 crore and Rs.33 crore respectively posting an EPS of over Rs.10 on its equity base of Rs.31.80 crore. However for Q1FY12, it posted bit disappointing performance as the topline declined by 15% to about Rs.15 crore and net profit dropped by 30% to Rs.5.2 crore on a consolidated basis. Still, it recorded an EPS of Rs.1.60 for the quarter. Accordingly, it is expected to end FY12 with a PAT of Rs.25 crore. At the current market cap of less than Rs.100 crore, it is trading grossly cheap. Investors are recommended to buy this stock at current levels and hold it for a year or so for handsome returns.

STOCK ANALYSIS

United Phosphorous: Cultivating growth

By Devdas Mogili United Phosphorous Ltd. (UPL) is a 24 year old Vapi, Gujarat, based company established in 1985. It manufactures agrochemicals, industrial chemicals, chemical intermediates and speciality chemicals and has a captive power plant at Jhagadia. R. D. Shroff is the chairman and managing director of the company. UPL is a leading global producer of crop protection products, intermediates, speciality and industrial chemicals. It is present across value added agri inputs ranging from seeds to crop protection and post harvest activity as it offers a wide range of insecticides, fungicides, herbicides, fumigants, PGR and rodenticides. UPL has 21 manufacturing sites (9 in India, 4 in France, 2 in Spain, 1 each in UK, Vietnam, Argentina, Netherlands, Italy, China) supported by on-site technical services and quality control. It manufactures and markets Caustic Chlorine, White Phosphorus, Industrial Chemicals, Speciality Chemicals and 48.5 MW of power. It has subsidiary offices in Argentina, Australia, Bangladesh, Brazil, China, Canada, Denmark, Indonesia, France, Hong Kong, Japan, Korea, Mauritius, Mexico, New Zealand, Russia, Spain, Taiwan, South Africa, USA, UK, Vietnam & Zambia. In 2006-07, UPL acquired three products from Bayer Crop Science, AG Germany, which resulted in broadening its product portfolio, and purchased the global business of Propanil herbicide from M/s. Dow Agro Science LLC. This will help the Company achieve growth in North America, Latin America, Europe, Africa and Asia Pacific. In the same year, it purchased from DuPont Bensulfuron the methyl business including Londax herbicide and all mixtures throughout the world, except Asia Pacific Region and also acquired the Cerexagri group of companies, which specialize in the manufacture of fungicides. Recent Acquisitions: During 2010-11, UPL made the following acquisitions: 1) The global business of non-mixture Mancozeb fungicide and related assets including inventory, manufacturing and formulation production facilities from DuPont in Barranquilla, Colombia. Mancozeb is a leading fungicide and this acquisition will help UPL in strengthening its position in the high growth emerging markets of South and Central America. This purchase will enhance its position in the EBDC (Ethylene Bis Dithio Carbamates) segment. 2) RiceCo LLC, USA, along with its subsidiaries and certain assets of the global business of its affiliate company. RiceCo does business in over 20 countries with major markets in USA, Mexico, Thailand, Nigeria and Sri Lanka. RiceCo caters to the rice market and has a wide range of product offerings based on the herbicide Propanil for this segment. Propanil is a herbicide used for the control of many important annual grasses, broadleaf and sedge weeds in rice. RiceCo thus adds strong brands for the rice segment of UPLs branded product portfolio.

A Time Communications Publication

3) 50% stake in Sipcam Isagro Brasil (SIB), which is a niche producer and distributor in the Brazilian agrochemicals market. This acquisition will help UPL enter the direct distribution business in Brazil and help target untapped markets. 4) It also acquired 51% stake in DVA Agro Do Brasil, which produces crop protection chemicals and specialties in the Brazilian agrochemicals market and had a net revenue of about $130 million for the year ended 3 December 2010. Performance: The company posted total revenues of Rs.5804.51 crore with a net profit of Rs.557.64 crore netting an EPS of Rs.12.45 for FY11. Financial Highlights: (Rs. in lakh) Particulars Q1FY12 Q1FY11 FY11 Latest Results: During Q1FY12, UPLs sales rose 30.37% to Total Income 186214 146856 580451 Rs.1862.14 crore as against Rs.1468.56 crore in Q1FY11 while Total Expenditure 158011 122713 490771 net profit shot up 30% to Rs.184.31 crore from Rs.141.75 crore Other Income 2257 1863 9365 in Q1FY11 posting a basic/diluted EPS of Rs.3.99 for Int & Finance Cost 7137 10036 31199 Q1FY12. Exceptional Items 1400 Tax Expense 4660 1563 7308 Financials: The company has an equity base of Rs.92.36 Net Profit 18431 14175 55764 crore with a share book value of Rs.80.64 (FV: Rs.2). It has a Paid-up Equity 9236 8808 9236 debt:equity ratio of 1.10 with RoCE of 11.48% and RoNW of (FV: Rs.2) Res Ex Rev Reserve 363370 7.54%. Basic EPS (Rs) 3.99 3.22 12.45 Share Profile: The companys share with a face value of Rs.2 Diluted EPS (Rs) 3.99 3.08 12.45 is listed and traded on the BSE under B Group. Its share price touched a 52-week high/low of Rs.219.70/Rs.125.60. At its current market price of Rs.137.55, it has a market capitalization of Rs.6763 crore. Dividends: The company has been paying handsome dividends as follows: FY11 - 100%, FY10 - 100%, FY09 - 75%, FY08 100%, FY07 - 60%, FY06 - 50%, FY05 - 40%, FY04 - 30% Shareholding Pattern: The promoters hold 26.55% stake while the balance of 73.45% is with the non-corporate promoters, institutions, mutual funds and the investing public. Mutual Funds like Kotak, Sundram, DWS, DSP BR, ICICI Pru, Taurus, BNP Paribas, L&T, ING, Sahara, Tata, Birla Sunlife, Canara Robeco, Reliance, SBI Magnum have added the companys shares to their various schemes. Prospects: Being one of the largest manufacturers of off-patent generic agrochemicals, it has the largest agrochemical product portfolio in India and ranks among the top five generic agrochemical companies in the world. The Indian agrochemical industry has very good growth potential. Opportunities are increasing owing to the high prices of agriculture commodities and use of bio fuels and growth in the area of cultivation. Farmers, too, are willing to invest to improve productivity. Further, there are significant cost advantages in manufacturing various agrochemicals in India. Thus there is tremendous opportunity for growth of the company. The Indian Agrochemical industry is in a position to supply quality agrochemicals at an economical price because of which exports are growing every year. Since UPL exports to almost all the countries in the world, the effect of adverse weather conditions in one part is neutralized by diverting sales to other parts of the world. For 2011-12, normal monsoons are forecast in India. This should result in higher sales and improved profitability, which will positively impact the performance of the agrochemical industry. With the growing population, food production must go up and this is possible only by the increased and regulated usage of agrochemicals. Union Budget 2011-12 puts greater thrust on agriculture, infrastructure and education, which will also help improve UPLs performance in the coming years. Conclusion: UPL is a global generic crop protection, chemicals and seeds company with a combined market capitalization of approx $2.5 billion. Its revenue has grown at a CAGR of 26% over the last 5 years. At its current market price of Rs.137.55, the UPL share price is discounts its FY11 EPS of Rs.12.45 less than 12 times. Considering its global status, excellent performance and bright future prospects, the UPL share can be added to ones portfolio for significant gains in the medium-to-long-term.

MARKET REVIEW

Market recovers

By Ashok D. Singh The BSE Sensex rose 291.70 points or 1.8% to settle at 16,453.76 for the week ended Friday, 30 September 2011. The CNX Nifty advanced 75.50 points or 1.55% to end at 4,943.25. The BSE Small-Cap index tanked 2.27% and the BSE Mid-Cap index fell 1.5% for the week. Both these indices underperformed the Sensex. Out of the 5 trading sessions, the Sensex declined in 3 and gained in 2 during the week.

A Time Communications Publication

The market remained volatile last week as traders rolled over positions in the Futures & Options (F&O) segment from the September 2011 series to October 2011 series on expiry on Thursday, 29 September 2011. CRISIL Research expects corporate India to report significant moderation in revenue growth and lower EBITDA (earnings before interest, taxation, deprecation and amortization) margins in Q2FY12 primarily due to a decline in consumer confidence on the back of a stubbornly high inflation, rising interest rates and a slowdown in investment growth. Based on an analysis of the aggregate financial performance of select companies across 21 industries, excluding banks and oil companies, CRISIL Research expects around 15% revenue growth in Q2FY12 as compared to 19% growth in Q1FY12 and 22% growth in Q2FY11. Although companies have hiked prices, slower volume growth along with high input costs and rising wages will put pressure on corporate margins, says CRISIL. It expects a 100 basis points (bps) reduction in EBITDA margins in Q2FY12 from 19.5% in Q1FY12. Further with the increase in interest rates, net margins are expected to fall even more sharply. According to CRISIL, sales volumes in consumption linked and interest rate sensitive sectors such as automobiles, real estate, textiles, and retail have been significantly impacted. In infrastructure linked sectors such as cement, capital goods, and construction, order book/volume growth has declined. Monsoon rains were 2% above average till 28 September 2011. India is aiming for record food grain output of over 245 million tonnes this crop year that began on July 1 as well as bumper cotton, sugarcane and other crops. A good monsoon season can typically boost rural farm incomes and impact the wider economy through increased spending on consumer goods as well as reduced food prices. Trading for the week began on a lower note. The Sensex dropped for the fourth day in a row on Monday, 26 September 2011 to 1 month closing lows as anxiety of weak Q2FY12 corporate results and data on recent selling by foreign funds weighed on investor sentiment. The Sensex fell 110.96 points or 0.69% to close at 16,051.10. The media reports that the finance ministry is considering some tax cuts on equities to lower transaction costs and broaden participation in the market helped the market snap the 4-day losing streak on Tuesday, 27 September 2011. A rally in world stocks triggered by reports that the European policy makers are considering new plans to support European countries struggling with debt aided a rally on domestic indices. The Sensex rose 472.93 points or 2.95% to close at 16,524.03. The Sensex edged lower amid intra-day volatility on Wednesday, 28 September 2011 and fell 78.01 points or 0.47% to close at 16,446.02. On Thursday, 29 September 2011, it attained the highest closing level in more than a week supported by firm global stocks and higher US index futures. The Sensex rose 252.05 points or 1.53% to settle at 16,698.07. As world stocks fell on Friday, 30 September 2011, the Sensex fell 244.31 points or 1.46% finally to settle at 16,453.76. The Sensex advanced 291.70 points to settle at 16,453.76 last week. The next week is a truncated trading week. As financial markets are closed on Thursday, 6 October 2011 on account of Dassera. Market Participants will keep focusing the management commentary at the time of announcement of Q2FY12 results, which will provide cues on futures earnings outlook. Stock specific action may be witnessed on the indices ahead of Q2 result season which starts during the second week of October 2011. The advance tax payment by top 100 companies rose a modest 9.9% in Q2FY12 from a year ago against 19% growth in Q1FY12 suggesting corporate profit growth is likely to be muted in the second quarter. Auto and cement shares will be in focus this week as companies from these two sectors start unveiling monthly sales data for September 2011. Cement sales is likely to pick up as monsoon withdraws. On the other hand, higher interest rates and recent petrol price hike is expected to adversely impact sales of cars and 2-wheelers during the festive season. The timing of the latest petrol price hike has been bad for auto firms. The festive season started early this month and it will last until Diwali at the end of October 2011. Sales normally pick up during the festive season every year.

GURU SPEAK

Market is directionless

By G. S. Roongta Why did the BSE Sensex tank by 704 points on Thursday, 22 September 2011 followed by a further fall on Friday, 23 September and Monday, 26 September 2011, taking a toll of over 1100 points in just three days? Was it only because of global cues? If so, why did it bounce back 473 points on Tuesday, 27 September 2011 whereas the intra-day gains were even higher? The CNX Nifty, too, gained 136 points at 4971 that day. Was this again on account of global cues? No one has any clear explanation for this sudden fall or rise! I have been repeatedly expressing my concern about the Eurozone crisis, which is a year-old issue and has nothing do with our markets. Yet whenever the market weakens, the analysts, press and TV channels attribute it to the Eurozone

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crisis or the recession in the US as the reason for the fall. This has become the patent trade mark of these entities and repeated ad nauseam. Similarly, the bounce back is correlated to the relief package or bailout to debt ridden EU countries. But nothing has been specifically confirmed. Thus our economic fundamentals and corporate reasons for growth have been totally ignored and the market sentiment is dictated by the economic woes of the US or EU! It is so strange that technical experts start issuing guidelines in anticipation of the markets falling further to touch new bottoms despite being proved wrong time and again by these short-term guidelines. In the week before last, several analysts had started giving calls for the Nifty to hit the 4500 mark and the Sensex to test the 15000 level. But once again, they were proved wrong as the markets bounced back last week on Tuesday, 27 September 2011, gaining 473 points forcing short sellers to rush and cover up their short positions as quickly as possible before the expiry of the September 2011 F&O series on Thursday, 29 September 2011. As a result, the markets bounced back smartly without any fundamental merit based on the technical grounds just like it did on Friday, 23 G. S. Roongta September 2011 when it fell down on fears of negative news. Thus the market has turned extremely volatile based on contradictory position of global cues. Believe it or not, this sluggishness of the market is not on account of the Eurozone crisis or the rising inflation or the US slowdown but on account of the excessive speculation in the F&O trading. This, in turn, makes them worry whenever the market declines or rises beyond their expectations and forces them to cover their outstanding positions fast to cut their losses and dashing their hopes of making quick money. Technical experts are the ones that lure such folks to act upon their calls. But investors who indulge in such activities rarely make money and often get stuck in the volatility of the market. Over the last several months, the market has been moving within a range of 2000 points on the Sensex and 600-700 points on the Nifty forcing this class of gamblers to gain sometimes but lose more often than what they had gained earlier. However, the technical experts always get away with the excuse that their guidelines were for both sides indentifying the different levels for a rise or a fall. As long as traders keep on gambling and do not take delivery, they are unlikely to benefit as they cannot keep their outstanding position open for long because of their limited financial strength. Such a scenario results in limited gains but unlimited losses in a severely volatile market as experienced on 23 & 27 September 2011. Readers may recall that that I have been stating this as the only reason for the low cash market volumes, which are declining day by day while the F&O speculation is on the rise ever since 2005. More and more people are turning to speculation while withdrawing from short or long-term investments. On an average, the Sensex fluctuates within 150-200 points and the Nifty within 25-50 points on a daily basis. One can trade in this range so frequently at reasonable quotes for a buy/sell in a single day and gain of Rs.250 or lose Rs.500 on a daily basis by squaring up the position on a day-to-day basis without any investment. Such traders, however, do not calculate the extent of loss on a monthly or quarterly basis. Truly speaking, if these traders were making money in speculation, then there was no reason for the markets to fall. Instead they should have gone up as the number of people losing money is in lakhs while those gaining are few in numbers including the speculators. The gambling nowadays is not confined to only stocks but also commodities like copper, aluminium, steel, silver and gold. Thus speculation has now become more popular and fashionable irrespective of the gains/loss made by investors. Gold and silver prices crashed last week and goldsmiths are reported to be in a very diffcult position as they had bought the stocks at very high prices to make ornaments for the festive season. They are stuck in a very tight situation if the prices fall further, they will face a situation similar to that of equity investors who had invested in the stock market a year ago. Last week, one of my HNI clients called and informed me that he had news from a reliable source that gold and silver was set to rise and hit a new high. Believe it or not, I advised him that gold and silver are already too high as several countries had chosen them as a hedge for troubled times and there was little reason to stretch them further. And if they were stretched further, there is a likelihood of their crashing. This HNI is a staunch reader of Money Times for decades and has never missed an issue. But sometimes gets carried away by the advice of people holding high positions in the market such as technical experts, fund managers, etc. But when gold and silver prices crashed last week, he realized that Money Times has a wiser team of analysts compared to the people holding high ranks and positions in the market. These highly ranked advisors keep on changing their stand according to the market fluctuation on either side without any long-term vision. But as Money Times readers are aware, I stick to my observations based on corporate news, growth and earnings and hardly ever need to change my outlook.

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I have not made any specific recommendation in the last several issues knowing fully well that investors are in no mood to follow them in a bad market. Scrips like Arvind Ltd., recommended by me a little over a year back at around Rs.32, touched a 52-week high at Rs.101.70 on Wednesday, 28 September 2011. Recently, GSFC has also hit an all time high at Rs.465. My other favourites like SRF Ltd., Sarda Energy, Shanthi Gears, Graphite Investment Advisory Service India, Greaves Cotton, Elecon Engineering by G.S. Roongta are a few stocks that are performing Money Times is pleased to introduce Investment Advisory Service extremely well compared to other analysts (IAS) by our renowned columnist Mr. G. S. Roongta, who has over 25 whose recommendations have fallen below years of experience and is well-know for his accurate forecasts since their 52-week lows whether in the A or B 1986. group. Interested investors can visit Money Times office between 4 p.m. to 6 To deal with the psyche of investors is a p.m. on Tuesday or Thursday every week after prior appointment very delicate job and analysts must be fair with our office. Outstation readers can consult him by e-mail or while making recommendations based on phone. true facts rather than base it on their A minimum one time charge of Rs.1000 has to be paid in advance personal interests. This is how investors favouring Time Communications (India) Ltd. against which a land in a soup when they act upon such maximum of 5 scrips will be recommended for investment and motivated recommendations, which reviewed up to a period of three months. ultimately fails in the long run even though Other services like portfolios analysis/restructuring will be charged it may record a rise for a while. The market extra depending on the size of the portfolio & service. will remain volatile till Thursday, 29 Contact Money Times on 022-22654805 or September 2011 on account of the expiry of Telefax: 022-22616970 or email us at [email protected]. September 2011 F&O contracts but is likely to close much higher than last weeks closing. Mr. Roongta had submitted this article on the evening of Wednesday, 28 September 2011, as he was proceeding outstation. As per his forecast, on Friday, 30 September 2011, the Sensex closed the week at 16453.76 and the Nifty at 4943.25 higher than last weeks closing of Sensex 16162 and Nifty 4868.

STOCK WATCH
With over 4 decades of fluid engineering expertise, Roto Pumps (Code: 517500) (Rs.75) is a reputed manufacturer of progressive cavity pumps and twin screw pumps that have very wide applications in agriculture, domestic and industrial sector. Being an integrated manufacturer with its own polymer unit, the company makes all the critical components in-house thereby ensuring world class quality. Accordingly, it also supplies a wide range of quality retrofit spares for all major progressive cavity pumps manufacturers. Having warehouse cum marketing offices in Australia and U.K and backed by a good network of distributors across the globe, it derives over 55% of its total revenue from exports and claims to have 4000 satisfied customers worldwide. Recently, the company set up a wholly-owned subsidiary in Germany to carry out sales and marketing activities in Germany and adjoining German speaking countries and claims to have 4000 satisfied customers worldwide. Although, the company caters to several core sectors, the biggest industry for its main product is wastewater treatment, which is witnessing tremendous growth due to environmental and compliance factors. Presently company is in the midst of expansion cum modernization of its production facilities to augment capacities and improve operational efficiencies to cater to the increased demand. Accordingly, it has acquired industrial land of 20,000 sq. metres from Greater Noida Industrial Development Authority in Sector ECOTECH XII. Since the infrastructure development work on the land is yet to be completed, the company hopes to start the construction of its production facilities and office within two months and complete it by December 2012. Further, in order to introduce more cost effective and efficient products, it has acquired new designs from the United Kingdom. The new design of pumps are currently under development at the prototype stage and would be launched in the market in the next financial year. Given the acceptance of its products and growing marketing network overseas, its export turnover is expected to rise in future. Although its Q1FY12 was a bit subdued, it may end FY12 with sales of Rs.68-70 crore with PAT of Rs.5.75 crore. At the current market cap of less than Rs.25 crore, this niche company stock is trading fairly cheap and deserves much better valuation.

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As per market estimates, the disruption of work at the Manesar plant of Maruti has led to a loss in production of about 18,500 cars. This has impacted several auto parts suppliers including Bharat Seats (Code: 523229) (Rs.15), which is actually a joint venture of Suzuki Motor Corporation, Japan, Maruti Suzuki India Ltd and the Relan family of
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Delhi. Its share price has fallen considerably and is hitting new lows. The company manufactures complete seating systems and interior components for the automotive sector and for surface transport. It has the latest state-of-the art equipments for producing the complete range of seating systems such as high pressure polyurethane machines for foam moulding. During FY11, it set up an additional assembly line for making car seats for supplying to the modified Wagon-R model of Maruti Suzuki. It started manufacturing polyurethane (PU) Pads with its newly developed technology called Dual Hardness for more comfort in the seating system. Last year, it even added PU line for making head rest pads. Further. It has also installed an additional assembly system for 2 wheeler seats to cater to the increased demand and has introduced a new product range involving the technology of swaging and boring on the frames used in two wheeler manufacturing. To maintain its growth momentum, the company has planned further capacity expansion and is entering into another area of manufacture of extruded components for the Maruti range of vehicles. For this purpose, it has entered into an agreement with INOAC of Japan and has started setting up the facility at its plant at Bohrakalan. The production is scheduled to commence in FY13. Fundamentally, the company ended FY11 on quite a buoyant note as sales rose 30% to Rs.442 crore but PAT more than doubled to Rs.8.20 crore posting an EPS of Rs.2.60 on its equity of Rs.6.30 crore having face value as Rs.2 per share. Even for FY12 it is expected to maintain the same bottomline. Thus the scrip is currently available at a P/E multiple of less than 6 times. Start accumulating at declines. The current year is the Silver Jubilee year of the company, when it may declare some additional dividend for FY12.

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Themis Medicare (Code: 530199) (Rs.117) has once again posted a dismal
performance for Q1FY12 after reporting a huge loss in Q4FY11. The reason for such a poor performance was the temporary reduction in its biotech activities due to some technical reasons. The company has now confirmed that its bio-tech operations have re-started effective the last week of May 2011. Hence the company is expected to come back on track from Q2FY12. However, on the back of its adverse performance for the two quarters, its share price has fallen one-third from Rs.300 to the current Rs.100 level. Thus, it offers a very good opportunity for medium to long term investors to buy now. The company is a reputed pharmaceutical company with four state-ofthe-art manufacturing facilities at Vapi (Gujarat), Hyderabad (Andhra Pradesh) and Haridwar (Uttarakhand). With a product portfolio of APIs and formulations, it is
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present in the growing therapeutic areas like anti-tuberculosis, anti-malarials, cardiology, pain management, antiinfectives, haematinics, health & nutrition. Its E-MAL brand commands the No.1 position in the anti-malarial segment. It is also engaged in co-marketing its research based formulations with other pharmaceutical companies in India and abroad. It has a strong field force of over 500 with a nationwide network of over 2000 stockists, which ensures that its products are readily available across the country. Moreover, it has an expanding global portfolio of affiliates in 40 countries. Going forward, the company is betting on its Formulations division as the API segment is facing tremendous challenges from the Chinese market with fluctuating raw material prices. Presently, domestic formulation contributes about 30% of the total revenue but is expected to touch over 50% in the near future. To achieve this, the company has recently launched a new division Luminous and stepped into an altogether new but fast growing pharmaceutical marketing segment of Cosmeto-Dermatology. It has already launched a screen brightening cream and Sunscreen with SPF30 under its LUMIXYL brand. Secondly, it is seeking to enhance its overseas presence and has plans to enter all 29 EU countries, USA, Canada, Australia with its unique research formulations. Since all its plants have undergone several international audits and it has recently received the EDQM approval, its future looks very promising.

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Despite reporting an excellent performance, the share price of Bilcare (Code: 526853) (Rs.317) has been falling continuously and the scrip is now trading at very attractive valuation of Rs.750 crore and can easily appreciate 50% within 12 months. It is a niche player in the pharma packaging industry with expertise in delivering research-based packaging solutions to global pharmaceutical companies. It is the largest player in India commanding about 60% market share in blister packaging. It has 13 state-of-the-art manufacturing facilities with 25 representative offices across Europe, USA and Asia. Its Singapore facility is the world's largest multi-functional barrier film processing plant and has received the pioneer status from the Government of Singapore for its research initiatives. Its state-of-the-art design studio in Pune is the first-of-its-kind in pharmaceutical package design. It strongly believes in Intellectual Property Right (IPR) and is the only company in this space to have filed almost 150 patents for which it has also received an award from CII-DIPP in 2009. Apart from packaging, it also offers material support, services and complete project management for clinical trials. Besides, it has also developed a unique security technology called nonClonableID that can be seamlessly integrated into any supply chain system providing totally secure and irrefutable real-time product identification and authentication. In FY10 it took the bold step of acquiring the global film business of the INEOS group in a all cash deal of Rs.600 crore. INEOS is a major player in the world of pharmaceutical blister packaging, films for printing and decoration, shrink film for sleeves, capsules and plastic credit cards. After this acquisition Bilcare has emerged as one of the worlds largest pharma packaging company. For FY11, it reported consolidated sales of Rs.2287 crore with net profit of Rs.150 crore posting an EPS of Rs.63.50 on its equity of Rs.23.55 crore. Even for Q1FY12 it has announced a decent set of number with consolidated revenue at Rs.836 crore and PAT of Rs.39 crore i.e. an EPS of Rs.16.50 for the quarter. For FY12, it is expected to clock a turnover of over Rs.3,000 crore with net profit of Rs.170 crore. Thus it is trading extremely cheap at forward P/E multiple of less than 4.50. A solid buy.

FIFTY FIFTY
By Kukku

Investment Call * Lloyd Electric & Engineering (LEEL) (Rs.50.65) is a leading manufacturer of heat exchanger coils serving the Heating,
Ventilation, Air-conditioning and Refrigeration (HVAC&R) Industry. The company is an original equipment manufacturer (OEM) supplier to AC manufacturers in India and provides customized AC solutions for institutional clients like the Railways and Defence. It has further expanded into the transport segment and has developed new models for the same. Its six modern manufacturing facilities coupled with its robust product development team with significant contribution from OEMs and export growth has given the company a cutting edge in manufacturing. During FY11, it continued to strengthen its brand equity through innovation, quality products and appropriate business promotion steps and set-up state-of-the-art manufacturing facility at Ranipet in Tamil Nadu and at Haridwar in Uttarakhand. This is in addition to the facility set-up at Pantnagar in Uttarakhand last year. The new facility at Ranipet is strategically located to cater to the demand in South India and for the export market and has commenced commercial production in February 2011. It manufactures of room air-conditioners, both window type as well as spilt. The other plant at Haridwar was being set-up to cater to the demand for packaged air-conditioning units, RMPU for Railway applications, Metro and Commercial Refrigeration units like air-chillers, air cooled condensers, cooling towers and heat exchanger coils. The plant at Haridwar would commence commercial production in the current year.

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After a year of depression, its subsidiary, Lloyd Europe s.r.o, recorded a year of growth. The market demand was boosted by over 20% in the HVAC&R industry in Europe. Higher demand from traditional customers combined with the spot business obtained from many OEMs from distant markets calling for urgent expansion of capacity. In this segment, the growth was more in commercial air-conditioning especially on roof-tops becoming more popular in Europe. For Janka Engineering s.r.o., FY11 was the first full year of operations since its acquisition in 2009. This subsidiary had to face many challenges due to unfavourable conditions in the Czech and Slovak construction industry, which had a negative impact on the profitability of the subsidiary. By the close of the fiscal year, this subsidiary witnessed growth in the industrial cooling products. On a standalone basis, LEELs total income rose 15.32% to Rs.783.63 crore in FY11 as against Rs.679.5 crore in FY10. Profit before interest and depreciation rose 12.52% at Rs.82.28 crore from Rs.73.12 crore in FY10. The Profit after Tax grew by a modest 4.88% to Rs.36.06 crore from Rs. 34.38 crore in FY10. On a consolidated basis, its total income rose 24% to Rs.1015.84 crore from Rs.819.06 crore in FY10. PAT grew 11.11% to Rs.37.57 crore from Rs.33.8 crore in FY10. The penetration of room air conditioners in India is about 3%, which is very low compared to countries like China, Malaysia, Korea, Taiwan etc. and is expected to grow up to 5% by 2015. The market is evolving at a rapid pace and there are several factors favouring the market growth. Changing lifestyles, rise in disposable incomes and the ease of availability will aid this growth. The air conditioner market will grow but there will be a change in the mix of volume and price but input cost will continue to remain high with added challenges of volatility. While the competitive environment in the air-conditioning industry is expected to remain intense, the company is focused to defend and strengthen its leadership position and lead market development by way of categories and channels of future. The company earned an EPS of Rs.3.52 in Q1FY12 on sales of Rs.252 crore and expects that full year FY12 performance is likely to be good. At the current price of Rs.53 and share book value of Rs.138, its P/E ratio is just 5 compared to P/E of 14 of Hitachi and 17 for Blue Star. At the current price, the worst is discounted and investors can accumulate this stock on dips for good longterm growth.

Market Guidance * Marathon Nextgen (Rs.200.75) was recommended in this column two weeks back at Rs.170 from where it moved up
well to Rs.288 before correcting to Rs.210. Investors can continue to hold the stock and those who booked profit at higher levels can buy it again below Rs.205 level in corrections. * Valuations of Rishi Lazer (Rs.36.95) look attractive as its market cap is Rs.35 crore and the stock is trading near its last 2-year low while book value of the share is Rs.56. Its gross block is around Rs.100 crore. During the last two years, its debts have reduced from Rs.75 crore to less than Rs.43 crore and it has returned to the dividend list. With 13 manufacturing units across 5 States, the company has one of the largest enterprise-wide infrastructure for Sheet metal fabrication with 27000 sq. metre of manufacturing area and a sheet steel processing capacity of 46000 TPA. Investors can keep a watch to accumulate this stock on dips.

EXPERT EYE
By Vihari

Kewal Kiran Clothing: Leading the retail boom

The shares of Kewal Kiran Clothing (KKCL) (Code: 532732) (Rs.830) are strongly recommended for decent gain in the long-term based on its strong fundamentals and continued growth in sales and profitability when other retail stories have floundered. Incorporated in 1981, KKCL is among the few large branded apparel manufacturers in India that has sales in Asia, Middle East and CIS countries. It designs, manufactures and markets branded jeans, semi-formal and casual wear for men. It is exposed to global standards in quality, technology, marketing and branding. The companys strong fashion forecasting and trendsetting abilities have created brands which are vibrant, trendy and with an attitude. Each brand has been carefully crafted keeping in mind the desires and attitudes of the target consumers in specific market segments. Each brand is an expression of its customer. Its product range includes Jeans, Cotton Shirts, Jackets, Denim Shirts, Non-Cotton Shirts, Knitted T-Shirts, Cotton Trousers, Non-Cotton Trousers and Accessories like bags, belts, caps, etc. Killer the flagship brand of KKCL, is one of the few brands in the country that is over 2 decades old. Killer is a vibrant brand with a strong value proposition. The other brands Lawman Pg3, Easies and Integriti have also created niche markets and have consistently registered commendable growth year on year.
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K Lounge is a trendsetting concept pioneered by KKCL aimed at providing its customers with a fashion destination where the customer can experience all its four brands. Apart from the K-Lounge stores, KKCL has also set up exclusive brand outlets (EBO) under its existing brands Killer, Lawman Pg3 and Integriti. As on 31st March, 2011, it had 176 retail stores comprising 108 K - Lounge stores, 29 Killer EBOs, 22 Integriti EBOs, 4 LAWMAN Pg3 EBOs, 2 LAWMAN Pg3 cum INTEGRITI EBOs, 7 Factory Outlets and 4 ADDICTIONS stores for accessories spread across the country, which together contribute to 27% of the total sales. The company has started appointing master stockiests and master franchisees to service the company's retail stores across the country. In FY11, while sales rose by 34% to Rs.235 crore, net profit shot up 41% to Rs.46 crore and the EPS stood at Rs.34.7 and it paid a dividend of 165%. During Q1FY12, net profit has shot up further by 43% to Rs.12.6 crore leading to a quarterly EPS of Rs.10.2. KKCLs equity capital is Rs.12.3 crore and with reserves of Rs.185 crore, the book value of its share works out to Rs.160. With a debt of just Rs.5.6 crore, KKCL is almost a zero-debt company. The promoters hold 74.1% in the equity capital, Institutional holding is 16% and PCBs hold of 2.5% leaving only 7.4% with the investing public. On the brand and product front, KKCL has taken several steps to introduce new designs and range of fashion wear and continues its thrust on launching innovative and trendy products that have a global appeal. It has already launched Vertebrae, and Yi-Fi stitch under Lawman Pg3, which received tremendous consumer response. Next in line from the Lawman Pg3 stable is yet another innovative product called 'Emboss' which is ready to hit the markets. KKCL is in the process of introducing a range of personal care products in the current year and the ball has been set rolling with the launch of Deodorants. It is also positive about the new range of footwear which would be introduced in the coming year as it had already experimented with footwear two years back. KKCL is optimistic about the long-term potential of the Indian markets and has taken several steps to create a system driven, high performance organisation by targeting sustainable and profitable growth. KKCLs vision is to touch Rs.1,000 crore net revenue by 2015-16, and it is making every effort to enrich its product portfolio to cater to national and international customers. The success of Killer has been instrumental in driving its business of brand creation and management to new heights and has spawned the other brands as well as make an entry into the women's casuals segment. KKCL is now focusing on its first accessories extension, Addictions. These innovations will catalyse into future growth and sustainability. It is also optimistic about its foray into the lifestyle accessories business and foresees a tremendous business potential in it. KKCL has already launched deodorants, socks, handkerchiefs, swimwear, footwear, eyewear, to name a few and made a thrust in the lifestyle accessories business as it has in the branded apparel segment. KKCL had invested in aggregate Rs.34.5 crore in Joint Venture White Knitwear Private Ltd. (WKPL), which had acquired land in the Surat SEZ and set up a building for producing knitwear apparels for exports. In view of the sluggish demand in the overseas markets, most SEZ members have shelved their projects and approached the Central Government for denotification of the SEZ, which is expected shortly. Post de-notification, WKPL shall dispose off the land and building and realise the proceeds to return it to its joint venture partners. Estimates of the retail industry in India vary from US $300 to 400 billion (Rs.14.5-19 lakh crore). The rising share of organised retail investment newsletter now estimated at 6%, is set is grow on the Seize profitable investment opportunities before the herd! back of rapid urbanisation, improve retail infrastructure, rise in double income families, Over 50 low-risk, sure gain potential, off-beat stock picks in one increased brand consciousness. year by the experts at Money Times India remains among the leaders in the 2010 Near Term, Mid Term and Long Term recommendations with bookGRDI (Global Retail Development Index) and profit prices presents major retail opportunities. India's Regular updates on earlier recommendations retail market is expected to be worth about Only for those serious about seeking investment profits US $410 billion or Rs.20 lakh crore, with 6% For private circulation via the internet or by courier only sales through organised retail, meaning that Other relevant market information from time to time the opportunity in India is immense. Retail Subscription Rates: 6 months: Rs.4000, 1 year: Rs.7000, 2 years: will continue to grow rapidly to US $535 Rs.12000, 3 years: Rs.15000 billion (Rs.25 lakh crore in 2013 with 10% coming from organised retail according to the Contact Money Times on 022-22654805 or [email protected] for a free US-based global management consulting sample today! firm, A T Kearney.

Early Bird Gains

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According to a report titled 'India Organised Retail Market 2010 published by Knight Frank India in May 2010 around 55 million sq. ft. of new retail space will be ready in Mumbai, National Capital Region (NCR), Bengaluru, Kolkata, Chennai, Hyderabad and Pune during 2010-12. During this period, the organised retail real estate stock will grow from the existing 41 million sq. ft. to 95 million sq. ft. and India will continue to attract global retailers. However, the retail sector continues to have restrictions on FDI and many global players are awaiting relaxation in FDI norms to enter India or to enhance their investments in the country. The recent pronouncements about potentially allowing upto 51% FDI in multi brand retail, subject to conditions could ease the access of multinational retailers to enter India. KKCL believes that while the entry of foreign players will mean more competition, it will also enhance the growth opportunities as the level of fashion consciousness and willingness to spend increases. KKCL is targeting to provide its customers with a complete lifestyle experience and has introduced 'Addictions' range of accessories to complement its core portfolio of products. So far, there has not been any discernible evidence of a slowdown but the biggest threat remains the impact of continued inflationary conditions and rising interest rates that may impact the customers' wallet share of discretionary expenditure. Despite these challenges, the outlook for the industry is promising largely because of the fast evolving consumption patterns and accelerated economic expansion in emerging economies. India is now witnessing a consumption boom, and this phenomenon is here to stay as the economy continues to expand. KKCL is committed to capitalise on this tremendous market potential through enhanced innovation and brand visibility to drive growth and reinforce business sustainability. For FY12, KKCL is expected to post a net profit of Rs.63 crore on sales of about Rs.340 crore, and would fetch an EPS of Rs.51, which could go up to Rs.60 in FY13. At the current market price of Rs.830, the share is trading at a P/E multiple of 16.2 on FY12 estimated earnings and 13.8 times the FY13 projected earnings. Looking to its bright future, the KKCL share is recommended with a price target of Rs.1200 in the long-term. The 52-week high/low of the share has been Rs.875/385.

TECHNO FUNDA
By Nayan Patel

Elecon Engineering Ltd.

BSE Code: 505700 NSE Symbol: ELECON Last Close: Rs.76.10
Established in 1951, Elecon Engineering Co. Ltd. (EECL) pioneered breakthrough innovations in the manufacture of material handling equipment (MHE), industrial geared motors and reducers, mining equipment, casting processes etc. and is one of the largest manufacturers of MHE and Industrial gears in Asia. Its recent acquisition of Benzlers - Radicon Group of businesses from David Brown Gear Systems Group adds to its expertise in manufacturing customized gearboxes for Steel Mills, High speed Turbines, satellites for the Indian Space Research Programme and Naval aircraft carriers. EECL has thus expanded its skills and expertise to execute EPC contracts and has successfully transformed itself into a fully integrated EPC company in areas of its specialization. EECL has an equity base of Rs.18.57 crore that is supported by huge reserves of around Rs.376.03 crore. The promoters hold 45.72%, non-promoter corporate bodies hold 7.23%, Institutions hold 12.14% while the investing public holds 31.13% stake in the company. For Q1FY12, it posted net sales of Rs.257.31 crore with net profit of Rs.14.91 crore against net sales of Rs.247.17 crore with net profit of Rs.13.32 crore in Q1FY11. For FY11, it recorded net sales of Rs.1184.54 crore with net profit of Rs.87.92 crore against net sales of Rs.1054.31 crore with net profit of Rs.66.17 crore in FY10. The Q1FY12 EPS is Rs.1.61 while the FY11 EPS was Rs.9.47 and it paid 90% dividend for FY11. At the current level, the stock is available at a P/E multiple of just 7.9. Investors can accumulate this stock between Rs.73-76 with a stop loss of Rs.68. On the upper side, the stock will zoom to Rs.86-91 levels in the medium-term.

Taksheel Solutions IPO closes on 4 Oct.

th

MARKET FOLIO

Taksheel Solution Ltd. (TSL) one of the fastest growing IT & Telecom software companies, has entered the capital market with its IPO of 55,00,000 equity shares of Rs.10 each in the Price Band of Rs.130 to Rs.150 per equity share. The issue, which opened on Thursday, 29 September will close on Tuesday, 4 October 2011, has been graded IPO Grade 2 by CARE Ltd. indicating its below average fundamentals and will be listed on BSE and NSE. Focused on the software for the wealth management industry, TSL is a 100% EOU and ISO 9001: 2008 certified company. It plans to use the proceeds for setting up new software development centres at SEZ in Hyderabad and Warangal,
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acquisitions and other strategic Initiatives, financing the incremental working capital requirements and to meet the general corporate and public issue expenses. For FY11, TSL recorded Total Income of Rs.147.26 crore with PAT of Rs.27.42 crore as against Total Income of Rs.49.50 crore with PAT of Rs.8.09 crore.

Indo Thai Securities IPO closes on 5th Oct.

Indore based Indo Thai Securities Ltd. (ITSL), engaged in stock broking services is entering the capital market with its IPO of 40,00,000 equity shares of Rs.10 each in the price band of Rs.70-84 per share. The funds raised will be utilized for financing the growth of its business and part of the proceeds will be utilized as long-term working capital. The IPO, which opened on Friday, 30 September and closes on Wednesday, 5 October 2011, has been graded IPO Grade 2 by CARE Ltd. indicating its poor fundamentals and will be listed on the BSE and NSE.

RCF in expansion mode

RCF has undertaken to revamp its Thal plant to augment capacity from 1.7 to 2 million MT of Urea. Phase I implementation is complete while Phase-II is expected to be completed by November 2011. It has also lined up other expansion schemes in India and abroad. It plans to expand the Thal Unit by setting up an Ammonia-Urea stream for production of 1.15 million MT of additional Urea at an estimated cost of Rs.4,200 crore. Along with GAIL and Coal India, it plans to set up Ammonia-Urea, Nitric Acid and Ammonium Nitrate projects at Talcher in Orissa through Coal Gasification route. Overseas, RCF is exploring possibilities to set up projects in Ghana and Indonesia. For FY11, Total Income was Rs.5677.25 crore with net profit of Rs.245.12 crore against Total Income of Rs.5826.25 crore with net profit of Rs.234.87 crore in FY10.

L&T MIP Wealth Builder Fund

L&T Mutual Fund has launched L&T MIP Wealth Builder Fund, an Open Ended Income Scheme, by further expanding the investment options it offers to its investors. It is an Income Scheme with a debt exposure of 70% - 100% and equity exposure can be up to 30%. Fixed Income allocation of the scheme could be invested in CDs, CPs, government securities, money market and other debt instruments which endeavor to generate returns while moderating credit & interest rate risk. The scheme could be suited for those investors who are keen on taking possible advantage of the interest rate movement & the possible
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opportunity in the current equity markets.

Disclaimer: Investment recommendations made in Money Times are for information purposes only and derived from sources that are deemed to be reliable but their accuracy and completeness are not guaranteed. Money Times or the analyst/writer does not accept any liability for the use of this column for the buying or selling of securities. Readers of this column who buy or sell securities based on the information in this column are solely responsible for their actions. The author, his company or his acquaintances may/may not have positions in the above mentioned scrip.

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