Sudarshan Sukhani, Technical Analyst has given a buy call on five stocks for today. His favourite five are NTPC, Alok Textiles, Orchid Chemical, GMR Infra and Moser Baer.
1) Alok Textiles
Target of Rs 21/sh
Stop loss of Rs 19.40/sh
2) NTPC
Target of Rs 213/sh
Stop loss of Rs 202/sh
3) Orchid Chem
Target of Rs 108/sh
Stop loss of Rs 98/sh
4) GMR Infra
Target of Rs 140/sh
Stop loss of Rs 126/sh
5) Moser Baer
Target of Rs 85/sh
Stop loss of Rs 79/sh
SP Tulsian, Investment Advisor is bullish on Haldyn Glass Gujarat, Brigade Enterprises and IFCI. The details are as under...
1) Haldyn Glass Gujarat is into the glass bottles and glass jar making. If you see the financial performance of this company for FY06-07 & 08 practically it was stagnant on topline between Rs 65-70 crore with the bottomline of close to about maybe Rs 7-7.5 crore. But for FY09 they have show in jump in the topline as well as in bottomline. The topline crossed Rs 100 crore marks with an EPS of close to Rs 13 per share. They have a very low equity of about Rs 5.5 crore. If you take the call on the first quarter performance they have given a topline of about Rs 31 crore with EPS close to Rs 6.30. That means if I just extrapolate these figures because if you look at the orders and the acceptability of the products of the company they should be able to give a topline close to Rs 125 crore with an EPS of atleast expected to be close to about Rs 20.
The book value of the share is close to about Rs 70 while the market price is anywhere between Rs 60-61. If you take a call on the expected EPS of Rs 20 it gives you a PE multiple of 3. They have been in existence as I said for the last over 5-6 years with a consistent performance with bottomline of more than the equity that is EPS of more than Rs 10. But the growth has started coming in from FY09 and in FY10 we will be seeing a topline growth of about 25% and bottomline growth of atleast about 60%. So this stock looks quite cheap at Rs 60-61. It has target of Rs 100 in the next 10-12 months time.
2) The performance of Brigade Enterprises because when I visited the projects of the company in Bangalore they have been giving the quality construction and that is the reason one of the agency have rated the top 10 builders of the country for 2007-2008. If I state the valuation on the property they have close to about 35 million sq feet of saleable area. They have presence in all the sectors, whether it is residential, commercial, shopping, hospitality and multiplexes. Actually the problem the company did was that they thought of leasing the major portion of their property baring residential. Initially when they went public in December 2007 at Rs 390 per share, their call was that they will sell the residential and all the commercial properties will be leased out. But I do not think that they were really capable and that was a big blunder committed by the promoter and the company. But still they are sitting on IPO funds which they mobilised to the extent of Rs 700 crore. That money is enough for them to carry on the show for the construction expenses. That is the reason that the book of the company is not quite leverage and the promoter stake of 57% held by them is totally unencumbered.
If you go by the performance and in the recent past couple of months we have seen the renewed interest coming in all the major metros like Mumbai, Delhi, NCR region and even in Bangalore the property prices have started moving up and there is always the demand for the quality construction for which the company is known for, so with a market cap close to Rs 1200 crore and the 35 million sq feet of salable area with not much shortage of the funds at their end. The IPO having made by them at Rs 390 in December 2007 gives you a lot of comfort, lot of margin of safety and if you just want to pick some stocks which have a sizeable presence because there are 75% of this saleable area is in Bangalore and 15% is Mysore. Both the markets are quite attractive for real estate market since 90% of their properties are held in these two places. I think at Rs 100-101 the stocks looks quite attractive. It has target of Rs 175 in the next 10-12 months.
3) IFCI is undervalued but if you see the stock has been moving up, about a month back it was at Rs 45 and now it is trading in a band of about Rs 50, maybe Rs 50-51. For the last 6 months or maybe if I take a call little longer – for the last one year the management has within the process of cleaning up their books. They have cleaned their entire NPA, now the book is carrying standard loans of about Rs 7000 crore which is also backed by the borrowing of close to Rs 7000 crore and the surplus money whatever have been, have been deployed in the stock investments.
Unfortunate part which happened with the company that they subscribed to the rights issue of Hindalco and Tata Motors in the last 6 months and both the issue got devolved mark to market losses were huge because they made an investment of close to Rs 250 crore in each issue and since the share price of both the companies have gone above the issue price. They do not have that fear so if you have the total standard loan of Rs 7000 crore which take care of the entire borrowing held by them on account of the forex liability, NCD, Optionally convertible debentures and all sort of things preferential share capital. They are left with huge listed and unlisted stocks which can all get valued close to Rs 2500 crore. They have investments in NSE, Tourism Finance, in Hindalco, Mytas. Apart from that they have huge real estate of about 4.5 lakh sq feet of commercial in Delhi and Mumbai and 7.5 lakh sq feet of residential.
Apart from all these things we all know that the process of inducting a strategic investor can get initiated at any point of time. If that happen the standard valuation, the net present value of the properties held by the company is coming about Rs 75-80 per share. Whenever strategic partner investor gets inducted definitely some premium element will come. There has been talk of the company getting the banking license whether that happens now or after inducting the strategic investor will increase the valuation by about Rs 10-15. So if you want to take all these factors into consideration you can come to a valuation of close to Rs 90-100 maybe over 6-8 months time. It all depends how the events take place but they are all likely to take place in the next 6-8 months because with the new government in the place. So you have a very good margin of safety. On the bottom side you do not see stock going below Rs 45 and on upside you have about Rs 90-95 potential of the stock going up. If someone really wants to punt on the stock on a daily basis as a trading opportunity also I think one can easily look to get about Rs 5-10 on a monthly basis. So from that angle even it has an investment potential, it has a trading potential.
s: MC
1) Alok Textiles
Target of Rs 21/sh
Stop loss of Rs 19.40/sh
2) NTPC
Target of Rs 213/sh
Stop loss of Rs 202/sh
3) Orchid Chem
Target of Rs 108/sh
Stop loss of Rs 98/sh
4) GMR Infra
Target of Rs 140/sh
Stop loss of Rs 126/sh
5) Moser Baer
Target of Rs 85/sh
Stop loss of Rs 79/sh
SP Tulsian, Investment Advisor is bullish on Haldyn Glass Gujarat, Brigade Enterprises and IFCI. The details are as under...
1) Haldyn Glass Gujarat is into the glass bottles and glass jar making. If you see the financial performance of this company for FY06-07 & 08 practically it was stagnant on topline between Rs 65-70 crore with the bottomline of close to about maybe Rs 7-7.5 crore. But for FY09 they have show in jump in the topline as well as in bottomline. The topline crossed Rs 100 crore marks with an EPS of close to Rs 13 per share. They have a very low equity of about Rs 5.5 crore. If you take the call on the first quarter performance they have given a topline of about Rs 31 crore with EPS close to Rs 6.30. That means if I just extrapolate these figures because if you look at the orders and the acceptability of the products of the company they should be able to give a topline close to Rs 125 crore with an EPS of atleast expected to be close to about Rs 20.
The book value of the share is close to about Rs 70 while the market price is anywhere between Rs 60-61. If you take a call on the expected EPS of Rs 20 it gives you a PE multiple of 3. They have been in existence as I said for the last over 5-6 years with a consistent performance with bottomline of more than the equity that is EPS of more than Rs 10. But the growth has started coming in from FY09 and in FY10 we will be seeing a topline growth of about 25% and bottomline growth of atleast about 60%. So this stock looks quite cheap at Rs 60-61. It has target of Rs 100 in the next 10-12 months time.
2) The performance of Brigade Enterprises because when I visited the projects of the company in Bangalore they have been giving the quality construction and that is the reason one of the agency have rated the top 10 builders of the country for 2007-2008. If I state the valuation on the property they have close to about 35 million sq feet of saleable area. They have presence in all the sectors, whether it is residential, commercial, shopping, hospitality and multiplexes. Actually the problem the company did was that they thought of leasing the major portion of their property baring residential. Initially when they went public in December 2007 at Rs 390 per share, their call was that they will sell the residential and all the commercial properties will be leased out. But I do not think that they were really capable and that was a big blunder committed by the promoter and the company. But still they are sitting on IPO funds which they mobilised to the extent of Rs 700 crore. That money is enough for them to carry on the show for the construction expenses. That is the reason that the book of the company is not quite leverage and the promoter stake of 57% held by them is totally unencumbered.
If you go by the performance and in the recent past couple of months we have seen the renewed interest coming in all the major metros like Mumbai, Delhi, NCR region and even in Bangalore the property prices have started moving up and there is always the demand for the quality construction for which the company is known for, so with a market cap close to Rs 1200 crore and the 35 million sq feet of salable area with not much shortage of the funds at their end. The IPO having made by them at Rs 390 in December 2007 gives you a lot of comfort, lot of margin of safety and if you just want to pick some stocks which have a sizeable presence because there are 75% of this saleable area is in Bangalore and 15% is Mysore. Both the markets are quite attractive for real estate market since 90% of their properties are held in these two places. I think at Rs 100-101 the stocks looks quite attractive. It has target of Rs 175 in the next 10-12 months.
3) IFCI is undervalued but if you see the stock has been moving up, about a month back it was at Rs 45 and now it is trading in a band of about Rs 50, maybe Rs 50-51. For the last 6 months or maybe if I take a call little longer – for the last one year the management has within the process of cleaning up their books. They have cleaned their entire NPA, now the book is carrying standard loans of about Rs 7000 crore which is also backed by the borrowing of close to Rs 7000 crore and the surplus money whatever have been, have been deployed in the stock investments.
Unfortunate part which happened with the company that they subscribed to the rights issue of Hindalco and Tata Motors in the last 6 months and both the issue got devolved mark to market losses were huge because they made an investment of close to Rs 250 crore in each issue and since the share price of both the companies have gone above the issue price. They do not have that fear so if you have the total standard loan of Rs 7000 crore which take care of the entire borrowing held by them on account of the forex liability, NCD, Optionally convertible debentures and all sort of things preferential share capital. They are left with huge listed and unlisted stocks which can all get valued close to Rs 2500 crore. They have investments in NSE, Tourism Finance, in Hindalco, Mytas. Apart from that they have huge real estate of about 4.5 lakh sq feet of commercial in Delhi and Mumbai and 7.5 lakh sq feet of residential.
Apart from all these things we all know that the process of inducting a strategic investor can get initiated at any point of time. If that happen the standard valuation, the net present value of the properties held by the company is coming about Rs 75-80 per share. Whenever strategic partner investor gets inducted definitely some premium element will come. There has been talk of the company getting the banking license whether that happens now or after inducting the strategic investor will increase the valuation by about Rs 10-15. So if you want to take all these factors into consideration you can come to a valuation of close to Rs 90-100 maybe over 6-8 months time. It all depends how the events take place but they are all likely to take place in the next 6-8 months because with the new government in the place. So you have a very good margin of safety. On the bottom side you do not see stock going below Rs 45 and on upside you have about Rs 90-95 potential of the stock going up. If someone really wants to punt on the stock on a daily basis as a trading opportunity also I think one can easily look to get about Rs 5-10 on a monthly basis. So from that angle even it has an investment potential, it has a trading potential.
s: MC
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