For the last two weeks I have been getting ample of emails on the outlook of Indian markets. Due to busy schedule I will not be able to for sometime reply most of the emails. I would like to use this post in answering most common market and stock questions posted by our subscribers.
1) What is the outlook of Indian markets after a deep crash last week?. Can the markets go down even further?
Last week saw market swinging down by around 4000 points, thanks to the end of week recovery.
We had cautioned our investors on several occasion to take a conservative call on the markets Click Here and to book partial profits.
Despite the recent sharp correction, Indian equities have delivered relatively good performance over a three months period compared to it's Asian and Global peers.
The strong performance of Indian markets compared to the Asian peers can be attributed to the money inflow from Domestic Institutions of around USD 1.5 Billion as against the FII outflow of USD 3.5 billion dollars.
As such with the global economy outlook, the chances of US entering to recession (or slowdown, whaterver name it) has become high. With FED cutting interest rates by almost 125 basis points in a week shows the impact of damage the current credit crisis has caused to US Economy. Though the Indian economy has come to stand on strong domestic factors we cannot rule out the fact that a more pronounced correction in the US economy is likely to have a repercussion on Indian economy as well.
As per data on SEBI website FII's have pumped in around 17 billion USD dollars in 2007 alone. The net outflow in Jan' 08 stands around 3.5 billion US dollars. Any further impact on global slowdown can see FII's pull out more money from the markets. The probability of market touching the recent low at this stage looks very high. Investors are requested to watch the global trends and take a call before taking position in the markets.
2) The US Credit crisis at this stage seems to have come to a stand still. Is it safe to say at this time the correction in Indian markets have been bottomed out?
You are right in one way saying the credit crisis as reported by financial institutions have come to a standstill. But not to forget there are lot of loan defaulters in this subprime market, many of those have already filed bankurpcy. Secondly, the current credit crisis in housing market can also trigger defaults in the US Credit card market. Not to forget the US credit card market is around 950 Billion US Dollars of money in credit. At this stage it is very difficult to say if the Indian markets have bottomed out or not. But if you are a long term investor you need not worry about this short to medium term volatility.
3) Which stocks are looking good at this stage after the correction?
As we had recommended earlier Orchid Chemicals and Tata Steel looks good from 12 to 18 months horizon. Currently we have initiated coverage on SCI and ONGC (Recommendation Follows) with a 24 months horizon. Hotel Leelaventure looks strong with all the expansion turning EPS assertive in the coming years. Keep watching our blog for multibagger recommendation.
To conclude, there is a saying that anyone can make money in a bull market, Investors are one who ride the bear market. Our portfolio has delivered an average return of 19% as against the sensex negative return of -2% over the 4 months period (Since our blog Inception).
JK Lakshmi Cement currently operates 3.5 million tonnes per year of cement capacity. The company is a leading player in north-west India with a wide network of 1500 dealers and 60 cement dumps. The company premium brand includes JK Lakshmiplast and JK Lakshmi Ready Concrete Mix (RMC).
JK Lakshmi Cement is planing to set up a greenfield cement plant operating around 2-2.5 MTPA capacity with a investment of around 650 Crores in the next three years. This is expected to widen it's presence in the eastern and southern states of India.
Expansion Details
1) The company is currently increasing it's cement capacity from 3.5 MPTA to 5 MTPA. This is expected to be operation by October 2008.
2) The company currently operates 5 RMC plant and expects to add 7 RMC units this fiscal.
3) The firm recently commissioned fully it's 36MW captive power plant. This is expected to improve it's Operating margin from the current quarter.
Investor with medium risk profile can consider investment into this stock with a horizon of 2 years. At the current market price of Rs. 168/- the stock valuations appears to be discounted compared to it's mid-cap peers. The stock currently trades at less than 4 times it's trailing 12 month EPS of 45. We initiate a buy call in this stock with a target of Rs. 320/- on it's current valuation. With the complete expansion in place which the company is undertaking, we expect the stock to be a potential multibagger.
The current quarter Q3' 07 results were below our expectation and also we saw a steep decline in Operating margins. We expect the margins to improve with the commission of Captive power plant. The bottomline of the company is also set to increase with the restructuring of it's 325 crore debt.
Risk
1) Cement imported from Asian counterparts like china and Thailand have become cheaper after goverment scrapping import duty.
2) Domestic cement prises are in it's peak, Possible reversal.
3) High Interest expense due to higher Debt ratio.
Till Date: 13-Jan-08
Largecap/Midcap/Smallcap Results Analysis
Hits
1)
GM Breweries Q3 net profit up 86.02%
Snapshot:
Net sales up 10.57% y-o-y
Operating margin at 14.85% as compared to 9.99%
EPS for current quarter at Rs. 4.69
Summary:
At the current market price of 121.15 the stock trades at 7.3 times it's trailing 12 months EPS of 16.7.
2)
ABG Shipyard net up 60.81% in Dec`07 qtr
Snapshot:
Net sales up 53.83% y-o-y
Operating margin at 30.39% as compared to 30.12%
EPS for current quarter at Rs. 9.25
Summary:
At the current market price of 936 the stock trades at 28 times it's trailing 12 months EPS of 33.
3)
Prism Cement net up 28.67% for Dec`07 qtr
Snapshot:
Net sales up 20.05% y-o-y
Operating margin at 41.23% as compared to 45.36%
EPS for current quarter at Rs. 2.16
Summary:
At the current market price of 63.30 the stock trades at 8.11 times it's trailing 12 months EPS of 7.8.
4)
Axis Bank net up 66.20% for Dec`07 qtr
Snapshot:
Interest Income up 51.50% y-o-y
Profit margin at 17.02% as compared to 15.52%
EPS for current quarter at Rs. 9.09
Summary:
At the current market price of 1167 the stock trades at 39 times it's trailing 12 months EPS of 30.
5)
Rajesh Exports net soars 2.18 times in Dec`07 qtr
Snapshot:
Net sales up 10.41% y-o-y
Operating margin at 5.07% as compared to 2.16%
EPS for current quarter at Rs. 16.56
Summary:
At the current market price of 881 the stock trades at 16.62 times it's trailing 12 months EPS of 53.
6)
Infosys consolidated net up 25% for Dec`07 qtr
Snapshot:
Net sales up 15.78% y-o-y
Profit margin at 29.66% as compared to 27.74%
EPS for current quarter at Rs. 20.70
Summary:
At the current market price of 1580 the stock trades at 20.51 times it's trailing 12 months EPS of 77.
7)
Tata Metaliks swings to profit in Q3
Snapshot:
Net sales up 83.74% y-o-y
Operating margin at 11.98% as compared to 2.47%
EPS for current quarter at Rs. 6.27
Summary:
At the current market price of 187 the stock trades at 8 times it's trailing 12 months EPS of 23.5.
Other notable Hits released till now includes Jaiprakash Hydro, Jaiprakash Associates, Aban Offshore, Indian Bank, Motilal Oswal, IGate Technologies, Mastek, Steel Exchange, Ushdev and Sintex Industries.
Misses
1)
Celestial Labs net dips 45.55% for Dec`07 qtr
Snapshot:
Net sales down 26.21% q-o-q
Operating margin at 37.26% as compared to 51.17%
EPS for current quarter at Rs. 1.34
Summary:
At the current market price of 58 the stock trades at 11 times it's annualized Q3 EPS of 5.2.
2)
Bilpower net down 5.92% in Dec`07 qtr
Snapshot:
Net sales up 31.91% y-o-y
Operating margin at 11.32% as compared to 11.71%
EPS for current quarter at Rs. 7.36
Summary:
At the current market price of 297 the stock trades at 9.78 times it's trailing 12 months EPS of 30.36.
For Live Result Analysis visit the Market News page @ http://profitfrommarketnews.blogspot.com
Note :
The information above is just an update on the current quarter results. This information is neither an offer to sell nor solicitation to buy any of the securities mentioned herein.Please perform your analysis before entering into these scripts.
Fundamental Analysis
Fundamental Analysis is the cornerstone of Investing. In fact, some would say that you aren't really investing if you aren't performing fundamental analysis.
During fundamental analysis we look at a stock from three aspects
Company
At the company level, fundamental analysis may involve examination of financial data, management, business concept and competition.
Industry
At the industry level, there might be an examination of supply and demand forces for the products offered.
Economy
Fundamental analysis might focus on economic data to assess the present and future growth of the economy.
To forecast future stock prices, fundamental analysis combines economic, industry, and company analysis to derive a stock's current fair value and forecast future value. If fair value is not equal to the current stock price, fundamental analysts believe that the stock is either over or under valued and the market price will ultimately gravitate towards fair value. Fundamentalists do not heed the advice of the random walkers and believe that markets are weak-form efficient.
For the last two weeks I have been getting ample of emails on the outlook of Indian markets. Due to busy schedule I will not be able to for sometime reply most of the emails. I would like to use this post in answering most common market and stock questions posted by our subscribers.
