Thursday, December 31, 2009

delhistockclub Sujana Towers-Power Play (BSE 532887, Target Rs 80)

 

Sujana Towers-Power Play
BSE 532887; CMP Rs 51
 
Shares in Issue: 6.82 crore
Market Cap: Rs 347 crore
Cash In Hand (post GDR)-Rs 150 crore
FY09 Revenues-Rs 700 crore
FY09 PAT-Rs 32 crore
FY09 EPS-Rs 7.7
PE - 6
Fair PE-10
Fair Market Value-Rs 80
 
Backdrop FY08
INDUSTRY OVERVIEW:
Domestic
 
The economic acceleration has put significant pressure on the existing infrastructure, such as power, roads, ports, airports and railways. According to certain estimates, India being the fifth largest generator of power, positioned behind USA, China, Japan and Russia is expected to surpass Russia and Japan by 2030.
 
However, power generation has not been able to catch up with demand growth in recent years. The demand-supply mismatch has been an area of great concern and the Government of India is committed to bridging this gap. In order to achieve the 11th five-year plan targets, the Government has introduced new accelerated process for awarding ultra mega power projects (UMPPs) to the private sector. The Government has already planned 8 UMPPs of 4,000 MW each and this initiative is expected to help the Government achieve the target of adding 76,000 MW by 2021.
 
India has witnessed remarkable growth in the telecom sector in past five years. But this growth has been limited to the urban sectors. It is only now that the telecom operators have begun focusing growth opportunities in the semi-urban and rural areas, where the telecom penetration stands at an abysmal 2% of population. This growth in coverage area coupled with growth in subscribers will drive the demand for towers and cell sites.
 
International
 
Apart from India, big growth opportunities have come up in the regions such as Africa, Central Asia, Middle East and North America. Industry experts believe that Africa and Middle East, together, are expected to spend more than US$ 20 billion on transmission and distribution. Moreover, according to international Energy Agency, private investors and Governments will need to invest more than US$ 10,000 billion in the world's power sector in the next 25 years to prevent shortage of electricity supply.
 
PERFORMANCE HIGHLIGHTS:

Turnover for 2007-08 (consisting of 15 months) grew by 73.83% to Rs.78074.07 lakhs against Rs.44913.54 lakhs of the previous year (consisting of 12 months), driven by impressive growth across all business verticals of your Company.
Pre-tax profit increased by 54.23% to 7955.04 lakhs and post-tax profit grew to Rs.4123.11 lakhs, registering a growth of 4.83% against Rs.5157.74 lakhs and 3933.10 lakhs of the previous year respectively. The financial strength, resulting from sustained superior performance and the capability of Sujana's human capital, constitute the foundations to scale even greater heights in the years to come.

 
SUBSIDIARIES:
 
Digitech Business Systems
 
Your Company acquired M/s Digitech Business Systems Limited at Hong Kong as it's Wholly Owned Subsidiary (WOS) by investing an amount of US $5001 towards share capital on 30-01-2008. The operations of the subsidiary company are yet to be commenced.
 
Telesuprecon Limited
 
Your Company had acquired 51%of the shareholdings of M/s Telesuprecon Limited, a GBL 2 Company incorporated in Mauritius on 03-05-2008. M/s Telesuprecon Limited is in the business of providing infrastructure facilities of both telecom and transmission towers. The Telecom Business in Africa is picking up on par with other developing countries.
 
The telecom growth in India during last five years is expected to replicate in Africa in next five years. STL is targeting this business opportunity through its subsidiary company Telesuprecon Limited. The company is in the business of turn-key-service provider to Telecom Operators in OFC, GSM/CDMA and OSP works.
 
Sujana Transmissions Limited
 
Your Company incorporated Sujana Transmissions Limited at Hyderabad on 31-07-2008 exclusively for the purpose of undertaking transmission business of power sector in India. The Company is participating in the tendering process of erection of transmission towers in the north eastern states of India. The operations of the subsidiary company is yet to be commenced.
 
KHANAPUR PROJECT
 
Your Company is setting up a manufacturing unit at Turkalakhanapur Village, Medak District, Andhra Pradesh with a Tower capacity of 72,000 TPA and Technological Structural Fabrication (TSF) capacity of 30,000 TPA and L&T Infrastructure Finance Company Limited, Chennai has agreed to grant financial assistance by way of a term loan not exceeding Rs.100 crores. The documentation and other formalities are under progress and it is expected that, the unit will commence production by end of June, 2009.

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
 
Nothing in this article is, or should be construed as, investment advice.
 
 
 

 
 

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delhistockclub Sujana Towers-Q4 PAT Rs 16.5 crore, FY09 EPS Rs 7.7; Value Buy

 

 
 
FYI

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
 
Nothing in this article is, or should be construed as, investment advice.
 
 
 

 
 

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Wednesday, December 30, 2009

delhistockclub Astral Poly-BUY With A Target Of Rs 265

 

Astral Poly Technik-Play On The Transitional Shift
 
At CMP of Rs 180 the Astral Poly stock is trading at 8 times FY10E EPS and 5.9 times FY11 Estimated EPS of Rs 27. With increased capacities under its belt, the company is likely to grow at 30 per cent CAGR over the next 3 years.
 
Background
 
Astral Poly Technik is a major player in chlorinated poly vinyl chloride  (CPVC)  pipes and plumbing systems, with a licensing arrangement with Lubrizol of the US. It has entered into a JV with Speciality Process LLC of the US for manufacture of CPVC pipes and fittings for home, hospital, hotels and industrial applications.
 
Globally CPVC pipes are taking over from metal pipes, because of durability and corrosion resistant properties.
 
Expanding Capacities
 
Astral Poly has raised CPVC capacities to 26000 tpa in FY09 and will further raise the same to 35000 tpa by FY11.
 
Market Shift
 
Indian plumbing market is estimated to be worth Rs 25 to Rs 30 bn which is dominated by GI Pipes. On account of corrosion, heavy weight, high cost and low life span, market is shifting to GI Pipes.
 
New Products
 
The company has ventured into manufacture of SWR, Underground, Foamcore, ABS apart from increasing the range in its existing products of CPVC  and PVC pipes to Fire Sprinkler Systems.
 
BUY
 
 
 

 
Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
 
Nothing in this article is, or should be construed as, investment advice.
 
 
 

 
 

--- On Thu, 12/31/09, Rajat Sharma <rajatsharma@rathi.com> wrote:

From: Rajat Sharma <rajatsharma@rathi.com>
Subject: papaji gud morning
To: rajivhanda@yahoo.com
Date: Thursday, December 31, 2009, 10:33 AM

hello papaji
 
bewa here ....
 
just to update you...had to leave kotak coz of some massive structural change and resignation of my back bone support jayanth..... m now working as head of sales with anand rathi wealth management....
 
kindly update my email id which is rajatsharma@rathi.com
 
so that i keep on recieving you valuable updates
 
thanx n regards
bewa
--
This message has been scanned for viruses and
dangerous content by Netmagic E-Mail Protection, and is
believed to be clean.

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delhistockclub Business Prospects Improve For Aban Offshore and Great Offshore

 

Drilling and offshore service providers, such as Great Ship and Dolphin Offshore, expect a revival in demand for services as the price of crude oil has stabilised in the range of $70 to $80 per barrel.
 
Explorations at high costs became unviable when Brent, the benchmark crude oil price, crumbled from a high of over $145 per barrel in July 2008 to just $34 per barrel in December 2008 due to the economic slowdown.
 
Many oil producers shelved their plans for exploration as the economic downturn coincided with the drop in oil prices. This led to the global supply of assets like rigs and platform supply vessels (PSVs) exceeding the demand for them.
 
According to industry analysts, the average charter rates for jack-up rigs of 300-foot water depth has dropped to $136,000 (over Rs 63 lakh) a day from a high of over $200,000 (over Rs 93 lakh) a day in mid-2008. The charter rate for PSVs of over 2,000 dead weight tonne has dropped to $5,600 (over Rs 2.61 lakh) a day now from $42,000 (nearly Rs 20 lakh) a day a year ago.
 
In addition, West Asia is expected to see an investment of $16 billion (nearly Rs 75,000 crore) for the development of oil fields by such countries as Iran, Qatar and Abu Dhabi.
 
"With oil steady at over $70 (over Rs 3,200) a barrel and with the credit crisis easing out, demand would be back to an extent," Great Ship Managing Director Ravi K Sheth said. Great Ship is a subsidiary of India's largest private shipping company Great Eastern Shipping.
 
"Demand usually has a six-month lag. So, the real impact would be seen if oil prices sustain at these levels till then," he added. Great Ship is currently operating two rigs and has chartered out 14 vessels, with 14 more vessels on order for supply.
 
"Globally, the utilisation level for rigs would pick up in 2010 and this would eventually help get better rates for these assets," said Ramesh Singhal, chief executive officer of Navi Mumbai-based i-Maritime shipping consultancy. The global utilisation levels for rigs have dropped to 80 per cent from 87 per cent a year ago. In India, there are 47 rigs deployed by Indian as well as international service providers currently.
 
Apart from rigs, the demand for other offshore services is also expected to pick up.
"We expect restoration of offshore works overseas," said Satpal Singh, managing director and chief executive officer of Dolphin Offshore, which executes offshore projects on a turnkey basis. It provides all three dimensions of marine constructions, including diving services, marine operations and topside fabrication service for making platforms.
 
Due to the downturn, some of the recent contracts with Indian oil producers were executing at rates 15-20 per cent lower than the normal budget. India's two largest rig and offshore service providers Aban Offshore and Great Offshore were not available for comment.

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
 
Nothing in this article is, or should be construed as, investment advice.
 
 
 

 
 

--- On Wed, 12/30/09, MID CAPIDEAS <midcapideas@gmail.com> wrote:

From: MID CAPIDEAS <midcapideas@gmail.com>
Subject: GRAPHITE INDIA - Accumulate - tgt Rs 95
To: tamizha11@yahoo.co.in, noreply@stocksbuddy.com
Cc: samir.shah.s@gmail.com, lovrks@yahoo.co.in, izabellascottt@gmail.com
Date: Wednesday, December 30, 2009, 10:46 PM

Accumulate 

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Tuesday, December 29, 2009

delhistockclub GeoGlobal Resources likely to explore Selan Oil's onshore blocks in Gujarat

 

GeoGlobal Resources Inc., headquartered in Calgary, Alberta, Canada, is a US publicly traded oil and gas company, which through its subsidiaries is engaged primarily in the pursuit of petroleum and natural gas through exploration and development in India.
 
Since inception, the Company's efforts have been devoted to the pursuit of Production Sharing Contracts with the Government of India. Currently, the Company is focused on the development of high potential exploration targets in the Krishna Godavari, Cambay, Deccan Syneclise and Rajasthan basin areas. The stock is quoted on the Amex in the United States under the symbol GGR.
 
Oil and Gas Sector in India
India is continuing to move forward with market-oriented economic reforms that began in 1991. Recent reforms include liberalized foreign investment and exchange regimes, industrial decontrol, significant reductions in tariffs and other trade barriers, reform and modernization of the financial sector, significant adjustments in government monetary and fiscal policies, and safeguarding intellectual property rights.
 
Energy demand including oil & gas has increased in tandem with economic growth. India's petroleum product consumption has doubled in last fifteen years. Current consumption of petroleum products in the country is about 120 MMTPA. Production of oil in the country is around 33 MMTPA for last few years. India currently imports over 70% of its crude oil requirements.
 
Economic growth is linked to the growth of energy sector and it is expected that oil demand in India would grow three fold by 2020. The demand for gas is expected to grow at a faster rate than oil. The large finds in the east coast of India are expected to ease the situation.
 
The search for and development of India's petroleum resources have now acquired an added urgency. This urgency stems from widening gap between the demands of the nation on the pat of vibrant industrial growth and the availability of oil and natural gas to fuel this growth.
 
One of the great success stories in the six decades since independence has been the growth and development of the Indian petroleum industry. In the past 60 years, the country witnessed growth of oil production from a mere 0.25 MMT of oil and 3 billion cubic feet of gas in 1947-48 to around 33 MMT today.
 
What started off as a minuscule production from one small oil field in the rain forests of upper Assam has today blossomed into major activity in several areas of onland and offshore of India.
 
The Government of India, with Directorate General of Hydrocarbons as a nodal agency, formulated the New Exploration Licensing Policy (NELP) in 1997-98 to provide a level playing field to all the parties to compete on equal terms for award of exploration acreage. Government of India's commitment to the liberalization process is reflected in NELP, which has been formulated keeping in mind the immediate need for increasing domestic production.
 
This has been a landmark event in the growth of the upstream oil sector in India. The terms and conditions of this open and transparent policy rank amongst the most attractive in the world. To attract more investment in oil exploration and production, NELP has steered steadily towards a level playing field resulting in a healthy spirit of competition between National Oil Companies and private companies.
 
"The oil and gas sector in India is fast emerging as the new destination for world business. Opportunity and initiative make a perfect meeting ground for world technologies in petroleum and natural gas exploration, production, refining, distribution and marketing.
 
The growing demand for energy has effected changes in the market environment and in policies, culminating in total decontrol of the petroleum sector since April 1, 2002.
 
This has opened up the hydrocarbon sector of a country of one billion people where the demand has been growing at the rate of 5-6% per annum, well above the world average."

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
 
Nothing in this article is, or should be construed as, investment advice.
 
 
 

 
 

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delhistockclub Tantia Constructions-Annual Report 2009

 

FYI

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
 
Nothing in this article is, or should be construed as, investment advice.
 
 
 

 
 

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delhistockclub Basant Agro BSE 524687 goes for stock-split, results

 

Basant Agro Tech India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on January 11, 2010, inter alia, to transact the following:

1. To approve the Unaudited financial results for the quarter ended December 31, 2009.

2. To approve the split / subdivision of the equity shares of the Company.

3. To convene the Extra ordinary General Meeting of the members of the Company to approve split / subdivision the equity shares of the Company.

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
 
Nothing in this article is, or should be construed as, investment advice.
 
 
 

 
 

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delhistockclub Simplex Castings-BSE 513472 ....BUY

 


Simplex Castings Ltd-Value Buy
BSE: 513472; CMP Rs 80
 
Investment Argument
-Strong Earnings, Low PE
-Core Focus Steel Industry and Railways
-Recent order wins include one from SAIL in a joint bid with Hyundai of Korea
-Key supplier of coco-buggies to Indian Railways for the new generation of high speed rail bogies.
-Small Equity Base
-Consistent Dividend Payment Record of Rs 2 per share per annum
 
Simplex Castings is part of 70 years old Simplex Group, which is a Leading manufacturer of engineering - castings in various grades in cast, machined and assembled condition for core industrial sectors like Steel, Power, Railways, Mining, Material Handling, Pumps & Valves, Cement, Sugar, Petroleum, Defense and other specialized areas.
 
Simplex Castings Ltd is the first Indian company to bring mini blast furnace concept in India, the first Indian Company to introduce Japanese sintering technology and has reputed image in global market. World leaders such as Nippon Steel use Simplex made Ladles.
 
As an equipment builder, Simplex has a prestigious position in heavy industries as a technology supplier and turnkey contractor for undertaking large projects in core sectors like Steel, Power, Railways, Mining, Material Handling, Pumps & Valves, Cement, Sugar and Petroleum etc.
 
The company has started with small projects in FY07 and is now participating into high value, high margin projects being bid by Simplex Group. Simplex Castings Ltd will receive project work of Rs. 180 crores in case Simplex Group wins an order of Rs. 600 crores from a leading fully integrated steel manufacturer, where it is favorably placed. The steel manufacturer is expected to award the order to the successful bidder next month.
 
Background
 
Simplex group was incorporated in1940's as Simplex Engineering & Foundry Works Ltd by the late Mr. Bhanji Monji Shah to manufacture agricultural implements, steel structures and castings. The Group has six plants situated in and around Bhilai and Madhya Pradesh. With multifaceted facilities under one roof, Simplex Group has acquired a prestigious position in heavy industries as an equipment builder, technology supplier and turnkey contractor for undertaking large projects.
 
The group is backed by 3000 experienced and professional work force comprising of highly skilled workmen and engineers supported by 350 most sophisticated machine tools meeting the customers' requirement in terms of quality, quantity and delivery. The group is also one of the leading exporters of engineering equipment and castings.
 
Simplex Castings Ltd is a leading manufacturer of engineering - castings in various grades in cast, machined and assembled condition for core industrial sectors. The 1990's marked a quantum jump to establish facilities for fabrication, Castings, forgings and machine shops with in-house design and engineering facilities.
 
Prestigious turnkey projects were secured during this period. Simplex casting started exporting products to USA, Japan, CIS Countries, Australia, Egypt, etc thus creating a niche in the quality conscious international market.
 
Simplex castings Ltd is well set to record high growth in Sales and Net Profit due to the buoyant of these user industries. The company is also one of the leading exporters of engineering equipment and castings.
 
Business
 
A leading manufacturer of engineering castings in various grades in cast machined and assembled condition for core industrial sectors; Simplex Castings Ltd has two major units, one heavy Grey Iron Foundry and other heavy Steel Foundry. To balance the facilities, both the units have been equipped with machine molding lines. The foundries have in-house facilities for stress relieving, normalizing, quenching, etc.
 
Grey Iron Foundry -The Grey Iron Foundry is equipped to manufacture engineering castings weighing up to 30 tonnes single piece. Special alloy cast iron castings in heat-resistant, acid resistant, Hi-chrome and Ni-resist materials are also cast in the foundry.
 
Steel Foundry -The Steel Foundry is equipped to manufacture engineering steel castings weighing up to 17 tonnes single piece cast weight. This foundry can also produce cast steel castings like slag pot weighing up to 22 tonnes single piece.
 
The foundries and the group company Simplex Engineering & Foundry Works Ltd are equipped with sophisticated machine tools comprising of Horizontal & Vertical Boring Machines, Milling Machines, CNC Lathes, Radial Drilling Machines, Plano Millers and Tool Planners.
 
To match the exact machining requirement of the products, the castings are also delivered in proof machined as well as in finish-machined condition. The products are accepted by inspection agencies such as LLOYDS, RITES, RDSO, SGS, BUREAU VERITAS and other such international agencies.

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
 
Nothing in this article is, or should be construed as, investment advice.
 
 
 

 
 

--- On Tue, 12/29/09, bhavesh shah <bhavesh71@gmail.com> wrote:

From: bhavesh shah <bhavesh71@gmail.com>
Subject: TRIVENI ENG FOR SHORT TERM LOOKS GOOD - TGT 118 -121
To: rajivhanda@yahoo.com
Date: Tuesday, December 29, 2009, 10:20 PM

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delhistockclub Buy Simplex Castings for a target of Rs 110-120

 



Standalone Result

Scrip Code : 513472      Company : SIMPLEX CASTINGS LTD.

Type
Un-Audited
Un-Audited
Un-Audited
Un-Audited
Un-Audited
Audited

Period Ending
30-Sep-09
30-Jun-09
31-Mar-09
31-Dec-08
30-Sep-08
31-Mar-09

No. of Months
3
3
3
3
3
12

Description
Amount(Rs. million)

Net Sales / Interest Earned / Operating Income
425.22
362.61
500.65
434.77
459.82
1,737.66

Other Income
3.31
1.69
6.12
0.37
11.53
16.00

Total Income
428.53
364.30
506.77
435.14
471.35
1,753.66

Expenditure
-360.64
-315.45
-436.22
-360.32
-400.67
-1,496.49

Interest
-15.15
-11.65
-23.53
-19.93
-22.57
-78.93

Profit Before Depreciation and Tax
52.74
37.20
47.02
54.89
48.11
178.24

Depreciation
-9.55
-9.55
-9.66
-13.41
-7.63
-37.08

Profit before Tax
43.19
27.65
37.35
41.47
40.47
141.16

Tax
-12.00
-12.00
-8.91
-20.35
-12.10
-49.92

Net Profit
31.19
15.65
28.45
21.12
28.37
91.25

Equity Capital
59.84
59.84
59.84
59.84
59.84
59.84

Basic And Diluted EPS after Extraordinary item
5.21
2.62
4.75
3.53
4.74
15.25

Basic EPS after Extraordinary items
-
-
-
-
-
-

Nos. of Shares - Public
2,472,427.00
2,456,082.00
2,456,793.00
2,641,213.00
2,639,730.00
2,456,793.00

Percent of Shares-Public
41.32
41.04
41.05
44.14
44.11
41.05

Operating Profit Margin
15.97
13.47
14.09
17.21
15.37
14.80

Net Profit Margin
7.34
4.32
5.68
4.86
6.17
5.25

Cash EPS
-
-
-
-
-
-

 
Notes
Notes
Notes
Notes
Notes
Notes

Detailed
Detailed
Detailed
Detailed
Detailed
Detailed

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
 
Nothing in this article is, or should be construed as, investment advice.
 
 
 

 
 

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Monday, December 28, 2009

delhistockclub Tantia Constructions-Another Order Win

 

Tantia Constructions Ltd has informed BSE that the Company has received a prestigious project for Construction of Road under Bridge near existing Railway level X-ing near Mundka No. 16 on Delhi- Bhatinda Section From Municipal Corporation of Delhi for worth Rs. 34,62,47,617/- (Rupees Thirty Four crore Sixty two lakh forty seven thousand and six hundred seventeen only).

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
 
Nothing in this article is, or should be construed as, investment advice.
 
 
 

 
 

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delhistockclub Tantia Constructions-Outperformer

 

Tantia Constructions can be a small part of the portfolio of investors with a penchant for risk. Reasonable revenue and profit growth in FY-09, a tough year especially for smaller construction companies, strong order book and presence in lucrative segments such as Railways and urban infrastructure lend themselves well to future earnings growth.
 
This Kolkata-based player is well-positioned to tap infrastructure development activities in the east and north-eastern regions of the country — geographies that hold higher potential for business, given the relatively slow growth, compared with the rest of the country.
 
At the current price of Rs 115 the stock trades at 6 times its expected earnings for FY-10. Given that the company managed a 12 per cent profit growth in FY-09 which was a difficult year, the coming year's earnings growth with the recent spate of order inflows can only be better.
 
Investors can buy the stock with a two-year perspective but should actively consider booking profits occasionally by setting target returns. This would help them lock into gains that small cap stocks often make in a market rally.
 

Niche player
 

Tantia Constructions is a contractor with presence in road, rail, bridges and urban infrastructure projects. For a small-sized contractor with revenue of Rs 450 crore (FY-09), the company has enjoyed lucrative profit margins. Its operating profit margin (OPM) for FY-09, for instance, was 13 per cent — superior to a number of listed players.
 
This high margin can be attributed to two factors: One, the company's presence in urban infrastructure and rail projects that typically carry healthy return on investments. Two, its well-entrenched presence in the north-eastern regions such as Mizoram and Assam, where there is little competition, given the tough conditions; thus providing scope for higher bidding prices.
 
Given the government's steady increase in the budgetary allocations for the region, and the recent creation of the North-East Rail Development Fund, Tantia could emerge as a key beneficiary especially in smaller contractual works.
 
Tantia has witnessed a spate of order flows from the beginning of this year taking its total order book position to Rs 1,935 crore, four times its revenue for the latest ended financial year.
 
Projects from Railways, including the Delhi Metro, and road projects account for a good 34 per cent each of the total order book. Urban infrastructure stands next at 28 per cent. Tantia has presence in power transmission and airports as well, though the value of such projects is not significant.
 
The current order-book proportion could well ensure that the company's OPMs are in the 12-15 per cent range, provided it is not hurt by any sharp hike in commodity prices. On this account, Tantia did witness a decline in its OPMs in the quarter ending September 2008 but quickly recovered, perhaps due to price escalation clauses available for raw materials costs.
 
Steady revenue growth
 

While Tantia's earnings growth for FY-09 was a muted 12 per cent, its earnings over the last three years has grown at a compounded annual rate of 26 per cent. Recent quarters ending March and June suggest that the company's earnings growth is back on track after a dip in the December quarter.
 
Interestingly, Tantia is among the few small infrastructure players that have managed to expand their revenues (on a year-on-year basis) over the last four quarters. This provides comfort as it suggests that the execution of projects has not been hurt as a result of economic slowdown or credit crunch.
 
Execution, though, has come only at the cost of high leveraging. The company's debt: equity ratio at about 1.7 times although not alarming, is rather tight, limiting scope for further leveraging, given the small size.
 
However, that 15 per cent or Rs 30 crore of the total Rs 192 crore of long-term debt is from FCCBs due only in 2012 provides some comfort. The decline in interest rates has also provided marginal relief to the company's profits.

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
 
Nothing in this article is, or should be construed as, investment advice.
 
 
 

 
 

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delhistockclub Chris Wood: 2010 Will Be The Year Of The Dragon

 

Chris Wood: 2010 Will Be The Year Of The Dragon
The long term China story remains as clear as ever. Rising urbanisation leading to a rising demand for resources. With 300 mn people estimated to move from the rural areas to cities over the next 20 years, the long planned desire for an incremental move to a more consumption driven economy has been dramatically accelerated by last year's Western Economic Collapse.
 
Beijing is hoping, though certainly not assuming, that Western Demand is coming back. This is why investors should expect to see continuing growing focus on long term policies to increase consumption. These include medical reform, education reform, reform of the social sector and construction of affordable housing.
 
The increasingly pro consumption government of the PRC is likely to keep in place the incentive programme for cars and consumer durables which have been so spectacualrly successful in 2009. Thus, auto sales are expected to reach 13 mn this year which means there will be more cars sold in China than America.
 
Passenger car sales rose by 98 per cent yoy in November to 1.04 mn while total auto sales increased by 96 per cent yoy to 1.34 mn. Moreover, in terms of future untapped potential, a survey of 78 auto dealers conducted by CRR (China Reality Research) in mid October found that only 23 per cent of sales were done via auto loans. Whereas in India about 80 per cent of the sales are done via loans.
 
Cofirming this trend, the State Council announced in December that it will expand subsidies for alternative-fuel vehicles, purchases in rural areas and for consumers trading in older cars. The price cap for the rural home-appliances subsidy programme will be raised significantly while one more type of home appliance will be added to the programme. The rural auto and motorcycle subsidy programme will be extended to December 2010 and January 2013 respectively.
 
Meanwhile, the lack of lending excesses in the emerging Chinese consumption story is a sign of just how far the story can run, just as it is in the residential property market where the average loan to value mortgage ratio remains only 46 per cent and where about one quarter of property transactions are completely without mortgages, according a recent CRR survey of over 120 residential projects in more than 40 cities across China.
 
It also means the Bank loan portfolios are not really yet dangerously exposed to asset price risk because of the conservative nature of the Chinese borrowing on property. Affordability cannot just be considered in terms of a persons's income. In many case, the downpayment for newly married couples, who are not expected to live in rental house, are provided on both sides' parents. They have the money because they received a windfall gain when they were able to buy their government supply housing "cheap" more than 10 years ago.
 
Where the Banks are exposed to credit risk, however, is clearly in terms of the forced lending to local government infrastructure projects. Remember that RMB 13.7 tn of the investment projects were implemented by the local government in the first ten months of this year whereas only RMB 1.35 tn came from the Central Government.
 
This is why there is no doubt that the credit risk from this year's dramatic lending surge when new loans accounted for 30 per cent of GDP will come from the infrastructure loans made to local governments. The certainty of problems in this area is freely admitted to by Beijing officialdom.
 
But it is also the widespread view that the central government will make good on these loans for the banks when they become due 5 to 7 years down the road. It is CLSA's view that potential NPLs are not the reason to shun Chinese Banks for now. However, there remains a risk that NPLs blow up earlier than 5 years if local governments cannot even pay interest.
 
With domestic demand momentum picking up and an asset bubble risk looming, authorities could have a better chance of heading off that risk if they decided to take a more proactive view on the currency in terms of allowing a sharper appreciation.
 
This would fulfill the desired role of promoting consumption. The wider view remains a status quo on currency as regulators try and protect the exporters. China's mandarin's are influenced by mainstream economists who hold the view that currency appreciation will not cut the trade surplus, because of the inherent propensity of the Chinese to save and not spend. A currency chest is also needed to prepare for the day when the yuan is allowed to become a convertible currency.
 
A graduall upmove of the Renminbi throughout 2010 is plausible, in place of a big bang move, to keep currency speculators hot money flows away from China which expect a short term currency appreciation against the dollar.
 
A sign of the hot money flows returning is growing gap between forex reserves and trade surplus. While trade surpluses in q209 and q309 were a mere $ 34 bn and $ 39 bn, forex reserves rose by $ 141 bn and $ 178 bn in the two consecutive quarters.

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
 
Nothing in this article is, or should be construed as, investment advice.
 
 
 

 
 

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