Thursday, January 31, 2013

(i) I have spoken with the sources of Southern Online Bio Technologies Ltd, regarding the approval of the Bank Loans and the answer is that, the banks have approved the loans. Now in the plant at Vizag, all modifications have taken place and Raw Material supply & finished product contracts are signed and are in place. The unit has started trial production and within some months it will be ready for exports, which will give a tremendous boost in the earnings. The additional working working capital has been infused after a consortium of Banks approved the same. There are talks of interest rate waivers, like in case of Jai Balaji Industries Ltd and Suzlon Energy Ltd and the company hopes to get at least 200 bps, interest subvention in the total loans. The company's plant at Samsthan Narayanpur Village & Mandal, Nalgonda District with 30,000 Liters per day capacity  is working well and also its ISP division is also performing satisfactorily. According to my close sources,  even in Q3FY13, the company is expected to show better financial performance, on Q-o-Q basis and the Net Loss is expected to come down or in the EBDTA levels it could show positive performance. From Q1FY14, the company is expected to turn to black, as the Vizag plant would. start production. It is therefore a turnaround case and should be bought into in all declines, before it starts  hitting upper circuits once again. CMP: Rs.4.44.
(ii) Jai Prakash Associates Ltd, has again closed above Rs.86.90, which brings it again in the buy list. The cross--over has already taken place and the scrip is now above its both 150 and 200 DEMAs. The osciallators (both fast and slow) are in buy mode and MACD is turning bullish. Moreover, Mass Index and RSI are giving early signs of turning bullish. I reiterate a buy on the scrip at Rs.86.95, for a target of Rs.91--92--97.
(iii) Rolta Ltd closed at Rs.62.80 today, though it tried to clear its 50 DSMA intra-day a number of times. Rolta India Ltd. is a niche IT solutions firm based in Mumbai. The company caters to a whole host of sectors like Defense, Security, Oil & Gas, Power, Business Intelligence, Enterprise Applications, etc. The company derives a major portion of its revenue from the Indian market (Nearly 55% of total revenue comes from the Indian market, while the rest is spread out across various geographies like North America, Europe and the Middle East. Thus Rolta India Ltd., unlike its larger peers, is well insulated from foreign currency risks. Also, since most of its clients are government-based organizations, the company has strong assured revenue growth prospects going forward), and the rest from its operations across various countries around the globe. 
Rolta India Ltd has leadership position in the Geospatial Imaging and Engineering Design & Automation Segments: with nearly 70% market share in the Geo-Imaging and Mapping Industry and 90% in the Engineering Design & Automation market in India, Rolta India Ltd. is well poised to consolidate its leadership position in these segments on the back of key capital expenditures (amounting to nearly INR 16 bn) and regular acquisitions that have helped to develop niche capabilities to service these sectors. The company’s decision to move away from low-end services business to high-value solutions based on IP, augurs well from the company and we have already seen that, the order book has swelled from Rs.22,062 million (Rs.2206.2 Cr), the strongest growth in the last five quarters in Q1Fy13 to Rs.2500 Cr in Q2FY13. I therefore, feel that the scrip is expected to be multi-bagger in the coming days, when the world economy, especially the US (or whole of North America) and Europe, has started to do well. India too off-late has started to give more stress in developing IT infrastructure. Rolta Ltd having an order book of around Rs.2500 Cr, does look attractive as a positional buy for 2-3 months perspective. Accumulate at Rs.62.80--63, for a target of Rs.82, in before the Union Budget, 2014.