Thursday, May 29, 2014
WINNING STROKES: THINK DIFFERENT
Today's call Kingfisher Airlines Ltd, at Rs.3.42-3.47, hit the upper freeze. Yesterday, I took some shares in the accounts I manage at Rs.3.20, after I found that there are some strong reasons to buy the stock, when afer a long time, the NDA came to power in India. This is a pure POLITICAL STORY. Vijay Mallya, was the working president of the Janata Party, which was merged with the BJP. Hence, the BJP and Vijay Mallya is synonymous. Now on th flip side, though United Bank of India (UBI) has filed a winding up petition against Vijay Mallya- promoted Kingfisher Airlines for failing to retire loans amounting to Rs.336 crore; the case could drag on and on and in between Mr.Mallya could manage the funds. Moreover, though SBI is trying hard to declare declare Vijay Mallya a willful defaulter on the ground that, the borrower diverted funds which was taken from the bank and not paying up despite having the ability to pay; it is not that easy to do that in any court of law, especially when one has high political connections. SBI leads a 17-member consortium of lenders that is trying to recover dues running into over Rs.7,500 crore in principal alone from Kingfisher Airlines. SBI has the maximum exposure of Rs.1,600 crore to the airline, which has been grounded since October 2012. Vijay Mallya is a seasoned businessman and he would manage money from somewhere, and revive the airlines, when it has a friendly government at the centre.
A buy call was given on IVRCL Ltd today at Rs.25, for a target of Rs.29. The company announced on 27 May, 2014, that the company Board will consider the proposal of raising funds by issue of equity shares preferably on rights basis or by any other permissible means. The Board of Directors of the Hyderabad-based construction and infrastructure company is slated to meet on May 30 to finalise the company accounts and also consider payment of dividend, if any. The company is in the process of restructure of the finances and has sought to go in for corporate debt restructure. The process is now underway and is likely to be announced shortly. As a part of the CDR process, the company may also have to consider allotment of preferential shares to some of the lenders, which is generally part of the package. There is hope that the new (NDA) government will expedite infrastructure development and speed up execution cycles. This can lead to long-term financing, easier approval and clearance processes and better profitability for infrastructure companies. Award of fresh orders is also likely to resume with the new government taking charge. On the other side, high levels of receivables (Rs.2,379 crore) have been qualified by the auditors. Working capital constraints also held up execution, even though its order book is healthy at around Rs.23,700 crore. Inspite of these caveats the stock is looking good both fundamentally and chartically at the current moment (Rs.25.03) and it was recommended today by a marketman for a target of Rs.31.
My recent call, Western India Shipyard Ltd at Rs.2.09, saw it hit the upper circuits at Rs.2.29. Western India Shipyard (Rs.2.29) -As an ABG group company, is assured of continuous ship repair technology, flow of repair orders, marketing & financial support for achieving higher revenue and profitability. Western India Shipyard Limited (WISL), India's largest composite ship & rig repair facility in the private sector, is one of the world's advanced multi-dimensional and multi-purpose yard offering modern, streamlined, sophisticated ship & rig repair facilities and industrial services. WISL's state-of-the-art Floating Dry Dock "westerner" has a capacity to repair ships upto 60,000 dwt and to accommodate ships upto 225m. length and 32.5m. in breadth. The yard has been designed and established in collaboration with world leaders in Ship Repairs. Functionally laid out and built around the gravity centre concept, the yard is 90% covered by lift and carry facilities by Portal/EOT/FDD & mobile cranes. The scrip is expected to give you huge returns going forward.
Now the Indian Markets are on a strong BULL RUN, but the choice of Arun Jaitley, a novice in the Finance Department, as the FM of India, has depressed the mood of many marketmen. FIIs have been on a selling spree, post, the declaration of the names of the Finance Minister, External Affairs Minister and HRD minister (to point out a few). Narendra Modi's cabinet is an example of Idiocy (Picking up the mad lady Smriti Irani Vs Dr.M M Joshi) and Mediocrity. Today FIIs sold share worth Rs.522.9 Cr while DIIs were net buyers to the tune of Rs.195.2 Cr. However, in these markets too, Rs.5 (five) lakhs can be converted into Rs.1 Crore (Rs.10 million) in 5 years or before that. Those who want to become crorepatis or at least semi-crorepatis, can contact me at the earliest. After Rs.1 crore is made, I will take Rs.25 (twenty five) lakhs and you will take Rs.75 lakhs, though in between there will have to be some sharing of profits, to make the things interesting. Any stable government gives a vibrant share market, provided the government at the centre is effective and responsible. If you are interested then send me a mail at: firstname.lastname@example.org and please do it fast, to take advantage of the current buoyancy in the markets. Also, I would suggest you to leave the specialized works to persons, who have spent years in this field. This will help you cover all your losses and come out victorious at the end.