Friday, January 16, 2015

WINNING STROKES: THINK DIFFERENT
Allied Digital Services Ltd today went in for another round of correction before closing at Rs.27.40 in the BSE. I hope most of you have booked profits in the counter. The scrip was repeatedly recommended in this blog for a short term target of Rs.31-32. 
Today Rohit Ferro Tech Ltd was recommended today at Rs.8.30, based on certain parameters: 
  • Since the government has taken-up the cudgel to boost the infrastructure and economy, the demand for building materials like Steel, Cement, Glass, Ceramics, Wood, Aluminium, Plastics, etc are set to increase in the coming days. 
  • The company is implementing a CDR package and hence there is already lot of sops for payment of loans, including waver of interest rate and easy payment options 
  • The company will allot, subject to the approval of the shareholders, 7,12,05,000 (Seven Crores Twelve Lacs Five Thousand) Convertible Warrants of nominal value of Rs 10 each at a price of Rs.20 per Warrant (including a premium of Rs.0 per Warrant) in accordance with SEBI (ICDR) Regulations, 2009. This is much higher than the current market price of the scrip which is Rs.8.10 in the NSE and Rs.8.09 in the BSE. 
  • The NDA government is also revamping the Indian Railways--this will also push up the demand for steel, especially the Ferro-alloys in the coming days. Rohit Ferro Tech, you know is a major producer of Ferro Alloys. 
  • The Economic Times, writes on November, 14, 2014: Makers of ferrochrome, a key alloy used in making stainless steel, are planning expansion of their facilities to gear up for an expected increase in domestic demand instead of focusing mainly on exports to China that account for more than half of their annual production. The Narendra Modi-led NDA government's focus on building infrastructure and spurring domestic consumption holds promise of increased demand of stainless steel from consumer durables, auto, transport, water management and solar energy sectors.
  • Bulk Ferro Alloys like H.C. Ferro Manganese, Silico Manganese, High Carbon Ferro Chrome are used for manufacturing different grades of steel depending on their characteristics and are in great demand. The Ferro Alloys produced by Rohit Ferro Teh Ltd are as per International / Indian Standard Specifications for manufacture of mild steel, alloy steel and stainless steel. About 90% of the High Carbon Ferro Chrome produced is used in the making of Stainless Steel, where chromium is the unique ingredient. UNique, beacuse it is Chromium that makes stainless steel 'stainless'. The additions of Ferro Chrome in low alloy steels contribute towards a range of improved properties, especially to achieve a balance of through-section hardness and toughness in Engineering Steels such as bearing, tool, high strength/low alloy and high speed steels, pumps, valves, pipes, rolls and wear plates. NC Mathur, president of Indian Stainless Steel Development Association (ISSDA) told Eonomic Times: "The steel industry grows at 1.2-1.3 times the GDP. With a strong Prime Minister and the new government's initiatives, the demand of stainless steel can be expected to grow around 8%. The industry is focusing on architecture, shopping complexes, institutional buildings, auto sector and railways for growth," 
  • It is to be noted that Indian ferrochrome makers are currently dependent on China, the world's largest maker of stainless steel, which is also the biggest importer of Indian ferrochrome as it buys over half of the country's annual output of one million tonne. "All this is going to change in the next three-five years because stainless steel is starting to pick up significantly and in many commodities there is a lag before demand can be met. In ferrochrome industry, we are talking about adding capacity. We see production going up to 1.5 million tonnes in the next three-five years," said Subhrakant Panda, MD of Indian Metals & Ferro Alloys (IMFA). According to ISSDA president Mathur, the industry is not only banking on higher economic growth over the next five years but also on initiatives such as Swachh Bharat, 100 Smart cities and overseas investment as Modi sells the India growth story to the world.
  • Meanwhile, the Chinese domestic ferrochrome market is expected to remain under pressure after the 1% import tax on ferrochrome with more than 4% carbon was scrapped. Exporters lauded Beijing's decision in December. The 1% import tax was factored into the selling prices quoted to Chinese buyers, they said previously. Removal of the 1% import tax will give sellers higher price realization, they added. This is positive for the domestic Ferro Chrome sector. 
  • The recent government of India, initiatives, like bringing in the mining ordinance and trying to zero in on the mine renewal leases augurs well for the companies like Rohit Ferro Tech Ltd. 
  • With the price of Crude Oil and Coal going down, we can expect good days ahead for the Ferro Alloys sector. High power costs and scarcity of raw materials for its ferro-alloys unit had in the past made operations difficult for this sector as increased Chinese stainless steel imports lowered capacity utilisation of the sector.
  • PR Newsware writes on Dec. 24, 2014: Growth in construction and automobile industries is expected to boost the overall demand for steel. This, in turn, is anticipated to drive the global ferroalloy market between 2014 and 2020. Ferroalloys are iron alloys that contain chromium, manganese, silicon or other elements in varying proportions. Ferroalloys are primarily used by the steel industry. 
  • Since, Ferro Alloys is a power intensive sector and hence, any effort to increase the captive power capacity would definitely boost the bottomline of the companies. For ferroalloys plants without captive power, the electricity bill alone accounts for about 35% of the overall production cost. The Company is in the process of setting up an additional Sub Merged Arc Furnace of 33MVA and a Captive Power Plant at its Jajpur Unit. The same were scheduled to be completed by September 30, 2014. The completion is delayed for the reason of non delivery of certain equipment from the vendors in time. The management expects to complete the same by March 31, 2015. Hence, we have around 2-months time. Meanwhile, the company is also talking of selling the Jajpur Unit in Orissa (Odisa). 
  • The market for stainless steel in 2013-14 was at 2.5 million tonne of which flat products accounted for approx 2 million tonne. With a low per capita consumption of 2.1 kg (as against the world average of ~5 kgs) there lies a huge potential for future growth but slowdown in sectors such as infrastructure, railways, seaports, airports, highways, and bridges etc. had become impediments. We certainly need protection in terms of 'anti dumping duty'. The difference between raw material and finished products imports currently stands at 5% in India as against 10% in China. The Chinese government protects its local industry. However, the Indian companies, cannot import raw materials from China due to higher duty. So, we have to import finished products at the expense of the local industry. The government of India likely come up with similar duty protection to prevent units from closing down in the Union Budget-2015.
  • The Book Value of the shares of the company is Rs.50.94 and the market cap is only Rs.92.04 Cr against FY14 income of Rs.2,494.52 Cr and H1FY15 income of Rs.963.32 Cr.  
  • During FY14, the coking coal mine in Indonesia owned by M/s. PT Bara Prima Mandiri through the Subsidiary SKP Overseas Pte. Ltd., Singapore has started commercial production. The mine located in Central Kalimantan province of Indonesia has an estimated coking coal reserve of 10 MN Tonnes. The Company is also having 60% economic interest in a thermal coal mine in Indonesia owned by M/s PT Palopo Indah Raya through its aforesaid Subsidiary. The mine located in Central Kalimantan province of Indonesia has an estimated thermal coal reserves of 20 MN Tonnes.
With so many positives at place, you are getting the shares of Rohit Ferro Tech only at Rs.8.09 in the BSE and Rs.8.10 in the NSE. Just buy as much as you can and keep holding. I am sure by the end of March, 2015, you would get more than 40% return on your investments. 

Yesterday, the Premium Members were asked to average both Jaiprakash Power Ltd  at around Rs.11.80 and 26.30 respectively. Today, both the scrips gave a decent return with J P Power Ltd shooting to Rs.12.48 intra-day and J P Associates Ltd to Rs.27.20. With the direction of Interest rate now on the donward spiral, most of the companies with high debt, like Suzlon Energy Ltd (Rs.16.11), Jaiprakash Power Ltd (Rs.12.35), Jaiprakash Associates Ltd (Rs.26.80), etc are set to do well. 

Meanwhile, today another of my earlier recommended counter Jai Balaji Industries Ltd was asked to be averaged at around Rs.15-15.50 by those who still did not book profits in the counter, when the scrip to above Rs.30, during the whirl-wind rally post win of NDA. The scrip today closed at Rs.15.70 and would slowly move towards Rs.31-32 in the coming days. 
Today, Anant Raj Ltd touched Rs.47.75 (NSE), intra-day before cooling at Rs.46.05 in the BSE and Rs.46.15 in the NSE. Today many real estate counters came down, after shooting up yesterday and post initial rise of today. It is to be understood that, Anant Raj Ltd is  a class apart in the real estate space, having huge land bank, apart from having an exponential growth in the lease income. It also has low debt and is speaking of exiting from its non-core businesses. The scrip should touch Rs.70, in the coming days, as the interest rates continues in their downward spiral. 

Join my service or trade through my recommended brokerage house/s to get professional help during the market hours. In this kind of market, where you need to compete with CA, ICWAIs, MBA Finances, Harvard and Cambridge (and from DSE and LSE), apart from Highly Professional Traders and Brokers, the things are not that easy. You may succeed once or twice due to luck or otherwise, but to make money on a consistent basis, one has to be highly professional, due to reasons mentioned above. Therefore, if you do not have much time for the research but want to make money from this raging bull run, you definitely need to take the help of professionals. If you have lost money earlier, then try in a new way, with small funds. 
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