Recommendations of the last week:
1. Ricoh India Ltd( BSE CODE--->517496) at Rs.30:
A pioneer in digital office equipment, Ricoh offers a broad range of office solutions with world class support and services, including MFPs, printers, fax machines, and digital cameras. With 394 consolidated subsidiaries worldwide, employing approximately 75,000 people, the Ricoh Group posted consolidated total sales of $17 billion US for the fiscal year ended March 31, 2005 . A global leader, the Ricoh Group currently enjoys No.1 market share for plain paper copiers in Europe, Japan and No.2 share in the USA .
In India the company recently amalgamated M/s Gestetner (India) Ltd with itself. Ricoh Company Ltd, Japan, a global leader in office solutions with consolidated revenues of more than US $ 17 bn, completed the merger of its two Indian subsidiaries, Gestetner India Ltd and Ricoh India Ltd. Post merger of two strong brands with proven profitability, Ricoh India Ltd is providing the Indian office equipment market with a stronger serives in the recent past. With a combined market share in the region of 22%, Ricoh India Ltd is well on its way to becoming the Numero Uno as Solutions Provider in Document Management Systems with top share of the market in the near future.
With BRIC's (Brazil, Russia, India and China) improving their economies and enjoying market growth, Ricoh Company, Ltd., Japan, the parent company has great expectations of the India region and has assured full support to the Indian subsidiary in terms of the latest range of technologically advanced products.
The Ricoh group has experienced success with mergers elsewhere. For instance, the merger of Ricoh and Savin in the USA has resulted in continuous growth in business and improved market share. To put the above strategy into effect, Ricoh Japan has already announced a new management team for Ricoh India. But the challenge before the management team consists in leveraging the collective market strengths of the Ricoh India and Gestetner India entities, while aggressively pursuing market expansion and growth opportunities in India.
For 31st March, 2006 the company came out with good set of numbers the total income almost tripled to Rs.169.8 Cr as against Rs.55.1 Cr in the same period previous year, though net profit took a hit to mitigate the cost of the said amalgamation. But the most striking part is that reserves of the company jumped to Rs.12.05 Cr as against Rs.1.9 Cr.
The last quarter the results of the compay were not upto the mark due to higher interest cost though the net sales increased by a good amount. The company is now able to function full force after its has almost absorbed the cost of amalgamation.
Also note that NORMALLY THE DECEMBER QUARTER RESULTS ARE THE STRONGEST, hence the catch. Thus it is a foregone conclusion that the next quarter results which is expected to be out in the next month will be very good......
I place a target of Rs.100--Rs.150 in 8 to 18 months time frame.
2. Nagpur Power & Industries Ltd. at Rs.15.
The stock is expected to hit some more buyer freezes due to some recent developments and India signing the nuclear deal. This deal is set to benefit the power companies. Keep holding with a price target of Rs.30--Rs.35 in the short to medium term.
3. Vamshi Rubber Industries Ltd at Rs.11.5
The company is doing excellently well in its own field. It is set to benefit from the fall in rubber prices and also due to the expansion plans. Hold or buy with a price target of Rs.70-Rs.75 for 8 to 18 months time frame.
4. Agro Dutch Industries Ltd at Rs.23
It is set to cross Rs.100 within the next 6 months due to lot of interesting happenings in the company. The company is expected to complete the EXPANSION OF ITS CAN MAKING DIVISIION by March, 2007. Now a days it makes can only for its own packaging purpose. The company share price will take a quantum jump due to this new initiatives. So buy this undervalued giant mushroom producers. It is a 100% export oriented unit, which means all its products are of high quality and sold to foreign countries.
5. MRO TECH Ltd at Rs.48.
MRO-TEK has been at the forefront of providing solutions in high-speed and reliable networking access for more than two decades now. Its winning product mix and the ability to deliver appropriate solutions and service level agreement, have made itthe preferred partners of customers in India as well as overseas. MRO-TEK's R & D Centre equipped with advanded tools for Design, Testing and Development of complete product realisation of cutting edge networking and telecom products. The R & D team is driven by more than 50 skilled professionals with vast experience in Embedded System design and Network Management.
MRO-TEK's state of the art manufacturing facility is geared to produce world-class access networking products meeting stringent industry standards. MRO-TEK has the product range to match any system solutions for private or public networks or building blocks for campus or central office.
The company came out with excellent results for the 31st March, 2006. MRO-TEK reported a growth of 323 per cent in net profits and 21 per cent in revenues for the year-ended March 31, 2006, over the previous year. Net profits for FY06 stood at Rs 17.56 crore on revenues of Rs 144 crore as compared to a net of Rs 4.15 crore on revenues of Rs 119 crore in the previous year.The company declared a final dividend of 20 per cent (Re 1 on par value of Rs 5) for the year. With this, the total dividend payout works out to 45 per cent (Rs 2.25 per share), including the interim dividend of 25 per cent declared earlier (Rs 1.25 per share).
The company has cleared its Rs 13-crore term debt as well as temporary working capital borrowings and is totally Debt-Free.
The company is set to post robust results in the following quarters. It is jewel in the Indian IT space.
Friday's Market Round-up: Pivotals lead rally as Sensex gains 87 points: The BSE Small-Cap index closed at 6721.39, up 56 points or 0.84% while the BSE Mid-Cap index gained 36 points or 0.64% to settle at 5,648.77 :
Market settled with decent gains, on the back of strong buying in index pivotals.
BSE Sensex gained 86.88 points at 13,471.74. The market gathered steam at the fag end of the trading session after it had remained range bound for a better part of the day. Sensex struck its intra-day high of 13493.88 in late trading. Its intra-day low was at 13,362.11.
The S&P CNX Nifty rose 37.65 points to 3871.15
The market breadth was strong on BSE, with around 1.5 gainers for every loser, as buying interest was seen for small-cap and mid-cap stocks. 1501 shares advanced, as compared to 1069 that declined. 92 stayed unchanged. The BSE Small-Cap index closed at 6721.39, up 56 points or 0.84% while the BSE Mid-Cap index gained 36 points or 0.64% to settle at 5,648.77
The total turnover on BSE amounted to Rs 4188.60 crore, as compared to Rs 4369 crore on Thursday.
Among the Sensex pack, 22 advanced while the rest declined.
Bike maker Hero Honda was the top gainer, up 3.74% to Rs 755.10 on 24370 shares. The stock moved in a broad range of Rs 728 – 759.
Gujarat Ambuja Cements (up 3.16% to Rs 137), L&T (up 2.92% to Rs 1440) and Grasim (up 2.06% to Rs 2718.10) were the other top gainers.
Frontline IT stocks witnessed renewed buying interest. Wipro (up 3.02% to Rs 575), Infosys (up 0.41% to Rs 2170) and TCS (up 1.22% to Rs 1150) advanced.
Tata Steel gained 1.88% to Rs 476.40 on 9.56 lakh shares. It had struck an intra-day high of Rs 479.95.
Car maker Maruti Udyog lost 0.42% to Rs 922.10 after hitting a high of Rs 939. The government on Thursday decided to sell in its remaining 10% stake in the car major in favour of banks and financial institutions.
Ranbaxy Laboratories declined 0.25% to Rs 385.05. The company received approval from the US Food and Drug Administration (FDA) to manufacture and market Simvastatin Tablets USP, 5 mg, 10 mg, 20 mg and 40 mg in the US.
Index heavyweight Reliance Industries (RIL) rose 0.85% to Rs 1272 on 3.97 lakh shares.
ICICI Bank rose marginally by 0.05% to Rs 855 after it borrowed $1 billion from overseas markets to fund credit growth. The yen-denominated syndicated loan is the largest by an Indian bank. The loan is split into three tranches of $350 million for 364 days, $450 million for two years and $200 million for three years.
Satyam Computer was the top loser, down 1.03% to Rs 461 on 6.83 lakh shares. The company said on Thursday its back office unit Nipuna Services has signed an animation order worth $25 million. Nipuna will partner 4K Animation of the United Kingdom to execute the project.
HDFC Bank dropped 0.44% to Rs 1006. The private sector bank has raised its prime lending rates (PLR) by 1.5% to 13% effective 20 December. But only a small portion of HDFC Bank’s loans are linked to PLR. The private sector bank has also raised deposit rates by 50 to 75 basis points across various maturities over the past month.
Tata Motors (down 0.81% to Rs 858), ITC (down 0.76% to Rs 169.45), and HLL (down 0.57% to Rs 218.70) were the other losers.
Tech Mahindra was the most active counter on BSE with turnover of Rs 485.50 crore) followed by Sobha Developers (Rs 236.62 crore) and Great Offshore (Rs 204.39 crore).
Jindal Drilling & Industries settled at Rs 580 on BSE on 1.85 lakh shares. The stock hit high of Rs 702 and low of Rs 505. The scrip was relisted on the bourses today. Jindal Drilling’s restructuring scheme involved amalgamation of two group companies Newsco Newtech and Discovery Hydrocarbons with the company. It also involved demerger of Jindal Drilling’s Casinvest division into Haryana Engineering. Following the restructuring scheme, Jindal’s equity capital was reduced substantially to Rs 4.50 crore from Rs 9 crore. The face value per share remains same at Rs 10. Trading in the shares of the company was stopped in September 2006 to give effect to the restructuring scheme. The scrip’s last trading was at Rs 319.60 on BSE on 11 September 2006.
Cement shares witnessed renewed buying in anticipation of firm cement prices. Gujarat Ambuja Cements was the top gainer, up 2.03% to Rs 135.50 on 4.05 lakh shares. Other cement shares ACC (up 1.59% to Rs 1046), Shree Cement (up 1.21% to Rs 1380), UltraTech Cement (up 2.48% to Rs 1038), Dalmia Cement (up 5.46% to Rs 415), and India Cement (up 4.59% to Rs 231.25) gained.
A host of mid-sized IT firms surged today in anticipation of robust set of December quarter results from them. The top gainers were Orient Info (up 20% to Rs 22.25), Zensar Tech (up 13% to Rs 237), VisualSoft Tech (up 11% to Rs 77.75), Aztec Software (up 8% to Rs 174.50), Infotech Enterprises (up 7% to Rs 328.50), 3i Infotech (up 6.6% to Rs 185), Helios & Matheson Information Technology (up 6% to Rs 138), Rolta India (up 6% to Rs 248.20), Mastek (up 6% to Rs 347), iGate Global Solutions (up 5.8% to Rs 329), R Systems International (up 5.6% to Rs 186), CMC (up 3.9% to Rs 644), Aftek Infosys (up 3.5% to Rs 51.40), Hexaware (up 3.3% to Rs 186), Polaris Software (up 3% to Rs 165), Kale Consultants (up 3% to Rs 120), and NIIT Tech (up 2.4% to Rs 281).
Among the side counters, iron ore exporter Sesa Goa jumped 12.58% to Rs 1392.30 on reports that Japan's Mitsui & Co plans to sell its 51% stake in company. Reports add that Sesa Goa's enterprise value is expected at about Rs 6000 crore. Steel makers such as Arcelor Mittal, Tata Steel, Jindal Steel & Power and Essar Steel, besides iron ore exporter MSPL are said to be in the fray to buy Japanese promoters stake.
Telecom software provider Tech Mahindra jumped 10.59% to Rs 1650.50 on high volume of 28.87 lakh shares, extending its recent solid surge after it won a mega $1 billion five-year outsourcing deal from BT to provide strategic sourcing services. This is the biggest ever outsourcing deal won by an Indian IT vendor. As per the deal, Tech Mahindra would support BT's planned growth of managed services to business customers around the globe and continue to provide ongoing services related to its internal systems, processes and re-usable platforms.
Gammon India plunged 10% to Rs 196.05 after Sebi on Thursday barred Gammon India and its chairman Abhijit Rajan from accessing the capital markets for one year, in investigations into use of company funds for a rights issue and failure to make certain disclosures.
Mount Shivalik jumped 8.10% to Rs 60.70 on reports that SABMiller, the world's second-largest brewer, is eyeing to buy at least 50% stake or a complete buyout of the Mount Shivalik Group, which owns Mount Shivalik Industries. The deal could carry an enterprise value of $67-$78 million.
Mahindra & Mahindra rose 2.31% to Rs 870 after the company said it agreed to buy 90.47% of German auto parts firm Schoneweiss & Co. GmbH for an undisclosed sum.
Fedders Lloyd Corporation advanced 7.10% to Rs 125.90 after the company said its board will meet on 2 January 2007 to raise FII investment ceiling in the company. As on 30 September 2006, FII holding in the company was 14.66%.
Software developer R Systems International rose 5.7% to Rs 186.25 after the company said it will buy 13.51% of Japan's Aisel. The proposed transaction also includes both parties collaborating exclusively for delivery of certain services to each other's customers. R Systems would serve Aisel for all its offshore software development needs and Aisel would serve R Systems with onsite project management and coordination needs.
Textiles and chemicals firm GHCL lost 2.41% to Rs 163.75 on high volumes of 47.55 lakh shares. Two block deals of 13.07 lakh shares were struck on the counter at an average price of Rs 162.25 per share in opening trade. GHCL said on Friday its U.S.-based step-down subsidiary DanRiver Inc. has acquired the assets of U.S. textile firm HW Baker for $6.75 million. H W Baker supplies sheets, pillows and pillow cases to hotels and has a turnover of $70 million.
Jewellery maker Rajesh Exports jumped 5% to Rs 338 after the company got an order worth Rs 276 crore from Sharjah-based Excel Goldsmiths.
Aurobindo Pharma gained 4% to Rs 689 after the company said on Friday it had received tentative approval from the US Food and Drug Administration for anti-AIDS drug efavirenz in capsule forms. Efavirenz is the generic version of Bristol-Myers Squibb’s brand drug Sustiva.
FIIs pressed substantial sales for the second day in a row on Wednesday (20 December). Their net outflow was Rs 365.10 crore on 20 December compared to an outflow of Rs 673.40 crore on 19 December. The outflow in two trading sessions between 19 December and 20 December aggregated Rs 1038.50 crore.
But the provisional data pertaining on Thursday (21 December)’s trade showed that FIIs were net buyers to the tune of Rs 254 crore on that day. They were net sellers to the tune of Rs 301 crore in index-based futures. They were net buyers to the tune of Rs 52 crore in individual stock futures.
Mutual funds stepped up buying on 20 December. They bought shares worth a net Rs 460 crore on that day. [Edited version from the Internet]
More in the following postings.....
Best wishes,
Suman Mukherjee
India.
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