Hilton Metal Forging Ltd: Beautiful Chart Pattern

Hilton Metal Forging Ltd is one of the cheapest stocks in the sector. The Indian Forging industry has now emerged as a major contributor to the manufacturing sector of the Indian economy. Forging industry is a basic industry and such industries tend to grow in a country in relation to the rate of growth of its GDP. 

As far as India is concerned, with the new NDA government taking measures, we can expect our GDP to improve in the near future and therefore, the basic industries will grow and so will the industry. 

Since the forging industry is largely dependent on the automotive sector, the forging industry will also continue to grow and do well. Thanks to outsourcing, opportunities for exports are huge. An increasing number of companies from all over the world are coming to India to procure components and products. Many companies are working hard to capitalise on this. Hence the optimism that the forging industry will continue to grow and do well in the immediate future.

Forging is a process in which metals are shaped into desired designs by applying compressive forces. This technique is very robust compared to a number of other metal shaping techniques because of the strength acquired by the metal during forging. Some metals are processed hot while others are processed cold. There are a number of forging methods such as closed die, press, and upset forging; open die forging; and cold forging. The Automotive industry is the major end-user of forged products, followed by the Engineering Machinery and Railway industries.

TechNavio's analysts forecast the Forging market in India to grow at a CAGR of 7.29 percent over the period 2014-2018.

Time ripe for RBI's Raghuram Rajan to cut rates? 

Photo: The Economic Times

NEW DELHI, 7 Nov, 2014: The industry is clamouring for a rate cut from the Reserve Bank of India (RBI). India Inc believes that RBI Governor RaghuramRajan should soften his anti-inflationary hawkish stance, to support Modi government's growth efforts. Banks have also been cutting rates, with Axis Bank reducing its lending rate recently. Banks, led by SBI, have been cutting term deposit rates amid signs of weak credit growth. 

But, is the time ripe for the central bank to cut rates? And, will that rate cut necessarily spur investments? Yes, feel most economists and analysts. 

Indranil Sengupta, Economist at Bank of America Merrill Lynch told Economictimes.com that cutting lending rates is key to economic recovery. "The last upcycle was driven by higher capital expenditure. That itself was made possible by sustained monetary easing by the then Governor, Bimal Jalan," said Sengupta. 

Vinay Khattar, Head of Research at Edelweiss is of the opinion that, "The cost of capital is an extremely important parameter for investments in an economy. "Previously, the Indian situation was complicated due to policy logjam. With that situation beginning to improve, an RBI rate cut would definitely help investments," Khattar told Economictimes.com. 

In September, the WPI inflation plunged to a five-year low of 2.38% and CPI inflation fell to 6.46%, its lowest level since the index was introduced in January 2012. However, Raghuram Rajan in his last monetary policy review said, "Future food prices and the timing and magnitude of held back administered price revisions impart some uncertainty to an otherwise improving inflation outlook, where lower oil prices, a relatively stable currency, and a negative output gap continue to put downward pressure." "Base effects will also temper inflation in the next few months only to reverse towards the end of the year. 

The Reserve Bank will look through base effects," he had said. 

Rajan also cautioned that while the RBI's target of 8% CPI inflation by January 2015 was likely to be met, the medium-term objective of 6% CPI by January 2016 may be difficult to meet. "The balance of risks is still to the upside, though somewhat lower than in the last policy statement. This continues to warrant policy preparedness to contain pressures if the risks materialise. 

Therefore, the future policy stance will be influenced by the Reserve Bank's projections of inflation relative to the medium term objective (6 per cent by January 2016), while being contingent on incoming data," Rajan had said. 

Meanwhile, industry is not yet out of the woods, with August IIP disappointing at a meagre 0.4%. Even as RBI remains cautious on the inflation trajectory, economists and experts are of the view that benign global factors, particularly falling crude oil prices offer room for the central bank to signal a rate cut. 

Says Mythili Bhusnurmath, Consulting Editor of ET Now, "While there is no one-to-one relation between rate cut and investment pick-up, it does play a crucial role." "The RBI should at least signal a rate cut, because banks have already started cutting rates. After all, it is important for the central bank not to sound redundant. The markets have already signalled a rate cut, so should the RBI if only to help at the margin," Mythili told Economictimes.com. 

"I think the RBI should take a dovish stance. Inflation is definitely coming down, if not because of the the government or RBI's efforts, but owing to dipping global crude oil prices. If the Governor does not want to cut rates in the December review, he should certainly signal willingness to do so and then maybe cut rates in February," Mythili added. 

According to Khattar, the inflation trajectory is down, food prices have started softening and oil has fallen drastically. "What could be holding RBI though is the apprehension that with demand pick up, inflation may go up. Also the prospect of a US Fed rate hike, which in turn will lead to capital outflow may be adding to RBI's reluctance to cut rates," he said. 

Courtesy: The Economic Times

DO YOU KNOW?

A standalone debt figure, does not therefore necessarily indicate that a company is in trouble. The debt level, in itself, does not establish that a company is over-leveraged. One has to look at indicators such as debt-equity ratio, interest coverage ratio, etc. Capital intensive sectors such as infrastructure and capital goods usually have a debt-equity ratio above two, while for companies in software, the figure ought to be much less, below 0.5.

Interest coverage ratio is the company's operating profit divided by its interest cost. The ideal figure once again depends on the sector, but the lower this is, the more a company is shackled by its debt. An interest coverage ratio below one means the company's operating profit is not even enough to meet its interest cost, while a negative figure shows the company is making operating losses.

According to Prime Database, India Inc raised more than Rs.2,000 crore through QIPs in 2012/13 and 2013/14. Fundraising through QIPs has seen a significant jump this year with Rs.20,171 crore already raised so far.

In the mid-2000s, with the Indian economy galloping ahead, many companies embarked on ambitious capacity expansion ventures, including overseas acquisitions, largely funded by debt. But with the downturn, the global economy went into a slide and the domestic economy too followed suit after 2010, totally upsetting their business plans. Increasing difficulties in acquiring land for projects and getting environmental clearances compounded their problems.


Worst affected were companies in sectors such as capital goods, infrastructure, construction, power, and metals, which have long working capital cycles and gestation periods for projects; along with those in drugs and pharmaceuticals. The capital goods sector has seen debt grow at a CAGR of 23 per cent in the last three years. In 2013/14, debt levels increased 17 per cent over the previous year, from Rs.18,500 crore to Rs.21,500 crore. Debt in the metals' sector rose 19.7 per cent in the last three years; in the infrastructure sector by 12.7 per cent. Infrastructure companies' debt increased by 14 per cent in 2013/14, from Rs.5,000 crore to Rs.40,000 crore. The main reason is projects coming to a halt in the power and infrastructure sectors.

One of the means of means of reducing debt is selling off assets. A CRISIL report of July 2014 said 21 companies had announced 36 deals in the past 18 months to divest assets and sell equity to strategic partners which would raise Rs.80,000 crore - nearly a fifth of their total debt. Not surprisingly, 62 per cent of the assets sold will be by companies in the infrastructure sector. The report also estimates that another Rs.60,000 crore will be similarly raised in 2014/15.

These measures have started yielding results. CRISIL's credit ratio (ratio of number of companies showing credit quality improvement to deterioration) was 1.64 times for the first half of 2014/15 with 741 upgrades as compared to 451 downgrades. However, the ratio of the size of debt of upgraded firms to that of those downgraded (excluding financial sector players) was 0.59 times during the same period, showing persistent high debt levels.

Source: Business Today (edited version)

WINNING STROKES: THINK DIFFERENT

Please Click on the Chart to Expand

Suzlon Energy Ltd hit another buyer freeze in the late market hours. On Monday, it will reach my 1st target of Rs.15, where some profit booking should be done. The scrip should consolidate there for the next round of upmove to Rs.17-19. Congratulations to those who bought the scrip and made profit. 

Resurgere Mines and Minerals Ltd today hit another upper circuits before closing at Rs.1.73. The management is taking lot of measures to revive the company. The mining is going on in Soapstone Mines and it is expected that the company could start mining in one of the mines in Maharashtra. The market cap of Resurgere Mines and Minerals Ltd is only Rs.34.41 Cr while the book value of the shares of the company is whooping Rs.27.14. We can look for a target of Rs.5 in the coming days. 

Today Hilton Metal Forging Ltd hit the upper circuits at Rs.21.65 before closing at Rs.21.05. It is one of the cheapest stocks in the sector in which it performs.
Today, was also a good day for the shareholders of Prajay Engineers Syndicate Ltd. The scrip today moved to Rs.11.14, in the BSE before closing at Rs.10.84. It is a huge company and many do not know that it is also into hospitality sector. The stock was recommended to the Paid Members at Rs.10.30-10.40.
Today also, Western India Shipyard Ltd continued its upward journey. The scrip touched a high of Rs.2.65 intra-day before closing at Rs.2.58. The company's gradually improving fundamentals is likely to take the scrip above Rs.5 in the coming days. Thanks to all those who believed in my recommendation and continued to add the scrip on all declines or held the scrip even though it was falling, precariously.
As expected Jaiprakash Power Ventures Ltd (Rs.14.08) went in for a mild correction today, after a whirlwind rally during the last few days. Congratulations to all who entered the scrip early and make decent returns on their investments, within a very short time. The company is coming  up with results tomorrow, which according to my close sources is expected to be good. The scrip was again recommended today at around Rs.14.10-14.20, for a target of Rs.17-20, by the end of next week. Jaiprakash Associates Ltd on the other hand closed in the green at Rs.33. The scrip would now slowly move towards Rs.40-41, in the coming days. Jaypee Group is India's third largest cement producer and the largest private sector hydropower company with 1,700 MW in operation. The Jaypee Group successfully completed projects in 18 states of India and Bhutan. Jaypee is the engineering and construction company for India's Yamuna Expressway, which opened 9 August 2012. According to Wikipedia: JIL, the group flagship, has an engineering and construction wing which mostly supports Jaypee projects. It also has the largest land bank in India's National Capital Region, i.e., New Delhi. Jaypee has four thermal power plants totalling 5,120 MW under construction, and these are slated to go on stream by December 2014. Besides, the Business Standard, October 27, 2014 writes: 

Business Standard has identified some of the companies having potential for strong RoE expansion, of over 300 basis points (bps) in both FY15 and FY16, and robust earnings per share (EPS) growth, based on consensus Bloomberg estimates. Most of these companies belong to beaten-down cyclical sectors and, hence, are likely to witness significant RoE expansion with a revival in macroeconomic growth.

Of the BSE 500 companies, about 30 are likely to witness RoE expansion of over 300 bps each in FY15 and FY16. Of these, 12 are likely to turn profitable over FY14-16 versus a loss in FY14. Four are likely to report a higher compounded annual growth rate (CAGR) in EPS over FY14-16. These are Jaiprakash Power Ventures (up 334 per cent), Ramco Cements (up 311.9 per cent), Motilal Oswal Securities or MOSL (145.6 per cent) and Gujarat Fluorochemicals (118.6 per cent). Barring Lanco Infratech, all other companies are expected to post an earnings CAGR of 26 per cent, to 94.6 per cent over FY14-16.

Goyal pegs power sector investments at $250 bn

Minister says addressing fuel supply issues, increasing private participation high on govt's agenda

Jaiprakash Power Ventures Ltd
Photo: http://jppowerventures.com

New Delhi, November 7, 2014: India's energy sector will see investment of $250 billion (Rs 15.3 lakh-crore) in five years as the government addresses key constraints, including fuel supply issues and problems in private sector participation, said Piyush Goyal, the Union minister for power, coal and renewable energy.

"This will include $100 billion in renewable energy and another $50 billion in the transmission and distribution sector," he said at a gathering of global and domestic investors and policy makers at the India Economic Summit here.

His ministry, said Goyal, had solutions for all the problems being faced by investors. The new government, he said, was focusing on increased private participation in coal mining, in technological upgradation of Coal India's operations and clearances for new mines for the mining behemoth, to double annual coal output from the current 500 million tonnes in a few years. "This will increase the plant load factor of power stations. We are also working out solutions for the issue of stranded gas-based capacity," he said.

And, was going to expand the contribution of solar power in India's overall energy supply. "The original task was to increase solar capacity from the current 2,000 Mw to 20,000 Mw by 2020. Now, the government has raised it to 100,000 Mw," he said, adding the economy of scale achieved will allow technology upgradation that will further drive down costs.

"The government is trying to ensure bankability of power purchase agreements for renewable power. This government will protect investments and remain committed to providing power to all. We are incentivising more production to have grid stability."

Experts at the session pointed to more pressing issues. Bankability of projects, consistent yields on investments, consistency in regulation and policies are some of the key factors that impact investments, said Dong-Kwan Kim, managing director at Korea-based Hanwha Group. "The cost of capital is too high. Many of the off-grid consumers might not be able to afford it."

Ashvin Dayal, the MD of Rockefeller Foundation in Thailand, said some of the key factors that would determine the government's ability to make power available to remote areas are the cost of technology for storage solutions and an integrated approach in decision making and implementation of policies.

Courtesy: The Business Standard

Jaypee Group among 8 firms interested in power project in Himachal Pradesh

[Editor: This shows the depth of the company's firmness in dealing with the current situation and also the commitment of the promoters, to create value for the shareholders; even though a section of the so-called TV analysts, cry hoarse on its fundamentals. We should remember that in any stock market one should always have a vision and have the ability to asses the future of any company; in order to make good profit. Taking Buy/Sell decision based on the current set of fundamentals, is simply boorish and unattractive. Premium Members (those who booked profits at higher levels) were today again suggested to enter the counter around Rs.14.15-14.20. Now the next target for the scrip is Rs.17. The same holds true for Jaiprakash Associates Ltd (Rs.32.80). Earlier, in a filing to BSE, Jaiprakash Power said the Abu Dhabi company is liable to pay a break fee as per the deal agreement after they withdrew from an agreement to purchase two of its hydropower plants in Himachal Pradesh. Therefore, the company infact gained from the process. Also, Karcham Wangtoo (1000 MW) hydropower project in Kinnaur District of Himachal Pradesh isIndia’s largest Hydropower Project, in the Private Sector. Hence, you can understand, you are buying the stocks of which company!!]

Nov 6, 2014: SHIMLA: Around eight companies have shown interest in the 960MW Jangi-Thopan-Powari hydropower project proposed in Kinnaur district of Himachal Pradesh. Among those are Jaypee Group, which is already trying to sell its two hydropower projects - Karchhwam Wangtoo and Baspa-II - situated in Kinnaur district.

Interest shown by Jaypee group has left many surprised as the company is already trying to sell its two projects in Kinnaur. Jaiprakash Power Ventures Limited (JPVL), a subsidiary of Jaypee Group, had entered into an agreement for the sale of 1,000MW Karcham Wangtoo and 300MW Baspa-II projects in Kinnaur district with Abu Dhabi National Energy Company PJSC (TAQA) but the latter had opted out of the around Rs 10,000 crore deal. Himachal Pradesh government had also opposed the deal. Sources said that now, Jaypee is trying to enter into a deal with Jindal group for the two projects.

Sources said that around eight companies have shown their interest in the proposed project and their officials had recently held meeting with officials from Directorate of Energy about terms and conditions and rules. Sources said that these companies would soon participate in the financial bidding. Jangi-Thopan-Powari project is pending before Supreme Court, and it is on the direction of Apex Court that state government has invited pre-bids for the project.

Official sources said that companies showing interest in the project includes Tata Power, Adani, Raliance, Jaypee Group, HSW, SJVNL, NBCC and Uflex. Sources said that with big companies showing interest, the department would invite financial bids shortly only after that it would become clear which company is selected by the government for the project.

The state government had earlier allotted the project to Brakel Corporation as two separate entities of 480MW each as Jangi-Thopan and Thopan-Powari through competitive global bidding process. But on April 23 2013, the cabinet decided to re-bid the Jangi-Thopan and Thopan-Powari projects as a single Jangi-Thopan-Powari project of 960MW capacity as per the new hydel policy. Official sources said that allotment of Jangi-Thopan-Powari project would fill coffers of the state government as upfront premium of around Rs 1,000 crore is expected from it.

Courtesy: The Times of India

WINNING STROKES: THINK DIFFERENT

Suzlon Energy Ltd hits the buyer freeze on the late trade at Rs.14.07 on the BSE. With so much buzz on wind energy around and the NDA introducing sops for the sector, the scrip will soon see the levels of Rs.29-30, in the coming days. Meanwhile, there were media reports the wind turbine maker Suzlon Energy expects to receive additional orders worth about Rs.3,250 crore this fiscal on the back of government re-instating the accelerated depreciation scheme.  Moreover, on Oct 31, 2014, Bloomberg, reported: 

Suzlon Energy Ltd. (SUEL), Asia’s biggest wind-turbine maker, said its business is recovering sufficiently to meet loan repayments that began this month after a two-year debt holiday ended. The Pune, India-based company’s net loss narrowed to 6.56 billion rupees ($107 million) in the three months through September from 7.82 billion rupees the previous year, according to an e-mailed statement today. Operations are improving and revenues are expected to increase in the second half, said Kirti Vagadia, group head of finance. 

Suzlon, which suffered India’s biggest convertible-bond default in 2012, is seeking to emerge from a debt reorganization program by the end of the fiscal year. As part of a $1.8 billion restructuring, domestic lenders had agreed to a two-year moratorium on loan repayments that has now ended, Vagadia said. Interest dues, which were being converted into equity, will now have to be paid in monthly cash payments of about 500 million rupees, Vagadia said. Principal repayments will be spread over 10 years and start off small, he said.

India last month officially reinstated a wind-farm tax benefit that was first announced in July. The effect of that policy change will start to become visible in orders later this year, Vagadia said. The company has already received about 150 megawatts of new orders linked to the restored incentive, according to an investor presentation today.Suzlon reported a 12 percent increase in revenue to 53.8 billion rupees. Finance costs rose 8 percent to 5.23 billion rupees. 

Suzlon Energy will invest close to Rs.15,000 crore in the next five years to set up power projects of 2,000 MW capacity in Madhya Pradesh. The company will also set up a manufacturing base in the state. 

My recommended J P Power Ltd (Rs.14.72) at around Rs.12-12.30 a few weeks back, touched Rs.15.85, in the early morning trade. Even J P Associates Ltd, which was recommended around Rs.29-30, yesterday touched Rs.34.35, before closing at Rs.32.85. Now while J P Power Ltd is expected to consolidate around the current ranges, the next round of move is likely to come from J P Associates Ltd. 
With the inflation trajectory trending down and chances of interest rates CUT by the RBI increasing, banking and auto sectors will do well and there will be buying interest from foreign investors who have been selectively buying these stocks. It is basically due to this reason, that the FIIs holding in Jaiprakaash Associates Ltd (J P Associates Ltd) inspite of so much negative news from these so called TV-analysts, have changed very little (only 2.22% down). The scrip should cross Rs.40, by the end of the next week. Remember, when most of the TV analysts asks all to exit a counter, it is time to enter; because of the obvious reasons. These people have been parroting the same stereotyped wordings, since the scrip was below Rs.29. Meanwhile, J P Associates Ltd gave more than 15% appreciation and J P Power more than 30%, to those traders/investors who did not hear them....Most of these so called analysts, suffer from a disease of "Dalal Street", called "Herd Mentality"---they cannot think beyond a certain point; problem lies here.

My recommended Western India Shipyard Ltd yesterday, touched Rs.2.48, before closing at Rs.2.45. With the fundamentals of the company improving, we could, soon see the levels of Rs.5, in the coming days. The scrip was repeatedly asked to be accumulated in this blog. 
Hilton Metal Forging Ltd yesterday closed in the green at Rs.19.70, after making an intra-day high of Rs.20.15.  This is one of the cheapest stocks in the sector in which it performs. A decent P/E re-rating can take the scrip to around Rs.31-32, in the coming months. 

Celebrity Boutique Hotel Begumpet

Prajay Engineers Syndicate Ltd yesterday made a high of Rs.10.85, before closing at Rs.10.29. The company has huge land bank of around 738 acres, most of which were acquired by the company at low prices long back, but its market cap is only Rs.73 Crores. Also, I think many do not know that Prajay Engineers Syndicate Ltd is also into hospitality sector. Celebrity Hospitality Services (the hospitality division of Prajay Engineers Syndicate Ltd), has been providing unparalleled service in the hospitality industry for the past 8 years. Its team of dedicated employees, guided by the Board of Directors of Prajay, has been striving hard to provide the clients, comfort and satisfaction. Doesn't it look absurd? Therefore, should the price of the share go up?

Do you know?

(i) Do you know that Prajay Engineers Syndicate Ltd (Rs.10.30) has a comfortable land land bank of  around 738 acres, most of which were acquired by the company at low prices long back, but its market cap is only Rs.73 Crores. Doesn't it look absurd? Therefore, should the price of the share go up?

(ii) Do you know that Hilton Metal Forging Ltd (Rs.19.60) is one of the cheapest stocks in the metal forging sector? 

Land acquisition law may be eased for PPP projects

Need for consent of affected families and social-impact assessment could go

Photo: Reuters

New Delhi  November 5, 2014: The National Democratic Alliance government is planning to exempt public-private partnership (PPP) projects from the need to obtain consent of affected families and the mandatory social-impact assessment, through amendments to the land acquisition law.

In the Bill put up by the previous government and passed by Parliament, PPP projects need consent of 70 per cent of affected families and have to study the social implications in the neighbourhood.

Most states, irrespective of being ruled by the Congress or the Bharatiya Janata Party, sought scrapping of the social-impact study, claiming it would delay land acquisition by two years. The same reason was cited against the consent clause, too. An alternative formula was suggested, for reducing the consent requirement to 50 per cent of land owners. "The Act provides for obtaining consent from 70 per cent of affected families in the case of acquisition for PPP projects. This will be a big ask and identifying land owners in the initial stage will create problems. This will delay initial acquisition proceedings," Kerala's revenue minister had argued.

The exemption is one of the amendments that might be proposed by the department of land resources. The department of law and justice has endorsed the changes and has said the Centre has the powers to bring these in through an ordinance. A final decision is awaited.

The draft amendments in The Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation & Resettlement Act are expected to go to the Cabinet for clearance. The Act came into force on January 1, by repealing the Land Acquisition Act, 1894.

No dilution has been proposed in rehabilitation & resettlement practices. However, projects governed by 13 laws in the fourth schedule of the Act could be given a concession period of five years, to bring in rehabilitation & resettlement provisions on par with or greater than those provided in the law.

In the earlier law, the concession period was around one year. Some of the laws that provide for land acquisition include The Atomic Energy Act, 1962; The Metro Railways (Construction of Works) Act, 1978; The Land Acquisition (Mines) Act, 1885; The National Highways Act, 1956; and The Special Economic Zones Act, 2005.

Some state governments had represented to the Centre that projects needed by farmers, such as irrigation, canals and roads, were being delayed by lengthy procedures and contradictory sections in the new law. These will be streamlined.

The new land acquisition law was formulated by the previous government and passed by Parliament. Soon after the NDA government took over, there were consultations to bring in changes. Rural Development Minister Nitin Gadkari held discussions with all states in June. His ministry sent a list of proposed amendments to the Prime Minister's Office after it received inputs from the states.

Courtesy: Business Standard

Jaiprakash Associates Ltd: Beautiful Chart

After relaxation of the FDI Norms for the construction sector, the National Democratic Alliance government is planning to exempt public-private partnership (PPP) projects from the need to obtain consent of affected families and the mandatory social-impact assessment, through amendments to the land acquisition law. This is going to another, good news for the stocks in the construction sector--the scrips like J P Associates Ltd (Rs.33.15), IVRCL Ltd (Rs.19.70), etc.would be one of the biggest beneficiaries. 

Moreover, today, eight metals shares fell by 0.76% to 2.79% on BSE on weak Chinese economic data. The S&P BSE Metal index had underperformed the market over the past one month till 3 November 2014, rising 4.20% compared with 4.86% rise in the Sensex. The index had also underperformed the market in past one quarter, falling 7.61% as against Sensex's 9.34% rise. 

However, low price of Steel (or metal) is positive for the construction sector. China is the world's largest consumer of steel, copper and aluminum.

There’s finally some good news for India’s beleaguered power sector

Coal India's Performance

November 3, 2014: This hasn’t been an easy year for Coal India, the government-controlled mining company that supplies fuel to 82 of India’s 86 coal-based power plants.

But after seven consecutive months of missing its production target, the Kolkata-headquartered mining company has finally delivered. In October, Coal India produced 53.40 million tonnes of coal (PDF), one percentage point higher than its target for the month.

While Coal India’s production has increased by over 5 million tonnes since Oct. 2013, the company has also substantially scaled back its targets. Meanwhile, compared to July 2014, the company’s coal offtake—the amount of coal dispatched—remained almost flat at 39.11 million tonnes, missing its target by four percentage points.

Between April 2014 and Oct. 2014, Coal India’s overall production has increased by 6.6% but remains at only 97% of the desired target of 259.85 million tonnes.

Nonetheless, its performance in October should be a shot in the arm for the coal miner, which is likely to see the government—its biggest shareholder—dilute its stake later this year.

But it’s been a difficult few months for Coal India.

First, it faced flak after coal stocks across multiple power plants fell to alarmingly low levels because Coal India, along with its seven coal producing subsidiaries, just wasn’t able to supply enough fuel.

Next, pressure mounted after the Supreme Court cancelled almost all coal mining allocations since 1993, putting Coal India under further scrutiny. And finally, the government in late October announced its intention to open up India’s coal sector to private players; Coal India has enjoyed a near monopoly since the 1970’s.

The government’s proposed stake sale and its move to allow private coal mining has irked Coal India’s powerful unions, who have now planned to protest by going on strike on Nov. 24. That’s unlikely to help the company’s coal production at a time when the country needs it to perform.

Courtesy: Quarts

Suzlon trims loss by 28% in second quarter

PUNE, NOVEMBER 2, 2014:  A focus on more remunerative markets and introduction of newer products with higher margins have helped wind energy major Suzlon trim its losses in the second quarter of the current fiscal in comparison to the same quarter of last year.

The standalone entity Suzlon Energy has reported a loss of Rs.528 crore in Q2 2015 against Rs.734 crore in Q2 2014 representing a drop of around 28 per cent in loss year-on-year.

The Q2 2015 loss includes Rs.172 crore written off against losses of one of its subsidiaries that appears in the financial statement as an exceptional item.

Income in the two quarters under review rose by 25 per cent to Rs.754 crore and Rs.599 crore, respectively. On a consolidated basis, the Group posted a loss of Rs.634 crore in Q2 2015 against a loss of Rs.778 crore in Q2 2014 indicating that the company has cut its loss by around 19 per cent.

The Group’s total income also rose 11.8 per cent to stand at Rs.5,389 crore against Rs.4,809 crore in Q2 2014. Suzlon has posted its third consecutive quarter of positive EBIDTA at consolidated level moving from a loss of Rs.31 crore to a profit of Rs.114 crore.

The improved results were on account of the change in the products mix and launch of new generation products with better margins, change in the market mix and better execution of orders, Vagadia said.

On Friday, the Suzlon scrip closed at Rs.13.45 up by 1.97 per cent on the BSE.

Courtesy: The Hindu Business Line

Wind energy sector in India expected to attract Rs.20,000 crore of investments 

Photo: Indian Wind Energy Associaion

NEW DELHI, 4 Nov, 2014: India's sluggish wind energy market is set for a revival following the restoration of a depreciation incentive, which is expected to attract about Rs 20,000 crore of investments next year as companies across sectors add 3,000 MW of capacity powered by this renewable source of energy. 

The reintroduction of accelerated depreciation (AD), which was withdrawn in 2012, is poised to support equipment manufacturers, including Suzlon Energy Ltd, the country's largest wind turbine maker, which received 150 MW of orders soon after the benefit was brought back. 

"Investment of Rs 20,000 crore is expected in the next fiscal year, with 70% coming as debt. Rs 5,000-6,000 crore can come from equity. Keeping the potential of wind energy in mind, it's still not big money," Chintan Shah, President (Strategic Business Development) at Suzlon, told ET. 

Accelerated depreciation allows a higher level of an asset's value to be written off in the first few years, reducing taxable income. The government proposed reintroducing the benefit in July. Wind power accounts for the biggest chunk of India's renewable energy capacity. Reinstatement of AD makes wind energy attractive for captive use by companies and some even want to hive it off as a separate business unit due to stable long-term returns. 

"We've been investing in wind energy since 2006 and stopped during 2013-14 when AD was withdrawn. Back in 2006, investment in wind was a taxsaving tool but that's no more the case. We're hiving it off into a separate business vertical," said Sharad Saluja, Director, Sterling Agro Industries, the maker of Nova dairy products. 

The company, which has plants in Haryana, Madhya Pradesh and Uttar Pradesh, plans to add 20-30 mw each year until 2017, investing about Rs 300 crore, with 13 megawatts already under commissioning, Saluja said. Ayurvedic pharmaceutical firm Shree Baidyanath Ayurved Bhawan is setting up an independent power unit to harness wind power. "We're investing close to Rs 450 crore towards the addition of 75 MW of wind energy this year. In the long term, we'd like to scale it up to 500 MW," Baidyanath MD Pranav Sharma told ET. Global consultancy firm KPMG is advising the company for the setting up of Baidyanath Private Power Ltd. 

Cement behemoth Holcim Group, which owns ACC and Ambuja CementsBSE 0.07 %, plans to invest Rs 120 crore to add 20 MW of wind power to its existing 26.5 MW, which is the combined capacity of both units. Small and medium enterprises, Surat-based zari exporter 

Sumilon Industries, like are equally enthused and hope to become more efficient by using cheaper clean power. 

Surat-based zari exporter Sumilon Industries, which meets half of its energy needs through wind power, plans to add 4.2 MW over the next two years to its existing 7.4 MW capacity. 

"We plan to be a green company in the next five years. Since windmills are expensive, without AD, wind energy is not viable," said Sumilon Industries Director Nikunj Jariwala. 

Courtesy: The Economi Times

Suzlon expects more orders on accelerated depreciation booster

New Delhi,  November 3, 2014: Wind turbine maker Suzlon Energy expects to receive additional orders worth about Rs 3,250 crore this fiscal on the back of government re-instating the accelerated depreciation scheme. 

The accelerated depreciation scheme, that would provide relief for wind energy projects, came into force from mid-September. 

According to sources, Suzlon expects to receive additional orders to the tune of 500 MW, worth about Rs 3,250 crore, in the current fiscal on account of AD scheme. 

On a conservative basis, setting up 1 MW of wind energy generation capacity costs about Rs 6.5 crore. 

Accelerated depreciation (AD) refers to calculation that allows for higher deductions towards deprecation in the early life time of an asset. 

When contacted, Suzlon Group Head of Finance Kirti Vagadia told PTI, "We expect to receive more orders in third and fourth quarters on account of accelerated depreciation (scheme)". 

However, he did not divulge size of expected orders. 

The scheme, which had benefited the wind energy sector, was withdrawn by the earlier government in 2012. 

"To encourage the wind energy programme, there is an accelerated depreciation. There was a confusion whether we have extended it or not. Members wanted it to be extended. I am, therefore, continuing with that accelerated depreciation," Finance Minister Arun Jaitley had informed the Lok Sabha in July while replying to a debate on the Finance Bill. 

At the end of September, Suzlon's order book was worth USD 6.3 billion, with emerging markets alone accounting for about USD 1.1 billion. In terms of capacity, the order book stood at around 4,600 MW. 

Suzlon saw its consolidated net loss narrowing to Rs 656.21 crore in the three months ended September from Rs 782.37 crore recorded in the year-ago period. 

This figure is after taking into account 'share in minority interest'. 

In the second quarter (ended September) of current fiscal, the wind turbine maker's total income climbed to Rs 5,378.89 crore from Rs 4,808.90 crore in the same period a year ago.

Courtesy: Business Standard

Easier FDI in real estate means govt is inflating India’s urban housing bubble

[Editor: This news report says: (i) The move (relaxation of rules for foreign direct investment)  has surely been cheered by the real estate sector, for it will bring in much needed capital for those steeped in debt (ii) It is possible to fuel prices by creating a stock of inventory, diverting  money to other projects and investing to build land banks for future projects. With this thought in mind two real estate stocks/construction stocks, Jaiprakash Associates Ltd and Prajay Engineers Syndicate Ltd were recommended recently (since both the stocks did not participate fully in the whirl-wind rally). Moreover, in addition to this two scrips, the shares debt laden companies like IVRCL Ltd (Rs.20.50) is also likely to get sentimental upward-push. The Indian real estate companies apart from taking advantage of the new FDI rules, are expected to benefit in future, as the RBI is likely to start cutting interest rates from February, 2014 or may be before that]

Oct 30, 2014: India's relaxed rules for foreign direct investment (FDI) in construction will make it easier for foreigners to invest in real estate. While the move has surely been cheered by the real estate sector, for it will bring in much needed capital for those steeped in debt, it could bring more pain for home buyers. Reason: more foreign money in realty means higher property prices. Simple demand-supply logic.

Current urban realty prices represent affordability for a microscopic few, while the average home buyer will have to exchange 20-30 years of future earnings to afford a house.

Under earlier rules, the government allowed 100 percent FDI in real estate development but with strict riders, including a lock-in period of three years during which the investment cannot be repatriated. Under the new rules, the minimum built area for projects in which foreign investment is allowed will be reduced to 20,000 square metres from 50,000, the government said in a statement late on Wednesday. For "serviced plots", there is no minimum land requirement now, compared to 10 hectares earlier, while the  minimum capital investment by foreign companies has been cut to $5 million from $10 million.

"The announcement literally comes in the nick of time for Indian real estate. Construction, housing and real estate segment's share in total FDI had further slipped from 5 percent in the previous year to under 3 percent as of the current fiscal until August. In fact, its share has been consistently falling over the last six years since 2009-10, when it stood at over 20 percent. Meanwhile, developers continue to reel under high levels of debt, even as the channels of funding have shrunk. The easier rules will help faster completion of projects delayed by a squeeze on funds due to elevated debt levels," said Anuj Puri, chairman and country head at Jones Lang Lasalle India.

But a back-of-the-envelope calculation by Vallum Capital Advisors shows that an FDI-compliant project sale of $150 million requires a peak investment (except land and approval) of not more than $20 million, implying that private equity (PE) investment is not needed to support the project. It is possible to fuel prices by creating a stock of inventory, diverting  money to other projects and investing to build land banks for future projects. This essentially defeats the very purpose of allowing FDI in the real estate sector for making housing affordable. 

The reduction of minimum requirements for built areas and capital will now allow investment to flow into South Mumbai or central Delhi. Till now investment was going to the outskirts because it was tough to find large areas to develop or construct 50,000 square metres. So  the new rules will encourage the development of smaller projects, especially in urban areas, where the availability of land is limited.

More construction in prime areas does not imply that property prices here will come down. In fact, buyers are most likely to see more Rs 60 crore prices for 2 BHK flats in tony areas of south and central Mumbai areas like Worli or Peddar Road. This is because demand for houses in posh areas far exceeds supply and builders will cater to this snob requirement rather than construct 'affordable flats' in south Bombay or south Delhi.

The lower area requirement is also expected to result in more interest in smaller towns as the reform would now allow foreign investors to invest in smaller projects spread over land parcels of about three to four acres. This means that speculation in real estate is once again bound to rise and spread to smaller towns. "Allowing easier FDI in construction only spells bad news for home buyers because it is expensive capital seeking high returns," says Pankaj Kapoor, MD of real estate research firm Liases Foras.

Once the government allows more hot money to come in, investor expectations from returns on investment rise without any consideration for affordability. If builders have to ensure that investors get bang for the buck, they have no choice but to prop up realty prices. How else will they manage to deliver 25 percent RoI?

"Take the case of the NRI investor battle against ICICI. Investors have sued them for not delivering 25 percent returns as promised from the investment in a property fund. This is the case with most investors and, by easing the investment norms for them, the government is in essence creating an investor's market rather than a buyer's market. FDI in construction will kill the property market and I am seriously thinking of filing a PIL against the new norms, " said Kapoor.

The real devil lies here: While an investor will  be allowed to exit on completion of the project, or after three years, from the date of final investment, whichever is earlier, the government may also permit repatriation of FDI or transfer of stake by one non-resident investor to another non-resident investor, before the completion of the project. 

Such a move will not only make it easier for investors to repatriate profits, but also  increase speculation in the market since investors will once again trade in properties like they do in stocks, which in turn will make houses even more unaffordable for both middle class and masses.

And the  permission to sell completed projects to foreign investors will help builders get much-needed liquidity to trim their debt and hoard more inventory for longer.

For the benefit of consumers, there is just once clause which  makes it mandatory for developers with foreign funding to only sell "developed plots". This means tracts that have trunk infrastructure, including roads, water supply, street lighting, drainage and sewerage.  The fine print, otherwise says the real winners are the builders and investors once again.

In 2013, PE money started returning abroad as investors had stayed invested for seven to eight years. This marked the beginning of a slowdown in FDI in real estate. Builders increased prices  to accommodate investors at every stage of the development, thereby creating a false sense of price appreciation. With a steep slowdown in genuine sales (both Delhi and MMR currently have the highest unsold inventory), they are stuck in a catch-22 situation. By opening the floodgates to investors once again, the government is doing the exact opposite of deflating the housing bubble.

Courtesy: Firstpost.com

Market Mantra

The two Jaiprakash Group stocks, J P Power Ltd (Rs.13.80) and J P Associates Ltd (Rs.31.80) are on fire today. Though both the scrips are expected to move up vertically from here, but the more momentum is likely to be seen in the shares of the Jaiprakash Power Ltd. I think soon we will again see the levels of Rs.20, for the share. 
Gitanjali Gems Ltd (Rs.59) is showing good  upmove today. The marriage season and Christmas buying, should firm up its top and bottomlines. We could soon see the target of Rs.72-73, in the coming days. 
Allied Digital Services Ltd hit another buyer freeze in the opening trade. The company is expected to come up with better set of numbers from Q3FY14.

Suzlon Energy Ltd again becomes a buy around Rs.13.45, after yesterday and today's consolidation phase. The scrip will is expected to touch Rs.17--19, in the short term. Those who have booked profits in the counter can again enter it and keep holding. 
The shares of IVRCL Ltd are on a roll since the new of FDI in construction came up. The scrip is slowly inching towards Rs.24-25 mark. 
Hilton Metal Forging Ltd can be bought at the CMP of Rs.19, for a target of Rs.31-32, in the short term.  
Marg Ltd hits another buyer Freeze at Rs.14.25. Those who are holding or have taken fresh positions, should celebrate. 
The investors with risk appetite can go for the shares of Prajay Engineers Syndicate Ltd at around Rs.10.40. The company has a huge land bank not only in Hyderabad and Vizag, but also, in the Guntoo--Vijaywada road, according to my close sources. 

Buy SAIL; target of Rs.103: BP Equities BP 

Equities is bullish on Steel Authority of India (SAIL) and has recommended buy rating on the stock with a target of Rs.103 in its October 28, 2014 research report.

“Steel Authority of India Limited (SAIL) is a fully integrated iron and steel maker, producing both basic and special steels for domestic construction, engineering, power, railway, automotive and defence. SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanised sheets, electrical sheets, structurals, railway products, plates, bars and rods, stainless steel and other alloy steels. SAIL produces iron and steel at five integrated plants, namely Bhillai (3.15 MTPA), Bokaro (3.9 MTPA), Durgapur (1.6 MTPA), Rourkela (1.7 MTPA) and IISCO steel plant (2.5 MTPA) with a total capacity of 12.4 MT in FY14 (2nd highest in India).” 

“SAIL’s on-going Modernization & Expansion Plan (MEP) will increase it’s saleable steel capacity from 12.4 MT to 20.2 MT and improve efficiency as well. The MEP will also serve to improve SAIL’s product mix to match the forthcoming rise in demand by increasing share of Structural's (4% to 14%), Bars and Rods (13% to 19%) and Railway products (13% to 19%) while rationalizing other product categories. 

We believe that SAIL’s product and cost rationalizations is planned and placed well to exploit the forthcoming lucrative domestic demand scenario and wave of infrastructure wave. The Government’s intention towards reviving the economy was evident in the Union Budget’s inclination towards infrastructure investment, manufacturing and formation of a dynamic investment climate. 

The budget’s emphasis on investments in infrastructure - namely Railways (Golden Quadrilateral, Connectivity in North Eastern India, etc.), Ports, Airports (development of airports in Tier I and Tier II cities), Roads, Construction (100 smart cities) and improved urban infrastructure (waste management plants, revamped public transport, etc) - through PPP route indicate higher demand for long products in forthcoming quarters as sanctioned and initiated projects are increasingly implemented.” 

“We believe that the Modernization and Expansion Program should result in improvements in efficiency and productivity, apart from an increase in saleable steel output. Additionally, demand revival on account investment push in infrastructure, manufacturing and equipment and impetus given to domestic steel industry is expected to drive volume growth going ahead. 

We initiate with a BUY rating on the stock to arrive at a DCF based target price of Rs. 103* (~27% upside from CMP). The stock currently trades at a EV/EBITDA of 9.7x and 7.3x FY15E and FY16E earnings respectively,” says BP Equities research report.

Courtesy: Moneycontrol.com

Jaiprakash Associates Ltd: Some Points

Manoj Gaur

• In the recently held Global Investors Summit in Madhya Pradesh, J.P. Gaur of diversified firm Jaiprakash Associates Ltd promised an investment of Rs.35,000 crore and also offered to develop Rewa as a smart city. 
• Aditya Birla group firm Ultratech Cement is believed to be looking at possible acquisition of Jaypee Group's three cement plants in Madhya Pradesh in a deal that could be worth about Rs.5,500-6,000 crore. 
• In a recent interview, Mr.Deepak Narang, ED, UBI, said, that their loan account with J P Associates Ltd: "As of now is standard. Once we are able to sell their assets we will be able to get back our money. We have already demanded money from them. We have raised an issue". This means anyhow, the next round of stake sell would happen. 

• The company also recently said in regards to the news report appearing in a financial daily, titled, "Jaypee may sell Bhilai unit to Shree cement": While on the subject we may add here that, as already announced on various occasions, with a view of enhance the stakeholders' value, the Company has its firm resolve to reduce its debt including through disposal of some of its assets/investments.
• Meanwhile, last month while addressing the gathering, elangana Retired Engineers Forum (TREF) general secretary Mereddy Shyamprasad Reddy appealed to Chief Minister K. Chandrasekhar Rao to release funds required to complete 44 km. long SLBC tunnel project. He said the Rs.1,920 crore worth project tenders were bagged by Jaiprakash Associates Limited in 2005 but the works were stalled as the engineering firm is demanding payments according to the increased expenditures besides sanctioning of some pending bills. Mr. Reddy said though the Jaiprakash Associates had agreed to complete the project by 2010, it was delayed because the successive Seemandhra rules delayed payments to the project intentionally. About Rs.1,150 crore have already have been paid to the contractor, he said. Another positive development in case of J P Associates Ltd. 

THIS MEANS BY HOOK OR CROOK THE STAKE SELL IS GOING TO HAPPEN AND THE COMPANY WOULD PARE ITS DEBT. In between if they can go for another round of QIPs, then further debt reduction is possible. Meanwhile, the 1st round of interest rate cut by the RBI, would probably happen in February, 2014--this is expected to bring in much relief to its HIGH interest outgo of J P Associates Ltd. Apart from this relaxation of FDI norms in the construction sector and revamping of the wind energy sector, would be positive for the company. It is to be noted that a few months back, the company raised nearly Rs.1,500 crore from investors at Rs.70 per share, through QIP-route. 

The shares of the J P Associates Ltd (Rs.30.10) which broke out of the earlier trend on last Friday,  after a long consolidation phase is likely to move up vertically from here and reach Rs.55-60 in the medium term. 

Jaiprakash Associates Ltd: Bullish Pattern is being formed on the Chart

The shares of Jaiprakash Associates Ltd (J P Associates Ltd), could see a vertical rise from here, on the back of Japanese Stimulus Package, apart from the news of stake sale. The scrip has given a clear break-out on the daily chart. The scrip is above its 21D EMA and SMA. Moreover, Jaiprakash Associates Ltd's proposed merger of subsidiary Jaypee Sports International Ltd with itself has received green signal from National Stock Exchange.

The Company has been operating Wind Power Project of 49 MW (40.25 MW in Maharashtra and 8.75 MW in Gujarat). Out of the aggregate capacity of 49 MW, 16.25  MW  (13  generators each  of 1.25 MW) was commissioned during December 2006 to March 2007 at Dhule in Maharashtra. The remaining 32.75 MW was commissioned at Sangli, Maharashtra (24 MW- 16 generators each of 1.5 MW) during September 2007 to March 2008 and at Kutchh, Gujarat (8.75 MW- 7 generators each of 1.25 MW) in  March 2008. The electricity generated from the project is being sold to Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) in Maharashtra and Gujarat Urja Vikas Nigam Limited (GUVNL) in Gujarat. The energy sold and the revenue from sale of electricity during the FY14 were 89.41 Million units and Rs.37.15 crores against 94.74 Million units and Rs.38.19 crores respectively in the year 2012-13. The recent development on wind energy projects, brought about by the NDA government would help the company. 

The Company (either directly or through its subsidiary/ JVs) is engaged  in  the business of  Heavy  Civil Engineering Construction, Expressways, Cement Manufacturing, Generation of Power, Real Estate and Hospitality. The Business of construction of Hydro-Power Projects is operated from various sites of the Clients. Therefore, the relaxation of FDI investment norms for the construction sector is positive for the company.

The government on last Wednesday eased rules for foreign investment in the construction sector by allowing inflows into projects spread over a smaller area. The move may result in overseas players participating in the development of malls and office spaces in central Delhi and South Mumbai.

As an added sweetener for foreign investors, the Union cabinet also decided to ease the rules for them to exit the project and repatriate profits. For the benefit of consumers there is a clause that will make it mandatory for Indian companies with foreign funding to only sell "developed plots", which means tracts that have trunk infrastructure including roads, water supply, street lighting, drainage and sewerage.

While the government allows 100% FDI in construction, the rules related to minimum area requirement and exit of investors were hampering overseas interest, especially when the sentiment in the sector depressed. 

Consultants said that the biggest change is the reduction in the construction and development requirements. The minimum floor area requirement for construction and development has been reduced from 50,000 square metres to 20,000 square meters. For "serviced plots", there is no minimum land requirement now, compared to 10 hectares earlier. 

These moves will help in inner-city development. The lower area requirement is also expected to result in more interest in smaller towns where the requirement for large top-of-the line office or residential complexes is limited.