DO YOU KNOW?

The FIIs have almost exited the IT-company, Allied Digital Services Ltd (Rs.31.60). The latest (December, 2014 quarter) shareholding pattern shows the FIIs holding as only 0.06% against the 2.96% of the September, 2014 quarter.

In such circumstances, it would be better to book complete profit in the counter and wait for it to come up with QFY15 results. If the results are good then we can look for fresh entry. 

The point of apprehensive is that: one of the key figures, have already left the company and now with dismal FIIs figures, it does not augur well for the shareholders. Anyway, let us hope for the best. 

WINNING STROKES: THINK DIFFERENT

There is no stopping of Rohit Ferro Tech Ltd. Today it, closed at Rs.8.98 up 6.27%, in the BSE; giving a bullish breakout on the daily candle stick chart pattern.  It is pertinent to mention here that the share has already given more than 15% return in the last two days. Moreover, the company earlier informed that, 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. 10 per Warrant) will be allotted to the promoters.  This gives some sort of datum for the shareholders, regarding its future price. Also, the company will be disposing of the Jajpur manufacturing unit located at Kalinganagar Industrial Complex, District: Jajpur, Orissa by the way of slump sale or otherwise, to further reduce the debt. The next targets for the scrip are Rs.9.60-10.4-11.20--12.30-14. Therefore, do not sell the shares in a hurry. Infact accumulate the share on intra-day declines. 

Reliance Capital Ltd today reached its 1st target of Rs.492, as it touched Rs.495, intra-day. The next target for the scrip is Rs.503, where some profit booking is expected. 

Today Jaiprakash Power Ventures Ltd (Rs.12.15) closed above a crucial resistance level. Hence, we could look for bullishness in the scrip in the coming days. Moreover, once Rs.12.60 is broken on the upside, we can look for targets of Rs.13.50-15.

The SAW Pipe manufacturer, Jindal Saw Ltd today closed at Rs.81.40 in the BSE, after touching Rs.83 in the morning trade. It is to be remembered that as the price of crude oil starts to move up in the international market, the company would also benefit, immensely. Meanwhile, Brent crude was up 1.3% at $53.65 a barrel, having reached $55, while US oil rose 1.7% to $48.52, as investors speculated that the falling cost of crude may have ended.

Firstsource Solutions Ltd (Rs.29.15), saw good delivery based buying today, as the percentage of Deliverable Quantity to Traded Quantity was 35.43% in the BSE. A meeting of the Board of Directors of Firstsource Solutions Ltd will be held on February 09, 2015, to consider, the audited standalone and consolidated financial results for the quarter ended December 31, 2014 (Q3). The next target for the scrip is Rs.32, once it closes above Rs.29.70.

Nifty which today closed at 8797.40, should get support at around 8740-8605 ranges; though today both the FIIs and DIIs were net sellers, as Obama effect died down.

Jindal Saw Ltd: Operational Highlights

Jindal SAW Ltd (Rs.81.10) is the flagship company of the US $ 18 billion O.P. Jindal Group. The company is in a commanding position in India's tubular market, being the undisputed leader with a turnover in excess of Rs.7500 crores. It is one of the country's largest producers of SAW pipes, which is widely used in the energy sector for the transportation of oil and gas.

With integrated facilities at multiple locations and an ever expanding market opportunity, Jindal SAW Ltd has diversified from a single product company to a multi-product company, manufacturing large diameter submerged arc pipes and spiral pipes for the energy transportation sector; carbon, alloy and stainless steel seamless pipes and tubes manufactured by conical piercing process used for industrial applications; and Ductile iron (DI) pipes for water and wastewater transportation. 

Besides these, the company also provides various value added products like pipe coatings, bends and connector castings to its clients.

Now, if the price of Crude Oil continues to improve (moves up), from the current rates, in the international market, the demand for its products might take an exponential jump; as new rigs will start to function, escalating the demand for SAW Pipes.

The investors are therefore, suggested to buy the scrip of Jindal Saw Ltd, for a short term target of Rs.92. 

DO YOU KNOW

Firstsource Solutions Ltd (Rs.29.20) has informed BSE that a meeting of the Board of Directors of the Company will be held on February 09, 2015, inter alia, to consider, the audited standalone and consolidated financial results for the quarter ended December 31, 2014 (Q3).

The results according to my sources will be along the expected lines. Therefore, investors should board the train, before it leaves the station. 

The economics of falling oil prices 

India should use the opportunity presented by cheap oil to spur growth and dismantle energy subsidies

$40 marked the Global Financial Crisis low in Brent crude oil, which makes it an important support level.
Photo: Frobes

1 February, 2015: Global oil prices hovering below $50 per barrel is not a surprise. The surprise is how long oil prices stayed above $100. The decline, at long last, is good news for the world economy and India. International Monetary Fund (IMF) simulations suggest this will directly boost world growth by up to 0.7% and more for big oil importers such as India. Low oil prices also provide an opportunity for governments around the world to lower interest rates—spurring investment—and phase out harmful energy subsidies that amount to over $600 billion per year. More growth should follow that. 

The winners from lower oil prices are spread widely, the losers are concentrated and more vocal for it, shading the mood. There will be dislocation to the economies of big oil exporters beyond what we have already seen in Russia, Venezuela and Nigeria. Also affected will be oil companies and stock markets heavily weighted to oil and oil service companies and to those that sell what the oil exporters spend their $1 trillion of oil export revenues on. This is not just homes in Kensington and cars built in Munich, but also, and perhaps particularly for the likes of Indonesia, Nigeria and Algeria, the products sold to them by India’s manufacturers and service providers. 

But don’t let that shove the good news behind a bushel. Some fret that lower oil prices signal a slowdown in economic growth in general and particularly in China where growth has decelerated to its slowest pace in 24 years—7.4%. This last statistic is pretty meaningless. After 24 years of 10% annual growth rates, the additional gross domestic product (GDP) created from an economy that has slowed to a growth rate of 7.4% is seven times greater than that of the same economy growing at 10% 24 years earlier. Even a slowing China imported seven million barrels of oil per day in 2014, more than the US and 30 times more than it imported 24 years ago. 

There are demand factors weighing on oil prices but they are structural, not born of the economic cycle. Although the US economy was 10% larger in 2013 than in 2005, consumption of petrol, diesel, jet fuel and other refined products was down 12%. The best solution to high oil prices is often high oil prices, meaning that expensive oil is a strong incentive to conserve. But there were a raft of other incentives too. The US Energy Policy Acts, and the Energy Independence and Security Act, 2007, were among the many initiatives around the world after 2004 that intended to promote conservation. Fuel economy standards for vehicles were raised, ethanol blending targets increased and much more. Lower oil prices may relax the pressure to find further efficiencies, but past gains are seldom reversed. 

Those surprised by the drop in oil prices believed two things: the shale revolution would be stifled by environmental concerns and the Middle East was burning itself down. Often these beliefs served other causes, but whatever the motive of their proponents, the reality was different. The quadrupling of oil prices between 2002 and 2012 financed technological improvements in downhole steering and telemetry that paved the way for the shale revolution. In 2005, fewer than 150 oil wells were drilled into the Bakken formation beneath North Dakota. Last year it was over 2,000. Shale oil production surged from 2,500 barrels of oil per day in 2005 to approximately one million at the end of 2014. Today, shale represents 5% of total oil consumption. 

Shale oil still only makes commercial sense when oil prices are north of $30 per barrel and in some places, north of $75. What kept oil prices high and US shale production in business and feeding their Congressional lobbyists, was concern that tensions in the Middle East would stifle production or reduce certainty of supply. In the first half of 2014, cable news and newspapers were filled with stories of Libya disintegrating and the Islamic State running amok in the oil fields of Iraq and Syria. These concerns prompted financial investors to build long positions in Brent and West Texas Intermediate oil futures contracts equivalent to 650 million barrels of oil. 

This story was laid bare on 22 June when two supertankers loaded 1.3 million barrels of crude at the port of Tobruk in eastern Libya. Libya’s production, which had dropped from 1.8 million barrels per day to just 250,000 by May, rebounded to 900,000 by August. Elsewhere, the Islamic State proved better at winning airtime than oil wells. As oil prices slipped, investors bailed, accelerating price declines. By September, 60% of the net long positions in oil futures had disappeared. 

Financial markets overestimated the challenges to oil supply, prolonging unsustainable prices. Their capitulation made oil prices slump almost overnight to where they should have been. Today, financial markets are misreading the decline as a symptom of Saudi Arabian stubbornness and worries over the world economy. Consequently, the strength of the world economy will surprise on the upside. Politicians will grow impatient, but policymakers should hold their nerve and not be frightened into anything rash. India’s annual oil import bill will probably fall by $40 billion or more in 2015 which should deliver more growth, less inflation and a healthier fiscal position. The government should let part of this dividend provide a temporary boost to consumption and investment and let part of it offset a permanent dismantling of energy subsidies. 

Avinash Persaud is non-resident senior fellow of the Peterson Institute for International Economics in Washington and non-executive chairman of Elara Capital.

Courtesy: Live Mint

Oil surges 8% as US rig count plunges, shorts cover 

Photo: Forbes

[Editor: It was expected and I had hinted about that last week, when most of the "Analysts" across the globe including the savvy Hedge Fund Managers were looking for further weakness. It is natural to understand that ultimately there would be a balance of demand and supply at a particular price tag. I had commented at that time, that the crude oil has perhaps bottomed out at around USD 45 per barrel. Then came positive comments from the OPEC head. 

Also, it is pertinent to mention here that the traders had heavily shorted the crude oil market, which also aided to the rise. I had mentioned that the time that the crude oil will now slowly move towards USD 60 per barrel. With the rise in oil, there could be a revival in the global commodity prices, especially Steel, Aluminium and Copper. I am already bullish on the Steel and Ferro Alloys sector and have given a buy on Rohit Ferro Tech Ltd (Rs.8.45) for at least 50% appreciation in the next couple of months]

Jan 31, 2015: Oil prices rocketed more than 8 percent higher on Friday, their biggest one-day gain in two and a half years, after data showed US drillers were slamming the brakes on the shale drilling boom. 

In a rally that may spur speculation that a seven-month price collapse has ended, global benchmark Brent crude shot up to more than USD 53, its highest in more than three weeks, after Baker Hughes data showed the number of rigs drilling for oil in the United States fell by 94 - or 7 percent - this week. 

Two weeks of relatively stable oil prices have helped shift sentiment after months of decline, setting the stage for the violent rebound on Friday afternoon. Short traders raced to cover their positions on fears that the rout was nearing its end. 

Some "short covering was expected and the rig count number sparked the rally late," said Phil Flynn, analyst at Price Futures Group in Chicago. 

The rig count drop was the most since 1987. With drillers having idled about 24 percent of their oil drilling rigs since the summer, some traders may be betting that an anticipated slowdown in US oil production is nearer than expected. US oil futures rose by USD 3.71, or 8.3 percent, to settle at USD 48.24 a barrel, soaring by nearly USD 3 in the final frenzied hour or so of trade.

Courtesy: Moneycontrol.com

Galada Power and Telecommunications Ltd

~~ Hemant K Gupta

Hyderabad based co (CMP: Rs. 22.00; BSE Code: 504697) has equity of 7.49 crores. Although Bse site shows promoter stake at less than 20% but ACTUAL stake is nearly 50%. Co is engaged in production of Aluminium conductors for power sector. However, co has been in big trouble since last several years. Co is operating at low capacity and that too job work for companies like Sterlite, Apar Ind. Galada has accumulated losses with negative networth. 

Now company has finalised ONE TIME SETTLEMENT with bankers for Rs.26 crores. Galada is likely to write back 70 crores in Q3 or in Q4 which will make it networth positive. Galada has 2 parcels of land (surplus) and owns 3 floors in Galada Tower Hyderabad. Total fair market value of these 3 surplus assets is around 50 crores. Company is planning to sell any 2 assets which will enable it to raise nearly 30 crores. This amount will be used to pay OTS amount of 26 crores. Thereafter, company will have very good working.

Several years back, Galada had imported rod-making plant. Co started facing trouble and did not had money to pay custom duty. At that time, this plant cost 13 crores. This plant is still lying at Bombay customers, incurring huge huge demurrage. once co concludes OTS, starts full fledged production at its factory, company will try (that will be around 18 months from now) to clear this plant from customs (may not have to pay demurrage as co will seek/request BIFR to issue directive for waiver of demurrage). If co succeeds in clearing this plant (which can be operational by installing fresh software), its production capacity can double. Current market cap of Galada is aroun 14 crores.

WORST IS OVER FOR GALADA (Really?)

You are advised to buy DECENT/BIG quantity and hold for 2-3 years. We expect share price of Galada to double by May 2015. It can cross 50 mark in 15 months and can be even Rs 100 in 3 years from now. Downside is very unlikely.

Editor: This writer has been after this scrip since a last few years, peddling the OTS story to the gullible investors. But unfortunately OTS never comes and when the scrip fell to around Rs.3.20 on 09/04/2014, he was seen nowhere to give solace to the battered investors. He even half quotes the name of the company, as Galada Power (leaving the Telecom part) in a Gujarat Based weekly, perhaps because the Indian Telecom sector is still, in blues. He writes: 

Although Bse site shows promoter stake at less than 20% but ACTUAL stake is nearly 50%.

Now, the point is that that the BSE website shows the promoters' holding as 15.71% while the public hold as 84.29%. The clause "Less than 20%'", could be tricky as even 1% is less than 20%, isn't it? These jargons are deliberately used, to create an effect of 20% on the minds of traders--a psychological play. 
2ndly if the promoters are really holding nearly 50% then why is the BSE website constantly mentioning the erroneous data? 

Moreover, if anyone wants to buy LAND STORY, then why not go after Prajay Engineers Syndicate Ltd (Rs.8.30) or PVP Ventures Ltd (Rs.7.50) instead of running after NTC Industries ltd (another of his recommendation). Also, while recommending Deepak Spinners Ltd in June 2014 at Rs.40, this is what he wrote: 

 "Investment highly recommended as scrip can easily cross 60 (sic)  mark in coming months". 

The scrip is now trading at Rs.33.55, down more than 15% from his recommended price in around one year. Besides this, take one of his recent recommendations (December, 2014): CHAMANLAL SETIA EXPORTS LTD at Rs.64.60. The stock shot up to Rs.86.85 (as of 13/01/2015), after his research report figured in various Financial Publications. But since then it has been falling and falling, with the CMP being Rs.77.85--the same PUMP and DUMP FORMULA. Isn't it?

Incidentally Hemant K Gupta, talks more about operators moving the scrips in Indian Bourses routinely, in his columns, but look, at some of his recommendations during the past 10 years, unfortunately it all been the same PUMP and DUMP story (Agro Dutch Industries at Rs.26; Twilight Litaka Pharmaceuticals Ltd at Rs.52.20; Electrotherm Ltd at Rs.487.70 and so on) in case of many scrips. 

Let us look at a couple of past cases, now: 

(i) On February, 2009, Victory Projects Ltd announced that the Board of Directors of the Company at its meeting held on February 16, 2009, inter alia, has resolved to issue 10,00,000 equity shares on preferential allotment basis in accordance with SEBI - DIP Guidelines 2000 to Mr. Hemant Gupta, a non-promoter investor for funding the proposed "Payment Gateway, VAS and Voice-Hosting Projects" of the Company. The Investor has already released around 60% of the above investment money to the Company.

(ii) In May, 2009, TeleCanor Global Ltd announced that the Board of Directors of the Company at its meeting held on May 22, 2009, inter alia, has resolved to issue 7,84,000 Equity Shares on preferential allotment basis in accordance with SEBI - DIP Guidelines 2000 to Mr. Hemant Kumar Gupta an Independent non-promoter investor and other non-promoter investors for funding the proposed "Payment Gateway, VAS and Voice-hosting Projects" of the Company.

Now kindly check the prices of these companies as of  now....Therefore, be careful while taking entry in such rosy stories circulated by vested interests. This scrip (Galada Power and Telecommunications Ltd) is already near its 52-week high price and anytime downturn could start. 

But as long as the operators continue to be in charge of the affairs, I believe the shares would could continue to tread new levels, like MIC Electronis Ltd did before nosediving to Rs.8.03 from Rs.10.99. 

Unprecedented crisis of iron ore to hit steel industry, says ASSOCHAM

January 30, 2015: In the wake of bans and restrictions imposed on iron ore mining in Odisha, Jharkhand and Karnataka, India's steel industry is likely to face unprecedented crisis due to extreme shortage of iron ore and cheaper imports from China and Russia.

In a note submitted to the government, apex industry body ASSOCHAM has suggested for an urgent intervention to correct artificially inflated rate of iron ore in the domestic market by the non-captive iron ore miners.

The chamber secretary general, D.S. Rawat lamented that as against the international norm of efficient steel making, the Indian steel industries have no captive mines and fully dependent on the domestic merchant miners. Both private and PSU in the states of Chhattisgarh, Odisha, Jharkhand, etc. have been paying very high cost for Iron Ore ranging from US$ 96-105/ MT (landed cost) resulting in high production cost of Steel $ 450 -500 / MT rendering them less competitive in the international market as well as in the domestic market because of cheaper Imports from China/ Russia/ other countries.

As a result of such high level of Iron ore prices maintained by domestic producers coupled with crash in international iron ore prices and dumping by Chinese and Russian Steel producers, domestic steel producers are left with no option but to resort to import of iron ore in order to maintain sustainability in the current market scenario and stay afloat.

While in India, steel production has gone up from 65.84 MT in 2009-10 to 91 MT in 2014-15, the iron ore production has gone down from 218.55 MT in 2009-10 to 138 MT in 2014-15, adds the ASSOCHAM.

The low Iron ore production is reducing year upon year and is leading to a situation where the Iron ore requirement is surpassing the restricted production currently being witnessed in India. While few de-bottlenecking steps have been taken recently by the government, the same has yet to produce results. During the current year Indian Steel industry has already imported 8.5 Mio T of Iron ore (Apr-Dec'14) and the total Iron ore imports likely to cross 12-13 Mio T during FY 2013-14.

Due to various restrictions imposed on iron ore producers in various states and closure of mines happening for various reasons, there is mismatch in demand and supply. As a result, few other mines. Which are allowed operation is operating with huge demand from the Steel/ Sponge Iron/ Pellet producers having no captive mines.

In order to continue their operation, the plants are forced to offtake Iron ore at a price determined and dictated by these producers. This has resulted in anomalous situation whereby while the world over all commodity prices including Iron ore prices are falling, domestic Iron ore prices are sustaining at a very high level.

The International prices have dropped by almost 50% from its peak level of US$ 135.88/ DMT CFR China in Nov'13 to the current level of US$ 63-64/ DMT CFR. The JSM FOB price, which also follow Platts IODEX, have reduced by 41% from US$ 121.90/ DLT in Nov'13 to US$ 72.29/ DLT in Jan'15. However, during the same period the domestic Fines price has increased by 17% from Rs. 2610/ WMT to Rs. 3060/ WMT in Jan'15 on ex-mines basis, the chamber said.

Steel industry continues to be sluggish for the past 2-3 years with there being hardly any chance of recovery in the near term. The price of Hot Rolled Coil (HRC) has crashed in the International market during the past 1 year from a level of US$ 570 to the current level of US$ 440, a drop of 23%. With the Chinese economy slowing down and Infrastructure/ Construction activities waning in China, it has doubled its export of Steel and is dumping Steel in the Indian market and elsewhere in a big way.

Powered by Capital Market - Live News

India's JSW Steel calls for action against Chinese steel "dumping"

MUMBAI, Fri Jan 30, 2015: India's JSW Steel Ltd on Friday urged the government to address "dumping" of cheap steel by Chinese rivals and take steps to improve iron ore availability after lower steel prices led to a 30 percent drop in the company's third-quarter profit.

Steel imports into India leapt by more than 60 percent in the April to December period, with 1 million tonnes imported in December alone, group Chief Financial Officer Seshagiri Rao told reporters in Mumbai.

"We have been representing to the government that they should take steps, as is being done by various countries, in stopping the dumping and to stop injury to the domestic industry," Rao said.

The company has been struggling with restricted supply of steel making raw materials, especially iron ore, due to mining bans in India and high domestic prices, forcing it to resort to imports to keep up production rates.

"The major concern going forward is the iron ore availability and iron ore pricing which is against the interest of domestic steel production," Rao said, pointing to a 14 percent rise in iron ore prices in India over the past year. International prices have halved in that time.

JSW Steel, which needs about 25 million tonnes of the steel making raw material per year, said it imported over 40 percent of its requirement in the December quarter.

It posted a consolidated net profit of 3.29 billion rupees ($53.07 million) for the quarter ended Dec. 31, its fiscal third.

The company also said it was increasing its focus on value-added steel products to differentiate itself from competition domestically and in the international market, where it faces pressure from Russian as well as Chinese steel makers.

"We are changing the product mix so that we are not competing in the commodity space with the Chinese. We are making that extra effort to see that more and more value added products get exported." Jayant Acharya, Director - Commercial and Marketing at JSW Steel, said.

Courtesy: Reuters

WINNING STROKES: THINK DIFFERENT

Rohit Ferro Tech Ltd  was one of the stars of the day, as the scrip closed at Rs.8.45, up 9.74%m after intra-day touching Rs.8.92.The Board of Directors of Rohit Ferro-Tech Ltd at its meeting held on December 29, 2014, has approved the proposal to sell, transfer or otherwise dispose of the Jajpur manufacturing unit of the Company located at Kalinganagar Industrial Complex, P.O.: Duburi - 755 026, Dist,: Jajpur, Orissa as going concern by way of slump sale or otherwise, subject to the such approvals and permission as may be required for such sale. Meanwhile, the Board also approved proposal to offer and 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.10 per Warrant) in accordance with SEBI (ICDR) Regulations, 2009, to the entities belonging to the promoter group and strategic

investors belonging to non-promoter group on preferential basis. Rohit Ferro-Tech Ltd earlier said that the Pt Bara Prima Mandiri (BPM) having a Coking Coal mine located in Central Kalimantan Province of Indonesia owned by the company through its wholly owned subsidiary SKP Overseas, Singapore has started commercial sales on 19 November 2013 by shipping its first cargo to China. It is currently implementing, Corporate Debt Restructuring (CDR) Process. There are lot of other developments going on in the company. 

Anant Raj Industries Ltd today touched Rs.51.90 in the BSE before closing at Rs.50.05. We have to observe, whether the break-out given yesterday sustains or not. The traders are suggested to book partial profits and wait for the scrip to cross Rs.53, for taking further positions.
Mangalore Refinery and Petrochemicals Ltd (MRPL) today touched Rs.59.35 in the BSE before closing at Rs.58.85. The long term investors can hold the stock for a target of Rs.72. 
Firstsource Solutions Ltd today fell to Rs.28.45 (2.90% down), with Nifty which nosedived by more than 143 points. It is from the reputed CESC Group of Kolkata (Calcutta).  Firstsource Solutions Ltd provides BPM and BPO solutions to enterprise across telecommunications & media, BFSI and healthcare & publishing industries. The firm claims that it currently serves over 100 global clients from multiple delivery centres and in various languages. A multinational company, Firstsource has over 30,000 employees in India, the Philippines, Sri Lanka, the US, Ireland and the UK. The investors are suggested to buy the scrip on all declines, for a medium term target of Rs.52.

Jindal Saw standalone quarterly net rises 23.74% 

20 Jan, 2015: Jindal Saw Ltd (Rs.80,40) saw a good increase in standalone net profit for the quarter ended December 2014.  During the quarter, the profit of the company rose 23.74% to Rs 619.20 million from Rs.500.40 million  in the same quarter last year.

Net sales for the quarter  rose marginally 3.97% to Rs.17,774.30 million, compared with Rs.17,096 million for the prior year period.

Earnings per share for the quarter stood at Rs.2.21, registering 22.10% growth over previous year period. 

Courtesy: Myiris.com 

FII/FPI  were Net Buyers Yesterday

The selling actually came from the DIIs, who sold around shares worth Rs.1680.09 Cr. But still the net buy figures of both FIIs and DIIs were positive yesterday. 

Today, while the Nifyt is down 149 points, the mid-cap index is down only 59.45 points. This show that the selling is coming basically in the large caps, near 9000 level of Nifty. 

Hence, the traders can enter the mid and small cap space today and keep holding. 

Market Mantra

Rohit Ferro Tech Ltd which was repeatedly recommended in this blog from Rs.8.40 till Rs.7.5, during the last couple of weeks today made an intra-day high of Rs.8.90 and is now trading at Rs.8.75. This time the target of the shares of the company is Rs.12-14, hence do not sell them in a hurry. According to the website of Rohit Ferro Tech Ltd, the group now has a total installed capacity of 2,74,583 mtpa. Interestingly, it takes about $1 billion (Rs. 6,000 crore) to build one mtpa capacity.  In January, last year, the government-owned Steel Authority of India Ltd (SAIL) said it would expand its capacity to 24 mtpa, by adding 10 mtpa at a cost of Rs.60,000 crore. And, that further expansion to 50 mtpa by 2025 would cost Rs.170,000 crore or Rs.6,500 crore per mt. Now you can calculate the enterprise value of Rohit Ferro Tech Ltd. Meanwhile, the company is also setting up a 67 MW Captive Power Plant at its jajpur unit to feed its energy requirements. In an attempt to forward-integrate, RFTL has set up a 100,000 TPA Stainless Steel manufacturing facility at its Bishnupur unit and the capacity utilisation is being enhanced in phases. On the side of backward integration, RFTL has acquired economic interest in coal mines in Indonesia securing thermal and coking coal requirements of its manufacturing facilities. Hence, in all probability the scrip will reach the short term targets and hence buy and keep holding.

Have you all entered Jindal Saw Ltd (Rs.81.70), which I recommended yesterday....? This time the target is Rs.92-110. Hence board the train and enjoy the journey. No infrastructure development is possible without creating a corresponding demand in the SAW pipes. Hence, infra-development and Saw Pipers are synonymous....Also, it is from the reputed O P Jindal Group. Savitri Jindal, the richest woman in the country, is the chairperson of the multi-billion rupee OP Jindal group that has interests in the steel, power and mining sectors. First named the country's richest woman in 2008 by Forbes, she has retained the position in the October, 2014 issue of the respected business magazine. She has been placed 12th in the list of India's richest, with a net family worth of $6.4 billion (Rs 395 billion).
Today Reliance Capital Ltd touched Rs.488, in a market when the Nifty is down 106 points. The stock was recommended in this blog, at Rs.474.
Today Firstsource Solutions Ltd touched Rs.30,10 and is  now trading around Rs.29. With INR at around Rs.61, the IT companies are expected to take in mollah from export market. This Rs.10, FV, scrip is from the reputed CESC group of Kolkata (Calcutta).  
HDIL Ltd recommended in this blog around Rs.67-68, today touched Rs.110, intra-day. With this all my short term targets have been achieved for the scrip. 

BPO firm Firstsource Solutions Ltd Q2 profit up 36.8 per cent at Rs 61.2 crore

NEW DELHI, Nov 14, 2014: BPO firm Firstsource Solutions Ltd today posted a 36.8 per cent increase in net profit at Rs 61.2 crore for the quarter ended September this fiscal.

This is against a net profit of Rs 44.7 crore in the same period last year.

The company's revenues, however, fell by 2.1 per cent to Rs 773.9 crore in the quarter under review from Rs 790.7 crore in the July-September quarter of the previous fiscal.

Sequentially, net profit was up 15 per cent from Rs 53.2 crore, while revenue was higher by 2.4 per cent from the April-June quarter.

Firstsource reported additional wins of about $ 45 million in ACV (annual contract value) across business verticals with existing and new customers in July-September period.

This includes the entry and cross selling of customer management services into the healthcare vertical in the US.

Firstsource removed 224 people during the quarter under review to bring its total headcount to 26,923 as of September 30, 2014.

Its attrition rate at its offshore (India and the Philippines) operations stood at 49.6 per cent (from 56.6 per cent in the first quarter), while the same for onshore (US and Europe) operations was at 43.6 per cent (46.4 per cent).

As of September 30, Firstsource derived 47 per cent revenues from the US, 36 per cent from the UK and 17 per cent from rest of world, including India.

About 46 per cent revenues in the reported quarter came from telecom & media, 34 per cent from healthcare and 20 per cent from BFSI.

"This fiscal the company has signed significant new business wins, which will translate into revenues over ensuing quarters," RP-Sanjiv Goenka Group and Firstsource Chairman Sanjiv Goenka said.

The investment into analytics strengthens capabilities to provide valuable insights to clients and the focus on profitable margin growth and customer satisfaction continues, he added.

Courtesy: The Economic Times

DO YOU KNOW?

The stock of HOUSING DEVELOPMENT & INFRASTRUCTURE LTD was recommended few weeks back at Rs.67-68. Yesterday it touched Rs.98.55, Congratulations to those who bought the scrip and kept on holding. 

Jindal Saw Ltd: Screaming Buy

Jindal Saw Ltd, part of the O.P. Jindal Group, is the undisputed leader in India’s tubular market. Today, Jindal SAW is one of the largest pipe manufacturers with business interests catering to varied industries spanning across the globe. It competes with companies such as Welspun and Maharashtra Seamless.

With integrated facilities at multiple locations, Jindal SAW is rolling out Large Diameter Submerged Arc Welded Pipes and Spiral Pipes for the energy transportation sector; Ductile Iron (DI) Pipes for water and wastewater transportation; Carbon, Alloy and Stainless Steel Seamless Pipes and Tubes for industrial applications. Maintaining its edge, Jindal SAW provides value added products and services in different verticals of its business.

It is India’s most diversified manufacturer and supplier of Iron & Steel pipe products for the energy, water sector and other industrial applications. Its principal products include (a) Large Diameter SAW Pipes i.e. Longitudinal Submerged Arc Welded (LSAW) and Helically Submerged Arc Welded (Spiral/HSAW), (b) Seamless Tubes, and (c) Ductile Iron (DI) Pipes etc.

It is one of the largest global producers of DI pipes with manufacturing facilities in India, UAE and Europe. 

In FY 2011, the Company acquired iron ore mines in district Bhilwara, Rajasthan in India. These mines have iron ore which is low in Fe content and hence, needs to be first beneficiated and thereafter the iron ore concentrate is used for production of value added products like pellets and other Iron & steel products. The beneficiation and pellet plants are fully operational. Pellet plant is producing at its rated capacity of 1.20 MTPA. 

The Company had commenced operations in its captive iron ore mine and ramped up operations in this segment. Pellet plant has achieved 100% capacity utilization. Jindal Saw Ltd would continue to get benefits from its captive iron ore mine (the company  has already achieved 100% backward integration in iron ore) and pellet plant.

Jindal Saw’s most profitable segment – seamless pipes – is expected to see a revival in demand from North America and Europe, its primary market. However falling oil prices may have an adverse impact on the OCTG product demand. The company is focusing on enlarging product range which shall take care of the changing business environment. 

The scrip should be bought in intra-day dips, for a medium term target of Rs.110.

Market Mantra

Today MRPL Ltd touched Rs.57.90, and almost came near my first target of Rs.60. Those who do not want to take too much risk of the Oil and Gas sector can book profits and shift to Firstsource Solutions Ltd at around Rs.29.35. 

Today's call: Buy Jindal Saw Ltd at Rs.81.80 for a target of Rs.87-92.  The pipes are used in large quantities in Nuclear installations and any forward movement in the Indo-US nuclear deal is positive for the company. 
For the time being Nifty would meander along 8900-9000 mark, till it breaks up. However, the stock specific action would continue to rule the roost. 
Firstsource Solutions Ltd today touched Rs.30.30 and is  now trading at Rs.29.30. The investors should buy the stock  and keep holding.

Firstsource Solutions: Buy in Bulk

CMP: Rs.29.35

Firstsource Solutions Ltd is a global provider of customized BPO (Business Process Outsourcing) services to the Banking & Financial Services, Insurance, Telecommunications, Media and Publishing and Healthcare sectors. The company’s clients include Fortune 500, FTSE 100 & Nifty 50 companies. Firstsource has a “rightshore” delivery model with operations in India, Philippines, Sri Lanka, UK and U.S. 

Prime Triggers: 

(i) Firstsource Solutions’ wholly owned subsidiary - Firstsource

Please Click on the Photo to Expand

Group USA, Inc., has successfully made its seventh quarterly repayment of $11.25 million on its outstanding debt on December 31, 2014.

(ii) According to the latest shareholding pattern, the promoters' holding in the company stood at 56.25% (controlling stake), while ICICI Bank Ltd, the ace investor, Rakesh Jhunjhunwala and Goldman Sachs India Fund Ltd holds 4.85%, 3.76% and 1.27% respectively. FIIs hold 8.25% of the shares of the company. 
(iii) It is from the reputed RP-Sanjib Goenka group, who are also the promoters of CESC Ltd (Calcutta Electric Supply Corporation, the flagship company of the RP-Sanjiv Goenka Group). In 2012, the Kolkata-based CESC Ltd (RP-Sanjiv Goenka Group) agreed to pay around Rs.400 crore for a 49.5% holding in the ICICI-promoted BPO firm, paving the way for the partial exit of existing shareholders ICICI Bank, private equity firm Temasek and Metavante Investments. Now, Firstsource Solutions Ltd is a step-down subsidiary of CESC Ltd. It is pertinent to mention here that, Sanjiv Goenka's brother Harsh owns mid-sized IT services provider, the BSE and NSE listed Zensar Technologies Ltd.
(iv) India-based BPOs have been steadily moving up the value chain as low-value call centre operations move to locations such as the Philippines. In the immediate future, impending healthcare reforms in the US and Banking reforms in India, are likely to give BPOs like Firstsource a boost.
(v) In November, 2014, there were media reports that Anand Rathi, which has the stock among its high conviction ideas, believes with the interest-cost burden lightening because of debt repayments, and focus shifting to accelerating growth, return ratios could improve. 
(vi) Over the past two years, the company has been trying hard to go up the value chain by going beyond the low cost offerings. The company's revenue growth expected to gain momentum as the company concentrated on growing revenues and improving profitability by weeding out low cost contracts and undertaking price increases. The elevation of Rajesh Subramaniam — who was part of the founding team — as CEO and acquisition of majority stake by the Sanjeev Goenka group were seen as big positives.
(vii) On the back of improved margin Firstsource Soultions, the IT arm of  the R P Sanjiv Goenka group, reported a 36.8% rise in net profit at Rs.61.2 crore for the quarter ended September, 2014 compared to a net profit of Rs.44.8 crore during the corresponding period last year. The Business Process Management (BPM) services company’s net sales for the period declined 2.1 per cent to Rs.774 crore, against Rs.790 crore. “Our focus has entirely been on bottom-line growth. We have closed a number of loss making accounts, beside other cost cutting measure,” said Sanjiv Goenka, chairman, RP-Sanjiv Goenka Group.
(viii) The company has won deals worth $45 million in the September 2014 quarter, up from $36 million signed in the June 2014 quarter. Revenue from top clients also grew at a healthy pace of 4.8% Q-o-Q, while revenues from the top five clients declined marginally. With the large telecom client walking away, analysts have cut their forecasts for the current year. However, a strong deal pipeline will ensure better growth for the company in FY16. The company has indicated that it expects growth to pick up pace in FY16. Sharekhan says the company has  indicated that the topline would grow seven-eight per cent y-o-y in FY16, even as growth in FY15 would be impacted by vendor consolidation and client ramp downs.
(viii) Though the turnaround has been delayed, analysts believe that the growth in the coming years would be better than the last few years, as the company has strong capabilities in the telecom and healthcare vertical. Also, the company is looking at launching product platforms, which would improve revenue potential of the company. According to Sharekhan, which has a buy on the stock, the stock trades at a reasonable valuations.
(ix) In November, 2014, there were media reports which quoted, Mahantesh Sabarad, Deputy Head of Research at SBI Capital Securities who said, he is bullish on Firstsource Solutions. He said: "It  is a rare kind of IT stock which has debt on its book. We will see that increasingly as the business goes ahead and they have been signing good amounts of deal, for example this quarter gone by, they have signed deals worth USD 45 million, the quarter before it was somewhere around USD 31-33 million." "Increasing deal wins, good amount of cash flow coming in and deleveraging of balance sheet is the story on Firstsource and that is why we like the stock, Rs.55 is the price target in the stock," he said.
(x) The Hindu Business Line gave a buy on 8 September, 2014:

Firstsource Solutions (FSL) is a leading global provider of customised business process management (BPM) services to the healthcare, telecom and media and banking, financial services and insurance (BFSI). The company has over 100 global clients including 21 Fortune 500 and 9 FTSE 100 companies. After a difficult F10-12 period, the company has shown a resolute recovery over F13-F14 aided by a fresh lease of life from their new owners. We believe, the company can a) catapult itself to cover lost ground; b) set it on an elevated revenue growth path from 2HF15e onwards; c) flag down an improvement in margins; and d) recompense it with superior free cash flows (FCFs). All this while FSL would shrink its debt pile making a strong investment case in its favour.

Key risk: Impairment of goodwill from past acquisitions that exceeds networth, could impede valuation uptick.

Caution: The business process outsourcing (BPO) sector has been facing headwinds over recent years. The industry was faced with rising competitive intensity, on one hand, and pricing pressures on the other. Firstsource Solutions Ltd has been battling with these problems in the past couple of years and the ill-timed acquisition of Med Assist at $330 million in 2007. The company has been trying for a turnaround over the past two years, as revenues and margins fell to eight per cent and Ebit margin fell to four per cent in FY12. After the September quarter numbers, some analysts have cut the company's earnings estimates as the turnaround is expected to be delayed.
In the September quarter, Firstsource reported a sequential revenue growth of 2.4 per cent but a year-on-year decline of 2.1 per cent to Rs.774 crore. Analysts claim this is below estimates as a large client walked away. Along with disappointing revenue growth, EBIT margins too were below estimates at 10% and remained flat q-o-q sequentially. Emkay Global has cut its FY15/16 earnings per share estimates by eight to 10% to Rs.3.6/4.7, respectively, as the brokerage is factoring in lower revenue growth and operating margin assumptions for both years.
However, even at an EFY15, EPS of Rs.3.6-4.7 (worst case scenario), the share should be trading around Rs.40-45, against the CMP of Rs.29.35.

Conclusion: The shares of the company might have made a temporary bottom on the candle-stick chart. Q4 (March Quarter) is typically a high margin and a high revenue quarter for the BPO business and hence the investors are suggested to buy the scrip of Firstsource Solutions Ltd, in Bulk and keep holding for sometime; to get one of the best returns. The short term target for the scrip is Rs.34, while the SL is Rs.27.

Promoters cut pledged shares as stocks rally

Volumes fell in 39 companies and rose in 34 during Oct-Dec

Photo: The Indepndent

Mumbai, Jan 28 2015: Promoters of companies and business conglomerates, like Anil Ambani and the Jindals, have revoked large volumes of pl­edged shares following the sharp gain in stock prices over the past few months.

On the contrary, there was a rise in share pledges by promoters of many midcap companies during the December quarter.

Share pledge is a popular and convenient fund raising option among company promoters, who mobilise credit from banks and other financial institutions by mortgaging part of their shareholdings.

There was a rise in share pledges in recent years as companies struggled to raise cash amid rising interest rates, credit squeeze in the banking system and a slowdown in businesses that curtailed cash flow.

But the quantum of shares pledged by various companies, especially lar­gecap firms, have come down sharply over the past few months as share prices moved up.

Anil Ambani group companies — Reliance Capital, Reliance Infrastructure, Reliance Communication and Reliance Power — have seen pledged share volumes drop substantially. 

In Reliance Infra and Reliance Communication, the entire volume of pledged shares was revoked during October-December. Reliance Infra had a 27.03 per cent stake on pledge, while Reliance Communication had 13.94 per cent at the end October 2014, data available on the BSE website shows.

In Reliance Capital, the volume of pledged shares has come down from 33.09 per cent in October, 2014 to 21.81 per cent at the end of December, 2014, while in case of Reliance Power, it has fallen to 8.91 per cent from 22.58 per cent.

Among others, Jindal Steel and JSW too have seen a drop in promoters’ pledged shares. Pledged share volumes declined in 39 companies and rose in about 34 others during the October-December period.

“Many promoters mortgaged their shares in the past few years to tide over liquidity crunch, raising pledged share volumes substantially,” said Harish HV, partner at Grant Thornton. So much so, at one point it had become a cause of concern, especially when the stocks were falling.

In more than 20 companies that are part of the BSE200 index, promoters’ pledged shares as a percentage of their total holdings was in excess of 70 per cent at one point, as promoters of many midcap companies pledged their entire holdings.

Since share prices have since gone up in most cases, the amount of shares needed to be kept as margins must have also come down, he pointed out.

Banks have a margin requirement of two-three times for loans extended against pledged shares, which means promoters are required to bring in additional shares when prices drop.

There have been concerns among the regulators over the increase in promoters’ share pledges, which they feel can pose a potential threat to the financial system.

Flagging the issue in the recent financial stability report, the Reserve Bank of India (RBI) said in view of the prevalence of promoters pledging substantial portions of their holdings, the leverage could be a concern not only for the shareholders but also for the health of the financial system,”

“This issue calls for a closer examination, especially in the current scenario of buoyancy in stock prices wherein the collateral in the form of pledged shares may appear to justify higher leverage,” it said.

Courtesy: Mydigitallife.com

Market Mantra

Reliance Capital Ltd recommended around Rs.474, today touched Rs.480.75 in the BSE, before some profit booking set in. In view of company's improved performance and being a share from Anil Ambani group, the investors are suggested to buy and hold the scrip for some good returns in the short term. 

Today's Call: Buy First Source Solutions Ltd at Rs.29-29.50, T -Rs.35, Sl--Rs.27. This is a buy and hold scrip. The ace investors, Rakesh Radheshyam Jhunjhunwala, Goldman Sachs India Fund Ltd and ICICI Bank Ltd holds 3.76%, 1.27% and 4.85% of the shares of the company, respectively. Recently, Mr.Jhunjhunwala has reportedly hiked his stake in Polaris Consulting & Services Ltd and this could be in his radar too........
MRPL Today touched Rs.53.60, intra-day and is now trading at Rs.53. Those who do not want to take high-risk of the oil and gas sector can book some profits in the counter.
The Nifty is expected to meander around the current ranges till the resistance zone of 8950-9000 is cleared.