XL Telecom & Energy Ltd.
BSE Code: 532788
CMP:Rs.29.35
By Saarthi
XL Telecom & Energy Ltd. (XL) was incorporated as a private limited company in 1985 to manufacture and deal in cable splices, protection equipment and allied accessories used in electronic telephone exchanges and other establishments. In 1990, it converted into a public limited company and gradually emerged as one of the fastest growing telecom equipment manufacturers. In 1994, it ventured into solar energy sector albeit on a small scale and is a pioneer of solar modules having rich experience of 15 years. To cash in on the huge opportunity, it has aggressively moved into the non-conventional energy business especially the solar photovoltaic segment. As a result, the energy segment, which contributed to 55% of total sales last year, now contributes almost 90% of total revenue. Apart from solar energy, the company also has interest in ethanol production. Broadly, the company has divided its revenue model into two segments.
A. Energy Segment: This is sub categorized into two divisions:
==> Solar Photo Voltaic Systems Division: This division is now the core business and the revenue driver for the company. It makes solar photovoltaic modules/panels of various capacities ranging from 5Wp to 280Wp catering to both the domestic and overseas customers’ requirements. Beginning with an initial module manufacturing capacity of 24MW in 2005, it has increased the capacity multifold to 180 MW last year.
Moreover, it is in the midst of setting up a huge greenfield plant at Fab City (SEZ), Hyderabad, at a capex of Rs.360 cr. With this, it will add another 40 MW module manufacturing capacity taking the total to 220 MW. Besides, it has backward integrated and is putting up a solar cell manufacturing facility with a rated capacity of 120 MW. The capex has been fully funded and the plant is expected to begin commercial operation within 2009. Along with this backward integration, the company has also moved up the solar value chain by venturing into solar energy power generation through grid connected solar farms. During October 2008, its 100% subsidiary in Europe, ‘Saptashva Solar Ltd.’, has established the first solar farm in Spain with an installed capacity of 1.60 MW, XL has perhaps become the first and only solar cell manufacturing company in the world to capture the complete solar value chain of solar cell to module to system to solar farm or power generation. It has also signed a power purchase agreement for 25 years with a Spanish utility company, which ensures it stable revenue.
Importantly, Saptashva is looking to establish a series of solar farms across Europe, which may lead this subsidiary to become the largest customer of the holding company in terms of solar panels and EPC services. In fact, XL is very bullish of getting into the EPC segment of solar farms and targets to set up solar farms generating as much as 300 MW over the next three years. Recently, one of its end customer commenced operation at its largest 30 MW solar park using XL’s exported solar panels, which helps build XL’s credentials.
==>Ethanol Division: Earlier, the company had aggressive plans about this division but with the drastic fall in crude oil price and the unfriendly approach of the government, it has decided to go slow. It has an ethanol fuel facility at Nanded in Maharashtra with a production capacity of impressive 1.5 lakh litres per day. The plant has been inspected and cleared technically by oil companies both in terms of capacity evaluation and the quality of the product produced. To meet the raw material requirements for ethanol production, XL is contemplating to establish the distillery unit for which it has already incurred Rs.27 cr. out of total planned capex of Rs.72 cr.
B. Telecom Segment: This segment used to be XL’s main business earlier but given the saturation in the Indian market and better opportunities in energy sector, the company has reduced its focus and efforts on telecom. However, it still continues to manufacture and market the following products depending upon the demand scenario:
==>CDMA Handsets & Fixed Wireless Phones: XL is the first Indian company to set up a manufacturing facility for CDMA mobile handsets, as an independent company. It established an Assembly facility for manufacturing mobile phones in partnership with Kyocera Inc of USA and has a capacity of about 35,00,000 handsets per annum. It is supplying multiple models to all CDMA operators like BSNL, MTNL, Tata Teleservices and Reliance. Similarly, it has established a partnership with Axesstel of USA for Fixed Wireless Phones with BSNL as its main customer.
==>Switch Mode Power System: Under technology transfer from SMPS de Austria, XL manufactures and offers a full range of SPMS required by telecom operators in their exchanges as well as for the BTS stations in the mobile segment.
==>Outside Plant Accessories: XL has been a supplier of jointing kits, optic fibres accessories, fusion splicers etc. for over two decades and enjoys nearly 40% market share in jointing kit business. Its plant at Hyderabad with a capacity of 20,00,000 Heat shrink sleeve & 5,00,000 cable jointing kits was set up in technical collaboration with Corning Inc., USA.
Solar power is fast emerging as the most viable and eco-friendly power generation option with no moving parts, no noise pollution and zero emissions. Solar power systems are used for a variety of residential, commercial and industrial applications generally described as either 'on-grid' or 'off-grid' by nature.
The market for on-grid applications, where solar power is used to supplement electricity purchased from the utility network, represents the largest and fastest growing segment of the market and most of the XL products are used for on-grid applications, XL’s focus remains on emerging grid connected solar solutions as against conventional stand alone solar power systems. Although, the generation and distribution costs of solar power has come down substantially, thanks to technological breakthroughs, solar energy still constitutes only a small fraction of the world's energy output.
It is estimated that Spain, Italy, and France will drive the solar power demand in the near future along with Germany, Japan and USA being the largest markets for solar photovoltaic cells. As per consensus among global research organizations, solar products are slated to register 40% CAGR over the next 10 years.
In order to fund its growth plans, XL raised nearly Rs 59 cr. in December 2006 through an IPO route at Rs.150 per share and approx 175 cr. through the FCCB route and has allotted 52,50,000 warrants at Rs.135 each. With part of the FCCBs and warrants already been converted, its equity share capital currently stands at Rs.18.80 cr. The company has recently reset the FCCB conversion price to Rs.160 per share from Rs.260 originally. Despite this, the holders may not opt for conversion as the CMP is trading at a huge discount. For the year ending 30 June 2008, it recorded a 25% rise in the topline to Rs.654 cr. but net profit doubled to Rs.40 cr. posting an EPS of Rs.21.
Despite very poor performance for Q3FY09, the H1FY09 looks impressive with 40% and 60% growth in topline and bottomline at Rs.359 cr. and 15.80 cr. respectively. It may end FY09 with sales of Rs.700 cr. and PAT of Rs.25 cr. leading to an EPS of Rs.13 on its current equity of Rs.18.80 cr. The company’s bottomline is hit by the significant interest cost on the loan it took for expansion. But instead of capitalizing the same, XL is writing it off as a revenue expense. It has capital work-in-progress of nearly Rs.250 cr. against the current gross block of Rs.55 cr.
Thus the day its new plant comes into full production, XL will report a substantial jump in its topline as well as bottomline. Investors are, therefore, recommended to buy XL at current levels as its share price can triple in 24 months. However, investors should note that the company has high debt and receivables to the tune of Rs.378 cr. (including FCCB) and Rs.224 cr. respectively.
SUMANSPEAK
Monday, March 30, 2009
PICK OF WEAK THERMAX LTD.
Thermax Ltd
BSE Code: 500411, CMP: Rs.157, P/E: Rs.6.84, Face Value: Rs.2, Dividend:400%
EPS: Rs.22.95
52-Week High/Low: Rs.622/Rs.150.5
Resistance zone: Rs.160—Rs.166.
Introduction: Thermax Ltd is a global solution provider in energy and environmental engineering. Itoffers products and services in energy sector (boilers, heaters & coolers, waste heat recovery, captive power production) and industrial environment friendly solutions (water treatment and recycling, waste management and performance chemicals).
Thermax Ltd is a market leader in providing small and medium sized industrial boilers; while its biggest rival BHEL focuses on large utility boilers.
It is well positioned to capture the market share of industrial and smaller utility boilers using its innovative technology. Capacity expansion will enable the company to fulfill the growing demand of boilers.Thermax brings its rich experience gained from customer engagements around the world. Through technology partnerships and strategic alliances, it provides superior value to help industry perform efficiently and profitably. With a dedicated sales & service network spread over South East Asia, Middle East, Africa, Russia, India, UK and the US, Thermax ensures innovative solutions and reliable support for client's business improvement. Strong capex announcement made by its user industries would continue to drive the order book of Thermax Ltd.
Shareholding Pattern: The promoters hold 61.98% while the general public holds 38.02 %. Among the general public, Arisaig Partners (Asia) PTE Ltd A/c Arisaig India holds 1.02% while Saif III Mauritius Company Ltd holds 1.74% shares of the company.
Financials: For Q3FY09, the company came out with flat top and bottomlines consider Q-o-Q. This is significant considering the overall economic downturn. The total income of the company for Q3FY09 came out to be Rs.803.83 Cr as against Rs.854 Cr. The net profit of the company for Q3FY09 came outto be Rs.72.3 Cr as against Rs.75.03 Cr in the same period previous year. This is on a very small equity capital of Rs.23.83 Cr. The year to date income of the company was Rs.2, 343 Cr (Rs.2, 311.3 Cr in the same period, last year), while profit after tax for the period stood at Rs.193 Cr (Rs.200.3 Cr in the same period previous year).
On a consolidated basis, year to date, Thermax group’s total income stood at Rs.2, 447.1 Cr (Rs.2, 464.2Cr) and profit after tax was Rs.183.5 Cr (Rs.207.8 Cr).The EPS of the company for Q3FY09 is almost flat at Rs.6.07, as against Rs.6.30 in the same period previous year. Even the operating profit margin is flat at 13.28% in Q3FY09 as against 13.43% in the same period previous year. The net profit margin of the company is also flat at 9.09% as against 8.87%in the same period previous year.
Industry Outlook:Thermax Ltd is power utilities manufacturer and a sophisticated player in the environment friendly solutions. Intense capital and technological requirements makes this sector of the market less fragmented. Total market share by sales of 4 (four) firms (Ecoboard Industries Ltd, Ion Exchange Ltd,Thermax Ltd & Western Paques) of pollution control equipment manufacturing industry is 98.8% in which the Thermax Ltd alone owns the 82.5% of share.
Thermax is second largest Power Equipment manufacturer, renowned supplier of industrial and utilitiesboilers, with a market share of around 21%, just next to the BHEL which stands at 69%.The ambitious target of 78,000 MW for additional power generation capacity taken up as part of the Eleventh Plan is slated to be on the fast track with the government already approving several megapower projects. It is widely expected that the intensive capital investment in mega power generation facilities will drive the demand of power utilities.
Steel, Cement and Petrochemicals are the sectors, which contribute 60% of the total order book forThermax Ltd. Thus, High capital expenditure in these sectors will be the main driving factor. Till some months back, the high interest rates regime have lead to the postponement of capital expenditure,which is going to change in the near future. It is expected that these sectors will be witnessing the increased investment in the near future
Investment Rationale:
(a) Good order book position: The Thermax group has an order book of around Rs.4,103 Cr as ofDecember 31, 2008 which is substantially up considering Q-o-Q. Last year Thermax bagged Rs.820 Crorder from an oil company under expansion in the Western India to build utility segment boilers which are currently only supplied by BHEL. In October, 2008, the company won a Rs.450 Cr order for setting up a captive power plant. The 60 MW power plant will be built and commissioned on a turnkey basis for a green field integrated steel complex in Andhra Pradesh. The plant will use process gases and blended coal as fuel. The Company is currently bidding for multiple projects with an average order size of Rs.500Cr.
b) Increased carry forward order book: Thermax Ltd has good carry forward order book, i.e.unexecuted orders. It is widely expected that a large pile of these orders are sufficient enough to takecare of revenue growth for few quarters incase of unexpected drop in the new orders.
c) Efficient Working Capital Management: The Company has been effective in managing the Debt Equity position at lowest possible over the past few years. This type of structure makes the earnings(EPS) less volatile, to have linear variability with its operating earnings (EBIT). This type of structure is unusual for a capital-intensive company. The main reason for this is the effective working capital management.Company has been able to maintain its cash conversion cycle by effectively increasing its creditor’s velocity in line with the debtor’s velocity. At the same time the company has been able to bring down thedays of inventory. The company’s advances from customers have gone up substantially in line with the increasing size of order book. Advances make the net working capital to be negative. We can expect thetrend to continue and this will allow the company to fund its capital expenditure with the internal accruals.
d) National Action plan on climate change: On 30th June ‘08, Prime minister of India, unveiled climate change action plan which seeks to promote sustainable development through use of clean technologies.The focus of this action plan is on implementation of energy efficiency measures, effective water resource management, and enhancement of eco-system services. Further, the clean environment is themain focus of this century. This in a way augments well for the environmental engineering division ofThermax Ltd.
e) Tie up with Balcke-Dürr GmbH and Babcock & Wilcox: In February, 2008, Thermax Limited and Balcke-Dürr GmbH, Germany signed a Technical Know How Transfer and License Agreement for dry and wet Electrostatic Precipitators (ESPs) — air pollution control equipment for power, industrial and utility segments upto 300 MW. The agreement will help Thermax to gain a rightful share of the air pollution control business emerging from this sector. Thermax Ltd has also signed a license agreement with Babcock & Wilcox (B&W) for utility boilers that grants the former, the right to engineer, manufactureand sell sub-critical B&W Radiant utility boilers in India. This should enable it to gain a strong hold in themarket for power utilities.
(f) New Manufacturing Facility: The Company has decided to set up a new manufacturing facility inIndia, which would manufacturer large boilers having a capacity ranging from 100 Mw to 800 Mw. Thecompany has signed a technical agreement with US--based Babcock & Wilcox Co for making sub--critical boilers in India, as mentioned earlier. The company plans to invest Rs.300 Cr in the Phase I of the project, which would have an annual boiler manufacturing capacity of 1,500 Mw.
(g) Cutting edge technologies: Thermax has sourced cutting-edge technologies for its business operations through alliances with world technology majors, like Babcock & Wilcox USA, Kawasaki Thermal Engineering Company, Japan; Eco Tech, Canada; Honeywell, USA; Bloom Engineering, Germany;Struthers Wells and Ozone Systems, USA. Through technology partnerships and strategic alliances, the company is expected to perform well going forward. With a dedicated sales & service Network spread over South East Asia, Middle East, Africa, Russia, India, UK and the US, Thermax ensures innovative solutions and reliable support for client's business improvement.
(h) Production on China plant to drive growth: Very recently the production at China unit of the company has started which will usher in a new beginning for the company. This plant has cost around $10million with a capacity to manufacture 200 chillers. It expects to reach full capacity utilization in a three-year time frame. China accounts for 50% of the $600 million global market for absorption chillers.In FY09, the company is carrying out a capex of around Rs.3 bn towards setting up a independent utility investment.
Concerns:
• Thermax Ltd may see selling pressure as institutional investors may churn portfolio in favour of companies with less dependence on private sector for orders.
• Most of the company's projects business and large boiler orders are at fixed price. Unless, the company builds cushion or hedges against steel price, the profitability on these orders are at arisk; given the probability of increase in steel prices in next few months.
• Given the prevailing economic conditions coupled with the credit squeeze, many industries are reviewing their capital expenditure plans.
• Since some of Thermax's revenue (packaged boilers and enviro chemicals) come from fast-moving products with very low invoice cycle hence revenue growth could taper off to around 12%-15% inFY09.
Conclusion and Chart-Check: The recommendation of Thermax Ltd is backed by three reasons, its strong financial performance, strong order book and most importantly company’s execution capability.The fact that the government has lifted the ban on coal linkage for Captive power projects, has spurred interest into such power projects. Thermax is aiming for a 10% market share out of the planned capacity in power generation by the private sector. With the significant private sector interest in power generation, Thermax Ltd is expected to generate sizeable revenue from utility boilers in the coming years.
What I feel is that India’s long-term story is intact and capital goods have a larger part to play in that.Hence, it is imperative at this stage to invest in fundamentally strong scrip like Thermax with a long term perspective. The scrip is available near its 52-week low price and most importantly the valuations also looking very attractive. Hence, considering the points mentioned above it is found that the scrip ofThermax Ltd could be purchased with a short term target of Rs.165—Rs.180. The scrip has a strong resistance around Rs.160—Rs.166 range.
On the charts it appears that the scrip has bottomed out in the short term and is poised to move up.The MACD, Stochastic (slow and fast), Williams % R, Bollinger Bands, and RSI are all in buy mode. Also good point is that the stock has not broken down the envelop pattern formed on daily charts. Moreover,it has given a minor breakout at Rs.155 and is looking to cross the stiff resistance zone of Rs.160—Rs.165, provided the market conditions remain buoyant. However, these days, the stock markets arehighly unpredictable and hence please keep a SL of Rs.148, (exit) for any short term trade. The stock atthe CMP of Rs.157 is available at throw-away price, considering the potential of the company. Last yearKotak Securities Ltd came out with a price target of Rs.526.
SOURCE : SUMANSPEAKS
BSE Code: 500411, CMP: Rs.157, P/E: Rs.6.84, Face Value: Rs.2, Dividend:400%
EPS: Rs.22.95
52-Week High/Low: Rs.622/Rs.150.5
Resistance zone: Rs.160—Rs.166.
Introduction: Thermax Ltd is a global solution provider in energy and environmental engineering. Itoffers products and services in energy sector (boilers, heaters & coolers, waste heat recovery, captive power production) and industrial environment friendly solutions (water treatment and recycling, waste management and performance chemicals).
Thermax Ltd is a market leader in providing small and medium sized industrial boilers; while its biggest rival BHEL focuses on large utility boilers.
It is well positioned to capture the market share of industrial and smaller utility boilers using its innovative technology. Capacity expansion will enable the company to fulfill the growing demand of boilers.Thermax brings its rich experience gained from customer engagements around the world. Through technology partnerships and strategic alliances, it provides superior value to help industry perform efficiently and profitably. With a dedicated sales & service network spread over South East Asia, Middle East, Africa, Russia, India, UK and the US, Thermax ensures innovative solutions and reliable support for client's business improvement. Strong capex announcement made by its user industries would continue to drive the order book of Thermax Ltd.
Shareholding Pattern: The promoters hold 61.98% while the general public holds 38.02 %. Among the general public, Arisaig Partners (Asia) PTE Ltd A/c Arisaig India holds 1.02% while Saif III Mauritius Company Ltd holds 1.74% shares of the company.
Financials: For Q3FY09, the company came out with flat top and bottomlines consider Q-o-Q. This is significant considering the overall economic downturn. The total income of the company for Q3FY09 came out to be Rs.803.83 Cr as against Rs.854 Cr. The net profit of the company for Q3FY09 came outto be Rs.72.3 Cr as against Rs.75.03 Cr in the same period previous year. This is on a very small equity capital of Rs.23.83 Cr. The year to date income of the company was Rs.2, 343 Cr (Rs.2, 311.3 Cr in the same period, last year), while profit after tax for the period stood at Rs.193 Cr (Rs.200.3 Cr in the same period previous year).
On a consolidated basis, year to date, Thermax group’s total income stood at Rs.2, 447.1 Cr (Rs.2, 464.2Cr) and profit after tax was Rs.183.5 Cr (Rs.207.8 Cr).The EPS of the company for Q3FY09 is almost flat at Rs.6.07, as against Rs.6.30 in the same period previous year. Even the operating profit margin is flat at 13.28% in Q3FY09 as against 13.43% in the same period previous year. The net profit margin of the company is also flat at 9.09% as against 8.87%in the same period previous year.
Industry Outlook:Thermax Ltd is power utilities manufacturer and a sophisticated player in the environment friendly solutions. Intense capital and technological requirements makes this sector of the market less fragmented. Total market share by sales of 4 (four) firms (Ecoboard Industries Ltd, Ion Exchange Ltd,Thermax Ltd & Western Paques) of pollution control equipment manufacturing industry is 98.8% in which the Thermax Ltd alone owns the 82.5% of share.
Thermax is second largest Power Equipment manufacturer, renowned supplier of industrial and utilitiesboilers, with a market share of around 21%, just next to the BHEL which stands at 69%.The ambitious target of 78,000 MW for additional power generation capacity taken up as part of the Eleventh Plan is slated to be on the fast track with the government already approving several megapower projects. It is widely expected that the intensive capital investment in mega power generation facilities will drive the demand of power utilities.
Steel, Cement and Petrochemicals are the sectors, which contribute 60% of the total order book forThermax Ltd. Thus, High capital expenditure in these sectors will be the main driving factor. Till some months back, the high interest rates regime have lead to the postponement of capital expenditure,which is going to change in the near future. It is expected that these sectors will be witnessing the increased investment in the near future
Investment Rationale:
(a) Good order book position: The Thermax group has an order book of around Rs.4,103 Cr as ofDecember 31, 2008 which is substantially up considering Q-o-Q. Last year Thermax bagged Rs.820 Crorder from an oil company under expansion in the Western India to build utility segment boilers which are currently only supplied by BHEL. In October, 2008, the company won a Rs.450 Cr order for setting up a captive power plant. The 60 MW power plant will be built and commissioned on a turnkey basis for a green field integrated steel complex in Andhra Pradesh. The plant will use process gases and blended coal as fuel. The Company is currently bidding for multiple projects with an average order size of Rs.500Cr.
b) Increased carry forward order book: Thermax Ltd has good carry forward order book, i.e.unexecuted orders. It is widely expected that a large pile of these orders are sufficient enough to takecare of revenue growth for few quarters incase of unexpected drop in the new orders.
c) Efficient Working Capital Management: The Company has been effective in managing the Debt Equity position at lowest possible over the past few years. This type of structure makes the earnings(EPS) less volatile, to have linear variability with its operating earnings (EBIT). This type of structure is unusual for a capital-intensive company. The main reason for this is the effective working capital management.Company has been able to maintain its cash conversion cycle by effectively increasing its creditor’s velocity in line with the debtor’s velocity. At the same time the company has been able to bring down thedays of inventory. The company’s advances from customers have gone up substantially in line with the increasing size of order book. Advances make the net working capital to be negative. We can expect thetrend to continue and this will allow the company to fund its capital expenditure with the internal accruals.
d) National Action plan on climate change: On 30th June ‘08, Prime minister of India, unveiled climate change action plan which seeks to promote sustainable development through use of clean technologies.The focus of this action plan is on implementation of energy efficiency measures, effective water resource management, and enhancement of eco-system services. Further, the clean environment is themain focus of this century. This in a way augments well for the environmental engineering division ofThermax Ltd.
e) Tie up with Balcke-Dürr GmbH and Babcock & Wilcox: In February, 2008, Thermax Limited and Balcke-Dürr GmbH, Germany signed a Technical Know How Transfer and License Agreement for dry and wet Electrostatic Precipitators (ESPs) — air pollution control equipment for power, industrial and utility segments upto 300 MW. The agreement will help Thermax to gain a rightful share of the air pollution control business emerging from this sector. Thermax Ltd has also signed a license agreement with Babcock & Wilcox (B&W) for utility boilers that grants the former, the right to engineer, manufactureand sell sub-critical B&W Radiant utility boilers in India. This should enable it to gain a strong hold in themarket for power utilities.
(f) New Manufacturing Facility: The Company has decided to set up a new manufacturing facility inIndia, which would manufacturer large boilers having a capacity ranging from 100 Mw to 800 Mw. Thecompany has signed a technical agreement with US--based Babcock & Wilcox Co for making sub--critical boilers in India, as mentioned earlier. The company plans to invest Rs.300 Cr in the Phase I of the project, which would have an annual boiler manufacturing capacity of 1,500 Mw.
(g) Cutting edge technologies: Thermax has sourced cutting-edge technologies for its business operations through alliances with world technology majors, like Babcock & Wilcox USA, Kawasaki Thermal Engineering Company, Japan; Eco Tech, Canada; Honeywell, USA; Bloom Engineering, Germany;Struthers Wells and Ozone Systems, USA. Through technology partnerships and strategic alliances, the company is expected to perform well going forward. With a dedicated sales & service Network spread over South East Asia, Middle East, Africa, Russia, India, UK and the US, Thermax ensures innovative solutions and reliable support for client's business improvement.
(h) Production on China plant to drive growth: Very recently the production at China unit of the company has started which will usher in a new beginning for the company. This plant has cost around $10million with a capacity to manufacture 200 chillers. It expects to reach full capacity utilization in a three-year time frame. China accounts for 50% of the $600 million global market for absorption chillers.In FY09, the company is carrying out a capex of around Rs.3 bn towards setting up a independent utility investment.
Concerns:
• Thermax Ltd may see selling pressure as institutional investors may churn portfolio in favour of companies with less dependence on private sector for orders.
• Most of the company's projects business and large boiler orders are at fixed price. Unless, the company builds cushion or hedges against steel price, the profitability on these orders are at arisk; given the probability of increase in steel prices in next few months.
• Given the prevailing economic conditions coupled with the credit squeeze, many industries are reviewing their capital expenditure plans.
• Since some of Thermax's revenue (packaged boilers and enviro chemicals) come from fast-moving products with very low invoice cycle hence revenue growth could taper off to around 12%-15% inFY09.
Conclusion and Chart-Check: The recommendation of Thermax Ltd is backed by three reasons, its strong financial performance, strong order book and most importantly company’s execution capability.The fact that the government has lifted the ban on coal linkage for Captive power projects, has spurred interest into such power projects. Thermax is aiming for a 10% market share out of the planned capacity in power generation by the private sector. With the significant private sector interest in power generation, Thermax Ltd is expected to generate sizeable revenue from utility boilers in the coming years.
What I feel is that India’s long-term story is intact and capital goods have a larger part to play in that.Hence, it is imperative at this stage to invest in fundamentally strong scrip like Thermax with a long term perspective. The scrip is available near its 52-week low price and most importantly the valuations also looking very attractive. Hence, considering the points mentioned above it is found that the scrip ofThermax Ltd could be purchased with a short term target of Rs.165—Rs.180. The scrip has a strong resistance around Rs.160—Rs.166 range.
On the charts it appears that the scrip has bottomed out in the short term and is poised to move up.The MACD, Stochastic (slow and fast), Williams % R, Bollinger Bands, and RSI are all in buy mode. Also good point is that the stock has not broken down the envelop pattern formed on daily charts. Moreover,it has given a minor breakout at Rs.155 and is looking to cross the stiff resistance zone of Rs.160—Rs.165, provided the market conditions remain buoyant. However, these days, the stock markets arehighly unpredictable and hence please keep a SL of Rs.148, (exit) for any short term trade. The stock atthe CMP of Rs.157 is available at throw-away price, considering the potential of the company. Last yearKotak Securities Ltd came out with a price target of Rs.526.
SOURCE : SUMANSPEAKS
Sunday, March 29, 2009
RELIANCE INDUSTRIAL INFRA LTD.
Reliance Industrial Infrastrucutre
The Company, is mainly engaged in the business of setting up / operating Industrial Infrastructure. The Company is also engaged in related activities involving leasing and providing services connected with computer software and data processing.
The Company has set up a 200-millimetre dia twin pipeline system from the Refinery of Bharat Petroleum Corporation at Mahul, Mumbai, for transporting petroleum products like Naphtha and Kerosene to the Petrochemical Complex of Reliance Industries Limited at Patalganga.
It has also erected and commissioned facilities, such as -(i) Supervisory Control and Data Acquisition (SCADA) system and (ii) Cathodic Protection system for the above pipeline system.It has also constructed -(i) Jackwell at River Tapi and an 18-kilometre long 1200-millimetre dia Raw Water Pipeline System in Hazira.(ii) 70000 kilolitre petrochemical product storage cum distribution Terminal at Jawaharlal Nehru Port Trust Area in Nhava Sheva, Uran (Raigad District) in Maharashtra.
The Company has acquired and deployed various construction machinery on hire for use at various construction sites all over India.The Company has its operations in the Mumbai and the Rasayani regions of Maharashtra, Surat and Jamnagar belts of Gujarat as also at other places in India.
The Company has a team of able and experienced professionals. It employs 148 persons and provides development opportunities and all round exposure to them.
Posted by SumanSpeaks at 1:33 AM
The Company, is mainly engaged in the business of setting up / operating Industrial Infrastructure. The Company is also engaged in related activities involving leasing and providing services connected with computer software and data processing.
The Company has set up a 200-millimetre dia twin pipeline system from the Refinery of Bharat Petroleum Corporation at Mahul, Mumbai, for transporting petroleum products like Naphtha and Kerosene to the Petrochemical Complex of Reliance Industries Limited at Patalganga.
It has also erected and commissioned facilities, such as -(i) Supervisory Control and Data Acquisition (SCADA) system and (ii) Cathodic Protection system for the above pipeline system.It has also constructed -(i) Jackwell at River Tapi and an 18-kilometre long 1200-millimetre dia Raw Water Pipeline System in Hazira.(ii) 70000 kilolitre petrochemical product storage cum distribution Terminal at Jawaharlal Nehru Port Trust Area in Nhava Sheva, Uran (Raigad District) in Maharashtra.
The Company has acquired and deployed various construction machinery on hire for use at various construction sites all over India.The Company has its operations in the Mumbai and the Rasayani regions of Maharashtra, Surat and Jamnagar belts of Gujarat as also at other places in India.
The Company has a team of able and experienced professionals. It employs 148 persons and provides development opportunities and all round exposure to them.
Posted by SumanSpeaks at 1:33 AM
Friday, March 6, 2009
IT raids on JaiCorp...........
I-T raids on Anand Jain offices, Jai Corp
Sreejiraj Eluvangal
Is is another case of "Witch Hunt" by the Anil Ambani team against his "Big Brother or his Associates" "??!!
It is to be noted here that if Late Dhirubhai Ambani was a larger-than-life patriarch, Mukesh Ambani is still an enigma. The shares of Jai Corp hit the lower circuit filter at the Bombay Stock Exchange (BSE) on Thursday to close with a loss of 4.94 percent, on news that the income tax authorities were conducting raids on the premises of its non-executive chairman Anand Jain. The company’s shares, which opened at Rs.79 at the BSE, eventually closed at Rs.74.15 - the lower circuit for the Jai Corp scrip on the BSE - data with the bourse showed.
Mumbai: Income tax officials conducted simultaneous raids on 8 offices of Jai Corp, promoted by Anand Jain, a confidante of Reliance Industries chairman Mukesh Ambani, on Thursday.
"We are conducting search operations at Jain's establishments including Jai Corp," a senior income tax official said.
"A team of 80 people is conducting the search operations at eight locations and it includes Jain's residence," the official said.
"We cannot say anything more at this moment. The operations are still on. All I can say for now is that the search operations have to do with some real estate deals," the official added.
An email sent to Jai Corp's investor relations department remained unanswered.Jain shot into limelight in 2007, when Forbes named him among 40 richest Indian billionaires.
He has plans for several special economic zones in the country. The website of Jai Corp says he is chairman of the Navi Mumbai SEZ Pvt Ltd, the Mumbai SEZ Ltd, Reliance Haryana SEZ Ltd and Urban Infrastructure Venture Capital Ltd. The venture capital firm had raised $500 million from international investors for investing in the Indian real estate sector.
This apart, his Urban Infrastructure Opportunities Fund had raised Rs 3,286 crore from some 750 retail and institutional investors, the website said. This fund was scrutinised by the Income Tax Department in September last year.
source : sumaspeaks
Saturday, February 28, 2009
GULF OIL CORP. LTD......
Pick of the week
Gulf Oil Corporation Ltd
BSE Code: 506480 CMP: Rs.27.90
Introduction: Gulf Oil Corporation Ltd is a juxtaposition blend of diverse business areas such as industrial explosives, mining products, lubricants, specialty oils and chemicals, active pharmaceutical ingredients (bulk drugs) and pharmaceutical formulations. Various divisions and subsidiaries are:(a) Industrial Explosives Division: Explosives/Accessories, Metal Cladding, Defense Products and Wind Energy(b) IDL Consultant Division: Mining Service and Construction Service(c) Specialty Chemicals Division: Active Pharma Ingredients and Formulations(d) Lubricants Division: Automotive Lubricants, Industrial Lubricants, and Petroleum Products(e) Subsidiaries: IDL Agro and IDL Buildware.
Shareholding Pattern: The promoters hold 45.73% while the general public holds 54.27%. Gulf Oil International Mauritius Inc is the only promoter of the company and which holds 45.73% of the shares of the company.
Financials: In Q3FY09, the total income of the company showed a rise of around 18% to Rs.216.01 Cr as against Rs.196.6 Cr in the same period previous year. However the net profit of the company suffered due to higher cost of raw material and most importantly on account of provisions for exchange fluctuations of Rs.6.03 Cr and higher interest charges. The net loss of the company for the Q3FY09 came out to be Rs.5.6 Cr as against Rs.6.54 Cr in the same period previous year. For the nine months period ended 31st December, 2009, the turnover increased by 26% to Rs.748 Cr and Profits after tax was Rs.1.78 Cr after provisions for exchange fluctuations of Rs.17.29 Cr.
Investment Rationale:1. Gulf Oil Corporation Ltd is a Hinduja Group Company. It has its explosives factory in Hyderabad, spread over 600 acres. Company had planned to set up knowledge city in 100 acres. It is reliably learnt now that the Government has given approval to shift this factory out of Hyderabad. Company has already given huge VRS package to around 4700 employees and now just 250 employees are there at Hyderabad factory. Apart from Knowledge City, company will also be constructing residential and commercial complex.2.The company received necessary approvals from the Karnataka Government for setting up of an IT SEZ on its land situated at Yelahanka, Bangalore on the Bangalore—Hyderabad Highway. The project assumes significance as it is strategically situated 14 Km from the new Bangalore International Airport. This will have a supporting infrastructure for Hospitality, Shopping, and Entertainment in an international ambience.3.The Company is also planning to finalize development plans for its land in Bhiwandi and DelhiThe Board of Directors of the Company had earlier approved a restructuring of the Company’s business in accordance with which, the Specialty Chemicals Division of the Company would be transferred effective from April 01, 2008 to IDL Specialty Chemicals Ltd (formerly IDL Agro Chemicals Ltd), a wholly owned subsidiary. The Scheme of Arrangement for restructuring has also been approved by the Shareholders and Unsecured Creditors.5.The company’s lubricant division came out with the new products in the name of Gulf Cargo Power and Gulf Super Duty. It also entered into new segments like Diesel Generator sets, largely used by telecom sectors, with a new range of lubricants co-branded with Ashok Leyland.6.The company’s explosives division reported a robust growth of 44% Y-o-Y. This robust growth in sales was due to increased sales both in the domestic and export markets. This division received a new contract from Coal India Ltd, for the supply of explosives to their subsidiaries with effect from 1st December, 2008. The new order has a price variation mechanism linked to raw material prices which would help stabilize margins in the subsequent quarters. Exports were strengthened with new orders from South East Asia, Easter Europe and Africa. This division is progressing well on its goal of achieving 20% of turnover of exports.7.The company’s mining division is doing excellently well which included the activities from the newly started Nigahi mine of NCL (a subsidiary of Coal India Ltd) in addition to Dudhichua mine in the same region. The division also started its first Manganese ore mining work of Adhunik Group in the Barbil region after completing the mine development work. The mine infrastructure work at Utkal Alumina Ltd is progressing well after a good start last year. Due to the high technical standards and quality of work, the Division is being offered various contracts in the mining and construction sectors. Currently the order book position of the Division is valued at Rs.500 Cr.8.The company is planning to raise US$ 100 million by way of issue of GDR/ADR/FCCB or otherwise (as was passed by the shareholders last year).
Conclusion: The Company is going to benefit from the fall in the price of major raw materials and this is expected to show up in the following quarters’ results. In the commercial vehicles segment the Division continued to achieve significant growth with higher market penetration of Ashok-Leyland Gulf co-branded lubricants led by India’s first long drain diesel engine oils with extended service period of 36000 Kms.Gulf brand promotion activities were stepped up with sponsorship of two wheeler racing events including National Dirt Track Championship. Economy standi-pack pouches were launched to cater to diesel segments in rural markets and the response has been very encouraging.In future the restructuring of the Specialty Chemical division, will drive its revenue growth. The Specialty Chemicals Division has obtained Certificate of Suitability for a cardiovascular drug, Enalapril Maleate from the European Directorate for the Quality of Medicine and HealthCare. This would give access for the molecule in the European markets. Application has been filed for a Cephalosporin for Certificate of Suitability with EDQM.In 2007, its share price touched Rs.350. It has also paid 75% dividend last year. The shares are trading near its book value of Rs.29 and 52-week low price of Rs.24.80. Hence there is minimum downside from the current price of Rs.27.90.
Chart-Talk: From the charts it is found that the stock is above its major support of Rs.27.5 and is in the highly oversold region. Though RSI and ROC is not indicating a clear trend however, MACD and Bollinger Bands are in super buy mode. However, since this is more or less a momentum counter like PSTL, it is move when the markets start to move up in tandem. Hence buy the scrip as long as it is above Rs.27.5 and don’t average if its falls below that levels unless you get some special positive signals.
Gulf Oil Corporation Ltd
BSE Code: 506480 CMP: Rs.27.90
Introduction: Gulf Oil Corporation Ltd is a juxtaposition blend of diverse business areas such as industrial explosives, mining products, lubricants, specialty oils and chemicals, active pharmaceutical ingredients (bulk drugs) and pharmaceutical formulations. Various divisions and subsidiaries are:(a) Industrial Explosives Division: Explosives/Accessories, Metal Cladding, Defense Products and Wind Energy(b) IDL Consultant Division: Mining Service and Construction Service(c) Specialty Chemicals Division: Active Pharma Ingredients and Formulations(d) Lubricants Division: Automotive Lubricants, Industrial Lubricants, and Petroleum Products(e) Subsidiaries: IDL Agro and IDL Buildware.
Shareholding Pattern: The promoters hold 45.73% while the general public holds 54.27%. Gulf Oil International Mauritius Inc is the only promoter of the company and which holds 45.73% of the shares of the company.
Financials: In Q3FY09, the total income of the company showed a rise of around 18% to Rs.216.01 Cr as against Rs.196.6 Cr in the same period previous year. However the net profit of the company suffered due to higher cost of raw material and most importantly on account of provisions for exchange fluctuations of Rs.6.03 Cr and higher interest charges. The net loss of the company for the Q3FY09 came out to be Rs.5.6 Cr as against Rs.6.54 Cr in the same period previous year. For the nine months period ended 31st December, 2009, the turnover increased by 26% to Rs.748 Cr and Profits after tax was Rs.1.78 Cr after provisions for exchange fluctuations of Rs.17.29 Cr.
Investment Rationale:1. Gulf Oil Corporation Ltd is a Hinduja Group Company. It has its explosives factory in Hyderabad, spread over 600 acres. Company had planned to set up knowledge city in 100 acres. It is reliably learnt now that the Government has given approval to shift this factory out of Hyderabad. Company has already given huge VRS package to around 4700 employees and now just 250 employees are there at Hyderabad factory. Apart from Knowledge City, company will also be constructing residential and commercial complex.2.The company received necessary approvals from the Karnataka Government for setting up of an IT SEZ on its land situated at Yelahanka, Bangalore on the Bangalore—Hyderabad Highway. The project assumes significance as it is strategically situated 14 Km from the new Bangalore International Airport. This will have a supporting infrastructure for Hospitality, Shopping, and Entertainment in an international ambience.3.The Company is also planning to finalize development plans for its land in Bhiwandi and DelhiThe Board of Directors of the Company had earlier approved a restructuring of the Company’s business in accordance with which, the Specialty Chemicals Division of the Company would be transferred effective from April 01, 2008 to IDL Specialty Chemicals Ltd (formerly IDL Agro Chemicals Ltd), a wholly owned subsidiary. The Scheme of Arrangement for restructuring has also been approved by the Shareholders and Unsecured Creditors.5.The company’s lubricant division came out with the new products in the name of Gulf Cargo Power and Gulf Super Duty. It also entered into new segments like Diesel Generator sets, largely used by telecom sectors, with a new range of lubricants co-branded with Ashok Leyland.6.The company’s explosives division reported a robust growth of 44% Y-o-Y. This robust growth in sales was due to increased sales both in the domestic and export markets. This division received a new contract from Coal India Ltd, for the supply of explosives to their subsidiaries with effect from 1st December, 2008. The new order has a price variation mechanism linked to raw material prices which would help stabilize margins in the subsequent quarters. Exports were strengthened with new orders from South East Asia, Easter Europe and Africa. This division is progressing well on its goal of achieving 20% of turnover of exports.7.The company’s mining division is doing excellently well which included the activities from the newly started Nigahi mine of NCL (a subsidiary of Coal India Ltd) in addition to Dudhichua mine in the same region. The division also started its first Manganese ore mining work of Adhunik Group in the Barbil region after completing the mine development work. The mine infrastructure work at Utkal Alumina Ltd is progressing well after a good start last year. Due to the high technical standards and quality of work, the Division is being offered various contracts in the mining and construction sectors. Currently the order book position of the Division is valued at Rs.500 Cr.8.The company is planning to raise US$ 100 million by way of issue of GDR/ADR/FCCB or otherwise (as was passed by the shareholders last year).
Conclusion: The Company is going to benefit from the fall in the price of major raw materials and this is expected to show up in the following quarters’ results. In the commercial vehicles segment the Division continued to achieve significant growth with higher market penetration of Ashok-Leyland Gulf co-branded lubricants led by India’s first long drain diesel engine oils with extended service period of 36000 Kms.Gulf brand promotion activities were stepped up with sponsorship of two wheeler racing events including National Dirt Track Championship. Economy standi-pack pouches were launched to cater to diesel segments in rural markets and the response has been very encouraging.In future the restructuring of the Specialty Chemical division, will drive its revenue growth. The Specialty Chemicals Division has obtained Certificate of Suitability for a cardiovascular drug, Enalapril Maleate from the European Directorate for the Quality of Medicine and HealthCare. This would give access for the molecule in the European markets. Application has been filed for a Cephalosporin for Certificate of Suitability with EDQM.In 2007, its share price touched Rs.350. It has also paid 75% dividend last year. The shares are trading near its book value of Rs.29 and 52-week low price of Rs.24.80. Hence there is minimum downside from the current price of Rs.27.90.
Chart-Talk: From the charts it is found that the stock is above its major support of Rs.27.5 and is in the highly oversold region. Though RSI and ROC is not indicating a clear trend however, MACD and Bollinger Bands are in super buy mode. However, since this is more or less a momentum counter like PSTL, it is move when the markets start to move up in tandem. Hence buy the scrip as long as it is above Rs.27.5 and don’t average if its falls below that levels unless you get some special positive signals.
Monday, February 23, 2009
IMMEDIATELY SELL NMDC AT PRESENT LEVEL !!!
IMMEDIATELY SELL NMDC AT PRESENT LEVEL All those who had made loss in this counter or has seen the higher level of 500 but failed to book profit have got golden chance to cower a part of it.Sale out your entire holding at present level , as the stock is going to touch it 52 week low of 120 level and then will make new lo near about Rs 100 . At that time cower your sale ,difference in price per share multiplied by no. of share will be your realized profit.
ICSA INDIA LTD ( BSE COD E: 531524 )
ICSA India Ltd (BSE Code-->531524)
Buy ICSA India Ltd at the CMP of Rs.90--Rs.92 for a target of Rs.150, in the next 45 days time frame. The company is into making of innovative products suitable for Power Utilities, in the field of Energy Management, Energy Audit, and Control Applications and provides versatile Data Acquisition System using several communication media such as GSM, CDMA, Satellite, Optical Fibre and RF.
Company has allotted 105000 Equity Shares on conversion of 35% of Stock Options granted under ESOP Scheme 2005 and 26,50,000 Equity Shares on conversion of Fully Convertible Warrants. Out of USD 46mn FCCB raised by the company, USD 25mn FCCBs were converted in the last financial year and an amount of USD 21mn are outstanding as on December 31, 2008.
Company has taken up the commissioning of Wind Forms aggregating to 9.6 MW.The company came out with superb set of numbers for the December, 2008 quarter, inspite of the downturn.
source : sumanspeaks
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