Dinesh Keskar, the President of Boeing India and Senior Vice President of Boeing International discusses the outlook for the aviation industry in India. He says, India will need about 1,000 airplanes of different types worth about USD 100 billion in the next 20 years.
Friends,
This was the heading I read today on moneycontrol.com......
Now what can we infer from it?Well, I think it says that Air traffic will be more and people would be travelling more in Airplane then in Train.
Now when I look at this sector , the growth down the line, some 5 yrs ,10 yrs, then this sector should get good growth in future.
And the stocks that come to my mind are Airlines stocks like Spice Jet,King Fischer Airlines etc not to mention stocks like Air India, Jet Airways etc.....
Then I think the stock which deals in Service sector will come in play and hence stocks like Taneja Aeorospace,Kale Consultant,Avantel comes in play....
Keep a watch on these stocks as they have the capacity to give multibagger return in times to come.
Kale Consultant is giving constantly great results since last many qrs and look extremly good to me.So is Taneja which I have recomended couple of times back, maybe not in recent past but I have recomended here.
Coming to market, it has remained sluggish for last whole week and breaking all support ,ringing alram bells in the camp of bulls.But one thing analyst need to keep in mind is operators are much more smarter then others .They will break the support , like 4750 and will take the market below it so create panic like situation so that investor sells their fundamentally good stock , that can be lapped up by HNI's etc....
People and analyst(read chartist) are gungho saying that distribution has happened between 16k to 17k and that now we will not see 17k again so early.Let us see what happens and who get what.Technical analyst says that Midcap and samllcaps will be battered and butchered and hence one needs to avoid such stocks.But they forget that when one buys such Midcap/ Smallcap stocks the risk always remain there as they are growing and after due diligence one has taken stake there.
In stock market nothing is impossible and everything is possible.I would like to ask in OPEN, that whoever sees and understand charts, here , who is a regular visitor of my blog needs to come out and write that what they FEEL WILL BE THE SENSEX IN NEXT 6 MONTHS OR NEXT 12 MONTHS.I want targets.If the charts is foretelling that let them come out and write it down here.
See, when market goes down , these chartist always come out to speak about the technicals, that didn't we say that?Where they go when market was bullish, I will never be able to understand......Why they come out to poke their nose and not when they proved wrong.......Nelson's Eye or what?
According to what I am reading and getting mails , it seems and can be derived that , If distribution has happened at 16k to 17k then it means that all the stronger hands has sold off their holding and hence now they will wait for 13k or 11k to come to getin back in market.These people are not going to buy at 10% correction as that makes no sense buying so early.So that also means that we should not see 17k in 6 months or 12 months.
But the problem here with them is , they don't want to stick their neck out and say that.They just want to redicule others by giving some negative views which according to me holds no water.They are like astrologer wherein they always scars you and nothing more.
I again make appeal to any of my readers who is able to read charts should come out with the targets for sensex.......Chart reading is just like astrology.They always come in play after things has already happened.They never foretells anything.Maybe once or twice they get correct and they make that a point to argue but never tell how many times they went wrong.One will never find a single Astrologer who will confess that he went wrong 9 out of 10 times but will go on saying he proved correct once...and that they will speak from the Top Of The Roof....
I am sorry if I am hurting any specific community in stock market, but I sometimes can't resist writing this because they are doing no good to investors.At some point of times my blood also get boiled and I ends up writing something unusal.
I have been advised that I also do not like Mandi and hence I always remain bullish and so are my followers.They are my followers because I always talk bullish and they like this and that is why they follow me.I have never wrote anyone to blindly follow me at any piont of time nor have I forced to take decision on my call.
My main purpose here is to write stocks which is still undiscovered and put it in front of investors so that they can gain from it.My intention has never to misguide anyone here....and never will be so in my LIFE.....Buy or not to buy is in their hands........from what I recomend here...
Tuesday, November 3, 2009
Wednesday, October 28, 2009
India Glycols,Dujodwala Products,Telecanor etc......
Friends,
I have been recomending stock in past time and again like India Glycols,Navin Flourine etc...
India Glycols has started making 52 week high, 157 , which I recomended at around 80.Marg Ltd now nearing 200,JMC from 80 to 180....etc etc the list is very long......
Well, among the recently picked , Frontier Spring has come out with again good results and one can keep a watch on thaat.
Another stock which has come out with fentestic results is Dujodwala Product Ltd.Moreover I also saw in todays bulk deal that one big investor bought some Dujodwala Product around Rs 14...check it your self who is he......
He is the same guy who has taken stake in TeleCanor Global Ltd and Telecanor is in down circuit but I would like to recomend it as a buy.
The following annoucement I saw at bse today.......
"TeleCanor Global Ltd has informed BSE that the Board of Directors of the Company at its adjourned meeting held on October 26, 2009, inter alia, has transacted the following:
1. Take a view on fully harnessing the potential of the 102.74 Acre Land Bank of the Company situated right in the middle of the PCPIR region where the GOI is estimating a Rs. 3.43 Lakh Crore investment with in the confines of 270 sq. kms.
2. Authorize the MD to appoint a reputed consultant well versed in such matters to give a road map on active participation of the Company as a Land Bank owner in either the capital intensive Processing Area with in the zone or all Non Processing Areas as identified by APIIC the nodal agency in view of the memorandum of agreement entered by the Dept. of Chemicals and Petrochemicals and the AP Govt. on October 01, 2009.It has been resoled that MD is authorized to hire the services of a reputed and appropriate agency and to hold discussions with APIIC in order to fully harness the potential of this land bank. After the consultant study the Company will deliberate on submitting an appropriate proposal to the nodal agency in this regard. "
Company having a land bank of 102.74 acre in the middle of PCPIR region where GOI is investing RS 3.43 lacs cr rupees? Wow!......what can be the price of that land ?Calculate it not in Acres but in sq feet or sq metre.......because these lands will be sold not in acres but in sq feet or sq metres.....
I would like to have feedbacks from readers who live in that vicinity or have any contact in that region to try and get what can be the value for this 102.74 acre of land.Intially when I recomended this stock,I was thinking that they must have a small plot of 2-5 acres of land but when I read it in bse annoucement today that they have 102 acres of land, makes this stock very precious according to me.
Moreover their product in IT is also going to fetch much higher valuation then what we are seeing today......the payment gateway product...if that comes out successfull then Telecanor will be the biggest multibagger in next 2 years.......
But remember this is all ifs and buts, these are my view and I can go horribly wrong in my analysis........do due diligence and then act on it......
India Glycols ,Navin,Marg, Madhucon,JMC ,Mcnally Bharat etc remains my favourites.
I remember I recomended Simmond Marshall at mmb around 40-50 and recently maybe, not sure, have written once in a list.Simmond Marshall has come out with excellent results and is going very cheap at 5 p/e and have a very tiny eq.....with promoters increasing stake as well......
Coming to market, it went down by over 300 points and investor become anxious what will happen.....Market was looking overbought in ST and hence the correction.Everyone who buys anything was going up and making easy money.That much of easy return was never going to happen for long time.Market always teaches lesson that making money in stock market is not easy.
Market is good and will remain good.It will bounce back.No need to worry on it. Just stay invested........We have a long way to go......If we are not following technicals then do not track at all.I had never written anything on technicals....because I do not understand it nor I believe in it.
I know all technical guys will say that didn't we say that there will be correction?But when it has come?After crossing 4750 , which was their biggest resistance for them?and market crossed all resistance....I have seen one of the website has written , which I copy pasted here in past, is still writing that who will FILL THE GAP?That is the problem with technical guys.But I ask, who created this charts?Human created charts....then who created this gaps filling, humanbeing...does market knows this charts?No.....these all technicals and charts came afterwards , market is the ultimate.......one needs to think and ask himself.............WHO COMES FIRST....it is a very simple question to ask.....Market or Charts.........!
So, when we do not invest on technicals then we do not sell on technical calls as well, so simple .Let them say that market will go below 4000....they have proved wrong from Mar 09...........When we are investing on fundamentals why we need to bother about technicals?This is horrible.....there will be no end...it is just like a person who is in bad state of affairs in life, goes to an astrologer...and what he will do...he will show this planet and this planet is not favouring you and hence you need to go through rituals and then everything will be alright....you need to wear the ring of Saturn or Jupiter or Mars ....or even they use to advice to wear a ring of Rahu and Ketu and if someone knows about astrology then Rahu and Ketu are not planets but an illussionary planets......and astorlogers has also made them a reason for earning.....well, according to what I understand, when a person goes to an astrologer , he is full of problem and sorrow.The duty of astrologer is to give solace , while saying that you will have better time in next year , something like that to help regain his confidence.But instead they will show something where clients will spend money and they will earn out of it.......
A person has come to an astrologer because he is in problem and see, here what happens.....the astrologer will instead show him way to dole out money for doing ritual and Pooja.....high spending for RICH people for same Pooja and same rituals for less money for poor one........How that is possible.....
So when we are following one path don't mix it up with other.......have confidence in what we are doing...that is the order of the day.......I have found no Astrologer who has said to Mohandas Karamchad Ghandhi, when he was in teens that he will be a famous figure and one day whole world will remember him even after his death.Not a single astrologer I have come through who said to Amitabh Bacchan when he was child that you will become an icon in Film industry.......if it is there in the Kundali then why astrologer were not able to say it when one is born.....No one told Dhirubhai Ambani that you will become a legend ..........that is called awakening..........that is what Swami Vivekanand says.......BE AWAKE.......that is the meaning what Swami Vivekanad means.......Awake means not what we do things awaked after night.....have your own conviction .....that is awakening....have confidence in what we do.....that is awakening.... have your own say....have your own reason ........ One should be able to understand what is RIGHT AND WHAT IS WRONG......that is awakening......
There is a very thin line which distinguishes FAITH AND BLIND FAITH......Shradhha aur Anshradhha main bahut jyada faraq nahi hai......there is a very thin line that bifurcates them......and one needs to understand that very well.......someone told you and you believed it that is blind faith......kisi ne bol diya aur humne man liya.....that is anshradhha.......
Remember one thing......there can be no human being who can take place of GOD.........kisi humanbeing ko bhagvan ka darraja kaise de sakte hai........that is blindly following someone.....a person who takes birth as human is full of vices and human weakness......how he can become GOD....or someone can put him in place of GOD........but I have seen that ....some people become GOD for someone.....they just believe what he says......even though what he says is not true....
Well, I need to stop here otherwise there is no end in writing on this......It can take hours and hours and days and days.....and we can go on discussing all these things .....
I have been recomending stock in past time and again like India Glycols,Navin Flourine etc...
India Glycols has started making 52 week high, 157 , which I recomended at around 80.Marg Ltd now nearing 200,JMC from 80 to 180....etc etc the list is very long......
Well, among the recently picked , Frontier Spring has come out with again good results and one can keep a watch on thaat.
Another stock which has come out with fentestic results is Dujodwala Product Ltd.Moreover I also saw in todays bulk deal that one big investor bought some Dujodwala Product around Rs 14...check it your self who is he......
He is the same guy who has taken stake in TeleCanor Global Ltd and Telecanor is in down circuit but I would like to recomend it as a buy.
The following annoucement I saw at bse today.......
"TeleCanor Global Ltd has informed BSE that the Board of Directors of the Company at its adjourned meeting held on October 26, 2009, inter alia, has transacted the following:
1. Take a view on fully harnessing the potential of the 102.74 Acre Land Bank of the Company situated right in the middle of the PCPIR region where the GOI is estimating a Rs. 3.43 Lakh Crore investment with in the confines of 270 sq. kms.
2. Authorize the MD to appoint a reputed consultant well versed in such matters to give a road map on active participation of the Company as a Land Bank owner in either the capital intensive Processing Area with in the zone or all Non Processing Areas as identified by APIIC the nodal agency in view of the memorandum of agreement entered by the Dept. of Chemicals and Petrochemicals and the AP Govt. on October 01, 2009.It has been resoled that MD is authorized to hire the services of a reputed and appropriate agency and to hold discussions with APIIC in order to fully harness the potential of this land bank. After the consultant study the Company will deliberate on submitting an appropriate proposal to the nodal agency in this regard. "
Company having a land bank of 102.74 acre in the middle of PCPIR region where GOI is investing RS 3.43 lacs cr rupees? Wow!......what can be the price of that land ?Calculate it not in Acres but in sq feet or sq metre.......because these lands will be sold not in acres but in sq feet or sq metres.....
I would like to have feedbacks from readers who live in that vicinity or have any contact in that region to try and get what can be the value for this 102.74 acre of land.Intially when I recomended this stock,I was thinking that they must have a small plot of 2-5 acres of land but when I read it in bse annoucement today that they have 102 acres of land, makes this stock very precious according to me.
Moreover their product in IT is also going to fetch much higher valuation then what we are seeing today......the payment gateway product...if that comes out successfull then Telecanor will be the biggest multibagger in next 2 years.......
But remember this is all ifs and buts, these are my view and I can go horribly wrong in my analysis........do due diligence and then act on it......
India Glycols ,Navin,Marg, Madhucon,JMC ,Mcnally Bharat etc remains my favourites.
I remember I recomended Simmond Marshall at mmb around 40-50 and recently maybe, not sure, have written once in a list.Simmond Marshall has come out with excellent results and is going very cheap at 5 p/e and have a very tiny eq.....with promoters increasing stake as well......
Coming to market, it went down by over 300 points and investor become anxious what will happen.....Market was looking overbought in ST and hence the correction.Everyone who buys anything was going up and making easy money.That much of easy return was never going to happen for long time.Market always teaches lesson that making money in stock market is not easy.
Market is good and will remain good.It will bounce back.No need to worry on it. Just stay invested........We have a long way to go......If we are not following technicals then do not track at all.I had never written anything on technicals....because I do not understand it nor I believe in it.
I know all technical guys will say that didn't we say that there will be correction?But when it has come?After crossing 4750 , which was their biggest resistance for them?and market crossed all resistance....I have seen one of the website has written , which I copy pasted here in past, is still writing that who will FILL THE GAP?That is the problem with technical guys.But I ask, who created this charts?Human created charts....then who created this gaps filling, humanbeing...does market knows this charts?No.....these all technicals and charts came afterwards , market is the ultimate.......one needs to think and ask himself.............WHO COMES FIRST....it is a very simple question to ask.....Market or Charts.........!
So, when we do not invest on technicals then we do not sell on technical calls as well, so simple .Let them say that market will go below 4000....they have proved wrong from Mar 09...........When we are investing on fundamentals why we need to bother about technicals?This is horrible.....there will be no end...it is just like a person who is in bad state of affairs in life, goes to an astrologer...and what he will do...he will show this planet and this planet is not favouring you and hence you need to go through rituals and then everything will be alright....you need to wear the ring of Saturn or Jupiter or Mars ....or even they use to advice to wear a ring of Rahu and Ketu and if someone knows about astrology then Rahu and Ketu are not planets but an illussionary planets......and astorlogers has also made them a reason for earning.....well, according to what I understand, when a person goes to an astrologer , he is full of problem and sorrow.The duty of astrologer is to give solace , while saying that you will have better time in next year , something like that to help regain his confidence.But instead they will show something where clients will spend money and they will earn out of it.......
A person has come to an astrologer because he is in problem and see, here what happens.....the astrologer will instead show him way to dole out money for doing ritual and Pooja.....high spending for RICH people for same Pooja and same rituals for less money for poor one........How that is possible.....
So when we are following one path don't mix it up with other.......have confidence in what we are doing...that is the order of the day.......I have found no Astrologer who has said to Mohandas Karamchad Ghandhi, when he was in teens that he will be a famous figure and one day whole world will remember him even after his death.Not a single astrologer I have come through who said to Amitabh Bacchan when he was child that you will become an icon in Film industry.......if it is there in the Kundali then why astrologer were not able to say it when one is born.....No one told Dhirubhai Ambani that you will become a legend ..........that is called awakening..........that is what Swami Vivekanand says.......BE AWAKE.......that is the meaning what Swami Vivekanad means.......Awake means not what we do things awaked after night.....have your own conviction .....that is awakening....have confidence in what we do.....that is awakening.... have your own say....have your own reason ........ One should be able to understand what is RIGHT AND WHAT IS WRONG......that is awakening......
There is a very thin line which distinguishes FAITH AND BLIND FAITH......Shradhha aur Anshradhha main bahut jyada faraq nahi hai......there is a very thin line that bifurcates them......and one needs to understand that very well.......someone told you and you believed it that is blind faith......kisi ne bol diya aur humne man liya.....that is anshradhha.......
Remember one thing......there can be no human being who can take place of GOD.........kisi humanbeing ko bhagvan ka darraja kaise de sakte hai........that is blindly following someone.....a person who takes birth as human is full of vices and human weakness......how he can become GOD....or someone can put him in place of GOD........but I have seen that ....some people become GOD for someone.....they just believe what he says......even though what he says is not true....
Well, I need to stop here otherwise there is no end in writing on this......It can take hours and hours and days and days.....and we can go on discussing all these things .....
Monday, October 26, 2009
PSL Ltd recomended in todays ...ET...Investor's Guide
Piping Hot
Rising demand, diversified manufacturing facilities and increased capacities provide higher upside potential for PSL
SANTAN U MI SH R A ET INTELLIGENCE GROU P
AS INDIA marches fast on the path of economic development, the demand for energy will increase rapidly. This has led to an increased exploration of oil and gas, raising demand for inputs such as pipes. Oil and gas companies such as Gas Authority of India (Gail) have been awarding bigger contracts to pipemakers in the last one year. A rebound in crude oil prices has also led to more exploration activity across the world, mainly in west Asia. PSL, with its diverse manufacturing facilities, will be one of the gainers of the increase in exploration. Anticipating more orders in the coming years, the company recently ramped up its capacity. An investor looking for reasonable returns with a 1-2-year horizon could consider adding PSL to her portfolio. BUSINESS: PSL is the largest helical submerged arc welding (HSAW) pipe-maker in the country and commands an over 50% share of the market with a capacity of about 1.5 million tonnes. The company also offers a range of coating services that are used to increase corrosion-resistance capacity of pipes. It has 13 pipe mills, a majority of which are spread strategically across eastern and western coasts. The well-distributed manufacturing facilities give it an edge over its competitors with lower freight cost and ability to service overseas markets. FINANCIALS: PSL’s net sales have more than doubled in the last two years. With an operating margin of 9-11%, the company has invested heavily in these two years. This has resulted in a sharp increase in its debt, with its debt-to-equity ratio at around 1.65. However, this is not a cause of concern as the company has consistent and high operating cash flows. It has given a return on capital employed (RoCE) of over 16% for the last five years, achieving a figure of 20% last year. PSL has the ability to set up its own manufacturing plants that saves it a lot of capital when building new plants. Also, the company uses hotrolled coil as raw material that is widely available in the country, helps it save on inventory maintenance cost. GROWTH DRIVER: PSL has an order book of about 1.3 times of its net sales in 2008-09, and most of these orders are from domestic clients. This provides a good visibility of its revenue flows for the next 12-15 months. The discovery of gas in the KG basin and a government proposal to set up a national gas grid provide ample growth opportunity for the company. PSL is probably the only firm that has a large number of manufacturing facilities in the east, helping it to tap a higher proportion of the pipe contracts from this region. VALUATION: The company’s decision to ramp up its capacity recently is timely considering the signs of recovery in the global economy. Also, its current capacity utilisation rate is 40-50% and this can be increased to 65-70%. The impact of all these factors would be visible in the coming years. The stock is currently trading at a trailing price-earning multiple of around 10.5. Historically, the stock has traded at a price-earnings multiple of more than 25 when Sensex was at around the 17,000 mark. PSL’s estimated earning per share (EPS) in 2009-10 is estimated at Rs 24, translating into a forward price-earning multiple of around 7. All these factors indicate that there is enough room for growth in the stock price. If an investor has a time horizon of 1-2 years, PSL is a good bet. santanu.mishra@timesgroup.com
Rising demand, diversified manufacturing facilities and increased capacities provide higher upside potential for PSL
SANTAN U MI SH R A ET INTELLIGENCE GROU P
AS INDIA marches fast on the path of economic development, the demand for energy will increase rapidly. This has led to an increased exploration of oil and gas, raising demand for inputs such as pipes. Oil and gas companies such as Gas Authority of India (Gail) have been awarding bigger contracts to pipemakers in the last one year. A rebound in crude oil prices has also led to more exploration activity across the world, mainly in west Asia. PSL, with its diverse manufacturing facilities, will be one of the gainers of the increase in exploration. Anticipating more orders in the coming years, the company recently ramped up its capacity. An investor looking for reasonable returns with a 1-2-year horizon could consider adding PSL to her portfolio. BUSINESS: PSL is the largest helical submerged arc welding (HSAW) pipe-maker in the country and commands an over 50% share of the market with a capacity of about 1.5 million tonnes. The company also offers a range of coating services that are used to increase corrosion-resistance capacity of pipes. It has 13 pipe mills, a majority of which are spread strategically across eastern and western coasts. The well-distributed manufacturing facilities give it an edge over its competitors with lower freight cost and ability to service overseas markets. FINANCIALS: PSL’s net sales have more than doubled in the last two years. With an operating margin of 9-11%, the company has invested heavily in these two years. This has resulted in a sharp increase in its debt, with its debt-to-equity ratio at around 1.65. However, this is not a cause of concern as the company has consistent and high operating cash flows. It has given a return on capital employed (RoCE) of over 16% for the last five years, achieving a figure of 20% last year. PSL has the ability to set up its own manufacturing plants that saves it a lot of capital when building new plants. Also, the company uses hotrolled coil as raw material that is widely available in the country, helps it save on inventory maintenance cost. GROWTH DRIVER: PSL has an order book of about 1.3 times of its net sales in 2008-09, and most of these orders are from domestic clients. This provides a good visibility of its revenue flows for the next 12-15 months. The discovery of gas in the KG basin and a government proposal to set up a national gas grid provide ample growth opportunity for the company. PSL is probably the only firm that has a large number of manufacturing facilities in the east, helping it to tap a higher proportion of the pipe contracts from this region. VALUATION: The company’s decision to ramp up its capacity recently is timely considering the signs of recovery in the global economy. Also, its current capacity utilisation rate is 40-50% and this can be increased to 65-70%. The impact of all these factors would be visible in the coming years. The stock is currently trading at a trailing price-earning multiple of around 10.5. Historically, the stock has traded at a price-earnings multiple of more than 25 when Sensex was at around the 17,000 mark. PSL’s estimated earning per share (EPS) in 2009-10 is estimated at Rs 24, translating into a forward price-earning multiple of around 7. All these factors indicate that there is enough room for growth in the stock price. If an investor has a time horizon of 1-2 years, PSL is a good bet. santanu.mishra@timesgroup.com
SRF Ltd......recomended in Todays ... ET......Investor's Guide
COMING OF AGE
The expansion projects in the last two years are set to lift future profits of SRF
R AM KR I SH NA K ASH ELK AR ET I NTELLIGENCE GROU P
LOWvaluation, attractive dividend yield and an expansion spree make SRF a compelling buy, but lack of clarity on carbon credits means the investors can invest only for medium term and review their decision based on the company’s future growth. BUSINESS: SRF is a Gurgaonbased diversified company that manufactures technical textiles, chemicals and packaging film. The company is India’s largest manufacturer of nylon tyre cord fabric (NTCF) and specialised fluoro-chemicals including refrigerants. Its other products include chloromethanes and polyester film. The company made two overseas acquisitions in FY09 augmenting its current lines of technical textile business – Thai Baroda Industries in Thailand that manufactures NTCF and Industex Belting in South Africa that manufactures belting fabrics. It also purchased the engineering plastics and industrial yarn business of its sister concern SRF Polymers during the year. With these acquisitions, the company now operates 11 plants including three overseas. The company is taking deliberate steps to reduce its dependence on NTCF business, which brought in over 55% of the company’s FY09 revenues. Similarly it is going for backward integration to ensure high margins. GROWTH DRIVERS: The company has been steadily expanding its production capacities in the last couple of years, the benefits of which will become available in the next few years. Particularly, the company has invested around Rs 70 crore to add over 1000 tonne of fluoro specialty capacity. It added 14,500 TPA polyester industrial yarn capacity that can cater to the increasing demand for radial tyres, besides debottlenecking and modernising its facilities. The company has acquired nearly 850 acres of land in Dahej to set up fluoro-chemical plants over next five years. It is also setting up a laminated fabrics plant in Uttarakhand with annual capacity of 48 million square metres to commission by March ‘10. The company has commissioned over Rs 600 crore investment projects in last 18 months and projects worth Rs 725 crore are presently under way. India imposed anti-dumping duty on NTCF imported from Belarus and China in May 2009. This, besides the auto sector revival, stands to benefit the company, which derives nearly half of its revenues from sale of NTCF. FINANCIALS: The company’s net profit has grown at a cumulative annual growth rate (CAGR) of 29.4% in last five years while its net sales grew 17.5% during the period. The company has a strong history of operating cash flows and dividends. Last three years witnessed its interest coverage ratio on a consolidated basis deteriorate to 4.6 in FY09 from 12.5 in FY07. In the same period, its debt-equity ratio has jumped to 1.1 from 0.6. The ongoing investment phase of the company has taken its net block including capital work up 56% in this period to Rs 1,859 crore. The company’s chemical business producing fluorine-based refrigerants, speciality chemicals, chloro-methanes and engineering plastics, is the largest profit making segment representing over 80% of the company’s FY09 profit. Packaging film segment contributed 11.6% and technical textiles accounted for just 4.6%. In FY09, the company completed a buy-back of its shares which led to around 5.3% reduction in its equity capital to Rs 61.88 crore. The company’s board has now approved another buy-back scheme at Rs 160 per share, which will remain open till July 2010. VALUATIONS: The company is currently valued at 6.1 times its profits for the trailing 12 months. The company had paid Rs 10 per share dividend for FY09 translating in a dividend yield of 4.9%. Its peers Century Enka (P/E 9.2), Gujarat Fluorochemicals (P/E 4.9) and Jindal Polyfilms (P/E 4.8) are trading at around similar valuation. RISK FACTORS: The company does not publish revenues and profit from sale of carbon credits, which boosts the profits of its chemicals business and may face profit erosion depending on the price and quantity of carbon credits sold. At the same time, there is little clarity on future of carbon credits after the first phase of the Kyoto Protocol ends in 2012. ramkrishna.kashelkar@timesgroup.com
The expansion projects in the last two years are set to lift future profits of SRF
R AM KR I SH NA K ASH ELK AR ET I NTELLIGENCE GROU P
LOWvaluation, attractive dividend yield and an expansion spree make SRF a compelling buy, but lack of clarity on carbon credits means the investors can invest only for medium term and review their decision based on the company’s future growth. BUSINESS: SRF is a Gurgaonbased diversified company that manufactures technical textiles, chemicals and packaging film. The company is India’s largest manufacturer of nylon tyre cord fabric (NTCF) and specialised fluoro-chemicals including refrigerants. Its other products include chloromethanes and polyester film. The company made two overseas acquisitions in FY09 augmenting its current lines of technical textile business – Thai Baroda Industries in Thailand that manufactures NTCF and Industex Belting in South Africa that manufactures belting fabrics. It also purchased the engineering plastics and industrial yarn business of its sister concern SRF Polymers during the year. With these acquisitions, the company now operates 11 plants including three overseas. The company is taking deliberate steps to reduce its dependence on NTCF business, which brought in over 55% of the company’s FY09 revenues. Similarly it is going for backward integration to ensure high margins. GROWTH DRIVERS: The company has been steadily expanding its production capacities in the last couple of years, the benefits of which will become available in the next few years. Particularly, the company has invested around Rs 70 crore to add over 1000 tonne of fluoro specialty capacity. It added 14,500 TPA polyester industrial yarn capacity that can cater to the increasing demand for radial tyres, besides debottlenecking and modernising its facilities. The company has acquired nearly 850 acres of land in Dahej to set up fluoro-chemical plants over next five years. It is also setting up a laminated fabrics plant in Uttarakhand with annual capacity of 48 million square metres to commission by March ‘10. The company has commissioned over Rs 600 crore investment projects in last 18 months and projects worth Rs 725 crore are presently under way. India imposed anti-dumping duty on NTCF imported from Belarus and China in May 2009. This, besides the auto sector revival, stands to benefit the company, which derives nearly half of its revenues from sale of NTCF. FINANCIALS: The company’s net profit has grown at a cumulative annual growth rate (CAGR) of 29.4% in last five years while its net sales grew 17.5% during the period. The company has a strong history of operating cash flows and dividends. Last three years witnessed its interest coverage ratio on a consolidated basis deteriorate to 4.6 in FY09 from 12.5 in FY07. In the same period, its debt-equity ratio has jumped to 1.1 from 0.6. The ongoing investment phase of the company has taken its net block including capital work up 56% in this period to Rs 1,859 crore. The company’s chemical business producing fluorine-based refrigerants, speciality chemicals, chloro-methanes and engineering plastics, is the largest profit making segment representing over 80% of the company’s FY09 profit. Packaging film segment contributed 11.6% and technical textiles accounted for just 4.6%. In FY09, the company completed a buy-back of its shares which led to around 5.3% reduction in its equity capital to Rs 61.88 crore. The company’s board has now approved another buy-back scheme at Rs 160 per share, which will remain open till July 2010. VALUATIONS: The company is currently valued at 6.1 times its profits for the trailing 12 months. The company had paid Rs 10 per share dividend for FY09 translating in a dividend yield of 4.9%. Its peers Century Enka (P/E 9.2), Gujarat Fluorochemicals (P/E 4.9) and Jindal Polyfilms (P/E 4.8) are trading at around similar valuation. RISK FACTORS: The company does not publish revenues and profit from sale of carbon credits, which boosts the profits of its chemicals business and may face profit erosion depending on the price and quantity of carbon credits sold. At the same time, there is little clarity on future of carbon credits after the first phase of the Kyoto Protocol ends in 2012. ramkrishna.kashelkar@timesgroup.com
Sunday, October 25, 2009
Zero Debt Cos.......
Friends,
I read this news in ET internet edition of Saturday .....and saw that 30 cos has cut the borrowings.Now if the borrowings are cut then it means that these paid up borrowings will have a very positive effect on the bottomline as they will not have to pay the interest to banks or creditors....
This is a simple thing to understand.If one pays loans , which is named as borrowings in corporate language , then it is obvious that co will have not to pay the interest of the loans paid and hence that Interest amt will be directly added to the bottomline and hence will flare up the EPS and hence the stock will become cheap with P/E also going down.
Anyone can read this news and understand it.It is very simple.But who wants to read?That is a moot question .But if one needs to learn and understand things in stock market , people has to find his own way because unless you do it yourself, u do not have the confedence and one ends up asking again and again whether the stock is still a buy or hold or sell etc etc.....and that is why I put emphasize that try to find facts on your own.......
I remember when I was in India I tried to read almost all, ET, BS, FT....all I cannot buy ,I use to buy ET and BS daily and use to go to library to read FT and other stock market magazine......I was a subscriber of Business India Magazine and Capital Market Magazine and never missed a single issue for last 4-5 yrs and more ....and use to read Business Today, Businees World etc, else where.
Knowledge is Wealth.When one is investing his hard earn money why he do not try and find out what he can for that stock?That is what Peter Lynch has said.If one go for buying a Refregerator or Washing Machine or AC or Scooter he will ask everyone what is it, how it is performing, will also ask numerable queries to showroom manager but when they buy stocks they depend on others.....That is the biggest anamoly of a human.....
I can say that what I have posted here which I read in ET is easily readable by anyone and there is no finer lines to pick.If someone would have read this news he should have been able to pick couple of damn cheap stock from this article......
Zero Debt co is a great thing to have.........NO Debt......to me is the biggest positive....moreover it is not easy to find which co has less debt eq ratio as one has to go through the BS or AR which is not possible and hence readers needs to be always on toes to pick up such news from newspaper......Needs to be vigilent .....
There is one Box in which they have written the list and how much debt has been lessoned.I tried to copy paste it but was not able to do it but in it one can see that many cos hass become a Zero Debt cos after this and these stock are a BUY ...at this rate....Insiders must have cornered some stock listed here...but it is hard for investors or even Fund Manager can have this information.....so it is still not too late to go ahead and buy these stocks...........
I give u one more hint......on every saturday in ET if you will try to look at the quotes of stocks which use to come daily in ET .....read it on every Saturday after almost a month is over..after the quaterly results are declared they keeps on adding new results I use to read it when I was in India and also sometimes I do it here on Internet edition whenever time permits me....one will find all results declared of cos at the end of the quote.....and how much the NP has increased or decreased then last previous year qr.....sometimes we do not read this results on BSE site but can see in ET....from that atleast we can see that which co NP has increased or decreased from last qr NP.....and take the decision accordingly....or find a new stock....
It is all not EASY as People THINKS.......I put lots of effort in finding and constantly tracking the stocks which I recomend and this takes away lots of time of mine to do such things.....
Corporate India gets ready to wear the debt-free tag
Around 30 Cos Cut Their Borrowings, While Some Reduced Them To Zero In FY09
Vijay Gurav & MV Ramsurya MUMBAI
IFB Industries, Eicher Motors, Tata Sponge Iron, Balmer Lawrie & Co, and Hind Copper are among 30 companies that are leading Indian corporates in attaining the status of a zero-debt company, which fetches higher valuations in stock markets. The slashing of debt helps them to save on interest cost which eats into net profit and also leaves more cash to be distributed to shareholders in the form of dividends. It will also insulate the companies from any future hike in interest rates that looks inevitable, given the rising prices. After studying the balance sheets of many companies across sectors, ET shortlisted about two-and-ahalf dozen companies which have brought down total borrowings, including secured and unsecured loans, to significantly low levels or even reduced them to zero in the last financial year. According to analysts, more and more companies will try to get rid of debt as market conditions turn conducive for raising funds from other relatively cheaper sources. Funds from alternative sources can be used to repay existing loans and to reduce interest outgo. “If a company pays off its loans, that could be because the company is confident of generating enough cash internally and does not need to raise debt for future growth,” said Maulik Patel, head of research, KR Choksey Shares and Securities. The market tends to favour stocks of such companies even in bad conditions. Highlighting the disadvantages of being a debt-heavy company, he said investors are cautious about them because of concerns over impact of large interest outgo on bottomline. Citing examples of companies like Tata Motors and Wockhardt, Mr Patel said mounting debt puts pressure on valuations. While reducing debt is a positive move, a company should also see that it is done without diluting equity significantly. If any company raises funds through equity issues like preferential allotment or QIP to retire debt, it would help reduce the debt-equity ratio. However, such moves would raise the equity capital and bring down earnings per share or EPS. “To avoid dilution in the equity, the company can instead tap the foreign market to raise debt like FCCB or FCCN where the cost of borrowing is much lower than the funds raised in local market through issue of debentures and in the form of loan from banks and financial institutions,” said an analyst with a leading Mumbai-based brokerage on condition of anonymity. Of the shortlisted companies, BOC India has become a zero-debt company after the industrial gases major repaid the entire loan of Rs 219 crore in 2008. The company had raised Rs 597 crore through preferential allotment to the foreign parent BOC Group, part of which was utilised for retiring the debt. State-owned Hindustan Copper, which is currently on the government’s list of possible candidates for disinvestment, is another example where the company has met its debt obligations from internal accruals. The company, which had a debt of Rs 216 crore, in 2006-07, was able to pare the outstanding to Rs 36 crore in the subsequent two years amidst the bull run in commodities. “The years 2006 and 2007 were the best periods, with copper prices ruling at all-time highs,” said one senior executive with Hindustan Copper, who asked not to be named. “This is also the time when we reduced our debt by about Rs 300 crore.” Tata Sponge Iron, IFB Inds and Eicher Motors are some of the other companies which are reducing debt to almost nil. The figures stood at Rs 0.1 crore, Rs 0.5 crore and Rs 8 crore respectively as on March 31, 2009, compared to Rs 147 crore, Rs 398 crore and Rs 218 crore as on March 31, 2007. Most of the abovementioned companies have recorded a sharp improvement in their performance. BOC India, Tata Sponge Iron and IFB Industries have recorded a net profit growth between 26% and 744% in FY09. vijay.gurav@timesgroup.com
I read this news in ET internet edition of Saturday .....and saw that 30 cos has cut the borrowings.Now if the borrowings are cut then it means that these paid up borrowings will have a very positive effect on the bottomline as they will not have to pay the interest to banks or creditors....
This is a simple thing to understand.If one pays loans , which is named as borrowings in corporate language , then it is obvious that co will have not to pay the interest of the loans paid and hence that Interest amt will be directly added to the bottomline and hence will flare up the EPS and hence the stock will become cheap with P/E also going down.
Anyone can read this news and understand it.It is very simple.But who wants to read?That is a moot question .But if one needs to learn and understand things in stock market , people has to find his own way because unless you do it yourself, u do not have the confedence and one ends up asking again and again whether the stock is still a buy or hold or sell etc etc.....and that is why I put emphasize that try to find facts on your own.......
I remember when I was in India I tried to read almost all, ET, BS, FT....all I cannot buy ,I use to buy ET and BS daily and use to go to library to read FT and other stock market magazine......I was a subscriber of Business India Magazine and Capital Market Magazine and never missed a single issue for last 4-5 yrs and more ....and use to read Business Today, Businees World etc, else where.
Knowledge is Wealth.When one is investing his hard earn money why he do not try and find out what he can for that stock?That is what Peter Lynch has said.If one go for buying a Refregerator or Washing Machine or AC or Scooter he will ask everyone what is it, how it is performing, will also ask numerable queries to showroom manager but when they buy stocks they depend on others.....That is the biggest anamoly of a human.....
I can say that what I have posted here which I read in ET is easily readable by anyone and there is no finer lines to pick.If someone would have read this news he should have been able to pick couple of damn cheap stock from this article......
Zero Debt co is a great thing to have.........NO Debt......to me is the biggest positive....moreover it is not easy to find which co has less debt eq ratio as one has to go through the BS or AR which is not possible and hence readers needs to be always on toes to pick up such news from newspaper......Needs to be vigilent .....
There is one Box in which they have written the list and how much debt has been lessoned.I tried to copy paste it but was not able to do it but in it one can see that many cos hass become a Zero Debt cos after this and these stock are a BUY ...at this rate....Insiders must have cornered some stock listed here...but it is hard for investors or even Fund Manager can have this information.....so it is still not too late to go ahead and buy these stocks...........
I give u one more hint......on every saturday in ET if you will try to look at the quotes of stocks which use to come daily in ET .....read it on every Saturday after almost a month is over..after the quaterly results are declared they keeps on adding new results I use to read it when I was in India and also sometimes I do it here on Internet edition whenever time permits me....one will find all results declared of cos at the end of the quote.....and how much the NP has increased or decreased then last previous year qr.....sometimes we do not read this results on BSE site but can see in ET....from that atleast we can see that which co NP has increased or decreased from last qr NP.....and take the decision accordingly....or find a new stock....
It is all not EASY as People THINKS.......I put lots of effort in finding and constantly tracking the stocks which I recomend and this takes away lots of time of mine to do such things.....
Corporate India gets ready to wear the debt-free tag
Around 30 Cos Cut Their Borrowings, While Some Reduced Them To Zero In FY09
Vijay Gurav & MV Ramsurya MUMBAI
IFB Industries, Eicher Motors, Tata Sponge Iron, Balmer Lawrie & Co, and Hind Copper are among 30 companies that are leading Indian corporates in attaining the status of a zero-debt company, which fetches higher valuations in stock markets. The slashing of debt helps them to save on interest cost which eats into net profit and also leaves more cash to be distributed to shareholders in the form of dividends. It will also insulate the companies from any future hike in interest rates that looks inevitable, given the rising prices. After studying the balance sheets of many companies across sectors, ET shortlisted about two-and-ahalf dozen companies which have brought down total borrowings, including secured and unsecured loans, to significantly low levels or even reduced them to zero in the last financial year. According to analysts, more and more companies will try to get rid of debt as market conditions turn conducive for raising funds from other relatively cheaper sources. Funds from alternative sources can be used to repay existing loans and to reduce interest outgo. “If a company pays off its loans, that could be because the company is confident of generating enough cash internally and does not need to raise debt for future growth,” said Maulik Patel, head of research, KR Choksey Shares and Securities. The market tends to favour stocks of such companies even in bad conditions. Highlighting the disadvantages of being a debt-heavy company, he said investors are cautious about them because of concerns over impact of large interest outgo on bottomline. Citing examples of companies like Tata Motors and Wockhardt, Mr Patel said mounting debt puts pressure on valuations. While reducing debt is a positive move, a company should also see that it is done without diluting equity significantly. If any company raises funds through equity issues like preferential allotment or QIP to retire debt, it would help reduce the debt-equity ratio. However, such moves would raise the equity capital and bring down earnings per share or EPS. “To avoid dilution in the equity, the company can instead tap the foreign market to raise debt like FCCB or FCCN where the cost of borrowing is much lower than the funds raised in local market through issue of debentures and in the form of loan from banks and financial institutions,” said an analyst with a leading Mumbai-based brokerage on condition of anonymity. Of the shortlisted companies, BOC India has become a zero-debt company after the industrial gases major repaid the entire loan of Rs 219 crore in 2008. The company had raised Rs 597 crore through preferential allotment to the foreign parent BOC Group, part of which was utilised for retiring the debt. State-owned Hindustan Copper, which is currently on the government’s list of possible candidates for disinvestment, is another example where the company has met its debt obligations from internal accruals. The company, which had a debt of Rs 216 crore, in 2006-07, was able to pare the outstanding to Rs 36 crore in the subsequent two years amidst the bull run in commodities. “The years 2006 and 2007 were the best periods, with copper prices ruling at all-time highs,” said one senior executive with Hindustan Copper, who asked not to be named. “This is also the time when we reduced our debt by about Rs 300 crore.” Tata Sponge Iron, IFB Inds and Eicher Motors are some of the other companies which are reducing debt to almost nil. The figures stood at Rs 0.1 crore, Rs 0.5 crore and Rs 8 crore respectively as on March 31, 2009, compared to Rs 147 crore, Rs 398 crore and Rs 218 crore as on March 31, 2007. Most of the abovementioned companies have recorded a sharp improvement in their performance. BOC India, Tata Sponge Iron and IFB Industries have recorded a net profit growth between 26% and 744% in FY09. vijay.gurav@timesgroup.com
Tuesday, October 20, 2009
Some new stock that has come to my radar......
Friends,
I have been going through some stock which I feel looking extremly good.I am listing it here with some comments on that....
1)Investment Precision and CastingLtd...cmp rs 134.....
This is one co which is in Casting sector with a very low eq and am seeing some movement and buying from informed circles......a la Lumax Ind type....of stock...
2)Alfa Laval Ltd..cmp Rs .1243.00
A MNC co which went for a buyback at Rs 1000 this year and promoters has increased the holding by over 10% and now hold almost over 88%.....It is another wonderful co with great fundamentals.Procure an order for BioFuel plant from Vietnam.....at Rs 1250 is going damn cheap...
3) APW President Ltd....cmp Rs 122.00...
This is one co which I am tracking so long but never able to recomend it here but am rectifying my previous error before it runs more .This is another co which can come in Power sector like Thermax......Great results and great management.
4)Patel Airtemps Ltd...cmp Rs...64.00
Promoters has constantly increasing the holding through open market deal.Great future....
SRF Ltd has crossed 200 mark and long way to go still.Tinplate after the right issue came down to below 50 and now at 66.....great co to buy still.....Gayatri Pro ltd recomended at 166 is now at rs 379 and lots of steam still left..there are score of stock which I have recomended which has gone through the roof......I hope readers must be benifitting from them......
My latest pick KPIT Cummins has jumped from 77 to 85....but I am seeing that some of the readers are taking advantage of my call to buy and exit with small profit after it has been recomended here and stock runup immidiately.
I have no problem with that but then they need not come and ask me whether the stock is still good to hold......it is their decision to sell at whatever profit they had and hence there is nothing left to be asked......as I have always written here that my call will give above average return then market.......
I have been going through some stock which I feel looking extremly good.I am listing it here with some comments on that....
1)Investment Precision and CastingLtd...cmp rs 134.....
This is one co which is in Casting sector with a very low eq and am seeing some movement and buying from informed circles......a la Lumax Ind type....of stock...
2)Alfa Laval Ltd..cmp Rs .1243.00
A MNC co which went for a buyback at Rs 1000 this year and promoters has increased the holding by over 10% and now hold almost over 88%.....It is another wonderful co with great fundamentals.Procure an order for BioFuel plant from Vietnam.....at Rs 1250 is going damn cheap...
3) APW President Ltd....cmp Rs 122.00...
This is one co which I am tracking so long but never able to recomend it here but am rectifying my previous error before it runs more .This is another co which can come in Power sector like Thermax......Great results and great management.
4)Patel Airtemps Ltd...cmp Rs...64.00
Promoters has constantly increasing the holding through open market deal.Great future....
SRF Ltd has crossed 200 mark and long way to go still.Tinplate after the right issue came down to below 50 and now at 66.....great co to buy still.....Gayatri Pro ltd recomended at 166 is now at rs 379 and lots of steam still left..there are score of stock which I have recomended which has gone through the roof......I hope readers must be benifitting from them......
My latest pick KPIT Cummins has jumped from 77 to 85....but I am seeing that some of the readers are taking advantage of my call to buy and exit with small profit after it has been recomended here and stock runup immidiately.
I have no problem with that but then they need not come and ask me whether the stock is still good to hold......it is their decision to sell at whatever profit they had and hence there is nothing left to be asked......as I have always written here that my call will give above average return then market.......
Saturday, October 17, 2009
Samvat 2065 ...sensex at 17322 and Nifty 5142...now we enters 2066...
Friends,
What a way to end!
Samvat 2065 is gone and sensex has ended at 17322 and Nifty at 5142.........
Now from here to where?Samvat 2066 ....I think we should be much much better off then thisI have already written many times here that we can see 21k before 2009 and 31k before 2010.....actually in last Oct market was at 8500 and we have come 100% from there defying all apprehension from technical analyst and even fundamentals analyst.
Not a single technical guy has perdicted this.If someone can give me evidence that they predicted 17322 and 5142 then I will be glad to read it.There were all sorts of resistance and always showing danger that if this mark is not crossed then we can see following percentage of reaction.
Market has moved 30% or 40% or 60% from this level and hence it has to come to fill the gap otherwise it will become over bought.There is an evening star or morning star pattern or Doji or head and shoulder pattern formed and hence surely market will react and so on and so forth.But alll the calculation turned out to be BIG BIG miscalculation and the funny part is these technical guys are still not ready to believe the move and says that market will tank.That is rediculous.They always have arguements that charts pattern shows what is coming up and not market course the chart......They always believe that Charts shows what is going to happen even they have failed miserably from 2003 to 2007 and again from March 2009 to Oct 2009.... In 6 months the entire scenario has changed and the shot in the arm came with Congress winning the election and Left were driven out completely....
I have never believed in technicals nor I adviced someone to follow it.It is all for day trading and that too operators manupalate it, eating your stoploss and then bounce back.
My advice(usually I suggest) to all my readers is that please , Never Never trade in F&O.Leave it for FII's,HNI's and big players.We are very small to play in it.If someone will play he will lose everything he has made while investing.
No Day Trading Nor play in F&O......
I remember I gave a call for Petron Eng and Const ltd on 17th sep at 169 and I remember when I gave the call, it was a day when I saw Petron going for 20% upper circuit and suddenly it caught to my mind that what the hell this stock is doing?
Well, even it was in UC of 20% I gave a call the very next day at 169.......and today after exactly 1 month it is RS 210.
One of my friend told me ,Rajeev, your Petron Eng is not moving and suddenly my eye went to Petron Eng for highest gainer list and it was there.I told him , it will run at its own time.Have patience.
Petron Eng,Lumax Ind, Areva T&D, SRF Ltd, Navin Flourine,KPIT Cummins,Apar Ind,Thermax,Alsthom,L&T, Seimens,TRF are evergreen stocks........and has been recomended here time and again.I have even went to the extent to write that L&T is a stock of the decade.
Deep Ind, Excel Crop are stock for coming years which can become large cap from midcap.
There were some dark horse I listed like Scan Point Geomatics,Lesha Energy,Telecanor Global ,Rungta Irrigation,EPC Ind etc which are making new 52 week highs.They are capable of going still up as my theory that new stock will take charge for the new bull run.
Readers are requesting me to list stock where they can buy and not to have a look at it till next Diwali.But that is something not possible.One needs to be on toes in stock market.Atleast to book profit when the stock doubles and sell 50% to make the rest FREE.
I have always written here that I do not look for any stock if it going to give me an average return.Only if I am convinced that it will give above average return , means more then market, then only I will recomend it or I personally have a look at it.
I would like to write on XL Tele , that it seems that the fall was delibarate and hence interest can be again seen in this counter with Solar Play coming back next year.So those who are holding must hold on with it.I think one of the reader also wrote me regarding XL Tele that will again run.
Would like to write on GOLD .Heard from experts that GOLD can touch $2500 in next 2 yrs and hence I just have to imagine what will the prices for Titan, Deccan Gold,Shirpur GoldRefinary and Jwellary making cos like Suashih Diamond,Gitan Jali Gems etc .Here the dark horse is Zodiac JRD.
There is one another stock in Gold Jwellary and it is Surana Corp.It is also diversified in Wind Mills power projects.Keep a watch on these two......
What a way to end!
Samvat 2065 is gone and sensex has ended at 17322 and Nifty at 5142.........
Now from here to where?Samvat 2066 ....I think we should be much much better off then thisI have already written many times here that we can see 21k before 2009 and 31k before 2010.....actually in last Oct market was at 8500 and we have come 100% from there defying all apprehension from technical analyst and even fundamentals analyst.
Not a single technical guy has perdicted this.If someone can give me evidence that they predicted 17322 and 5142 then I will be glad to read it.There were all sorts of resistance and always showing danger that if this mark is not crossed then we can see following percentage of reaction.
Market has moved 30% or 40% or 60% from this level and hence it has to come to fill the gap otherwise it will become over bought.There is an evening star or morning star pattern or Doji or head and shoulder pattern formed and hence surely market will react and so on and so forth.But alll the calculation turned out to be BIG BIG miscalculation and the funny part is these technical guys are still not ready to believe the move and says that market will tank.That is rediculous.They always have arguements that charts pattern shows what is coming up and not market course the chart......They always believe that Charts shows what is going to happen even they have failed miserably from 2003 to 2007 and again from March 2009 to Oct 2009.... In 6 months the entire scenario has changed and the shot in the arm came with Congress winning the election and Left were driven out completely....
I have never believed in technicals nor I adviced someone to follow it.It is all for day trading and that too operators manupalate it, eating your stoploss and then bounce back.
My advice(usually I suggest) to all my readers is that please , Never Never trade in F&O.Leave it for FII's,HNI's and big players.We are very small to play in it.If someone will play he will lose everything he has made while investing.
No Day Trading Nor play in F&O......
I remember I gave a call for Petron Eng and Const ltd on 17th sep at 169 and I remember when I gave the call, it was a day when I saw Petron going for 20% upper circuit and suddenly it caught to my mind that what the hell this stock is doing?
Well, even it was in UC of 20% I gave a call the very next day at 169.......and today after exactly 1 month it is RS 210.
One of my friend told me ,Rajeev, your Petron Eng is not moving and suddenly my eye went to Petron Eng for highest gainer list and it was there.I told him , it will run at its own time.Have patience.
Petron Eng,Lumax Ind, Areva T&D, SRF Ltd, Navin Flourine,KPIT Cummins,Apar Ind,Thermax,Alsthom,L&T, Seimens,TRF are evergreen stocks........and has been recomended here time and again.I have even went to the extent to write that L&T is a stock of the decade.
Deep Ind, Excel Crop are stock for coming years which can become large cap from midcap.
There were some dark horse I listed like Scan Point Geomatics,Lesha Energy,Telecanor Global ,Rungta Irrigation,EPC Ind etc which are making new 52 week highs.They are capable of going still up as my theory that new stock will take charge for the new bull run.
Readers are requesting me to list stock where they can buy and not to have a look at it till next Diwali.But that is something not possible.One needs to be on toes in stock market.Atleast to book profit when the stock doubles and sell 50% to make the rest FREE.
I have always written here that I do not look for any stock if it going to give me an average return.Only if I am convinced that it will give above average return , means more then market, then only I will recomend it or I personally have a look at it.
I would like to write on XL Tele , that it seems that the fall was delibarate and hence interest can be again seen in this counter with Solar Play coming back next year.So those who are holding must hold on with it.I think one of the reader also wrote me regarding XL Tele that will again run.
Would like to write on GOLD .Heard from experts that GOLD can touch $2500 in next 2 yrs and hence I just have to imagine what will the prices for Titan, Deccan Gold,Shirpur GoldRefinary and Jwellary making cos like Suashih Diamond,Gitan Jali Gems etc .Here the dark horse is Zodiac JRD.
There is one another stock in Gold Jwellary and it is Surana Corp.It is also diversified in Wind Mills power projects.Keep a watch on these two......
KPIT Cummins........cmp Rs 77.00....scrip of the year!
Friends,
Very happy and prosperous new year to all of you.I wish that all earn tons of money in stock market and wish all the loss are wiped off next year....whoever is having it.......Best Of Luck.......because without her(Goddess Laxmi) I firmly believe nothing is possible......He ( God Vishnu)will guide us when to sell and when to buy.....so that we can earn the maximum profit and do not sell early.....
I have done nothing here.Just copied paste what I got from while exploring Internet......I like the management, I like the statement of Chairman, I like the positive talk and hence I have posted it here.
KPIT Cummins net up at Rs 26 cr
Our Bureau PUNE
KPIT Cummins Infosystems, a product engineering and IT consulting partner to manufacturing companies, has revised its profitability outlook for the full year. While the software company’s net profit has more than doubled to Rs 25.8 crore from Rs 10.7 crore a year ago, net sales have fallen significantly to Rs 109.8 crore against Rs 165.1 crore. During the first half, the software solutions provider registered a similar fall in sales, to Rs 218.63 crore (Rs 310.45 crore) while its net profit shot up to Rs 42.05 crore (Rs 23.27 crore). “We are revising our outlook for the full year’s profits to Rs 77-82 crore, from our earlier forecast that these would be flat. Last year, our net profit for the full year was Rs 65.81 crore (for the standalone company). We have revised our guidance since profits for the second quarter and first half have improved hugely,” said KPIT Cummins managing director and CEO Kishor Patil. The higher profitability is being attributed to greater productivity, moving more work offshore and fixed price contracts. Reflecting confidence in an economic revival, KPIT Cummins has begun to grant promotions within the company. These had been frozen for the past six months. Mr Patil added that they have also begun to hire from the freshers who had been made offers but had been put on hold in June. “This year, we expect to hire 200 freshers,” he said. “PSUs in India and the rest of the world offer opportunities. We are addressing the energy, utilities and defence sectors. We have begun engagements with energy and utilities in the US and with the defence in India,” Mr Patil explained.
Investors Update: Coming straight from Chairman.......
Jul - Sep 2009
Q 2 FY10 Investor U pdate 1
INVESTOR U PD ATE
FOR
QU ARTER END ED 30th SEPTEM BER 2009
(NSE: KPIT, BSE: 532400) (July - Sep 2009)
KEY H IG H LIG H TS
Revenue for the quarter increased by 2.4% Q-o-Q to Rs.1769.86 M n.
In U SD term s, Revenues stood at $ 36.35 M n. Q-o-Q grow th of 3%.
EBITD A grew by 28% Q-o-Q and 20% Y-o-Y to Rs.468.37 M n. EBITD A m argins
expanded by 5.3% to 26.5% during the quarter.
Net Profits for the quarter stood at Rs. 211.95 M n, a Y -o-Y grow th of 27%. On a
Q-o-Q basis, profits declined by 5.3%.
G ross Profit M argins im proved Q-o-Q basis. They expanded by 2.9% to 45.8%. Yo-
Y basis they expanded by 3.8%.
PAT M argin expanded on Y-o-Y basis by 3.7% to 11.98%. H ow ever Q-o-Q they
declined by 0.97%.
Sequentially, EPS decreased to Rs. 2.69 from Rs. 2.86 during the quarter and
grew by 25% YoY .
4 new Custom ers w ere added during the quarter, taking the total num ber of
custom ers to 137.
Overall increase in utilization levels w ith offshore utilization increasing by 5%
going to 72.8% and onsite utilization increasing by 1.40% going to 94.33%.
Jul - Sep 2009
Q2 FY10 Investor Update 2
FINANCIAL HIGHLIGHTS FOR THE QUARTER ENDED 30TH SEPTEMBER 2009 (Q1
Revenues:
o During the quarter, Revenue in USD terms increased by 3% Q-o-Q. Q2 FY10 Revenue was USD 36.35 M n. In absolute terms, the q-o-q USD revenue growth was of USD 1.09 M n.
o Our largest customer contribution is around 32% during the quarter. There have been
deliver on a fixed price basis and also focused on Value delivery.
o In G eography terms, out of the total Q-o-Q revenue increase, US contributed 4%, Europe -4% and APAC 18.5 %. Our focus on the emerging markets is taking shape and will continue to contribute largely to our growth in the future.
o W e believe that the worst is behind us. W e actually faced a revenue decline only in Q1FY10 after seeing revenue growth till Q4 FY09 and we believe there would not be any further significant reduction in our USD denominated top line going ahead. There would be marginal ups and downs for the remainder of the year. W e have made a modest beginning by having QoQ growth in Q2FY10.
o Our customers are now coming back to the discussion tables to discuss projects and thus there is much more visibility now as compared to earlier two quarters. This is a sign that in the near future even the order flow will be normalized.
o W ith some new initiatives we have received good traction in two new customer
segments namely PSUs and Defense in our related areas of work.
o W e also believe we are well-equipped now to expand ourselves to offer services to a new industry sector Energy and Utilities.
o W e are focusing on bagging larger deals and maintaining key customer growth. W e are
also moving towards becoming a total solutions provider.
Profitability:
o Profits marginally declined during the quarter on a QoQ basis mainly due to increase in
forex loss by almost 640%. Keeping the forex loss in Q2 equal to Q1, the net Profits
have actually expanded proportionately to the operating margins. N et Profit margins
contracted by 1% Q-o-Q and expanded by 3.7% Y-o-Y basis.
o W e have been able to not only maintain healthy operating margins but increase them
which is a result of productivity improvement and cost control measures continuously
being taken over the past few quarters, along with the shift in business from onsite to
offshore. SG &A costs have fallen by 8.9% (Q-o-Q) and 24.6% (Y-o-Y). The offshore
Jul - Sep 2009
Q2 FY10 Investor Update 3
utilization improved by 5%+ during the quarter to touch 72.8%, an increase of 1.5% YoY.
The Onsite utilization improved by 1.4% QoQ and 0.5% YoY.
o The following factors have contributed to the improvement in profits and profitability:
1. Our productivity improvement initiatives, namely more fixed price contracts,
Improved reuse of production assets from repository, reduced rework efforts,
increased zero defect deliveries to customers, increased usage of automation tools,increased customer satisfaction rating and better onsite offshore revenue mix. have been delivering improved outcomes.
2. We are continuously increasing the number of assets in our asset repository and also focusing on their re use. We currently are reusing about 15% of the total assets in our repository. We are also focusing on use of open source and freeware tools for project management, configuration management and software model development.
We have internally developed a Project H ealth Management System which helps in the ongoing monitoring of the projects and thus enabling required corrective
actions, if any, at the right time.
3. The reduction in SGA costs depicts the ongoing cost control and reduction initiatives like consolidation of facilities and utilization of all assets ( hardware, software, space ), capital expenditure only on a must have basis, strict control on support hiring and renegotiation of contracts with service as well as capital vendors for rate reduction. These measures will continue on an ongoing basis.
4. The forex loss during the quarter stood at Rs.131.57 Mn. as against Rs. 17.82 Mn. in Q1 FY10. In Q1 there was a big gain on the conversion of foreign currency liabilities since the net differential in the closing rate of Q1 and the previous quarter was Rs. 3/$ less. This gain on liability conversion offset the MTM losses and actual losses on maturity of the forward contracts. In Q2, the closing rate was marginally higher than Q1 and thus there was no gain on liability conversion but a marginal loss which added to the MTM and actual conversion losses. Thus there was a net increase of Rs.114 Mn. of forex losses in Q2FY10 as compared to Q1FY10.
Jul - Sep 2009
Q2 FY10 Investor Update 4
Balance Sheet details (Rs. M illion):
o The Cash Balance as at September 30, 2009 stood at Rs. 1663.94 Mn. as compared to Rs. 1812.09 Mn. over the June 30, 2009 balance. The surplus funds were invested in Liquid Funds during the Qtr to the tune of Rs. 280.87 Mn. Thus on a comparable basis the Cash and Cash equivalents as of Sept 30, 2009 stood at Rs. 1944.81 Mn. registering
an increase of 132.72 Mn. The Cash Balance is being held in Current Accounts (Rs.
967.40 Mn.) and Deposit Accounts (Rs. 694.48 Mn.)
o As on September 30, 2009 our total debt stood at Rs. 1,081.68 Mn. (Rs. 1,036.61 Mn. as of June 30, 2009) comprising of Rs. 672.00 Mn. of Term Loan and Rs. 405.04 Mn. of
Working Capital Loan.
o Forex Hedging instruments with maturity of more than 3 months and considered effective hedges in accounting terms are provided for as adjustment to the Reserves and Surplus in the Balance Sheet. As on September 30, 2009 these Hedging Reserves were Rs. 772.51 Mn., as compared to Rs. 847.70 Mn. as of Q1FY10 end.
Balance Sheet Summary: As at
(Rs. Mn.)
September 30, 2009 June 30, 2009
Equity 2,923.99 2,635.88
Total Debt 1,081.68 1,036.61
Minority Interest & Deferred Tax Liability 52.41 68.25
Total 4,058.08 3,740.74
Fixed Assets 2,128.88 1,929.96
Investments* 280.87 0.31
Current Assets 3,801.08 3,968.08
Cash Balance 1,663.94 1,812.09
Receivables 1,300.53 1,411.05
Loans & Advances 836.61 744.94
Current Liabilities 2,152.75 2,157.61
Total Net Assets 4,058.08 3,740.74
Investments include investment of surplus cash in Liquid Funds.
Jul - Sep 2009
Q2 FY10 Investor Update 5
KEY DEVELOPMENTS
PARTNERSHIP
NEC Electronics in collaboration with KPIT Cummins have developed a new AUTOSAR 3.0 compatible software solution for various hardware platforms. This software package enables easy design of application software without the need for new developments. This will be mainly of use to the Auto Tier I suppliers to the OEMs and we will start generating revenues from this from the Tier I vendors.
KPIT has signed a MoU with a renowned National Research Laboratory towards joint research and development in the areas related to ultra-capacitors and batteries, which will
go a long way in the development of software solutions in the new generation of Hybrid and Electric vehicles.
AW ARDS AND THOUGHT LEADERSHIP
KPIT Cummins ranked 65 in Dataquest Top 100 survey - up from 78th position in 2008
KPIT co-Semiconductor & Software Business Collaboration Opportunities between India and Japan Semiconductor
Association (ISA) and The Japan External Trade Organization (JETRO).
KPIT participated as a speaker at the Germany Session of NASSCOM in Mumbai.
We also participated as speakers in
Productonica 2009 organized by ZVEI
association).
CUSTOMERS AND MARKETS
4 new customers were added during the quarter 2 in Europe and 2 in US. Total number of
active customers is 137.
Automotive:
Technology solutions for sustainable and G reen grow th.
Commenced strategic consulting engagement for an Indian Auto OEM.
Consulted an American OEM on Human Machine Interface (HMI) Tool selection.
Developed an end-to-end software solution for night vision and pedestrian detection for
an Asian Tier 1
Jul - Sep 2009
Q2 FY10 Investor Update 6
Built a Dedicated Short Range Communication (DSRC) based Advanced Traffic
management solution for an American Tier 1
Furthered automotive software standardization efforts: Selected for AUTOSAR
(AUTomotive Open System Architecture) Basic Software implementation for a leading
European OEM. This reinforces our leadership position in Europe.
Industrial Equipments:
Integrates multiple assembly lines for UK operations of a leading American Tier 1. KPIT
-engineered MES (Manufacturing Execution Systems)
solution replaces complex legacy systems.
Commenced a strategic enterprise IT engagement with a national automotive testing laboratory, to help them reduce the time required for testing, validating and documenting the test results for Auto Manufacturers.
Commenced engagement with an Asian auto component manufacturer and a leading Asian contract logistics company to implement end-to-end templatized ERP solution for
business operations.
Hi-Tech and Semiconductor:
Solution accelerators for quick-time-to-market
Engaged with a leading European semiconductor company on development of MCU for Dashboard Cluster for a High End Luxury Car.
Started project on developing reference designs for consumer and Automotive
applications for a leading Asian semiconductor company. Established Center of
Excellence for Motor Controls.
Commenced work on developing complete digital section of a controller chip for a leading European manufacturer of IC solutions.
Diversified Financial Services:
Customer award for excellent teamwork towards breakthrough Improvement in Quality &
Productivity
Initiates on-site/offshore reverse engineering project for a leading retail bank of South
Africa.
Jul - Sep 2009
Q2 FY10 Investor Update 7
CORE OFFERINGS
In the current economic scenario, we continue to focus on our niche and specialized areas of work. In Automotive electronics there have been some structural changes which shifted the focus towards hybrid engine, green emissions, Infotainment and safety systems. All the leading automotive OEMs and Tier1s are making significant investments in the area of emission controls, more fuel efficiency, comfort & connectivity and safety.
KPIT is well-positioned to leverage this opportunity with its domain expertise, scalability and the technological strength. Our existing customers are choosing KPIT as their consulting partners and we are helping them in designing their technology roadmaps. Emerging markets would be drivers of revival. We are witnessing significant traction in these markets and are making our strategy more robust. We are collaborating with OEMs, Tier 1s and Semiconductor companies to reduce time to market of new products and make existing products more competitive.
Currently we are working on 30+ vehicle programs as depicted in the table below, with new and existing customers thus helping them bring their products faster to the target markets at profitable price points.
Priority Industry Reactions
Green
Technology
1. Several American, European and Asian carmakers announce launch of electric, hybrid and eco-
smart, Renault electric car, ecological motor)
2. Governments sanction loans and funding for hybrid vehicles (FiskerAutomotive - $530 million, France 2.5 Bn euro, £25 Mn of UK Govt)
3. Car makers embrace fuel efficient green technologies for future models (Ford -
Ecoboost technology, GM Working on Active Fuel Management (AFM) & Spark Ignition
Direct Injection Technology (SIDIT), Samsung, Bosch to produce electric car batteries).
4. Electric Sports-Car maker Tesla gets $82.5 Mn Investment. Mazda to raise $1 Bn for
green cars.
5. Toyota to begin offering plug-in Prius in 3 yrs. Hyundai plans plug-in hybrid in 2012.
KPIT Engagements KPIT Role
Quick end- to- end implementation of Anti Brake system with regenerative
braking to an electric vehicle for major electric car OEM in APAC
Improving Competitiveness
Key contribution as software architect and developer for a strategic CNG
Hybrid program for Major diesel engine manufacturer in US
Reducing Time-to-market
Design of battery model, independent of battery chemistry for quick &
efficient testing of hybrid/electric battery system
Bringing in Frugal
Innovation
Model based design of battery management system software and the
associated hardware for Major Tier I in North America
Reducing Time-to-market
Specification development of stop start technology for passenger cars for Major OEM in APAC Creating competitiveness
Jul - Sep 2009
Q2 FY10 Investor Update 8
Priority Actions
Small Cars
1. Several American, European and Asian carmakers unveil small cars for emerging as well as developed markets (Ford Figo, VW Polo, Nissan New Micra, Toyota Scion iQ, Honda Jazz, Bajaj Bajaj Lite, Maruti Splash)
2. Companies collaborate to bring new technology for energy efficiency in personal
mobility solutions (Toyota Plans to Make Car Engines in India, GM India & REVA Form
Alliance for New Electric Small Car, India emerging as a manufacturing hub for cars
KPIT Engagements KPIT Role
Key contribution in a government-industry forum for designing the software
standard for small car with Indian Government- Industry ecosystem
Bringing in Frugal
Innovation
Final stage of discussions for conversion of 2 wheel drive vehicle to 4 wheel
drive for defense applications for a Tier I supplier in APAC
Bringing in Frugal
Innovation
Helping global OEMs & Tier I for component localization aimed at cost
reduction for Major OEMs globally
Value engineering
Design & development of active suspension seating control system for
Major Tier I manufacturer in APAC
Reducing Time-to-market
Priority Actions
Intelligent
& Smart
Cars
1. Car makers commit investments for smart vehicle technology in braking, safety, comfort and driver assistance systems (Mercedes Builds Car That Auto-Brakes At Red Lights, Ford To use virtual vehicle sound to improve interior sound quality & quietness, Daimler invests in Hambach to build electric Smart, Google Working on "Smart Charging" Software for Electric Cars - Popular Science - Mike Spinelli, Chevrolet Malibu, Smart car and other shockers on list of biggest resale value)
2. European Commission Intelligent car flagship initiative to include Autonomous Cruise
Control, Lane departure Warning System & Alarm for Drowsy or drunken driving.
3. Honda Jazz will have an automatic version in the coming days - Wheels Unplugged -
India's Automobile Magazine - Sep 14, 2009
KPIT Engagements KPIT Role
Lane departure warning system for passenger cars Internal R&D project
Bringing in Frugal
Innovation
Go-to-market for vision-based system for passenger cars of an Asian automotive
OEM
Increasing
competitiveness
Design & development of Remote keyless entry feature using a customized chip,
for passenger cars for a Major European Tier I
Reducing time to market
Vision based testing solution for automotive cluster systems for a Major
European Tier I manufacturer Increasing competitiveness
Conceptualization & implementation of state of art vehicle simulation facility
for a Major passenger car OEM in APAC
Increasing competitiveness Reference board and software design to test the new automotive
microcontroller in emerging mkts application for major semicon manufacturer
Reducing time to market Key contributor in immobilizer product devp for a Major FPGA manufacturer Competitiveness
Jul - Sep 2009
Q2 FY10 Investor Update 9
Focus Area KPIT Actions Imperative
Standardization
ECU integration, aimed at multiple application on a single
platform and reusability of platform components for a
Major Luxury car OEM in Europe
Frugal Innovation
Co-development & maintenance of Product Line architecture based engine platform for a Major diesel engine manufacturer of North America Improving competitiveness
Being a premium member of AUTOSAR, helping global OEM
for migrating to AUTOSAR with major German OEMs
Quick time to market
Standardized Network operating system for European C/D class vehicles with Major Europe passenger car OEM in Creating competitiveness Development of a configurable software stack, easily reconfiguring the system for OBD II and EOBD with minimal changes software for Major European Tier I Improving competitiveness
BUSINESS OUTLOOK
ECONOMIC RECOVERY IN SIGHT
Automotive Industrials HiTech
1. Government announces recovery packages for the automotive industry (Cash for clunkers program)
2. Leaders of American and European car manufacturing companies express optimism for economic revival (Renault- Nissan CEOPeugeot )
3. Companies launch initiatives to bring more fuel efficient, environment friendly and smart vehicles. Enhance focus on emerging markets (BMW, Mercedes-Benz, Ford).
4. Auto market has grown at 55% Y-o-Y in BRIC countries.
5. SIAM steps up forecast as vehicle sales grew by 22.4% in August. (Business Standard, April 9, 09)
1. Economic activity in the mfg sector expanded in Sep 2009 for 2nd consecutive month, and overall economy grew for the 5th consecutive month. -
Manufacturing ISM Report on Business® . October 1, 2009
2. According to the September CMI from the NACM, U.S. credit conditions and performance are improving at an increasing rate. -
September, 2009
3. Manufacturing jobs off-shoring has again picked up growth.
4. One-
manufacturing sector has registered high growths of up to 20% in the 1st quarter of 2009-10 fiscal, the CII-Ascon survey said.
5. Govt. has promised to keep interest rates low till recovery signs in the manufacturing sector strengthen.
1. Global chip makers boost revenue forecast for 3rd quarter and current financial year (Texas Instruments, Intel corp., ASML)
2. Semiconductor equipment purchased in Aug was up 14.6% (compared to 12% in July)
3. European technology stocks have gained on revised outlook statements from semiconductor firms. (WSJ,
April 17, 09)
4. India is now the second largest
R&D hub for $1.3bn Synopsys Inc, the California-based global leader in software and IP for semiconductor design, verification and manufacturing.
5.
will be at least 15% by 2020.
Jul - Sep 2009
Q2 FY10 Investor Update 10
Though the economic recovery is in sight, t
clearly visible, though the visibility has improved a lot over the quarter. Our manufacturing customers are still facing challenges of capacity utilization. Business environment continues to be volatile.
Despite all these challenges, the bottom is already behind us and slow signs of recovery have been observed during the quarter. Automotive sector has now started showing signs of revival with car sales picking up in US although at a very slow pace. Our Automotive business has also improved by 4% QoQ and semiconductor business has improved by 25%
during this quarter.
From geographical perspective, we noticed significant traction in India & APAC regions besides South Africa. India has shown good traction especially in SAP and Automotive. We would explore strategic partnerships in these regions as we have been doing in Europe. Our revenue share from the established geographies continues to be stable.
With the business scenario gradually recovering, we continue with our investment in CREST
(R&D), People Development (training & certification) and Practice Development in selected areas of interest.
Our R&D efforts in automotive have been recognized through project wins during this quarter. We will now start investments in Practices, SMEs and front end sales to be geared
. We have completed the campus recruitment process and fresh graduates would be joining us during the remainder of the year. The first batch has already joined in the first week of October. We are stepping up our investments in technical talent to get ready once the market is back to its ew Normal.
The Rupee has started appreciating against the dollar. If the same continues in the near future, it will have a big negative impact on the bottom line of exporters. We believe, we are much better placed to face the rupee appreciation, since there is a natural hedge in terms of our costs in foreign currencies and the balance exposure is sufficiently covered.
Having said this, the rupee appreciation will have some adverse effect on our bottom line numbers. Even after this expected appreciation, we are confident of maintaining the EBIDTA margins above 20% levels.
Jul - Sep 2009
Q2 FY10 Investor Update 11
As stated in our last communication, in spite of the expected fall in revenues, our outlook on profitability remains strong. We are confident of not only maintaining, but also of exceeding the absolute profits after tax, of last financial year. The Rupee continues to be volatile and in our calculations we have considered the Rupee to be around 47 to a dollar for the remainder of the year. With this, we believe we should end the year with Net Profit after tax between Rs. 770 Million to Rs. 820 Million.
LOOKING BEYOND
FOREX INSTRUMENTS
No more liabilities on the 3 derivative contracts
Total Outstanding Hedges:
Total amount of hedges as on 30th September 2009 : $151.85 Mn.
o Maturing in the next 6 months : $ 46.90 Mn.
o Maturing beyond March 2010 : $104.95 Mn.
The average hedge rate for FY10 is Rs. 45.73 / USD ( with an assumption of spot being around Rs. 47 / USD )
We expect to reach $500 m n in revenues by the end of FY 2013 by continuing sharp focus on select industries, practice areas and expanding reach in
em erging m arkets.We shall expand our service offerings to Energy & Utilities space and would bring in larger focus on manufacturing businesses in Defense and PSU sectors. We shall be leaders in key practice areas and our solutions would be aimed at reducing cost of ownership, ensuring sustainable mobility solutions and enhancing fuel efficiency
Jul - Sep 2009
Q2 FY10 Investor Update 12
INCOME STATEMENT FOR THE QUARTER ENDED 30th SEPTEMBER 2009
1. -o- compared to the immediately
preceding quarter
2. -o-
the previous year
Rs. Million Q2 FY10 Q1 FY10
Q-o-Q
Growth
Q2 FY09
Y-o-Y
Growth
Sales 1,769.86 1,728.07 2.42% 2,009.54 -11.93%
Software Development Expenses 958.49 985.42 -2.73% 1164.56 -17.69%
Gross Profit 811.37 742.66 9.25% 844.98 -3.98%
Selling and Marketing Expenses 152.82 162.93 -6.20% 165.84 -7.85%
General and Admin Expenses 190.19 213.58 -10.95% 288.99 -34.19%
EBITDA 468.37 366.15 27.92% 390.15 20.05%
Interest 5.12 5.37 -4.59% 10.12 -49.39%
Depreciation 75.79 71.17 6.49% 76.01 -0.30%
Profit After Depn. & Int. 387.46 289.61 33.79% 304.02 27.44%
Other Income -131.57 -17.82 638.4% 104.82 25.52%
Profit Before Tax 255.89 271.79 -5.85% 199.20 28.46%
Provision for Taxation 43.94 48.01 -8.48% 30.92 42.12%
Profit After Tax 211.95 223.78 -5.29% 168.28 25.95%
Minority Interest - - - 1.27 -100.0%
Profit after Minority Interest 211.95 223.78 -5.29% 167.01 26.91%
Exceptional Item - - - - -
Profit after exceptional item 211.95 223.78 -5.29% 167.01 26.91%
Paid up Capital 156.10 156.09 - 156.09 -
Free Reserves 2,767.66 2,479.79 - 2162.64 -
EPS (Rs. 2/-Face Value each)
- Basic 2.72 2.87 -5.33% 2.16 25.72%
- Fully Diluted 2.69 2.86 -5.95% 2.15 25.05%
Common Size Analysis:
Gross Profit Margin 45.84% 42.98% - 42.05% -
Sales & Marketing Exp / Revenue 8.63% 9.43% - 8.25% -
General & Admin Exp / Revenue 10.75% 12.36% - 14.38% -
EBITDA Margin 26.46% 21.19% - 19.41% -
Net Profit Margin 11.98% 12.95% - 8.31% -
Jul - Sep 2009
Q2 FY10 Investor Update 13
PERFORMANCE METRICS (QUARTER ENDED 30th SEPTEMBER 2009)
Q2 FY10 Q1 FY10
Q-o-Q
Growth
Q2 FY09
Y-o-Y
Growth
Revenue Spread Geography
USA 56.64% 55.53% 4.45% 53.88% -7.42%
Europe 34.01% 36.39% -4.26% 36.46% -17.84%
Rest of World 9.35% 8.08% 18.54% 9.66% -14.74%
Revenue Spread Verticals
Manufacturing 86.59% 82.68% 7.27% 88.87% -14.19%
BFSI 7.37% 7.63% -1.05% 5.08% 27.87%
Others 6.04% 9.69% -36.22% 6.05% -12.07%
Revenue Spread by LOB
Manufacturing Business IT 50.47% 52.27% -1.10% 51.21% -13.19%
Auto Electronics 26.45% 26.05% 4.00% 29.23% -20.30%
Semiconductor Solutions Group 6.80% 5.56% 25.15% 7.36% -18.64%
Diversified Financial Services 7.22% 7.88% -6.15% 5.12% 24.29%
Global Business Solutions 9.05% 8.23% 12.61% 7.08% 12.60%
Customer details
No. of Customers Added 4 5 - 6 -
No. of STAR Customers 26 26 - 26 -
No. of Active Customers 137 133 - 123 -
Customers with run rate of >$1Mn 26 25 - 30 -
Top Client Cummins 32.14% 33.76% -2.52% 40.43% -29.99%
Star Customers Non Cummins 49.82% 48.40% 5.41% 42.55% 3.12%
Top 10 Client Billing 67.71% 69.52% -0.26% 67.23% -11.30%
Repeat Business 90%+ 90%+ - 90%+ -
Onsite / Offshore Split
Onsite Revenues 37.30% 41.93% -8.89% 44.01% -25.35%
Offshore Revenue 62.70% 58.07% 10.58% 55.99% -1.38%
Revenue by Contract Type
Time and Material Basis 66.48% 77.74% -12.42% 83.22% -29.65%
Fixed Price / Time Basis 33.52% 22.26% 54.20% 16.78% 75.98%
Debtors (days) 70 74 - 74 -
Jul - Sep 2009
Q2 FY10 Investor Update 14
Q2
FY10
Q1
FY10
Q-o-Q
Growth
Q2
FY09
Y-o-Y
Growth
Human Resources Details
Development Team Onsite (Avg) 465 496 - 614 -
Development Team - Offshore(Avg) 3,543 3,539 - 3,753 -
Onsite FTE 439 461 -4.77% 576 -23.78%
Offshore FTE 2,580 2,389 7.99% 2,679 -3.70%
Total FTE 3,019 2,850 5.93% 3,255 -7.25%
Development (at Qtr end) 4,035 3,973 - 4,353 -
Gen Mgmt / Support (at Qtr end) 351 348 - 361 -
Marketing (Subsidiaries) (at Qtr end) 51 49 - 47 -
Total (at Qtr end) 4,437 4,370 - 4,761 -
Onsite utilization 94.33% 92.93% - 93.88% -
Offshore utilization 72.82% 67.50% - 71.38% -
Jul - Sep 2009
Q2 FY10 Investor Update 15
CONFERENCE CALL DETAILS
Conference name : KPIT Cummins Q2 FY2010 Conference Call
Date : Friday, 16th October 2009
Time : 1600 Hrs (IST)
Dial-in numbers : Primary : +91 22 25983200
Standby : +91 22 66085000
Toll Free : 1800 22 7129 / 1800 209 7129
About KPIT Cummins Infosystems Ltd.
KPIT Cummins Infosystems Limited (BSE: 532400; NSE: KPIT), a trusted global IT Consulting and
product engineering partner, is focused on co-innovating domain intensive technology solutions
for Manufacturing corporations (with special focus on Automotive, Hi-Tech & Industrials
verticals) to help its customers become efficient, integrated and innovative enterprises.
A leader in technology solutions and services, KPIT Cummins currently partners with 100+
global Manufacturing corporations including 50+ Original Equipment Manufacturers (OEMs),
semiconductor companies and Tier 1s, helping them globalize efficiently & bring complex
technology products/ systems faster to their global markets.
Please visit www.kpitcummins.com for more information.
SAFE HARBOUR
Some of the statements in this update that are not historical facts are forward-looking statements. These forward-looking statements include our financial and growth projections as well as statements concerning our plans, strategies, intentions and beliefs concerning our business and the markets in which we operate. These statements are based on information currently available to us, and we assume no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from these forward-looking statements. These risks include, but are not limited to, the level of market demand for our services, the highly-competitive market for the types of services that we offer, market conditions that could cause our customers to
Jul - Sep 2009
Q2 FY10 Investor Update 16
reduce their spending for our services, our ability to create, acquire and build new businesses and to grow our existing businesses, our ability to attract and retain qualified personnel, currency fluctuations and market conditions in India and elsewhere around the world, and other risks not specifically mentioned herein but those that are common to industry.
Very happy and prosperous new year to all of you.I wish that all earn tons of money in stock market and wish all the loss are wiped off next year....whoever is having it.......Best Of Luck.......because without her(Goddess Laxmi) I firmly believe nothing is possible......He ( God Vishnu)will guide us when to sell and when to buy.....so that we can earn the maximum profit and do not sell early.....
I have done nothing here.Just copied paste what I got from while exploring Internet......I like the management, I like the statement of Chairman, I like the positive talk and hence I have posted it here.
KPIT Cummins net up at Rs 26 cr
Our Bureau PUNE
KPIT Cummins Infosystems, a product engineering and IT consulting partner to manufacturing companies, has revised its profitability outlook for the full year. While the software company’s net profit has more than doubled to Rs 25.8 crore from Rs 10.7 crore a year ago, net sales have fallen significantly to Rs 109.8 crore against Rs 165.1 crore. During the first half, the software solutions provider registered a similar fall in sales, to Rs 218.63 crore (Rs 310.45 crore) while its net profit shot up to Rs 42.05 crore (Rs 23.27 crore). “We are revising our outlook for the full year’s profits to Rs 77-82 crore, from our earlier forecast that these would be flat. Last year, our net profit for the full year was Rs 65.81 crore (for the standalone company). We have revised our guidance since profits for the second quarter and first half have improved hugely,” said KPIT Cummins managing director and CEO Kishor Patil. The higher profitability is being attributed to greater productivity, moving more work offshore and fixed price contracts. Reflecting confidence in an economic revival, KPIT Cummins has begun to grant promotions within the company. These had been frozen for the past six months. Mr Patil added that they have also begun to hire from the freshers who had been made offers but had been put on hold in June. “This year, we expect to hire 200 freshers,” he said. “PSUs in India and the rest of the world offer opportunities. We are addressing the energy, utilities and defence sectors. We have begun engagements with energy and utilities in the US and with the defence in India,” Mr Patil explained.
Investors Update: Coming straight from Chairman.......
Jul - Sep 2009
Q 2 FY10 Investor U pdate 1
INVESTOR U PD ATE
FOR
QU ARTER END ED 30th SEPTEM BER 2009
(NSE: KPIT, BSE: 532400) (July - Sep 2009)
KEY H IG H LIG H TS
Revenue for the quarter increased by 2.4% Q-o-Q to Rs.1769.86 M n.
In U SD term s, Revenues stood at $ 36.35 M n. Q-o-Q grow th of 3%.
EBITD A grew by 28% Q-o-Q and 20% Y-o-Y to Rs.468.37 M n. EBITD A m argins
expanded by 5.3% to 26.5% during the quarter.
Net Profits for the quarter stood at Rs. 211.95 M n, a Y -o-Y grow th of 27%. On a
Q-o-Q basis, profits declined by 5.3%.
G ross Profit M argins im proved Q-o-Q basis. They expanded by 2.9% to 45.8%. Yo-
Y basis they expanded by 3.8%.
PAT M argin expanded on Y-o-Y basis by 3.7% to 11.98%. H ow ever Q-o-Q they
declined by 0.97%.
Sequentially, EPS decreased to Rs. 2.69 from Rs. 2.86 during the quarter and
grew by 25% YoY .
4 new Custom ers w ere added during the quarter, taking the total num ber of
custom ers to 137.
Overall increase in utilization levels w ith offshore utilization increasing by 5%
going to 72.8% and onsite utilization increasing by 1.40% going to 94.33%.
Jul - Sep 2009
Q2 FY10 Investor Update 2
FINANCIAL HIGHLIGHTS FOR THE QUARTER ENDED 30TH SEPTEMBER 2009 (Q1
Revenues:
o During the quarter, Revenue in USD terms increased by 3% Q-o-Q. Q2 FY10 Revenue was USD 36.35 M n. In absolute terms, the q-o-q USD revenue growth was of USD 1.09 M n.
o Our largest customer contribution is around 32% during the quarter. There have been
deliver on a fixed price basis and also focused on Value delivery.
o In G eography terms, out of the total Q-o-Q revenue increase, US contributed 4%, Europe -4% and APAC 18.5 %. Our focus on the emerging markets is taking shape and will continue to contribute largely to our growth in the future.
o W e believe that the worst is behind us. W e actually faced a revenue decline only in Q1FY10 after seeing revenue growth till Q4 FY09 and we believe there would not be any further significant reduction in our USD denominated top line going ahead. There would be marginal ups and downs for the remainder of the year. W e have made a modest beginning by having QoQ growth in Q2FY10.
o Our customers are now coming back to the discussion tables to discuss projects and thus there is much more visibility now as compared to earlier two quarters. This is a sign that in the near future even the order flow will be normalized.
o W ith some new initiatives we have received good traction in two new customer
segments namely PSUs and Defense in our related areas of work.
o W e also believe we are well-equipped now to expand ourselves to offer services to a new industry sector Energy and Utilities.
o W e are focusing on bagging larger deals and maintaining key customer growth. W e are
also moving towards becoming a total solutions provider.
Profitability:
o Profits marginally declined during the quarter on a QoQ basis mainly due to increase in
forex loss by almost 640%. Keeping the forex loss in Q2 equal to Q1, the net Profits
have actually expanded proportionately to the operating margins. N et Profit margins
contracted by 1% Q-o-Q and expanded by 3.7% Y-o-Y basis.
o W e have been able to not only maintain healthy operating margins but increase them
which is a result of productivity improvement and cost control measures continuously
being taken over the past few quarters, along with the shift in business from onsite to
offshore. SG &A costs have fallen by 8.9% (Q-o-Q) and 24.6% (Y-o-Y). The offshore
Jul - Sep 2009
Q2 FY10 Investor Update 3
utilization improved by 5%+ during the quarter to touch 72.8%, an increase of 1.5% YoY.
The Onsite utilization improved by 1.4% QoQ and 0.5% YoY.
o The following factors have contributed to the improvement in profits and profitability:
1. Our productivity improvement initiatives, namely more fixed price contracts,
Improved reuse of production assets from repository, reduced rework efforts,
increased zero defect deliveries to customers, increased usage of automation tools,increased customer satisfaction rating and better onsite offshore revenue mix. have been delivering improved outcomes.
2. We are continuously increasing the number of assets in our asset repository and also focusing on their re use. We currently are reusing about 15% of the total assets in our repository. We are also focusing on use of open source and freeware tools for project management, configuration management and software model development.
We have internally developed a Project H ealth Management System which helps in the ongoing monitoring of the projects and thus enabling required corrective
actions, if any, at the right time.
3. The reduction in SGA costs depicts the ongoing cost control and reduction initiatives like consolidation of facilities and utilization of all assets ( hardware, software, space ), capital expenditure only on a must have basis, strict control on support hiring and renegotiation of contracts with service as well as capital vendors for rate reduction. These measures will continue on an ongoing basis.
4. The forex loss during the quarter stood at Rs.131.57 Mn. as against Rs. 17.82 Mn. in Q1 FY10. In Q1 there was a big gain on the conversion of foreign currency liabilities since the net differential in the closing rate of Q1 and the previous quarter was Rs. 3/$ less. This gain on liability conversion offset the MTM losses and actual losses on maturity of the forward contracts. In Q2, the closing rate was marginally higher than Q1 and thus there was no gain on liability conversion but a marginal loss which added to the MTM and actual conversion losses. Thus there was a net increase of Rs.114 Mn. of forex losses in Q2FY10 as compared to Q1FY10.
Jul - Sep 2009
Q2 FY10 Investor Update 4
Balance Sheet details (Rs. M illion):
o The Cash Balance as at September 30, 2009 stood at Rs. 1663.94 Mn. as compared to Rs. 1812.09 Mn. over the June 30, 2009 balance. The surplus funds were invested in Liquid Funds during the Qtr to the tune of Rs. 280.87 Mn. Thus on a comparable basis the Cash and Cash equivalents as of Sept 30, 2009 stood at Rs. 1944.81 Mn. registering
an increase of 132.72 Mn. The Cash Balance is being held in Current Accounts (Rs.
967.40 Mn.) and Deposit Accounts (Rs. 694.48 Mn.)
o As on September 30, 2009 our total debt stood at Rs. 1,081.68 Mn. (Rs. 1,036.61 Mn. as of June 30, 2009) comprising of Rs. 672.00 Mn. of Term Loan and Rs. 405.04 Mn. of
Working Capital Loan.
o Forex Hedging instruments with maturity of more than 3 months and considered effective hedges in accounting terms are provided for as adjustment to the Reserves and Surplus in the Balance Sheet. As on September 30, 2009 these Hedging Reserves were Rs. 772.51 Mn., as compared to Rs. 847.70 Mn. as of Q1FY10 end.
Balance Sheet Summary: As at
(Rs. Mn.)
September 30, 2009 June 30, 2009
Equity 2,923.99 2,635.88
Total Debt 1,081.68 1,036.61
Minority Interest & Deferred Tax Liability 52.41 68.25
Total 4,058.08 3,740.74
Fixed Assets 2,128.88 1,929.96
Investments* 280.87 0.31
Current Assets 3,801.08 3,968.08
Cash Balance 1,663.94 1,812.09
Receivables 1,300.53 1,411.05
Loans & Advances 836.61 744.94
Current Liabilities 2,152.75 2,157.61
Total Net Assets 4,058.08 3,740.74
Investments include investment of surplus cash in Liquid Funds.
Jul - Sep 2009
Q2 FY10 Investor Update 5
KEY DEVELOPMENTS
PARTNERSHIP
NEC Electronics in collaboration with KPIT Cummins have developed a new AUTOSAR 3.0 compatible software solution for various hardware platforms. This software package enables easy design of application software without the need for new developments. This will be mainly of use to the Auto Tier I suppliers to the OEMs and we will start generating revenues from this from the Tier I vendors.
KPIT has signed a MoU with a renowned National Research Laboratory towards joint research and development in the areas related to ultra-capacitors and batteries, which will
go a long way in the development of software solutions in the new generation of Hybrid and Electric vehicles.
AW ARDS AND THOUGHT LEADERSHIP
KPIT Cummins ranked 65 in Dataquest Top 100 survey - up from 78th position in 2008
KPIT co-Semiconductor & Software Business Collaboration Opportunities between India and Japan Semiconductor
Association (ISA) and The Japan External Trade Organization (JETRO).
KPIT participated as a speaker at the Germany Session of NASSCOM in Mumbai.
We also participated as speakers in
Productonica 2009 organized by ZVEI
association).
CUSTOMERS AND MARKETS
4 new customers were added during the quarter 2 in Europe and 2 in US. Total number of
active customers is 137.
Automotive:
Technology solutions for sustainable and G reen grow th.
Commenced strategic consulting engagement for an Indian Auto OEM.
Consulted an American OEM on Human Machine Interface (HMI) Tool selection.
Developed an end-to-end software solution for night vision and pedestrian detection for
an Asian Tier 1
Jul - Sep 2009
Q2 FY10 Investor Update 6
Built a Dedicated Short Range Communication (DSRC) based Advanced Traffic
management solution for an American Tier 1
Furthered automotive software standardization efforts: Selected for AUTOSAR
(AUTomotive Open System Architecture) Basic Software implementation for a leading
European OEM. This reinforces our leadership position in Europe.
Industrial Equipments:
Integrates multiple assembly lines for UK operations of a leading American Tier 1. KPIT
-engineered MES (Manufacturing Execution Systems)
solution replaces complex legacy systems.
Commenced a strategic enterprise IT engagement with a national automotive testing laboratory, to help them reduce the time required for testing, validating and documenting the test results for Auto Manufacturers.
Commenced engagement with an Asian auto component manufacturer and a leading Asian contract logistics company to implement end-to-end templatized ERP solution for
business operations.
Hi-Tech and Semiconductor:
Solution accelerators for quick-time-to-market
Engaged with a leading European semiconductor company on development of MCU for Dashboard Cluster for a High End Luxury Car.
Started project on developing reference designs for consumer and Automotive
applications for a leading Asian semiconductor company. Established Center of
Excellence for Motor Controls.
Commenced work on developing complete digital section of a controller chip for a leading European manufacturer of IC solutions.
Diversified Financial Services:
Customer award for excellent teamwork towards breakthrough Improvement in Quality &
Productivity
Initiates on-site/offshore reverse engineering project for a leading retail bank of South
Africa.
Jul - Sep 2009
Q2 FY10 Investor Update 7
CORE OFFERINGS
In the current economic scenario, we continue to focus on our niche and specialized areas of work. In Automotive electronics there have been some structural changes which shifted the focus towards hybrid engine, green emissions, Infotainment and safety systems. All the leading automotive OEMs and Tier1s are making significant investments in the area of emission controls, more fuel efficiency, comfort & connectivity and safety.
KPIT is well-positioned to leverage this opportunity with its domain expertise, scalability and the technological strength. Our existing customers are choosing KPIT as their consulting partners and we are helping them in designing their technology roadmaps. Emerging markets would be drivers of revival. We are witnessing significant traction in these markets and are making our strategy more robust. We are collaborating with OEMs, Tier 1s and Semiconductor companies to reduce time to market of new products and make existing products more competitive.
Currently we are working on 30+ vehicle programs as depicted in the table below, with new and existing customers thus helping them bring their products faster to the target markets at profitable price points.
Priority Industry Reactions
Green
Technology
1. Several American, European and Asian carmakers announce launch of electric, hybrid and eco-
smart, Renault electric car, ecological motor)
2. Governments sanction loans and funding for hybrid vehicles (FiskerAutomotive - $530 million, France 2.5 Bn euro, £25 Mn of UK Govt)
3. Car makers embrace fuel efficient green technologies for future models (Ford -
Ecoboost technology, GM Working on Active Fuel Management (AFM) & Spark Ignition
Direct Injection Technology (SIDIT), Samsung, Bosch to produce electric car batteries).
4. Electric Sports-Car maker Tesla gets $82.5 Mn Investment. Mazda to raise $1 Bn for
green cars.
5. Toyota to begin offering plug-in Prius in 3 yrs. Hyundai plans plug-in hybrid in 2012.
KPIT Engagements KPIT Role
Quick end- to- end implementation of Anti Brake system with regenerative
braking to an electric vehicle for major electric car OEM in APAC
Improving Competitiveness
Key contribution as software architect and developer for a strategic CNG
Hybrid program for Major diesel engine manufacturer in US
Reducing Time-to-market
Design of battery model, independent of battery chemistry for quick &
efficient testing of hybrid/electric battery system
Bringing in Frugal
Innovation
Model based design of battery management system software and the
associated hardware for Major Tier I in North America
Reducing Time-to-market
Specification development of stop start technology for passenger cars for Major OEM in APAC Creating competitiveness
Jul - Sep 2009
Q2 FY10 Investor Update 8
Priority Actions
Small Cars
1. Several American, European and Asian carmakers unveil small cars for emerging as well as developed markets (Ford Figo, VW Polo, Nissan New Micra, Toyota Scion iQ, Honda Jazz, Bajaj Bajaj Lite, Maruti Splash)
2. Companies collaborate to bring new technology for energy efficiency in personal
mobility solutions (Toyota Plans to Make Car Engines in India, GM India & REVA Form
Alliance for New Electric Small Car, India emerging as a manufacturing hub for cars
KPIT Engagements KPIT Role
Key contribution in a government-industry forum for designing the software
standard for small car with Indian Government- Industry ecosystem
Bringing in Frugal
Innovation
Final stage of discussions for conversion of 2 wheel drive vehicle to 4 wheel
drive for defense applications for a Tier I supplier in APAC
Bringing in Frugal
Innovation
Helping global OEMs & Tier I for component localization aimed at cost
reduction for Major OEMs globally
Value engineering
Design & development of active suspension seating control system for
Major Tier I manufacturer in APAC
Reducing Time-to-market
Priority Actions
Intelligent
& Smart
Cars
1. Car makers commit investments for smart vehicle technology in braking, safety, comfort and driver assistance systems (Mercedes Builds Car That Auto-Brakes At Red Lights, Ford To use virtual vehicle sound to improve interior sound quality & quietness, Daimler invests in Hambach to build electric Smart, Google Working on "Smart Charging" Software for Electric Cars - Popular Science - Mike Spinelli, Chevrolet Malibu, Smart car and other shockers on list of biggest resale value)
2. European Commission Intelligent car flagship initiative to include Autonomous Cruise
Control, Lane departure Warning System & Alarm for Drowsy or drunken driving.
3. Honda Jazz will have an automatic version in the coming days - Wheels Unplugged -
India's Automobile Magazine - Sep 14, 2009
KPIT Engagements KPIT Role
Lane departure warning system for passenger cars Internal R&D project
Bringing in Frugal
Innovation
Go-to-market for vision-based system for passenger cars of an Asian automotive
OEM
Increasing
competitiveness
Design & development of Remote keyless entry feature using a customized chip,
for passenger cars for a Major European Tier I
Reducing time to market
Vision based testing solution for automotive cluster systems for a Major
European Tier I manufacturer Increasing competitiveness
Conceptualization & implementation of state of art vehicle simulation facility
for a Major passenger car OEM in APAC
Increasing competitiveness Reference board and software design to test the new automotive
microcontroller in emerging mkts application for major semicon manufacturer
Reducing time to market Key contributor in immobilizer product devp for a Major FPGA manufacturer Competitiveness
Jul - Sep 2009
Q2 FY10 Investor Update 9
Focus Area KPIT Actions Imperative
Standardization
ECU integration, aimed at multiple application on a single
platform and reusability of platform components for a
Major Luxury car OEM in Europe
Frugal Innovation
Co-development & maintenance of Product Line architecture based engine platform for a Major diesel engine manufacturer of North America Improving competitiveness
Being a premium member of AUTOSAR, helping global OEM
for migrating to AUTOSAR with major German OEMs
Quick time to market
Standardized Network operating system for European C/D class vehicles with Major Europe passenger car OEM in Creating competitiveness Development of a configurable software stack, easily reconfiguring the system for OBD II and EOBD with minimal changes software for Major European Tier I Improving competitiveness
BUSINESS OUTLOOK
ECONOMIC RECOVERY IN SIGHT
Automotive Industrials HiTech
1. Government announces recovery packages for the automotive industry (Cash for clunkers program)
2. Leaders of American and European car manufacturing companies express optimism for economic revival (Renault- Nissan CEOPeugeot )
3. Companies launch initiatives to bring more fuel efficient, environment friendly and smart vehicles. Enhance focus on emerging markets (BMW, Mercedes-Benz, Ford).
4. Auto market has grown at 55% Y-o-Y in BRIC countries.
5. SIAM steps up forecast as vehicle sales grew by 22.4% in August. (Business Standard, April 9, 09)
1. Economic activity in the mfg sector expanded in Sep 2009 for 2nd consecutive month, and overall economy grew for the 5th consecutive month. -
Manufacturing ISM Report on Business® . October 1, 2009
2. According to the September CMI from the NACM, U.S. credit conditions and performance are improving at an increasing rate. -
September, 2009
3. Manufacturing jobs off-shoring has again picked up growth.
4. One-
manufacturing sector has registered high growths of up to 20% in the 1st quarter of 2009-10 fiscal, the CII-Ascon survey said.
5. Govt. has promised to keep interest rates low till recovery signs in the manufacturing sector strengthen.
1. Global chip makers boost revenue forecast for 3rd quarter and current financial year (Texas Instruments, Intel corp., ASML)
2. Semiconductor equipment purchased in Aug was up 14.6% (compared to 12% in July)
3. European technology stocks have gained on revised outlook statements from semiconductor firms. (WSJ,
April 17, 09)
4. India is now the second largest
R&D hub for $1.3bn Synopsys Inc, the California-based global leader in software and IP for semiconductor design, verification and manufacturing.
5.
will be at least 15% by 2020.
Jul - Sep 2009
Q2 FY10 Investor Update 10
Though the economic recovery is in sight, t
clearly visible, though the visibility has improved a lot over the quarter. Our manufacturing customers are still facing challenges of capacity utilization. Business environment continues to be volatile.
Despite all these challenges, the bottom is already behind us and slow signs of recovery have been observed during the quarter. Automotive sector has now started showing signs of revival with car sales picking up in US although at a very slow pace. Our Automotive business has also improved by 4% QoQ and semiconductor business has improved by 25%
during this quarter.
From geographical perspective, we noticed significant traction in India & APAC regions besides South Africa. India has shown good traction especially in SAP and Automotive. We would explore strategic partnerships in these regions as we have been doing in Europe. Our revenue share from the established geographies continues to be stable.
With the business scenario gradually recovering, we continue with our investment in CREST
(R&D), People Development (training & certification) and Practice Development in selected areas of interest.
Our R&D efforts in automotive have been recognized through project wins during this quarter. We will now start investments in Practices, SMEs and front end sales to be geared
. We have completed the campus recruitment process and fresh graduates would be joining us during the remainder of the year. The first batch has already joined in the first week of October. We are stepping up our investments in technical talent to get ready once the market is back to its ew Normal.
The Rupee has started appreciating against the dollar. If the same continues in the near future, it will have a big negative impact on the bottom line of exporters. We believe, we are much better placed to face the rupee appreciation, since there is a natural hedge in terms of our costs in foreign currencies and the balance exposure is sufficiently covered.
Having said this, the rupee appreciation will have some adverse effect on our bottom line numbers. Even after this expected appreciation, we are confident of maintaining the EBIDTA margins above 20% levels.
Jul - Sep 2009
Q2 FY10 Investor Update 11
As stated in our last communication, in spite of the expected fall in revenues, our outlook on profitability remains strong. We are confident of not only maintaining, but also of exceeding the absolute profits after tax, of last financial year. The Rupee continues to be volatile and in our calculations we have considered the Rupee to be around 47 to a dollar for the remainder of the year. With this, we believe we should end the year with Net Profit after tax between Rs. 770 Million to Rs. 820 Million.
LOOKING BEYOND
FOREX INSTRUMENTS
No more liabilities on the 3 derivative contracts
Total Outstanding Hedges:
Total amount of hedges as on 30th September 2009 : $151.85 Mn.
o Maturing in the next 6 months : $ 46.90 Mn.
o Maturing beyond March 2010 : $104.95 Mn.
The average hedge rate for FY10 is Rs. 45.73 / USD ( with an assumption of spot being around Rs. 47 / USD )
We expect to reach $500 m n in revenues by the end of FY 2013 by continuing sharp focus on select industries, practice areas and expanding reach in
em erging m arkets.We shall expand our service offerings to Energy & Utilities space and would bring in larger focus on manufacturing businesses in Defense and PSU sectors. We shall be leaders in key practice areas and our solutions would be aimed at reducing cost of ownership, ensuring sustainable mobility solutions and enhancing fuel efficiency
Jul - Sep 2009
Q2 FY10 Investor Update 12
INCOME STATEMENT FOR THE QUARTER ENDED 30th SEPTEMBER 2009
1. -o- compared to the immediately
preceding quarter
2. -o-
the previous year
Rs. Million Q2 FY10 Q1 FY10
Q-o-Q
Growth
Q2 FY09
Y-o-Y
Growth
Sales 1,769.86 1,728.07 2.42% 2,009.54 -11.93%
Software Development Expenses 958.49 985.42 -2.73% 1164.56 -17.69%
Gross Profit 811.37 742.66 9.25% 844.98 -3.98%
Selling and Marketing Expenses 152.82 162.93 -6.20% 165.84 -7.85%
General and Admin Expenses 190.19 213.58 -10.95% 288.99 -34.19%
EBITDA 468.37 366.15 27.92% 390.15 20.05%
Interest 5.12 5.37 -4.59% 10.12 -49.39%
Depreciation 75.79 71.17 6.49% 76.01 -0.30%
Profit After Depn. & Int. 387.46 289.61 33.79% 304.02 27.44%
Other Income -131.57 -17.82 638.4% 104.82 25.52%
Profit Before Tax 255.89 271.79 -5.85% 199.20 28.46%
Provision for Taxation 43.94 48.01 -8.48% 30.92 42.12%
Profit After Tax 211.95 223.78 -5.29% 168.28 25.95%
Minority Interest - - - 1.27 -100.0%
Profit after Minority Interest 211.95 223.78 -5.29% 167.01 26.91%
Exceptional Item - - - - -
Profit after exceptional item 211.95 223.78 -5.29% 167.01 26.91%
Paid up Capital 156.10 156.09 - 156.09 -
Free Reserves 2,767.66 2,479.79 - 2162.64 -
EPS (Rs. 2/-Face Value each)
- Basic 2.72 2.87 -5.33% 2.16 25.72%
- Fully Diluted 2.69 2.86 -5.95% 2.15 25.05%
Common Size Analysis:
Gross Profit Margin 45.84% 42.98% - 42.05% -
Sales & Marketing Exp / Revenue 8.63% 9.43% - 8.25% -
General & Admin Exp / Revenue 10.75% 12.36% - 14.38% -
EBITDA Margin 26.46% 21.19% - 19.41% -
Net Profit Margin 11.98% 12.95% - 8.31% -
Jul - Sep 2009
Q2 FY10 Investor Update 13
PERFORMANCE METRICS (QUARTER ENDED 30th SEPTEMBER 2009)
Q2 FY10 Q1 FY10
Q-o-Q
Growth
Q2 FY09
Y-o-Y
Growth
Revenue Spread Geography
USA 56.64% 55.53% 4.45% 53.88% -7.42%
Europe 34.01% 36.39% -4.26% 36.46% -17.84%
Rest of World 9.35% 8.08% 18.54% 9.66% -14.74%
Revenue Spread Verticals
Manufacturing 86.59% 82.68% 7.27% 88.87% -14.19%
BFSI 7.37% 7.63% -1.05% 5.08% 27.87%
Others 6.04% 9.69% -36.22% 6.05% -12.07%
Revenue Spread by LOB
Manufacturing Business IT 50.47% 52.27% -1.10% 51.21% -13.19%
Auto Electronics 26.45% 26.05% 4.00% 29.23% -20.30%
Semiconductor Solutions Group 6.80% 5.56% 25.15% 7.36% -18.64%
Diversified Financial Services 7.22% 7.88% -6.15% 5.12% 24.29%
Global Business Solutions 9.05% 8.23% 12.61% 7.08% 12.60%
Customer details
No. of Customers Added 4 5 - 6 -
No. of STAR Customers 26 26 - 26 -
No. of Active Customers 137 133 - 123 -
Customers with run rate of >$1Mn 26 25 - 30 -
Top Client Cummins 32.14% 33.76% -2.52% 40.43% -29.99%
Star Customers Non Cummins 49.82% 48.40% 5.41% 42.55% 3.12%
Top 10 Client Billing 67.71% 69.52% -0.26% 67.23% -11.30%
Repeat Business 90%+ 90%+ - 90%+ -
Onsite / Offshore Split
Onsite Revenues 37.30% 41.93% -8.89% 44.01% -25.35%
Offshore Revenue 62.70% 58.07% 10.58% 55.99% -1.38%
Revenue by Contract Type
Time and Material Basis 66.48% 77.74% -12.42% 83.22% -29.65%
Fixed Price / Time Basis 33.52% 22.26% 54.20% 16.78% 75.98%
Debtors (days) 70 74 - 74 -
Jul - Sep 2009
Q2 FY10 Investor Update 14
Q2
FY10
Q1
FY10
Q-o-Q
Growth
Q2
FY09
Y-o-Y
Growth
Human Resources Details
Development Team Onsite (Avg) 465 496 - 614 -
Development Team - Offshore(Avg) 3,543 3,539 - 3,753 -
Onsite FTE 439 461 -4.77% 576 -23.78%
Offshore FTE 2,580 2,389 7.99% 2,679 -3.70%
Total FTE 3,019 2,850 5.93% 3,255 -7.25%
Development (at Qtr end) 4,035 3,973 - 4,353 -
Gen Mgmt / Support (at Qtr end) 351 348 - 361 -
Marketing (Subsidiaries) (at Qtr end) 51 49 - 47 -
Total (at Qtr end) 4,437 4,370 - 4,761 -
Onsite utilization 94.33% 92.93% - 93.88% -
Offshore utilization 72.82% 67.50% - 71.38% -
Jul - Sep 2009
Q2 FY10 Investor Update 15
CONFERENCE CALL DETAILS
Conference name : KPIT Cummins Q2 FY2010 Conference Call
Date : Friday, 16th October 2009
Time : 1600 Hrs (IST)
Dial-in numbers : Primary : +91 22 25983200
Standby : +91 22 66085000
Toll Free : 1800 22 7129 / 1800 209 7129
About KPIT Cummins Infosystems Ltd.
KPIT Cummins Infosystems Limited (BSE: 532400; NSE: KPIT), a trusted global IT Consulting and
product engineering partner, is focused on co-innovating domain intensive technology solutions
for Manufacturing corporations (with special focus on Automotive, Hi-Tech & Industrials
verticals) to help its customers become efficient, integrated and innovative enterprises.
A leader in technology solutions and services, KPIT Cummins currently partners with 100+
global Manufacturing corporations including 50+ Original Equipment Manufacturers (OEMs),
semiconductor companies and Tier 1s, helping them globalize efficiently & bring complex
technology products/ systems faster to their global markets.
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SAFE HARBOUR
Some of the statements in this update that are not historical facts are forward-looking statements. These forward-looking statements include our financial and growth projections as well as statements concerning our plans, strategies, intentions and beliefs concerning our business and the markets in which we operate. These statements are based on information currently available to us, and we assume no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from these forward-looking statements. These risks include, but are not limited to, the level of market demand for our services, the highly-competitive market for the types of services that we offer, market conditions that could cause our customers to
Jul - Sep 2009
Q2 FY10 Investor Update 16
reduce their spending for our services, our ability to create, acquire and build new businesses and to grow our existing businesses, our ability to attract and retain qualified personnel, currency fluctuations and market conditions in India and elsewhere around the world, and other risks not specifically mentioned herein but those that are common to industry.
Friday, October 16, 2009
Rakesh Jhunjhunwala latest interview ............in ET
‘No meaningful correction before another rapid rise’
Markets Will Remain Far, Far, Far Above The Lows Of October And March Last, Says Rakesh Jhunjhulwala
THE flood of money waiting on the sidelines means that the market is unlikely to see a meaningful correction anytime soon, says Rakesh Jhunjhunwala, leading stock investor, and partner, Rare Enterprises. In an interview with ET, he says a delayed recovery in the world economy is not a bad thing for India, as we stand to gain from moderate commodity prices.
You mentioned at a recent seminar that the market appears poised for a bust. What according to you, are the symptoms?
What I said has been grossly misinterpreted. What I said was that this kind of systematic rise in the market, where the market goes up, then corrects briefly — both price and time wise — and then once again resumes its gain, cannot even have a meaningful correction without a burst of a rise, which means a very, very rapid rise.
Key indices have more than doubled in the past seven months, many midcaps have given unbelievable returns. Is the market over heated?
I surely feel that in terms of commitment and belief, the market is not heated at all. There is disbelief all around and huge money on the sidelines. This is a reason why we don’t get any meaningful correction, and this is also the reason why we could still have a sharp rise ahead of us.
But a correction is only inevitable. Whenever that happens, do you see the market retesting the lows of March 2009 or October 2008?
Markets by their very nature will naturally correct at some point of time. The markets, as I see them, are not as of the moment indicating any signs of meaningful correction. Whenever markets correct, I do not expect the correction to be anywhere near what we saw last year, and I expect the markets to remain far, far, far above the lows of October and March.
Which are the sectors in the Indian economy that you are bullish on?
I am bullish on all sectors which are domestic economy dependent and underpenetrated. Banking, retailing, infrastructure, pharma are among the key ones.
What is your reading of the key events likely to play out in world markets over the next few months, and what implications do you see for India?
I do not expect that the western and the developed economies can make any meaningful recovery and sustain it. Mr Bernanke is well known for his views of having a loose monetary and fiscal policy in times of difficult economic conditions. Thus, I believe interest rate worldwide in general, and in the western world in particular, are not going to go up in a hurry. Even if the western and developed world do not make any meaningful recovery, I see no reason why the Indian economy and the Indian markets cannot continue to sail alone smoothly. If the world does not recover, commodity prices will remain moderate, which is a big plus for India. What is vital is what happens to Indian software exports. My personal view is that there is more than a fair chance that India will grow well and outperform, even if the world does not recover.
Is there any lurking negative that the market appears to have overlooked?
I think that the western and developed economies are set for sub-par/negative growth for a good period of time. There has to be a transition of both consumption and power from the developed world to the developing world. What effect this will have both economically and geopolitically is a matter of uncertainty and no one can definitely predict the smooth course of this transition. This, I surely think, is a matter that could unsettle markets if the transition is unruly and geopolitically destabilising. Be that so be, I have no doubt in my mind that this transition has to and will take place.
My Comments:
I am a great fan of Rakesh Juhnjhunwala.Why?Maybe because he is eternal BULL like me! Maybe.....but in his pre 2003 days he was a bear.
I was also surprised to read that he is saying that market will burst in couple of months.
But as he has said , he was misinterpreted.......
The reason I like him is because he is a visionary and is able to see things coming up.He was bullish right from 2003 and RJ and Shankar Sharma use to have debates on where the market is going and it turns out always to be hot.Becuase SS always use to speak on bearish side while RJ always speak on Bull side but ultimately RJ proved right all along the bull run uptill 2007 Diwali interview at CNBC.....
I read and hear RJ very keenly and try to understand the finer prints of his interview.....anyone of my reader who have any interview given elsewhere is always invited to give the link or entire interview transcript here.....I will be more then obliged.......
Markets Will Remain Far, Far, Far Above The Lows Of October And March Last, Says Rakesh Jhunjhulwala
THE flood of money waiting on the sidelines means that the market is unlikely to see a meaningful correction anytime soon, says Rakesh Jhunjhunwala, leading stock investor, and partner, Rare Enterprises. In an interview with ET, he says a delayed recovery in the world economy is not a bad thing for India, as we stand to gain from moderate commodity prices.
You mentioned at a recent seminar that the market appears poised for a bust. What according to you, are the symptoms?
What I said has been grossly misinterpreted. What I said was that this kind of systematic rise in the market, where the market goes up, then corrects briefly — both price and time wise — and then once again resumes its gain, cannot even have a meaningful correction without a burst of a rise, which means a very, very rapid rise.
Key indices have more than doubled in the past seven months, many midcaps have given unbelievable returns. Is the market over heated?
I surely feel that in terms of commitment and belief, the market is not heated at all. There is disbelief all around and huge money on the sidelines. This is a reason why we don’t get any meaningful correction, and this is also the reason why we could still have a sharp rise ahead of us.
But a correction is only inevitable. Whenever that happens, do you see the market retesting the lows of March 2009 or October 2008?
Markets by their very nature will naturally correct at some point of time. The markets, as I see them, are not as of the moment indicating any signs of meaningful correction. Whenever markets correct, I do not expect the correction to be anywhere near what we saw last year, and I expect the markets to remain far, far, far above the lows of October and March.
Which are the sectors in the Indian economy that you are bullish on?
I am bullish on all sectors which are domestic economy dependent and underpenetrated. Banking, retailing, infrastructure, pharma are among the key ones.
What is your reading of the key events likely to play out in world markets over the next few months, and what implications do you see for India?
I do not expect that the western and the developed economies can make any meaningful recovery and sustain it. Mr Bernanke is well known for his views of having a loose monetary and fiscal policy in times of difficult economic conditions. Thus, I believe interest rate worldwide in general, and in the western world in particular, are not going to go up in a hurry. Even if the western and developed world do not make any meaningful recovery, I see no reason why the Indian economy and the Indian markets cannot continue to sail alone smoothly. If the world does not recover, commodity prices will remain moderate, which is a big plus for India. What is vital is what happens to Indian software exports. My personal view is that there is more than a fair chance that India will grow well and outperform, even if the world does not recover.
Is there any lurking negative that the market appears to have overlooked?
I think that the western and developed economies are set for sub-par/negative growth for a good period of time. There has to be a transition of both consumption and power from the developed world to the developing world. What effect this will have both economically and geopolitically is a matter of uncertainty and no one can definitely predict the smooth course of this transition. This, I surely think, is a matter that could unsettle markets if the transition is unruly and geopolitically destabilising. Be that so be, I have no doubt in my mind that this transition has to and will take place.
My Comments:
I am a great fan of Rakesh Juhnjhunwala.Why?Maybe because he is eternal BULL like me! Maybe.....but in his pre 2003 days he was a bear.
I was also surprised to read that he is saying that market will burst in couple of months.
But as he has said , he was misinterpreted.......
The reason I like him is because he is a visionary and is able to see things coming up.He was bullish right from 2003 and RJ and Shankar Sharma use to have debates on where the market is going and it turns out always to be hot.Becuase SS always use to speak on bearish side while RJ always speak on Bull side but ultimately RJ proved right all along the bull run uptill 2007 Diwali interview at CNBC.....
I read and hear RJ very keenly and try to understand the finer prints of his interview.....anyone of my reader who have any interview given elsewhere is always invited to give the link or entire interview transcript here.....I will be more then obliged.......
Obama’s healthcare plan to benefit Indian IT players ......
Obama’s healthcare plan to benefit Indian IT players
BIBHU RANJAN MISHRA &PRAVEEN BOSE Bangalore, 15 October
Indian top-tier information technology services companies, who were banking on the recession-proof healthcare sector to tide over uncertainty, are now seeing multi-billion dollar opportunities from the healthcare space in the US, especially the Obama administration’s proposed American Recovery and Reinvestment Plan.
The chances that US President Obama will achieve a near-universal healthcare system have dramatically improved after a lone Republican, Senator Olympia Snowe of Maine, prepared to vote with Democrats for a compromise proposal. This gives Obama a much better chance of achieving the 60 votes he needs to pass a Bill in the Senate.
The plan, which proposes to create Electronic Health Records (EHRs) for all Americans by 2014 with an investment of $20 billion, can open up new vistas of opportunities for Indian IT services firms including Infosys, Wipro, TCS and MindTree in areas of EHR implementations, upgrade, integration and interoperabilityrelated works.
“Obama’s stimulus plan proposes to allocate $150 billion to healthcare. Of this, nearly $20 billion is proposed for healthcare IT alone, most of which is expected to be spent on Electronic Health Records. This allocation, as part of the American Recovery and Reinvestment Act, is opening up the healthcare IT market like never before. It is bringing in a host of opportunities for EHR vendors, healthcare IT service providers and hospital systems,” says Rajiv Shah, Senior VicePresident, Healthcare Services SBU (strategic business unit), Wipro Technologies.
Other than the EHR implementation and upgrade, he says the proposed Act has brought new opportunities for service providers to engage more closely with EHR vendors, which can open up more strategic partnerships and alliances.
“The Obama administration’s healthcare plan will benefit not just Infosys but also many other Indian IT services companies. We see this as an area of significant opportunity for the future, and that is an area where we are investing now. IT will play a significant role in bringing down the healthcare costs as proposed under the plan,” agrees SGopalakrishnan, CEO and MD of Infosys Technologies.
If the American Recovery and Reinvestment plan as proposed by Obama goes live, it will help hospitals maintain a digital record of the patients. If a patient decides to change his/her healthcare provider, the hospital can easily share the EHR with the next healthcare provider, thus ensuring portability for the EHRs.
The IT vendors will have to play a huge role in ensuring the EHR created by one provider is compatible with the IT systems used by another, in the absence of which there can be aloss of information. “Due to these fears, the patients might be restricted with regard to his choice for the right care. We are in a position to help build software to access the central database for doctors and hospitals,” said Sridhar Perepa, GM, R&D, MindTree.
Traditionally, the healthcare industry was quite slow in adopting technology, a bottleneck in integrating various healthcare systems. However, defying the recent recessionary markets, the healthcare sector has remained quite steady in terms of investment, which has kept alive the hopes of most IT services firms with alittle focus on the sector.
Says Gopalakrishnan: “All developed countries have a population that is aging. As the population ages, healthcare becomes very, very important — both preventive and curative.” The healthcare industry in most developed countries has been notoriously expensive, an offshoot of lower investment on technology, which is expected to force healthcare providers to increase their investment in IT.
“The healthcare industry has been very slow in adopting technology, globally. The databases are not integrated, the pharmacy does not talk to the physician — it’s not integrated. There is a lot that needs to be done through automation and that’s what US is planning —integrating all these things and creating a next generation technology-driven healthcare system,” opines Gopalakrishnan.
The US presently suffers from a high-cost delivery healthcare model arising from high medico-legal compliance cost. The US patient is paying for treatment based on process inputs, rather than outputs linked to benefits received. Analysts feel the Obama administration’s first priority will be to remove inefficiencies in the medicare delivery process, thereby reducing the cost of delivery. However, this may not directly benefit the Indian IT services providers, but opportunities will gradually trickle down in the form of long-term partnerships with the US healthcare industry.
“As the US healthcare system is generally well supported by tested technology platforms, the Obama plan on healthcare is, by itself, not likely to create significant new opportunities for the Indian IT industry in the normal course. However, if Indian technology players can build new solutions to assist the US healthcare industry to prevent leakages, improve efficiency, reduce the cost and wastage, and transform the core process of delivery, then they have a significant opportunity,” said Pradip Kanakia, Head of Markets and Healthcare Services, KPMG in India.
Even IT services providers have started to realise this. The renewed focus on healthcare by the administration is also encouraging other allied IT applications (other than EHR) to take better shape. “We are also working actively on hosted EMR models, remote managed services offerings for the EHR product vendors, interoperability testing, digitisation of medical records, and integration of EHR and PHR, among others,” says Rajiv Shah of Wipro Technologies.
BIBHU RANJAN MISHRA &PRAVEEN BOSE Bangalore, 15 October
Obama’s stimulus plan proposes to allocate $150 billion to healthcare. Of this, nearly $20 billion is proposed for healthcare IT alone
Indian top-tier information technology services companies, who were banking on the recession-proof healthcare sector to tide over uncertainty, are now seeing multi-billion dollar opportunities from the healthcare space in the US, especially the Obama administration’s proposed American Recovery and Reinvestment Plan.
The chances that US President Obama will achieve a near-universal healthcare system have dramatically improved after a lone Republican, Senator Olympia Snowe of Maine, prepared to vote with Democrats for a compromise proposal. This gives Obama a much better chance of achieving the 60 votes he needs to pass a Bill in the Senate.
The plan, which proposes to create Electronic Health Records (EHRs) for all Americans by 2014 with an investment of $20 billion, can open up new vistas of opportunities for Indian IT services firms including Infosys, Wipro, TCS and MindTree in areas of EHR implementations, upgrade, integration and interoperabilityrelated works.
“Obama’s stimulus plan proposes to allocate $150 billion to healthcare. Of this, nearly $20 billion is proposed for healthcare IT alone, most of which is expected to be spent on Electronic Health Records. This allocation, as part of the American Recovery and Reinvestment Act, is opening up the healthcare IT market like never before. It is bringing in a host of opportunities for EHR vendors, healthcare IT service providers and hospital systems,” says Rajiv Shah, Senior VicePresident, Healthcare Services SBU (strategic business unit), Wipro Technologies.
Other than the EHR implementation and upgrade, he says the proposed Act has brought new opportunities for service providers to engage more closely with EHR vendors, which can open up more strategic partnerships and alliances.
“The Obama administration’s healthcare plan will benefit not just Infosys but also many other Indian IT services companies. We see this as an area of significant opportunity for the future, and that is an area where we are investing now. IT will play a significant role in bringing down the healthcare costs as proposed under the plan,” agrees SGopalakrishnan, CEO and MD of Infosys Technologies.
If the American Recovery and Reinvestment plan as proposed by Obama goes live, it will help hospitals maintain a digital record of the patients. If a patient decides to change his/her healthcare provider, the hospital can easily share the EHR with the next healthcare provider, thus ensuring portability for the EHRs.
The IT vendors will have to play a huge role in ensuring the EHR created by one provider is compatible with the IT systems used by another, in the absence of which there can be aloss of information. “Due to these fears, the patients might be restricted with regard to his choice for the right care. We are in a position to help build software to access the central database for doctors and hospitals,” said Sridhar Perepa, GM, R&D, MindTree.
Traditionally, the healthcare industry was quite slow in adopting technology, a bottleneck in integrating various healthcare systems. However, defying the recent recessionary markets, the healthcare sector has remained quite steady in terms of investment, which has kept alive the hopes of most IT services firms with alittle focus on the sector.
Says Gopalakrishnan: “All developed countries have a population that is aging. As the population ages, healthcare becomes very, very important — both preventive and curative.” The healthcare industry in most developed countries has been notoriously expensive, an offshoot of lower investment on technology, which is expected to force healthcare providers to increase their investment in IT.
“The healthcare industry has been very slow in adopting technology, globally. The databases are not integrated, the pharmacy does not talk to the physician — it’s not integrated. There is a lot that needs to be done through automation and that’s what US is planning —integrating all these things and creating a next generation technology-driven healthcare system,” opines Gopalakrishnan.
The US presently suffers from a high-cost delivery healthcare model arising from high medico-legal compliance cost. The US patient is paying for treatment based on process inputs, rather than outputs linked to benefits received. Analysts feel the Obama administration’s first priority will be to remove inefficiencies in the medicare delivery process, thereby reducing the cost of delivery. However, this may not directly benefit the Indian IT services providers, but opportunities will gradually trickle down in the form of long-term partnerships with the US healthcare industry.
“As the US healthcare system is generally well supported by tested technology platforms, the Obama plan on healthcare is, by itself, not likely to create significant new opportunities for the Indian IT industry in the normal course. However, if Indian technology players can build new solutions to assist the US healthcare industry to prevent leakages, improve efficiency, reduce the cost and wastage, and transform the core process of delivery, then they have a significant opportunity,” said Pradip Kanakia, Head of Markets and Healthcare Services, KPMG in India.
Even IT services providers have started to realise this. The renewed focus on healthcare by the administration is also encouraging other allied IT applications (other than EHR) to take better shape. “We are also working actively on hosted EMR models, remote managed services offerings for the EHR product vendors, interoperability testing, digitisation of medical records, and integration of EHR and PHR, among others,” says Rajiv Shah of Wipro Technologies.
My Commnets:
This is another shot in arm for IT ind.Analyst are downgrading IT sector and good news keeps on coming.First we saw that Indian IT will get orders from European countries so they will have not to worry about Dollar depreciation.
Now Obama health Insurance plan is opening new vistas for IT Ind.I am seeing a great future for IT sector......$20 bn will be at stake.....means Rs 96,000 cr...Ninty six thousand crore orders....Wow!
Over and about that Aerospace cos orders like Boeing,Jet etc are suppose to add to the kitty of IT cos.
In small space the cos to keep a watch on is Avental Ltd.I am tracking this co since 2-3 yrs and I like it.It has recently concluded a buy back at rs 50 and has also recently won orders from Boeing.......That speaks about the quality of sevice Avantel gives.....getting order from MNC co is big thing for a small co..
There is one other co. named Intense Techno.They have allotted shares to Bennett and Colman (Times Of India Gr)at Rs 30 while the price is 15.Intense has collobarated with Hitachi Data Techno for selling their products and helping eachother to prosper...
Wednesday, October 14, 2009
How to Pick a Multibagger..........
Many friends has constantly suggested me to write again about "How to Pick Multbaggers" ....but I was vary of writing it as I thought let people try to explore and find my back post.....It is very easy......Go to Google and write the heading and write my bog name and you are there.....this goes for any post....
This post was posted by me on ISG wayback in 2006-2007 or maybe early......
and hence naturally the examples are of that time....
How to Pick Multibagger:
1)First and the biggest preference will go to Low Equity.Because low eq. is an advantage when company plans expansion and Eq dilution takes place.Even a right of 1:1 or even 2:1 will not expand the eq in a big way and hence earning can match the eq.Another reason for low equity preference is even though the earning is not coming because of slow down of economy or a bad year for the company , then when the tide turns and with slightest turnaround company can show good EPS which is one of the most important criteria for investing as it is related to P/E.
2)Next is Promoters Holding.I have many times just invested in stocks on just looking at one parametres.Promoter s Holding, apart from ofcourse Low eq.Above 55% is almost a must , with exception in IT Sector where it is seen that you almost get very less company where the promoters holding is above 55%.I will give an Example for this.I bought Narendra Properties at just Rs 18/- at just looking at promoters holding which was as high as 72% and moreover one of the promoters was also hodling some 8% in Public holding.Of course the sector also palyed a role for me to take a decision fast.Narendra Properties is in Construction Sector.Narendra Properties touched Rs 77/-.Another is Lancor Holding.Promoters holding is as high as 72% and almost over 20% is held by FII's.I bought at Rs 166/- and now it is Rs 481/-.Both these stocks I bougth after May Carnage and one can calculate what return I got and am still bullish on both of them.Both have very low Public holding and that is a trigger according to me.
3)Sector also plays a very important role while choosing stocks.
4)Now the most improtant criteria is earning visibility.This is very important.eg. Navin Flourine.Though it comes in Chemical sector actually I see it as a Carbon Credit Story.A very very big CC story.Never try to look at inetrnational prices of CC.They fluctulates. No need to worry on that front.What I compare is if Guj Flouro a 2 paid up stock can quote at Rs.630/- then Navin a 10 paid up stock will quote much much more.The reason is both have almost equal CC to sell.But thing for Guj Flou is that they have already started to sell CC while Navin is still on nascent stage and hence it is available cheap.
5)I almost do not go for already splitted stocks.It is obvious that splitted company say, 2 paid up has to earn more to show higher EPS as it is splitted in 2 paid up.Same is the case of 1 paid up.Unless you are sure of the earning of that company that it will be able to match the splitted shares one can buy. Like Aftek Info where the earnig is coming in a big way. Actually I try to find stocks which have the capacity to give exponential earning(eg Navin) and can go for Splitting rather then buy which have already splitted and hence gives fabulous return.Means that I will not buy stocks that have already become a mutibaggers by already becoming XB or XS or XR.No use to buy those stocks that have become XB,XR,XS.Of course if even after it looks good after XB and XR then one can buy it.eg JMC Project.It is still a buy even after JMC has given 2 right issues.
6)Now comes the promoters Gr.I dont think one should look at it in a big manner.I do not put much weigh on Management.Who was knowing Narayan Murthy when Infosys came out with IPO in 1990's?Those who went for lookig at management lost the opportunity to invest in bluest of blue chip.
7)Yes,P/E is important.eg, Garnet Const.It is still available at just around 8p/e.A stock which is in hot sector where the P/E is high Garnet is available under 10 p/e is a bargain.
8) Now comes the BV(Book Value).I have invested in stocks just looking at BV and come out winner.eg.Titagarh Ind which I bought at Rs 3/- and sold at Rs 30/-.I bought it just because I saw that price of Titagarh Ind was very very less then BV.I remeber when I bought Titagarh Ind the BV was over 30or 40 and price was just Rs 3/-.I just went and buy it.Though I am not a big player I bought just 1000 shares.So BV also plays an important role while buying a stocks.One more example I would like to give.Maestros Mediline.It' s BV is as high as 75 and it is available at Rs 18/-?I am holdong Maestros since long.
9)I use to buy everything I like buying.I do this because no one knows which is going to turn out as multibbagers. I have written elsewhere that buy even 100 shares.Even a small exposer is enough to give you big returns if it turns out to be a big big multibagger.
10)Hold the position.Hold it as much as you can.I bought MilkFood Ltd at Rs 40// and I remember I also recomended here at the same time and some of the members have bought also.Whether they have sold or not I donno , but I am still holding MilkFood which I purchased at Rs40/-Everybody knows that MilkFood is making newer highs and is at Rs/- 380.
11) Try to find all info where you have put money.This is very very important.These will help you in taking decision whether to hold or sell.
12)Try to find stocks on your own because this gives more conviction because conviction plays bigger part in buying stocks as well as holding it.If one have no conviction about the company you sell it cheaply.
13)Almost never buy stocks above Rs 100/- If you are buying stocks at Rs 500 how it can become a multibagger?
My Comments:
I have been suggested by my friends that I need to have this always on my front page so that they can regularly read it and get inspiration from it.They think that these all points are so good that one needs to keep on reading it........some of them has also written me that they have printed this out and kept it with them so that when they wants to read it come handy...
Well, I have given some calls which have been over Rs 100 .But they are nowhere near to astronomical high and hence I have recomended as they have enormous growth potential.......
Well, this is not an exhausted list.There are many more things that one needs to religiously follow while looking for this.....and that is another great story to be told and which I use to follow without fail.I think that I have iterated many times about that , maybe in small bites but I have been constantly writing what one needs to do....while finding stock undiscovered........
I have written this because these method has been proved very successful to me.It may happen that others may not feel like that.......
So even after reading if one feels it is not worth and find flaw in this method , one can ignore it and follow his own procedure......
This post was posted by me on ISG wayback in 2006-2007 or maybe early......
and hence naturally the examples are of that time....
How to Pick Multibagger:
1)First and the biggest preference will go to Low Equity.Because low eq. is an advantage when company plans expansion and Eq dilution takes place.Even a right of 1:1 or even 2:1 will not expand the eq in a big way and hence earning can match the eq.Another reason for low equity preference is even though the earning is not coming because of slow down of economy or a bad year for the company , then when the tide turns and with slightest turnaround company can show good EPS which is one of the most important criteria for investing as it is related to P/E.
2)Next is Promoters Holding.I have many times just invested in stocks on just looking at one parametres.Promoter s Holding, apart from ofcourse Low eq.Above 55% is almost a must , with exception in IT Sector where it is seen that you almost get very less company where the promoters holding is above 55%.I will give an Example for this.I bought Narendra Properties at just Rs 18/- at just looking at promoters holding which was as high as 72% and moreover one of the promoters was also hodling some 8% in Public holding.Of course the sector also palyed a role for me to take a decision fast.Narendra Properties is in Construction Sector.Narendra Properties touched Rs 77/-.Another is Lancor Holding.Promoters holding is as high as 72% and almost over 20% is held by FII's.I bought at Rs 166/- and now it is Rs 481/-.Both these stocks I bougth after May Carnage and one can calculate what return I got and am still bullish on both of them.Both have very low Public holding and that is a trigger according to me.
3)Sector also plays a very important role while choosing stocks.
4)Now the most improtant criteria is earning visibility.This is very important.eg. Navin Flourine.Though it comes in Chemical sector actually I see it as a Carbon Credit Story.A very very big CC story.Never try to look at inetrnational prices of CC.They fluctulates. No need to worry on that front.What I compare is if Guj Flouro a 2 paid up stock can quote at Rs.630/- then Navin a 10 paid up stock will quote much much more.The reason is both have almost equal CC to sell.But thing for Guj Flou is that they have already started to sell CC while Navin is still on nascent stage and hence it is available cheap.
5)I almost do not go for already splitted stocks.It is obvious that splitted company say, 2 paid up has to earn more to show higher EPS as it is splitted in 2 paid up.Same is the case of 1 paid up.Unless you are sure of the earning of that company that it will be able to match the splitted shares one can buy. Like Aftek Info where the earnig is coming in a big way. Actually I try to find stocks which have the capacity to give exponential earning(eg Navin) and can go for Splitting rather then buy which have already splitted and hence gives fabulous return.Means that I will not buy stocks that have already become a mutibaggers by already becoming XB or XS or XR.No use to buy those stocks that have become XB,XR,XS.Of course if even after it looks good after XB and XR then one can buy it.eg JMC Project.It is still a buy even after JMC has given 2 right issues.
6)Now comes the promoters Gr.I dont think one should look at it in a big manner.I do not put much weigh on Management.Who was knowing Narayan Murthy when Infosys came out with IPO in 1990's?Those who went for lookig at management lost the opportunity to invest in bluest of blue chip.
7)Yes,P/E is important.eg, Garnet Const.It is still available at just around 8p/e.A stock which is in hot sector where the P/E is high Garnet is available under 10 p/e is a bargain.
8) Now comes the BV(Book Value).I have invested in stocks just looking at BV and come out winner.eg.Titagarh Ind which I bought at Rs 3/- and sold at Rs 30/-.I bought it just because I saw that price of Titagarh Ind was very very less then BV.I remeber when I bought Titagarh Ind the BV was over 30or 40 and price was just Rs 3/-.I just went and buy it.Though I am not a big player I bought just 1000 shares.So BV also plays an important role while buying a stocks.One more example I would like to give.Maestros Mediline.It' s BV is as high as 75 and it is available at Rs 18/-?I am holdong Maestros since long.
9)I use to buy everything I like buying.I do this because no one knows which is going to turn out as multibbagers. I have written elsewhere that buy even 100 shares.Even a small exposer is enough to give you big returns if it turns out to be a big big multibagger.
10)Hold the position.Hold it as much as you can.I bought MilkFood Ltd at Rs 40// and I remember I also recomended here at the same time and some of the members have bought also.Whether they have sold or not I donno , but I am still holding MilkFood which I purchased at Rs40/-Everybody knows that MilkFood is making newer highs and is at Rs/- 380.
11) Try to find all info where you have put money.This is very very important.These will help you in taking decision whether to hold or sell.
12)Try to find stocks on your own because this gives more conviction because conviction plays bigger part in buying stocks as well as holding it.If one have no conviction about the company you sell it cheaply.
13)Almost never buy stocks above Rs 100/- If you are buying stocks at Rs 500 how it can become a multibagger?
14) Stock unknown is the best thing.If no one knows that is a BIG BIG Positive.If everybody knows then one need to understand that the game is over.The real Charm in a stock remains only when no one is tracking and we are tracking it silently .If the world knows then the game is over.No FII's, MF's is seen in the Share Holding Pattern(SHP) then , to me is a great buy.We should be the 1st to buy an undiscovered stock before someone buys.Remaining first is the KEY for success.So buy when noone is buying.Let them getin afterwards and let it then go up and we will book profit as soon as it gets double.
But remember when we getin early, when no one is knowing ,then the holding period lengthens as it takes time for other to have a look at it......but then as we have getin early we have got it CHEAP as well......which makes an ideal candidate to become a multibagger.....
PN: This last point(14) is written now.....
My Comments:
I have been suggested by my friends that I need to have this always on my front page so that they can regularly read it and get inspiration from it.They think that these all points are so good that one needs to keep on reading it........some of them has also written me that they have printed this out and kept it with them so that when they wants to read it come handy...
Well, I have given some calls which have been over Rs 100 .But they are nowhere near to astronomical high and hence I have recomended as they have enormous growth potential.......
Well, this is not an exhausted list.There are many more things that one needs to religiously follow while looking for this.....and that is another great story to be told and which I use to follow without fail.I think that I have iterated many times about that , maybe in small bites but I have been constantly writing what one needs to do....while finding stock undiscovered........
I have written this because these method has been proved very successful to me.It may happen that others may not feel like that.......
So even after reading if one feels it is not worth and find flaw in this method , one can ignore it and follow his own procedure......
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