Dalal Street :: India Equity Research, Investment Analysis

Reliance Growth Fund – SIP Review and Analysis

December 23, 20061 min read

Till now we have been only recommending HDFC Funds – Equity and Top 200. However, last month we recommended investors to invest in the NFO of Reliance Long Term Equity Fund. Our research team has carefully analysed Reliance Growth fund managed by Sunil Singhania and we recommend SIP investors to invest in the same.

Reliance Growth fund is a pure equity fund which mainly invests in Large Cap and Mid Cap stocks. If you have seen the presentation of Singhania, you will be convinced that he is in lookout for a sunrise sector and emerging companies of the same. These companies will always give higher percentage of returns.

Here is a quick look at historical performance of Reliance Growth Fund. Since inception, it has yielded a compounded return of 33.7% for NFO investors and 40.20% for SIP investors. Your investment of Rs 1,33,000 over a period of 11 years is today worth, Rs 14,75,756 🙂 Kindly take a look at the attached excerpt from the latest factsheet.

Equity Research

ABN Amro bullish on Federal Mogul Goetze India

December 20, 20062 min read

ABN Amro in its research report has upgraded 12 month target price of Federal Mogul Goetze India [FMGI] to Rs 583, current market price is Rs 425 [Markets have crashed but this stock has moved up].

FMGI is a turnaround stock. FMGI returned profits for quarter 2QCY06, as the restructuring-led clean-up of the balance sheet was carried out over the March and June 2006 quarters.

FMGI is banking on auto ancillary outsourcing wave. With its skilled manpower and capability, the company is well positioned to benefit from its parent’s plan to shift 25 plants to low-cost
countries by 2008, under its 2006 restructuring programme. Given 10 plant closures have already been announced globally, we expect benefits to begin to accrue for FMGI as early as calendar 1Q07, with the company building scale from that point forward.

FMGI has changed its year-end from March to December to get in sync with its parent. The expectation on the dieselisation of domestic cars in India to promote 18% growth in domestic sales for CY07 and CY08, and further exports are expected to grow more than five-fold as a result of the parent’s proposed plant shift. Revenues are expected to grow from Rs 404 crores in 06 to Rs 677 crores in 2007 and Rs 808 crores in 2008. PAT is expected to quadruple for CY06-08, leading to EPS of Rs24.8 in CY07F and Rs34.3 in CY08F.

Tags: Invest India, India Outsourcing, Federal Mogul Goetze India, Indian Stockmarket

Economy, Markets and Macro Views

Punj Lloyd – Review and stock recommendation

December 19, 20062 min read

Punj Lloyd Limited (PLL) is one of India’s best Construction and Infrastructure company. We are initiating coverage on PLL with a BUY recommendation and a 12 month target price of Rs 1,500. 50% upside from current levels.

PLL operates in India, Middle East, Africa and entire Asia. PLL mainly implements mega infrastructure projects. Some Key Statistics of Punj Lloyd Limited.

CMP – Rs 1018. Buy Upto Rs 1075.
52 week High / Low – 1254 / 544
Book Value – Rs 203.7
P/E for H1FY07 Annualized – 44
Equity : 52.22 crores. Face Value Rs 10

For H1, FY07, Punj Lloyd recorded a sales of Rs 2022 crores and a PAT of Rs 22.91. PLL management has guided for revenues of Rs. 5800 crores for FY07. Margins are likely to expand going forward as its acquired company Sembawang engineers and Contractors’ Operations are streamlined and larger number of higher margin urban infrastructure projects flow through.

Large and diverse order book: Punj Lloyd continues to have a large overseas exposure to tap potential opportunities across the globe, especially in the oil & gas and petrochemicals space. Punj Lloyd had an order backlog of INR 13394cr as at Sept-06 of which Rs. 12500cr is with an average duration of 2.5 years.

For FY07, We expect PLL to deliver a PAT of 220cr resulting in EPS of Rs 40. Compared to other infrastructure and construction stocks, PLL with a very strong management and execution track record is quoting at a forward P/E of mere 25. We recommend a BUY on Punj Lloyd Ltd with a target price of Rs 1,500.

Tags: Invest India, Dalal Street, Punj Lloyd, Infrastructure Stocks

India IPO Reviews and Updates

Sobha Developers Listing on Dec -20th

December 15, 20061 min read

Sobha Developers Limited will list on BSE and NSE on Dec-20th – Wednesday for Trading.
Demat ISIN INE671H01015.

Check allotment status of Sobha Developers Limited here.

Tags: IPO India, Sobha Developers, Invest India, Real Estate India

India IPO Reviews and Updates

Cairn India Ltd – IPO Analysis and Recommendation

December 14, 20062 min read

Read our earlier review about background of Cairn Energy and Cairn India.

Current IPO proceeds will goto parent company and very little to Indian subsidiary where we will be a shareholder. Cairn has carefully avoided an offer for sale and will suck the money out of company after the IPO. [Refer to page 12 of the Application form, the amount they will withdraw from the company is expected to be between $1.33 to $1.63 billion]
After IPO parent company will still hold 69.5% in Cairn India. So why do the listing drama ?

Cairn as on the date of IPO has huge oil reserves and very little operations. The risk factors also mentions that it may not be easy to extract oil from the Rajasthan[Largest reserve] and many incur additional expenses.

Looking at the financials and other peer group comparisons as stated in various research reports [CLSA, ShareKhan, JM Morgan Stanley], the offer price is expensive. Cairn India IPO is priced at double the valuations of state owned ONGC. [Don’t argue Petronas has bought 10% stake at Rs175, Cairn and Petronas are global oil companies and you never know where Cairn may have bought stake in Petronas at abnormal valuations]

Check out ShareKhan report on Cairn India Ltd IPO.[PDF]

Recommendation: Retail individual investors can avoid investing in Cairn India Ltd IPO. However, if you are a long term investor[3+ years, investment horizon] then you can apply and get allotment for some small quantity[0.094% subscription till Wednesday Midnight, VERY POOR Response] and I am sure just like Reliance Petroleum, you will get Cairn India sometime within the next 12 months below the issue price.

Tags:IPO India, Energy Stocks, Oil Stocks , Cairn India IPO

India IPO Reviews and Updates

Sobha Developers – Basis of Allotment

December 13, 20061 min read

Bangalore / Bengalooru based Real Estate firm Sobha Developers Ltd which recently concluded its IPO has announced the allotment of shares details and are made available here.

The issue was heavily oversubscribed and even in the Retail category of Maximum shares allotment was on lottery in the ratio of 32:43. This category also saw 70% of the total shares applied.

The grey market premium for Sobha Developers is Rs450. [At this price it is expensive, well Indian stocks are all expensive :-)]

Tags:Realty IPO, IPO India , Real Estate India, Land Bank India

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Sobha Developers Listing on Dec -20th

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