Stock Market Tips - Buy Ispat Industries For Short Term Gains

Nirmal Bang equity research & broking house has recommended to investors to buy stocks of 'ISPAT Industries' from short-term investment perspective.
Stock Trading Idea is:
CMP: Rs. 22
Strict stop loss: Rs 21.45
Short term target: Rs. 26
Medium term target: Rs. 30 (Above 30)

Tips:

• The report further stated that, if the counter is successful to breach 27, then it will hit a medium term target of Rs 30.
• Sept 01, 2009, the shares of the company opened at Rs 23.60 on BSE. The share price has seen a 52-week high of Rs 28.60 and a low of Rs 9 on BSE.
• For the three month period ended June 2009, Ispat Industries, an integrated steel maker posted loss owing to decline in sales and increase in input costs.
• During the period, the company recorded loss of Rs 2,149.20 million as against a profit of Rs 287.30 million during the same quarter previous year.
• Net sales fell 49.79% to Rs 13,997 million, whereas total income during the period declined 51.25% to Rs 14,018.50 million.
• It posted a loss of Rs 1.91 per share in the quarter as against with earnings of Rs 0.08 per share in the corresponding period of the last year.
• During the quarter, the company's operating margin fell by 1,228.23 basis points to 7.42% compared with the previous year period.
• Interest cost during the three month period dropped 37.88% to Rs 2,675.80 million whereas depreciation cost surged 1.81% to Rs 1,635.70 million.

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Top 10 fastest growing small companies in India

Growth is the only way listed companies generate wealth and value for their shareholders and other stakeholders, including employees. The younger and smaller the company, easier it is to grow. And the earlier you are able to pick future leaders, the better it is for you. In fact, during the last bear run, which ended in early 2003, many small companies gave double-digit annual returns on a consistent basis, even as frontline companies remained grounded.ETIG has come out with its 2008 edition of fastest-growing small companies. Last year's list was dominated by companies from the then hot sectors such as real estate, capital goods and construction, with a sprinkling of IT companies. However, the toppers this time are now from less cyclical and asset-light sectors, especially infotech.

Take a look at the top 10 fastest-growing small companies:

ICSA India Ltd: This is the new face of the Indian IT industry — companies offering niche product and services with a clear differentiating factor. ICSA offers supervisory control and data acquisition (SCADA)-based IT solutions to power companies.ICSA India had a market cap of Rs 1,305.2 crore (the average for September '08), besides having an average return on capital employed (RoCE) of 67.8% and interest coverage ratio (ICR) of 132.7, for the preceding three years.Also, its compound average growth rate (CAGR) in sales and net profit for the preceding three years stood at 214.8% and 210%, respectively.

Allied Digital: It provides remote infrastructure management and systems integration in the domestic market. It is a leading IT Infrastructure management and technical support services outsourcing company.It enables global, large and medium enterprises and service providers to reduce their total cost of ownership using a combination of onsite and remote services.With an average market cap of Rs 1,239.2 crore in September '08, the company's three-year average RoCE stood at 62.8% and ICR at 103.5. Moreover, its sales recorded a three-year CAGR of 79.2%, while the CAGR of profit after tax stood at 211.6%.

Prime Property Development Corporation: As the name suggests, it is a real estate developer in India, based in Mumbai.Its properties include information technology parks; commercial units comprising show rooms, shops, and offices; mall projects with anchor shop, shopping complex, multiplex, food court, entertainment area, and a hotel; and commercial-cum-residential projects.The company had a market cap of Rs 120.2 crore (the average for September '08). Its three-year average RoCE stood at 48.1% and ICR at 394.7. Its sales recorded a three-year compound average growth rate of 86.4%, while the CAGR of profit after tax stood at 185.3%.

Resurgere Mines and Minerals India Ltd: It is engaged in the business of extraction and processing of iron ore products, ie lump ore and size ore, and is predominantly a manufacturer of calibrated lump ore (CLO) and iron ore fines.It is also engaged into merchant export of iron ore fines to China. The company is a member of CAPEXIL, FIEO and FIMI and is a recognized star trading house. At present,the company has run-of-mines contracts for two mines situated at Nuagaon and Maharajpur in Orissa.Resurgere Mines' market cap (average for September '08) stood at Rs 733.5 cr, while the three-year average RoCE was recorded at 100.2% and ICR at 32.8. Its sales recorded a three-year compound average growth rate of 81%, while the CAGR of profit after tax stood at 561.4%.

Sharon Bio-Medicine: The success lies in its ability to expedite pace of product development by streamlining the processes and inculcating a culture of operational excellence. It offers contract research and manufacturing services for global pharmaceutical companies.Since its inception, the company has carved its niche by offering a distinct value proposition to its customers.Sharon had a market cap of Rs 101.7 crore (the average for September '08). Its three-year average RoCE stood at 30.8 % and ICR at 747.8. Its sales recorded a three-year compound average growth rate of 93.3%, while the CAGR of profit after tax stood at 254.2%.

Tanla Solutions: It develops value-added solutions for mobile phones. It offers end-to-end mobile commerce, mobile entertainment, mobile internet and mobile advertising solutions.Tanla is a global provider of mobile commerce, mobile entertainment, mobile marketing and advertising solutions to the telecommunications, media and digital content industries. It has the distinction of being one of the first Indian companies to focus on integrated solutions and products for the wireless world.With an average market cap of Rs 1,906.9 crore in September '08, the company's three-year average RoCE stood at 51.1% and ICR at 15.8. Moreover, its sales recorded a three-year CAGR of 173.8%, while the CAGR of profit after tax stood at 189.8%.
Northgate Technologies Limited: The corner stone capabilities of Northgate Technologies' business are infrastructure (high capacity, highly scalable server farm), services (internet advertising tracking tool, instant messaging, short messaging, net telephony, global content delivery, video streaming, social networking, file sharing and downloading, gaming and many more), and monetization (mass monetization through fast growing global internet advertising industry).Its core strengths of world-class server farm infrastructure, a rapidly-expanding global content distribution platform, popular internet properties, partnership with large web communities and own advertising network differentiates it from other peers who operate in only sector, the company claims.Northgate Tech's market cap (average for September '08) stood at Rs 904.9 crore, while the three-year average RoCE was recorded at 31% and ICR at 1141.4.Its sales recorded a three-year compound average growth rate of 102.1%, while the CAGR of profit after tax stood at 110.9%.
Venus Remedies India: It is a research and development driven, pharmaceutical manufacturing company. The company is constantly working to broaden the pipeline of products and to make a impact in the international markets.It has two manufacturing locations in India and one in Germany. Venus is a manufacturer of oncological and cefelosporine injectable products following EU-GMP norms for all is activities.The company had a market cap of Rs 316.9 crore (the average for September '08), besides having an average return on capital employed of 43.2% and interest coverage ratio of 59.5, for the preceding three years.Also, its compound average growth rate in sales and net profit for the preceding three years stood at 84.4% and 117.5%, respectively.

Geodesic Limited: It operates in a niche area of developing various innovative products in the information, communication and entertainment space. Its product-list is versatile and all-encompassing when it comes to offering choice of communication and collaboration solutions to its users, whether it is the inherently simple hand-held Simputer to web-based mobile & wireless applications to the intricately complex Engage Spyder applications.Geodesic's mix of innovative products and high performance solutions has driven the company to profit right from its first year, according to the company.With an average market cap of Rs 1,511.5 crore in September '08, the company's three-year average RoCE stood at 31.1% and ICR at 1027.3.Moreover, its sales recorded a three-year CAGR of 98.9%, while the CAGR of profit after tax stood at 98.2%.

Info Edge (India) Ltd: The company is a leading provider of online recruitment, matrimonial & real estate classifieds and related services in India.Its business is managed primarily through four divisions, which comprise online recruitment classified division, online matrimonial classified division, online real estate classified division and offline executive search division.Info Edge's market cap (average for September '08) stood at Rs 2,056.7 crore, while the three-year average RoCE was recorded at 60.4% and ICR at 11.4. Its sales recorded a three-year compound average growth rate of 70.6%, while the CAGR of profit after tax stood at 451.8%.

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Rakesh Jhunjhunwala's latest portfolio

Rakesh Jhunjhunwala have been buying stocks and making big money. His portfolio holdings are as on Sept'08 based on BSE / NSE data. Remember that his holding period is 5-10 years on an average and he has invested his money to buy stocks of Small and Mid caps only, so anyone who is buying stocks (good small cap & Mid caps) and holds it for 5-10 years, has better probability to create such huge amount of wealth. Trading stocks / stock trades are best to be avoided for retail investor. Online stock trading and buying stocks online have made it very easy for retail investors to trade stocks at fingertips very frequently. Learn how to buy stocks Rakesh Jhunjhunwala way. Buy stocks wisely!!! Investing in stock should be a long term affair & do not indulge in frequent stock trades.

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Income Tax Planning and Savings- Equities way

If you are looking at equity as an asset class and want tax reliefs as well, you can opt for ELSS, provided your goals are 5-7 years away. Equity is considered by many experts to be the asset class that can yield returns higher than many other instruments in the section 80C basket. ELSS provides you a chance to buy stocks thru mutual funds and at the time save income tax with higher returns on your long term investment.

Investing In Equities - Better Returns while Saving Income Tax

one of the best asset classes to provide that benefit is equity. Though its risky and volatile in the short-run , all kinds of long-term gains from equity, including capital returns and dividend income, are tax-free . In fact, as the investing period gets longer, dividend becomes a significant part of gains from the equity investment and it provides investors with a consistent flow of tax-free income.

ELSS - Income Tax Saving Instrument - Give It A Thought

If you haven't made the necessary investments already, it is time to go through your salary statement to find out the amount you need to set aside for claiming deductions up to Rs 1 lakh under the section 80C of the Income Tax Act.Since the valuations are quite low at the moment, it makes sense to invest in ELSS.

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High Dividend Stocks

Dividend is a tax-free income in the hand of shareholders. Dividends are far more profitable today than it would have been in the last four years. ET Intelligence dug deep to find out companies, which are consistent in paying dividends and in some cases have also increased the payout ratio. This is because the stock prices have crashed in last one year, as result the dividend yield (dividend per share divided by price per share) has gone up.

Therefore, the dividend per rupee of investment is much more today than it was earlier. However, investors should not aim at accumulating stocks with high dividend yield because such high yields may not be sustainable in case profit falls due to economic slowdown. ET Intelligence dug deep to find out companies, which are consistent in paying dividends and in some cases have also increased the payout ratio.

A high payout ratio means a higher percentage of profits are distributed among shareholders as dividends. The payout ratio has come down for most of the companies in the table. For instance, Great Eastern Shipping paid 38.6% of its profits as dividend in FY 2003, which came down to 17.3% in FY 2008. The drop in payout ratio has to be seen in the light of high growth in profits. When profits rise at astronomical rates, the dividend growth tends to be a bit lesser because the company prefers to retain some amount with it for further investment.

Investors interested in earning dividends should steer clear of companies with high fluctuations in profits. For instance, Tata Motors had incurred losses in FY 2001 and FY 2002. Though the company is incurring losses, it can still pay dividend from its past cash flows. But sustaining dividend payment will become extremely difficult in near future. Similarly, other auto manufacturers, like Ashok Leyland, were also excluded from the sample because they operate in highly cyclical industry.

As we all know that investing in stocks is a risky affair, so, an investor should always try to balance his investments between stocks and fixed interest instruments, which are less risky. We did a simulation (taking the stocks mentioned in the table) to calculate the return purely from the dividend the stocks have been paying. We assume that an investor had put in Rs 1,000 in each of the 10 stocks on April 01, 2003, taking his total investment to Rs 10,000.

The amount invested in all stocks was same to make a portfolio with equal proportions invested in different stocks. At the end of first financial year on April 01, 2004, the investor would have received dividends from the companies amounting to Rs 1,264. To minimise risk, we assume that the investor had invested the dividend in a fixed deposit for one year at the interest rate of 5.25% and then kept on rolling the fixed deposit every year for another one year. This is called ‘hybrid strategy’, wherein the income from risky investments (in this case equity) is routed to relatively less risky investments (in this case fixed deposit).

Similarly, every year on the first day of April, the investor would have got dividends, which he would have routed to fixed deposit of one year. Following this strategy, the investor would have made Rs 8,970 from dividend and interest on those dividends in five years. It is noteworthy that adopting this hybrid strategy the investor would have almost recovered 90% of his entire investment in five years time. This translates to annual return of 13.7% per annum from dividends only.

The most interesting part of the result is that the investor would have made a much higher return on his investments than offered by any fixed rate instrument. On the top of it, that return would have had been entirely free from taxes. The interest on fixed deposit is taxed. As the interest earned formed a lesser part of the return; the tax incidence would also had been much lesser. Moreover, we have not considered the capital gains. The value of the total portfolio stands at Rs 46,302 today— close to five times of the principal amount of Rs 10,000—though the market has crashed by more than 50% since its peak.

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Top Stocks to buy now : 2009

As uncertainties prevail and a revival expected only post second quarter of 2009, looking at current stock market situation it will pay to buy stocks of large cap companies with a proven track record, high earnings visibility, low leverage, good book value and low debt. Buying stocks with strong promoter holdings looking at recent Satyam fiasco could be one one of the considerations for stock buying. Stock trades at cheap brokerage fees and buying stocks online or online stock trading have made trading stocks very frequent practice for normal investor, they should understnad that stocks mentioned here are for long term investing and will be fruitful if they hold for longer time durations.

In the aftermath of economic slowdown and fall in markets, and also uncertainty over the next few quarters, it is advisable to play safe and practice stock buying of large companies with a consistent track-record. Stock trades are best to be avoided for retail investor. Online stock trading have made it very easy for retail investors to trade stocks very frequently. It is complete no-no in current stock market situation. Sandeep Shenoy, strategist, Pinc Research says, “Companies with integrated operations, strong balance sheets, low leverage or ability to complete financial closure for capex, and low working capital requirements are preferred.”

Beyond that, interest rate sensitive sectors are finding favour. Says Srivastava, “We are favourably inclined towards rate-sensitive sectors like banking, auto or even in real-estate on a selective basis. But, as the market is expected to be range bound, a trading strategy could prove helpful.”

Defensive plays like FMCG and utilities, too, figure among the preferred lot even as there is already some amount of premium built in their valuations, due to the stability they provide. Additionally, users of commodities are expected to outperform. Says Manish Sonthalia, senior VP Research & Strategy, Motilal Oswal Securities, “Now, the consumption side, like auto (two wheelers) will get more importance. Among other preferred sectors are FMCG and telecom.” Commodity user industries like construction, which may get a fillip on account of increased infrastructure spending, also figure in the list, although there are some issues pertaining to funding of projects.

Gold likely to touch Rs 18,000 per 10 gm by Diwali: Assocham

Gold is likely to touch Rs 18,000 per 10 gram during the forthcoming festival season as the demand for the yellow metal peaks around Diwali time, according to a projection by industry body Assocham.

Gold prices is expected to increase by Rs 2,000 per 10 gram by Diwali, which is followed by a marriage season in the country, it said. Currently gold prices are hovering around Rs 16,000 per 10 gram. "The bullion is likely to gradually see spurt in it's prices and stay around Rs 18,000 per 10 gram by Diwali," Assocham President Sajjan Jindal said. This is due to the fact that more and more investors are flocking to take refuge to gold as an asset class as it happens to be the best bet against rising inflation, Assocham said.

The high valuations of stocks and its attendant risk have by and large motivating investors to part shift to gold as an investment class, it said. The chamber has suggested that those who want to invest in gold, should not purchase jewellery but instead buy the metal from Singapore or Dubai in form of bars. It also said buying pure gold from banks is costly because one has to pay about 25 per cent more than the market price.

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