Financial Wisdom – By Kalidas

Radical Solution for Credit Crisis from Kalidas

Stock Watch – updated 13/Nov/08

with 4 comments

Following stock picks are meant for general guidance of investors. They are based on the circumstances prevailing on the date of issue. This is what I would do if I were you at this point of time.

Be careful to use them after 2 months – things may change. There is no guarantee that it will work for every reader or investor. Use it according to your temperament, understanding, risk taking ability and experience. This is normally meant for Cash investors, not for those who want to buy or sell on leveraged basis. 
Following format will be used. It will be numbered serially as 08-0nn where 08 is the calendar year followed by serial number. Latest post will figure on the top. The readers may post their comments. They may not be answered  by the Author unless he finds compelling reasons to do so. – Anil Selarka
Note: If you want printable version, please download PDF file from side bar in the folder Stock Watch. The file is titled “Stock Watch Oct 08”

 

Stock

Tata Tele Services Mah Ltd

Sector

Telecom

Market

India

Link to Financials

Financials on Moneycontrol

Company Web Site

http://www.tataindicom.com/

Symbol

TTML.

 Px 08/11/13

20.20

Target ST

32~60*

Target LT

60~120*

Year High

64.95

Year Low

12.50

 ST Hold

8m

LT Hold

3 years

Current PE

Negative

% Down Peak

-67.44%

Downside

-12..5%

Upside

20% ST

PE 2009

NA

Div Yield% CMP

Zero

Buy Range

16~21

Sell  Range

32~60

 Comments

As mentioned in the article, we do not know to what extent TTML will get cash allotment out of the deal for Rs 13000 crores.  The earning estimate largely depends on this factor.  We therefore gave two scenarios – without cash benefits from parents or with benefits from parent TTS. It was also reported in lat few days that TTML will roll out 3G technology before Mar 2009. It was also reported that Reliance Communication is severely constrained to raise fund to meet its expansion. TTML now has edge over almost all telecom operators. The downside to the stock is now severely restricted. The stock can make major move only if there is reverse split of 4:1 at least.

Stock Behaviour

This is often tricky stock. Sits like a dog most of the times and then suddenly start barking. Being a small value stock, not favorites of foreign fund managers. That is history. Japan stamp may reduce downside. New technology 3G will also help more demand. In short term, NTT has to buy 20% or 38 crores shares from the market which is nearly 30 day’s turnover in normal time. After the expiry of 20% offer, the stock may correct by 10% to 15% at least, if the market remains in state as present

SWAP

One may sell other high value telecom stocks like Bharati, Rcom, Hutch etc and swap into this tiny baby. Please note that this stock will not give run away return in short to medium term. The shares are too many and earnings are still far away. It may improve from July onwards

 

Stock

Royal Orchid Hotel

Sector

Hotel

Market

India

Symbol

ROHLTD

 CMP 08/10/30

42.15

Target ST

81.

Target LT

180

Year High

174.60

Year Low

38.50

 ST Hold

9m

LT Hold

24m

Current PE

3.71

% Down Peak

-78%

Downside

15%

Upside

300%

PE 2009

3.50 Est

Div Yield% CMP

14.23%

Buy Range

35~45

Sell  Range

81~131

 Comments

One of the cheapest hotel stocks with dividend yield of 14%. -40% higher than bank deposits. Less Debt, good presence in Bangalore, Hyderabad, Pune, Mumbai (All info tech centers).Also Goa.  Weaker Rupee helps. Trading at 33% discount to Book Value. Most negative already discounted.

Stock

Taj GVK Hotel

Sector

 

Market

India

Symbol

TAJGVK

 CMP 08/10/30

44.95

Target ST

108

Target LT

160

Year High

205

Year Low

40.85

 ST Hold

9m

LT Hold

24m

Current PE

3.96

% Down Peak

-80%

Downside

18%

Upside

400%

PE 2009

3.35 Est

Div Yield% CMP

7%

Buy Range

38~45

Sell  Range

108~

 Comments

This is premier Mid Cap stock with lot of growth. Decent yield of 7% should make you think why not you withdrew bank deposits and invested here. Weak rupee helps, good management. This can shine more than its parents = Indian Hotels

 

Stock

India Hotels

Sector

Hotel

Market

India

Symbol

INDHOTEL

 CMP 08/10/30

45.80

Target ST

92

Target LT

180

Year High

163.80

Year Low

43

 ST Hold

9m

LT Hold

24m

Current PE

8.61

% Down Peak

-72%

Downside

15%

Upside

400%

PE 2009

6.85 Est

Div Yield% CMP

4.1%

Buy Range

39~60

Sell  Range

92~40

 Comments

Best blue chip hotel stock of Taj Group of Hotels with largest revenue base of 1600 crores. Have presence in all metro and tourist cities. Good Dividend yield of 4%, low PE and best management can make this stock highly favorite. It is perhaps life time opportunity to buy at cheap price

 

New entries will be posted here as and when Ifeel that the markets are down. If I write when the markets are up, there is a possibility that some readers might impulsively make high end entry and get trapped.

Stock

Essar Shipping

Sector

Shipping

Market

India

Symbol

ESSARSHIP

 CMP 08/10/29

31.90

Target ST

140

Target LT

360

Year High

252

Year Low

31.65

 ST Hold

9m

LT Hold

24m

Current PE

8.57

% Down Peak

-87%

Downside

15%

Upside

800%

PE 2009

2.5

Div Yield% CMP

NIL

Buy Range

61~100

Sell  Range

210~310

 Comments

This company is uniquely placed, so rise in oil prices will not affect it. It has youngest fleet and also many tankers. Since Essar Oil has come into production with expected revenue of Rs 36000 crores per year, this company will be prime beneficiary for transportation of oil – crude from middle east to India and from India to overseas. Its revenue could grow 4 fold in one year, and its profit will expand 4 times. With equity base very low, this will be the fastest rabbit on Indian stock arena. I would not be surprised, if the EPS reaches even Rs 16 to Rs 20 in less than 12 months. The stock is near 12 months low. It has some of the finest potential. Just grab it when the market opens.

Stock

Essar Oil

Sector

Oil

Market

India

Symbol

EssarOIL

 CMP 08/10/29

76

Target ST

180

Target LT

480

Year High

360

Year Low

54

 ST Hold

9m

LT Hold

18m

Current PE

8 Est.

% Down Peak

-85%

Downside

20%

Upside

600%

PE 2009

>20 Est

Div Yield% CMP

NiL

Buy Range

61~92

Sell  Range

181~310

 Comments

This is the fastest growing stock in the Indian stock market. The company has come into production after 4 to 5 years. Its quarterly sales jumped from Rs 562 crores to Rs 9000 crores. For full year it may exceed the sales of Rs 36000 crores. This company is unique in that it is oil producer (like ONGC) and also a refiner (like BPCL, HPCL, MRPL), so its profitability will be higher than SOE Refiners and also MRPL. Its expansion plan will take hold in another 18 months. Since US does not have refining capacity, it may have to lease refiners like Essar and RPL. The potential of this company is simply huge. Yes, there were times when the Essar management wanted to privatize, but then dropped the idea. (After this author’s article on MMB). Even the management took new shares at Rs 200 plus. One may sell any share over Rs 600 and buy this share. The upside potential is simply outstanding. Buy with both hands. Risk of privatization is least now. Credit market is so tough that even the best borrowers do not have line of credit to pursue acquisitions. Do not wait – just grab it now and then buy more if it does come down. When oil prices rise, this stock benefits because it is also a producer. If Oil goes down, Essar as refiner benefits. This will become Index stock in 18 M

Stock

IFCI

Sector

Finance

Market

India

Symbol

IFCI.NS

 CMP 08/10/28

16.90

Target ST

39

Target LT

81

Year High

121.20

Year Low

15.40

 ST Hold

9 m

LT Hold

18 m

Current PE

1.88

% Down Peak

-87%

Downside

-20%

Upside

400%

PE 2009

 

Div Yield% CMP

No Div

Buy Range

12~31

Sell  Range

39~81

 Comments

One of the cheapest finance stocks. Net Worth turned positive after many years. Swap from higher value banks such as SBI, HDFC, BOI, BOB, and UTI. Low P/E, good growth in loan books benefit.

Stock

LIC Hsg Finance

Sector

Finance

Market

India

Symbol

LICHF.NS

 CMP 08/10/28

177.75

Target ST

360

Target LT

1,020

Year High

402.90

Year Low

164

 ST Hold

9m

LT Hold

24m

Current PE

3.62

% Down Peak

-56%

Downside

-10%

Upside

300%

PE 2009

2.65

Div Yield% CMP

5.61%

Buy Range

140~180

Sell  Range

360~480

 Comments

If one can not buy this stock, he should retire from the stock market.  Current fall in prices is related to problems in Home finance in USA, and other western countries. Indian is not related at all, but the funds are getting out of any housing finance related stocks. This fear is behind the fall. This is one of the finest stocks you can own, better than even IFCI. The company has access to large funds with parent LIC whereas other institutions have to borrow at higher prices, reducing their spread. This stock is better than even HDFC. It will overtake HDFC in 3 years time… Take out your money from deposits or PPPF and invest here. Much safer than others. I would even switch by selling HDFC into this counter. Selling HDFC will get me nearly 8.5 shares of this counter. This will outperform every other sector in Housing Finance sector Swap from SBI, BOI, BOB, LT into this counter immediately

Stock

Bharat Petroleum Corp Ltd.

Sector

Oil/Refin

Market

India

Symbol

BPCL.NS

 CMP 08/10/28

272

Target ST

360

Target LT

785

Year High

556

Year Low

206

 ST Hold

9m

LT Hold

36m

Current PE

6.21

% Down Peak

-51%

Downside

-30%

Upside

185%

PE 2009

4.53

Div Yield% CMP

1.47%

Buy Range

187~257

Sell  Range

360~450

 Comments

DO NOT be guided by numbers. They are erratic, following wrong accounting practice. The lower profits mainly due to pending subsidies. GOI issued 8% Bonds but they accounted it as Investment rather than income. It is not BPCL liability. The properties held by company are highly undervalued. EPS in this authors estimate using proper accounting will be well over 120 placing this stock as absolute bargain. The time is coming for lifting of subsidies that may happen after election. On 5 years horizon and expecting normal accounting, the stock trade over 2400 in 5 to 6 years. Expect fat dividend when the company starts using proper accounting. Until such time the stock may remain under pressure. Only Long term investors may touch this stock. Please note that due to improper accounting standard, the company understates profit and may therefore have more downside risk

Stock

Hindustan Petroleum Corp Ltd

Sector

 

Market

India

Symbol

HPCL.NS

 CMP 08/10/28

180

Target ST

360

Target LT

1800

Year High

405

Year Low

164.10

 ST Hold

9m

LT Hold

36m

Current PE

5.38

% Down Peak

-56%

Downside

20%

Upside

800%

PE 2009

4.50

Div Yield% CMP

 

Buy Range

140~187

Sell  Range

360 plus

 Comments

Same as BPCL, but this company is better. I would personally like to invest into lower value shares, as large cap stocks see the exodus of funds due to crisis.

Stock

Ambuja Cements

Sector

Cement

Market

India

Symbol

Ambujacem

 CMP 08/10/28

49.50

Target ST

92

Target LT

180

Year High

161

Year Low

43

 ST Hold

9m

LT Hold

36m

Current PE

5.85

% Down Peak

-70%

Downside

-20%

Upside

265%

PE 2009

4.50

Div Yield% CMP

20%

Buy Range

41~60

Sell  Range

108~135

 Comments

This is one of the finest stock in Cement sector. It could be privatized too at above 100 price. Even the current dividend yield is over 20% on current price, that is, entire capital could be recovered in 5 years from dividend alone. Swap from ACC into this counter. After

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Written by anilselarka

November 12, 2008 at 2:16 am

4 Responses

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  1. Dear Sir,

    Could I know if any specific reason not to include Balaji telefilm above the list?

    Rajmohan babu, Pointe-Noire, Congo

    Kalidas: I must have missed it in the update. No specific reason. It is still on my BUY list.

    Rajmohan babu

    November 12, 2008 at 2:48 am

  2. Dear Sir,

    Latest PDF file is not updated, could You please update? and also i could not download the TTSL file.

    Rajmohan babu, Pointe-Noire, Congo

    Rajmohan babu

    November 18, 2008 at 2:40 am

  3. sir
    why the volume is so low in royal orchid hotels ltd.
    reason i am asking this is that all business channel exoerts and anchors raise this querry to people asking questions.any specific reason in this case of rohltd ?
    regards
    ajay
    p.s i wish to send my full portfolio seeking help as its all RED if i can g

    ajay singh

    November 21, 2008 at 12:18 am

  4. sir
    sorry, continued as it was machine malfunction

    wish to send full portfolio as all is red and if i can get some guidance
    regards
    ajay

    Kalidas Send it over. Sent you separate email to which you may respond.

    ajay singh

    November 21, 2008 at 12:22 am


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