Money Times - Weekly - 210113

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T I M E S A TIME COMMUNICATIONS PUBLICATION

VOL. XXII No. 11 Monday, 21 – 27 January 2013 Pages 18 Rs.12

Markets positive but follow-up buying support neededBy Sanjay R. Bhatia

The markets moved higher on the back of positive announcements by the UPA government on GAAR and the hike in

diesel prices. Sustained buying support was witnessed especially in Oil & Gas stocks, which had underperformed themarkets for quite a while. Incidentally, the FIIs remained net buyers in both the cash and derivatives segments. Domesticinstitutional investors, however, remained net sellers during the course of the week. The breadth of the market remainedweak, while the volumes recorded remained on the higher side, which is a negative sign for the markets. On the globafront encouraging economic data from USA and China helped improve the global market sentiment.

Technically, the prevailing technical positives helped the markets move higher. The KST, RSI and MACD are placedabove their respective averages on the daily charts. Moreover, the KST, Stochastic, RSI and MACD are all placed abovetheir respective averages on the weekly charts. The KST and MACD are still placed in the positive territory, which augurswell for the markets. The CNX Nifty is placed above its 50-day SMA, 100-day SMA and 200-day SMA. More so, theNifty’s 50-day SMA is placed above its 100-day SMA and 200-day SMA, the latter being called the ‘Golden Cross’breakout. These positive conditions would lead to further buying support.

However, a few prevailing technical negatives conditions still hold good. The Stochastic has slipped below its average on

the daily charts. Moreover, the RSI and Stochastic are also placed around the overbought zone on the weekly charts. Thenegative divergence pattern formed on the Nifty daily charts still holds good, which does not augur well for the marketsThese negative technical conditions are likely to weigh on the market sentiment leading to selling pressure and cap theupside gains.

The +DI line is placed above the -DI line on the weekly charts and placed above the 27 level indicating that buyers aregaining strength. The market sentiment has turned cautious as the Nifty nears the 6158 resistance level. The Q3 earningsseason has started on a good note but a broad based rally still eludes the markets. The result announcements willcontinue to set the pace for the markets along with the forthcoming RBI meeting, wherein the Street expects a rate cutNow, it is important that the Nifty sustains above the6000 level for further buying support to emerge. Inthe meanwhile, the markets would take cues from theforthcoming earnings season, the RBI’s monetary

policy, the global markets, crude prices and Rupee-Dollar exchange rate.

Technically, on the upside the BSE Sensex facesresistance at the 20510, 21005 and 21110 levels seekssupport at the 19811, 19603, 18309, 18290, 17667,17429 and 17250 levels. The support levels for theNifty are placed at 5945, 5885, 5816, and 5747 while itfaces resistance at 6158, 6313 and 6358 levels.

Investors should wait & watch.




Preparing for 'D' day By Fakhri H. Sabuwala

The Finance Minister (FM) seems to be working overtime in getting the country's economy back on rails as the precariousfiscal situation is giving him sleepless nights. The socio-political impact of the Delhi gang rape and the beheading ofan Indian soldier at the LOC have overshadowed his economic agenda. Politics is once again at the fore while economicsand good governance take a backseat.

His mid-week meeting with the head honchos of India Inc. was one such major initiative in this direction and affirmationof his intention moving ahead. He spelt out his strategy to tame the fiscal situation by raising revenue and simultaneouslytrimming expenditure judiciously without jeopardising growth. The industry leaders were unanimous in letting himknow that there is just no room for any new tax burden to be levied or enhancing the tax rates. Each one of them was veryvocal in impressing upon him that the country's economic programme lacks consistency of direction and commitment;else, the investment climate would have been much better. Taking a cue from last year's miscarriage of GAAR, thecaptains of industry did not want any such mishap now nor waste time later in reversing it or toning it down.

Anand Mahindra of M&M was critical of the talks totax diesel vehicles, which prompted him to put onhold all his plans of fresh investments in enhancingthe capacity. Naina Lal Kidwai of HSBC and AdiGodrej from the Godrej group and not hide theirdislike of the proposal to re-introduce estate duty inthe garb of inheritance tax or taxing securitiesthrough the wealth tax route. The industrialists wereunanimous that while revenue growth must be therebut not by raising rates of taxation or by way of newtaxes as such measures are counterproductive.Instead he should remove the barriers to growth andthereby ensure revenue growth.

The FM's plan to meet investors in Asia and Europelater this month in a drive to boost capital inflowsinto Asia's third largest economy is seen as awelcome step by the industry barons. Such a movewill boost the sentiment in the capital market as it

will address concerns about the health of the Indianeconomy and the fate of the proposed reforms. It isbelieved that the Indian economy is set to post itslowest growth in a decade for the fiscal ending 31March 2013 and its investment grade credit rating isat risk if the government fails to mend its financesand rein in the bloated fiscal deficit.

In view of this, a hike in diesel and other fuels isvery likely early next week. Some other measures toboost investors’ confidence in our economy may alsobe on the cards. Hence the current correction onDalal Street may be considered as an opportunity to

get in. The Q3FY13 results declared so far have notproduced any major upset and were in fact, muchbetter than expected. The IT sector about whichanalysts were unanimously skeptical hassurprisingly come out with splendid results and wasa major booster for the market. But this once againproves that market often traverses the road deterredby consensus! This upmove has come at the righttime and the journey further may be driven bytraditional leaders like RIL. HUL, ITC etc.

BAZAR.COM




Now is the time for traders as the market gives wide intraday moves in the leading counters. Also, the positive FII figuresand the consistently negative DII figures are balancing the volatility very well. It’s, therefore, time to get into a right mixof large caps and mid caps since the Sensex and the Nifty stocks will be on the FII's radars and some jackpots may comeyour way.

So, till the FM prepares for the D-day on 28 February 2013, let us get on with the task of judicious and prudent moneymaking.

Higher range with volatility seenBy Hitendra Vasudeo

Last week, the Sensex opened at 19689.09 and maintained the same as the low of the week. It moved up to register a highat 20126.55 and finally closed the week at 20039.03 and thereby showed a net rise of 375 points on week to week basis.

The resistance of 19811 was crossed and it closed above it on the weekly chart, which indicates that a rise towards 20444 islikely.

The 61.8% projection of the rise 15748 to 19137, from 18255 is placed at 20353. The 88.6% retracement of the fall from 21108to 15135 is placed at 20444. The next target range can, therefore be 20353-20444

Weekly support will be at 19951-19776-19596.Weekly resistance will be at 20214-20651.

RSI on the weekly chart once again tested the

overbought zone and henceforth violation of thesupport of 19596 may trigger a reversal onweekly chart. The MACD is moving higher and isabove its average and zero line. The Stochastic isin the overbought zone and can provide intra-week correction but reversal can be seen below19596 on a weekly closing basis.

BSE Mid Cap Index

BSE Mid Cap index lost ground last week as theSensex moved higher. BSE Mid Cap closed flatwith just 8 points gain whereas the Sensex showed gains of 375 points.

Further mid cap rally may continue above 7400.

BSE Small Cap Index

BSE Small Cap index was negative on week to week basis and the Sensex was up to make a new high in the current rallyTherefore, a further rise in small caps may be seen above 7700.

However, selective outperformance of mid cap and small cap stocks may be seen but collectively the index may remainan underperformer in relation to Sensex/Nifty based/large cap stocks.

Wave Tree

Wave Tree Month Year Sensex Month Year Sensex Remark Wave I ‐ ‐ ‐ ‐ Dec 1979 113 Feb 1986 656 ‐

Wave II ‐ ‐ ‐ ‐ Feb 1986 656 Mar 1998 390 ‐

Wave III ‐ ‐ ‐ ‐ Mar 1998 390 Jan 2008 21206 ‐

Wave IV

‐ ‐ ‐ ‐Jan

2008

21206

Feb

2012

18523

In

progress

Wave IV Wave A ‐ ‐ ‐ Jan 2008 21206 Mar 2009 8047 ‐

Wave IV Wave B ‐ ‐ ‐ Mar 2009 8047 Nov 2010 21108 ‐

Wave IV Wave C A ‐ Nov 2010 21108 Dec 2011 15135 ‐

Wave IV Wave C B a ‐ Dec 2011 15135 Feb 2012 18523 ‐

Wave IV Wave C B b ‐ Feb 2012 18523 Aug 2012 15748 ‐

Wave IV Wave C B c ‐ Aug 2012 15748 Jan 2013 20126 In progress

Conclusion

TRADING ON TECHNICALS




Rise to continue with intra-week volatility

Strategy for the week

Hold long positions with a stop loss of 19500. Corrective dips to weekly support of 19951-19776 can be used for buyingwith a stop loss of 19500. Profit booking at 20444 or above could be undertaken.

WEEKLY UP TREND STOCKS Let the price move below Center Point or Level 2 and when it move back above Center Point or Level 2 then buy

with whatever low registered below Center Point or Level 2 as the stop loss. After buying if the price moves to

Level 3 or above then look to book profits as the opportunity arises. If the close is below Weekly Reversal Value

then the trend will change from Up Trend to Down Trend. Check on Friday after 3.pm to confirm weekly reversalof the Up Trend.

Scrips LastClose

StopLoss

Level2

Center Point

Level3

Level4

RelativeStrength

WeeklyReversal

Value

UpTrendDate

BuyPrice

BuyPrice

BookProfit

BookProfit

PERSISTENT SYS. 574.75 535.0 546.5 563.3 591.5 636.5 75.3 540.6 30-11-12

KIRLOSKAR OIL ENG. 210.50 202.0 204.3 208.2 214.3 224.3 73.3 207.4 04-01-13

YES BANK 518.30 495.3 497.4 516.2 537.1 576.8 72.9 492.5 30-11-12

BANK OF BARODA 885.00 863.0 867.0 881.0 899.0 931.0 70.3 875.0 30-11-12

NHPC 26.10 25.2 25.5 25.8 26.5 27.5 70.2 25.6 21-09-12

WEEKLY DOWN TREND STOCKS Let the price move above Center Point or Level 3 and when it move back below Center Point or Level 3 then

sell with what ever high registered above Center Point or Level 3 as the stop loss. After selling if the prices

moves to Level 2 or below then look to cover short positions as the opportunity arises. If the close is above

Weekly Reversal Value then the trend will change from Down Trend to Up Trend. Check on Friday after 3.pm

to confirm weekly reversal of the Down Trend.

Scrips LastClose

Level1

Level2

Center Point

Level3

StopLoss

RelativeStrength

WeeklyReversal

Value

DownTrendDate

Cover Short

Cover Short

SellPrice

SellPrice

E.I.D. PARRY (I) 182.90 160.8 176.8 186.8 192.9 196.7 26.60 198.22 07-12-12

EXIDE INDUSTRIES 125.95 95.3 118.1 133.1 140.9 148.0 32.97 137.49 18-01-13

OPTO CIRCUITS 104.95 96.0 102.5 106.6 109.0 110.7 34.60 107.74 18-01-13

MMTC 611.10 568.8 599.8 619.4 630.7 639.0 34.87 627.38 09-11-12

BHARAT FORGE 249.50 235.8 245.7 251.9 255.6 258.0 35.95 254.29 11-01-13

BUY LIST

ScripLast

CloseBuyPrice

BuyPrice

BuyPrice

StopLoss

Target1

Target2

HCL TECHNOLOGIES 704.00 682.42 670.50 658.58 620.00 783.4 884.4

INDIABULLS FIN. SERV 328.70 314.13 306.25 298.37 272.85 380.9 447.7

EXIT LIST

ScripLast

CloseSell Price

SellPrice

SellPrice

StopLoss

Target1

Target2

AMTEK INDIA 103.70 106.45 109.38 112.30 121.75 81.7 57.0

PUNTER'S PICKS

Note: Positional trade and exit at stop loss or target whichever is earlier. Not an intra-day trade. A delivery

based trade for a possible time frame of 1-7 trading days. Exit at first target or above.

ScripsBSECode

LastClose

Buy PriceBuy On

RiseStop Loss Target 1 Target 2

RiskReward

CAMSON BIO TECH. 590076 71.05 69.60 71.90 66.10 75.5 81.3 0.90

URJ A GLOBAL 526987 53.95 53.10 54.45 51.05 56.6 60.0 0.90

KADVANI SECURIT. 530479 26.00 25.25 26.50 23.85 28.1 30.8 0.99




ATUL 361.50 384.77 394.55 404.33 436.00 301.9 219.0

BAJ AJ FINSE 840.70 871.40 884.50 897.60 940.00 760.4 649.4

HDFC BANK 663.00 668.37 672.50 676.63 690.00 633.4 598.4

HINDUSTAN UNILEV. 490.05 506.09 511.67 517.26 535.35 458.7 411.4

KAJ ARIA CERAMICS 224.75 230.98 233.07 235.17 241.95 213.2 195.5

LUPIN 588.00 589.99 595.82 601.66 620.55 540.5 491.1

NESTLE INDIA 4796.00 4860.78 4895.00 4929.22 5040.00 4570.8 4280.8

TRENT 1193.00 1244.88 1264.00 1283.12 1345.00 1082.9 920.9

UNITED BREWERIES 684.00 778.63 812.50 846.37 956.00 491.6 204.6

* Gujarat Ambuja Exports is all set to post an EPS of Rs.9.5 in FY13 and Rs.11.5-12 in FY14. The share is poised to touchRs.40 mark.

* The shares of Mannapuram Finance have been acquired by some funds and HNIs. With a likely EPS of Rs.8, the shareis expected to touch Rs.55 mark.

* The shares of ASM Technologies are an excellent buy as this small cap IT company is likely to register an EPS ofRs.28-30 in FY13 and Rs.32 in FY14. The share can cross the Rs.120 mark.

* Yuken India has put in about Rs.25 crore (about 70% of its fixed block) in backward integration. The share can bebought for decent gain in the long-term.

* Visaka Industries , manufacturer of cement boards and yarns, has reported an excellent H1FY13 based on which an

EPS of Rs.35+ can be anticipated. The share is expected to touch Rs.175 mark.* Sources close to the management strongly recommend the shares of Uflex Ltd. as this leader in flexible packaging islikely to post an EPS of Rs.35 in FY13 and Rs.47 in FY14. The share is all set to touch Rs.150 mark.

* Diesel price hike may come in small doses but it shall do a lot of good to the bottom lines of oil marketing companies.

* Fuel scrips free of the subsidy burden may become multi-baggers. Analysts have started focusing on their hugeturnover supported by meagre equity capital.

* RCom , Bharti Airtel and Idea are in a consolidation mode and likely to attract investor interest from hereon.

* High price of diesel and petrol will propel the sale of CNG kits and give wings to stocks of kit manufacturers, CNGpackers and cylinder makers. Petronet LNG , Everest Kanto , Nitin Fire Extinguishers , and Gujarat State Petronet aresafe and sound bets.

HSIL Ltd. (Code: 500187) Rs.129HSIL Ltd. is the largest Indian sanitaryware manufacturer. It is engaged in the manufacture and distribution ofsanitaryware and glass containers primarily in India. The company operates in two divisions, namely Building Productsdivision and Container Glass. The Building Products provides a range of building products comprising sanitaryware suchas water closets, wash basins, pedestals, squatting pans, urinals and bidets; accessories including PVC cisterns andfittings/seat covers; faucets consisting of showers, kitchen faucets, and bathroom faucets. The Container Glass divisionproduces various glass containers for beverages, beer, food, pharmaceuticals, liquor, and chemical industries.

The two business segments namely Building Material (Sanitaryware & Faucetware) and Container Glass contribute 49%and 51%, respectively to its consolidated revenue.

Building material – (Sanitaryware) HSIL is the largest manufacturer of sanitaryware products in India with total capacity

of 35,600 TPA (35,00,000 prices) and the second-largest manufacturer of container glass with total capacity of 1,600 TPD(250 crore pieces p.a.). The company is headquartered in Gurgaon with four manufacturing units. One is located inBahadurgarh, Haryana, while the other three are located in Andhra Pradesh. The company also has six regional officesand 18 depots.

HSIL has a diverse portfolio of products for different customers with various designs and price ranges.

Its flagship brands are Hindware, Hindware Art, Hindware Italian Collection, Benelave, Evok, Raasi and AGI.

Strong recall of the flagship brand Hindware strengthens its leadership position with 40% share in the 60% organizedsanitaryware market and the advantageous location of its container glass plants has helped achieve a 70- 75% marketshare in South India.

TOWER TALK

BEST BET By Amit Kumar Gupta




In Building products, 93% of demand for sanitaryware products represents new demand while replacement demandrepresents 7%. Of this, 74% is from the retail segment while 26% is institutional. Region wise, southern India dominatescontributing 38% of sales in this segment.

Container Glass – Geographically the South dominates with 52% followed by the West at 25%.

Strong distribution network: HSIL has the strongest distribution network of about 1,550 dealers and 14,000 retailers inthe sanitaryware market spread across India. It continues with its strategy of strengthening the distribution network intier-II and III towns having population up to 75000. To meet the growing demand, it continues to invest in manufacturingfacilities and plans to add 215 outlets in FY13 and FY14, which would grow the distribution by 8-10% every year.

Expansion: Both the Sanitaryware and the Faucetware have good expansion plans lined up.Outlook & Valuation: The management expects the situation to improve going forward and expects a top-line growthof 24-25% in both the segments. Although cost pressures are still visible, the capacity expansion on the back of increasingdemand and diversification in Tier III cities will help the company achieve its targets. Going forward, the company has nofurther capex plans for now as its expansion plans are already in place. HSIL is also adding 3/4 new product lines to beimported for trading purposes. On the valuations front, P/E multiple and EV/EBITDA ratio of the company is tradingclose to its 5-Year average. Considering the outlook of the company, the stock trades at 7.7x FY13E and 5.4x FY14Eearnings.

Technical Outlook: HSIL isshowing signs of forming a bottomout from a long-term bearishtrendline after breaking out of an

Ascending Triangle with 200-DMAclose on Monday, 7 January 2013 withhuge volumes of 22,49,901 on the NSE– almost the highest volume in twoyears. Typically, a continuationpattern in bottom out formation witha breakout in the long-termdowntrend line by AscendingTriangles is often seen as a reversal aswell.

On Weekly Charts, HSIL has made atriple bottom around Rs.104-106 and

started to rise in a channel makinghigher tops and higher bottoms and atarget of Rs.158 & Rs.165 appears possible in the stock. On weekly and daily charts, it has taken strong double bottomsupport around Rs.122. The stock can be bought at the CMP of Rs.130 for a short-term target of Rs.165 and long-termtarget of Rs.180.

CMC Ltd.: An attractive buyBy Devdas Mogili

CMC Ltd., formerly Computer Maintenance Corporation, was promoted by the Government of India (GoI) and is a 38-year old Hyderabad based company established in 1975. It was converted into a public limited company in 1977

Subsequently, the GoI divested its stake in the company in favour of the Tata Group.CMC is a leading system engineering and integration company and a subsidiary of Tata Consultancy Services (TCS). Ioperates out of 18 offices and 180 service locations in the country. Mr. S. Ramdorai is the chairman while Mr. R. Ramananis the managing director and CEO of the company.

It is involved in the design, development and implementation of software technologies and applications and provides abroad range IT solution to a diverse clientele in India and abroad. It also provides professional services for export andprocurement, installation, commissioning, warranty & maintenance of imported and indigenous computer systems,education & training and networking services.

CMC's business is broadly divided into four strategic business units (SBUs) viz: customer services, system integration, ITenabled services and education & training. Its customers include some of the biggest organizations like the Reserve Bank

STOCK ANALYSIS




of India, Indian Railways, Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd., Oil & Natural GasCorporation Ltd., United Western Bank, Bank of India and Bank of Baroda.

When IBM wound up its operations in India in 1978, CMC took over the maintenance of IBM installations at over 800locations around India. In 1981, it commenced work on Project Interact, an UN funded project that paved its way from ahardware maintenance company to a complete end-to-end IT solutions provider. This project involved designdevelopment and systems engineering of real-time, computer-based systems dedicated to applications in the areas ofpower distribution, railway freight operations management, and meteorology.

In 1982, it set up a R&D facility to develop competence in frontier technologies. In 1984, it diversified into turnkeyprojects, IT education and software development. To reflect the diversified nature of its business activities, it wasrenamed CMC Ltd. in 1984.

It tied up with Xilinx to establish the latter’s first development centre in Hyderabad called Xilinx-CMC IndiaDevelopment Center. In 2006-07, it set up a Software Technology Park (STP) in Kolkata, which is primarily engaged inexecuting new international contracts. In 2008, it inaugurated phase I of its SEZ project, Synergy Park, at its campus inGachibowli in Hyderabad.

CMC is keen to emerge as a leading Systems Engineering and Integration Company and therefore focused on the deliveryof services around its software assets, turnkey project implementation, ERP implementations and development of Stategovernment portals to bring services to the doorstep of the citizen in 2011-12. It also refined its product developmentcapability including indigenously developed solutions involving complex embedded hardware designs, software andfirmware development.

CMC has two wholly-owned subsidiaries. CMC Americas Inc. and CMC eBiz, Inc. in USA.

Intelligent Transport System (ITS): CMC has designed and implemented Intelligent Transport System (ITS) forKarnataka Roadways (KSRTC) in Mysore and has won the Computer Society of India (CSI) award for excellence in IT -2012 in the category of Transport - air, rail & road - products, designs & solutions category.

The overall objective of this project is to make public transportation in the cities more efficient, comfortable and customerfriendly so that citizens are increasingly weaned away from using personal vehicles leading to improved traffic efficiencyreduced traffic congestion and fuel consumption, improved environmental quality & energy efficiency and improvedeconomic productivity.

Performance: For FY12, the company posted consolidated total revenue of Rs.1488.34 crore with a net profit of Rs.151.81crore netting a basic/diluted EPS of Rs.50.10.

Financial Highlights: (Consolidated) (Rs. in lakh)

Particulars Q3FY13 Q3FY12 9MFY13 9MFY12 FY12

Total Income 48297.28 39817.32 140389.87 106844.68 148834.24

Total Exp 38763.72 38763.72 118526.32 91014.63 126638.79Other Inc 113.59 392.97 910.45 1144.30 1745.98

Fin Costs 0.05 0.10 2.85 0.91 1.54Tax Expense 2274.03 1708.53 5881.91 5185.20 6858.65

Net Profit 4838.84 4137.37 16889.24 10884.24 15181.24Equity (FV: Rs.10) 3030.00 3030.00 3030.00 3030.00 3030.00Reserves - - - - 74188.95

EPS (Rs.) 16.30 13.65 55.74 35.93 50.10

Latest Results: The company posted highly encouraging results for Q3FY13 ending 31 December 2012. It postedconsolidated revenue of Rs.482.97 crore with net profit of Rs.48.38 crore recording a basic/diluted EPS of Rs.16.30 for thequarter and Rs.55.74 for the 9 months period ended 31 December 2012.

Financials: CMC has an equity base of Rs.30.30 crore with a share book value of Rs.229.84. It is a zero debt company withRoCE of 27.84% and RoNW of 22.16%.

Share Profile: The company’s share with a face value of Rs.10 is listed on the NSE and the BSE under the A group. Its

share price hit a 52-week high/low of Rs.1446.90/Rs.685. At its current market price of Rs.1325, CMC has a marketcapitalization of Rs.4022.48 crore.

Dividends: The company has been paying dividends as follows:FY12 - 125%, FY11 - 200%, FY10 - 200%, FY09 - 150%FY08 - 110%, FY07 - 80%, FY06 - 50%, FY05 - 45%, FY04 - 55%, FY03 - 40%, FY02 - 40%.

Shareholding Pattern: The promoter holding in the company is 51.12% while the balance 48.88% is held by non-corporate promoters, institutions, mutual funds and the investing public. Among mutual funds, HDFC, DSP BR, CanaraRobeco, Axis, Tata, Mirae Asset, UTI, Sahara, Goldman Sachs, and L&T Tax Advantage Fund have added the company’sshare to their various schemes.




Prospects: 2011-12 was a landmark year for the IT industry in India as the aggregate revenue of the industry is estimatedto have crossed US$ 100 billion. Further, investments in IT are increasingly accepted as an important element of growthstrategy and a fundamental enabler of cost reduction and cost optimization.

A NASSCOM study forecasts export revenue growth of 11-14% and domestic revenue growth of 13-16% in FY12-13. Thestudy expects the growth to be driven by new business models, organization efficiencies, services around disruptivetechnologies such as cloud, mobility, analytics, social media, flexible product portfolios and virtual solutions. Theprevailing global megatrends present new opportunities and risks for the industry, which will shape the technologylandscape. CMC is gearing itself to derive benefits of the emerging trends and opportunities.

In addition, the convergence of mobility and the internet is opening several opportunities for new applications for mobileaccess to the web system particularly in the area of business intelligence and reporting. Existing applications also need tobe enhanced to incorporate these technologies. CMC with core competence in mobile technology as well as embeddedsystems is expected to tap these opportunities.

Finally, the Indian IT industry continues to be the biggest recruiter in India and is estimated to have added 230,000employees in 2011-12. Most IT companies expect to continue with their hiring plans in 2012-13 as well, including freshcampus recruitment and recruitment of non-engineering graduates for roles that were till now reserved only forengineering graduates. This opens a large opportunity for custom designed induction training for IT companies. Therecruitment for increased job opportunities in IT will also boost the demand for job-oriented IT training courses. CMC’sEducation & Training SBU already has a significant presence in these segments and is likely to encash on theseopportunities to fuel its growth.

Conclusion: CMC is a Tata Group company and a subsidiary of Tata Consultancy Services. It has an excellent track

record of performance and payment of dividends regularly.At its current market price of Rs.1325, the CMC share price discounts around 23 times its 9 monthly EPS of Rs.55.74. TheIT industry is likely to hog the limelight in the days to come as can be seen from the results of IT bellwether stocks TCSand Infosys. Considering its pedigree, block buster performance, robust earnings and bright prospects going ahead makeCMC an attractive investment bet. Hence, the share of CMC can be accumulated on declines for good profits in themedium-to-long-term.

Sensex conquers 20KBy Devendra A. Singh

The BSE Sensex (30-share index) settled at 20039.04 with an advance of 375.40 points (+1.91%) whereas the CNX Nifty

closed at 6064.40 points having climbed 113.10 points (+1.90%) for the week ended Friday, 18 January 2013. The BSESmall-Cap index declined 1.13% while the BSE Mid-Cap index climbed 0.12%. Both these indices underperformed thSensex.

Key bourses geared up last week on sound corporate results which boosted the market sentiment and buying by investorhelped the Sensex rise above the psychological mark of 20K for the first time after January 2011. The Sensex gained in 4out of the 5 trading sessions during the week.

India’s headline inflation based on monthly WPI fell to 7.18% for December 2012 from 7.24% in November 2012However, it was still higher than the RBI Governor’s comfort level of 5-6%. On the other hand, industrial productiondeclined 0.1% in November 2012 as against a growth of 8.3% in October 2012.

The retail inflation or Consumer Price Index (CPI) rose for the third consecutive month to cross the double-digit mark a10.56% for December 2012 driven by higher prices of edible oil, fruits, vegetables, pulses and cereal. It was at 9.90% and9.75% for November 2012 and October 2012 respectively. The CPI for rural population climbed to 10.74% for December

2012 from 9.97% in November.RBI Governor, D. Subbarao, specified ahead of his credit policy that, “the inflation was still high and there was no roomfor fiscal or monetary stimulus to boost growth in a slowing economy. When growth is slowing down, you can stimulatethe economy either by monetary easing or by fiscal stimulus but both monetary and fiscal side have no room for stimulusSo that is the big concern.”

Last week, Credit Suisse cut its estimates for India’s economic growth stating that “India’s GDP will grow at 5.9% rathethan 6.0% in FY13 and 6.9% instead of 7.2% in FY14.”

MARKET REVIEW




Assocham stated, “Fiscal situation may worsen due to rising inflation, decline in economic growth and global slowdownWith little room available for taking counter cyclical fiscal measures, India’s faltering growth coupled with unresponsiveinflation can push the country’s economy to a precarious situation which could be close to the 1991 economic crisis.

On the global front, U.S. Federal Reserve Chairman Ben Bernanke stated, “Emerging markets like India and China arewitnessing a remarkable transformation, despite a slowdown in economic growth, lifting millions of people out ofpoverty. In the emerging markets, you have a variety of different stories but I think the fundamentals of the emergingmarkets are pretty good and even if there’s some moderation of growth we will see a rather remarkable transformation inChina and India, which has been the biggest anti-poverty programme in history.”

On the eastern scenario, Fitch warned about China’s investment-driven growth model, which faces serious constraintsdue to heavy debt financing by local governments. Rapidly expanding credit, especially debt financing by locagovernments, is one of the prime reasons behind this warning.”

Fitch also said, “Asia is likely to remain the world’s fastest growing region with growth of about 6.4% for 2013 picking upfrom 6% in 2012. It also expects that the macro-economic backdrop will be supportive of sovereign credit in Asia thisyear.”

Key indices edged higher on Monday, 14December 2012, as TCS registeredconsolidated gains on its quarterly results.The Sensex gained 242.77 points (+1.23%) toclose at 19906.41. The Nifty edged up 72.75points (+1.22%) to close at 6024.05.

On Tuesday, 15 January 2013, the Sensexrallied to bell 20K after two years as FMCGsector stocks, especially ITC, marked stronggains with their quarterly results. The indexclimbed 80.41 points (+0.40%) to settle justbelow 20K at 19986.82. The Nifty was up32.55 points (+0.54%) to close at 6056.60.

Key indices ended lower on Wednesday, 16 January 2013, on global worriers. The Sensexfell 169.19 points (-0.85%) to close at 19817.63.The Nifty lost 54.75 points (-0.90%) to close at6001.85.

Key indices closed higher on Thursday, 17 January 2013, on rupee appreciation. TheSensex surged 146.40 points (+0.74%) to closeat 19964.03. The Nifty was up 37.35 points(+0.62%) to close at 6039.20.

Market performance ended on a cheerful noteas the Sensex conquered the 20K mark onFriday, 18 January 2013. It settled above 20Kafter January 2011 rising with 75.01 points (+0.38%) to mark a close at 20039.04. The Nifty was up 25.20 points (+0.42%) toclose at 6064.40.

On the corporate front, Indian companies have started announcing Q3FY13 results in January 2013. Market participantswill closely watch the management commentary that accompanies the results, which could cause revision in the future

earnings forecast of the company in FY13 or FY14.The RBI is scheduled for quarterly monetary policy review on 29 January 2013 and is likely to keep both the CRR andrepo rate unchanged even at this time due to rising food inflation.

Expect volatility with upward biasBy G. S. RoongtaThere is no free lunch in the stock market contrary to the general perception of a bull market. People forget that there aresevere jerks & jolts like an aeroplane before it ascends to a new height as the indices demonstrated last week.

GURU SPEAK - By G.S. Roongta

Review of ‘Fantastic 15 for 2013’

How have the ‘Fantastic 15 for 2013’ featured in the issue of 6 January2013 performed in the second week since?

The most significant update came from Infosys results, which changedthe sentiment towards the IT sector. We had recommended Infosys

around Rs.2300 and on Monday, 14 January 2013, it touched Rs.2836yielding almost 23% returns in two weeks. Readers can book partialprofit or hold on for more upside of Rs.2900-3000 in the short-term.

HCL Technologies was the second IT stock recommend at Rs.620 and itmade a high of Rs.721 in two weeks. The company has presented robustresults. Keep holding on to it for good returns in the long-term. Short-term traders may also book partial profits.

Bank of Baroda rose from Rs.860 to Rs.895 yielding almost 4% returns intwo weeks.

Axis Bank recommended at Rs.1350 touched Rs.1430 yielding almost 6%returns.

Indiabulls Finance was identified among other stocks for long-termpositional play. It rose from Rs.310 to Rs.338 yielding almost 9% returns.

We advise readers to accumulate the stocks recommended under‘Fantastic 15 for 2013’ at lower price in a correction of the market orthe stock for better returns.

Investor or traders always remember not taking a risk is the biggestrisk so keep on investing for the future goal or objective.

- Amit Kumar Gupta




Last week on Monday, 14 January 2013, the BSE Sensex gained 242.77 points to close at 19906.41 while the CNX Niftyclosed at 6024.05.

On Tuesday, 15 January 2013, the stock market touched a new high in intra-day trades with theSensex crossing the 20K mark at 20036 and the Nifty at 6068 thus giving an impression that the bulltrend has taken root. On closing, the Sensex gained 80.41 points at 19986.82 while the Nifty gained32.55 points at 6056.But on Wednesday, 16 January 2013, the market suddenly fell and the Sensex lost 169 points to closeat 19817.63 while the Nifty lost 54.75 points at 6001.85 thus squaring up most of the gains of theprevious two days and leaving market participants wondering what exactly happened!

The bull party was interrupted by a two-line statement from the RBI Governor who said “Inflation isstill high, no room for monetary stimulus”. This sent a shiver across the stock market, which was

expecting a 25-50 basis point cut in interest rates in the RBI’s Monetary Policy that is scheduled to be announced on 29 January 2013.Such market sensitive news should not have been expressed before the meeting as it gives the impression that theauthorities have some vested interests. Earlier, last month, he had opined that there is room to ease interest rates from

January 2013 onwards as inflation had started falling and stabilizing towards the lower side. But he has changed his mindnow and this sudden announcement shocked the corporate and market players leading to the plunge.How can one expect inflation to fall below his comfort level when the prices of crude oil, manufactured products andagricultural products are galloping due to acute shortage of raw materials, mining products, electricity & power followedby costly labour costs? The RBI Governor has overlooked these realities, which are a world phenomenon and beyond hiscontrol.

The market is extra sensitive at the moment because of the Q3 corporate results, budget discussions between the financeminister and captains of industry followed by global cues that the slightest negative news is enough to puncture themarket as happened on Wednesday.In the previous week ended Friday, 11 January 2013, the market exhibited an uncertain trend and closed lower with theSensex losing 120 points on a week-to-week basis despite the market witnessing a breakout.Despite the weak trend of the previous week, readers may observe that I had made a strong forecast stating that themarket will have no choice but to go up in the last issue as follows: “According to me, the market will have to move up inthe next 15 days as there is no choice because the punters have already booked profit at higher levels and will now againstart buying at lower levels in days to come…”Readers of my column know very well that I never use uncertain words like ‘may’ or ‘might be’ or ‘else’ and confidentlyuse definite words like ‘will’ or ‘would be’ based on my strong conviction.Since the recovered over 200% by gaining 323 points in the first two days last week against the losses of the previous

week as a whole proves my strong conviction about the market as cent per cent true.Besides this, I had also forecast that the Sensex would cross 20K and Nifty 6000 before the Union Budget, which has alsocome true. In contrast, fancy predictions made by other analysts about the Nifty crossing 7500 and Sensex hitting 24K in2013, which are miles away.In the week under review, the Nifty has consistently closed above 6000 on each trading day. The Nifty premium, whichwas quoting almost 60 points during last month’s F&O expiry, has gradually come down to Rs.10 by now, which showsthat the bull position has mostly been liquidated in Nifty Futures for the January 2013 expiry.The Dow Jones has gained all its past losses and is trading over 13400 over and above its 52-week high. The FTSE, CACand DAX are also ruling above their recent highs. Asian markets, too, are up. In view of this, there is no cause of worryfor me.Readers may also recall that about six months ago I had predicted that if the stock markets have to go up, the price of gold& silver has to come down as the relationship of the stock market vs. gold-silver is inverse. Over the last 2-3 years, bothgold & silver have made a considerable headway whereas stock markets all over the worlds remained sluggish because

the world liquidity went for buying gold & silver to secure or hedge against the galloping fall in industrial productiondue to rising slowdown on the economic front.Those who still like to hoard gold & silver do so for unproductive use as a safe haven but not at all for effective returns.FDR is the second choice for such unproductive gains fetching low returns. The stock market is of course a king among alsuch investments and can provide hefty gains beyond anybody’s expectations in its bull run. The years 2013-14 to 2015-16will be the years for when the stock markets will leave behind gold & silver, FDRs, bonds, time deposits etc.As mentioned in the last issue, maximum gains lie in small cap and mid cap stocks, which have good fundamentalsinstead of blue chip stocks or MNC stocks. The P/E ratio in such stocks varies between 4-5 times while price:book valuerules around twice the market price. One, however, needs strong conviction and deep rooted study to identify such good

G. S. Roongta




fundamentally strong stocks to make good money in the ongoing bull run, which we provide by our InvestmentAdvisory Service (IAS).On Thursday, 17 January 2013, the market again flared up to regain most of Wednesday’s loss. The Sensex gained 146.40points at 19964.03 while the Nifty closed at 6039, which establishes that nobody cares about the RBI Governor’spessimistic and rigid attitude if the country’s economy has to grow fast.On Friday, 18 January 2013, the market made a gap-up opening at Sensex 20038.67 and rose further to touch an intra-dayhigh at 20126.55 before it finally closed at Sensex 20039 with a gain of 75 points while the Nifty closed at 6064.40, up by 25points.Despite the RBI’s hawkish Monetary Policy, the stock market has gained nearly 20-25% in the last 3-4 months without any

easing in interest rates.The government is now moving fast in line with expectations of resolving several issues that are hampering the country’sgrowth. The recent decision to increase diesel price announced on Thursday, 17 January 2013, speaks about the impact osuch bold decisions.The FIIs’ robust buying each day is a proof enough that the Indian stock market is very attractive even at current markeprices.So, investors should go ahead and build a healthy portfolio whenever they see any such jolts & jerks in the market trend.

TV18 Broadcast (Code: 532800) (CMP: Rs.35.45, TGT: Rs.60) TV18 Broadcast (TV 18) is a leading TV network with strong brands in the key genres. With its balance-sheet issuesaddressed and major network expansion behind, we expect investor focus to shift to its operational strengths andopportunities from cable TV digitisation. We initiate coverage on TV18 with a Buy and FY13E target of Rs.42.Strong bouquet of channels: CNBC TV18 is a dominant player in thebusiness news segment (with a 70% ad-revenue market share), andone of the top two in English news (CNNIBN) and Hindi GEC(Colors) market. In all, it operates 12 channels and is set to acquireequity stake in 12 channels of the ETV network.The management focus ahead would be on consolidating operationsand raising profitability.Set to unlock potential: We expect TV18’s EBITDA margin to expand 1250 bps over FY13-15, as digitisation of cable TVaids in lower carriage fee payouts and growth in subscription income. Recovery in advertising growth from FY14 wouldhelp margins as well.Investor focus to shift: After the recent rights issue, we expect TV18’s net debt to be Rs.380 crore (post-ETV investments)

which implies a comfortable financial position – net debt:EV of 6.5% (vs. 49% pre-issue). With limited expansion activityexpected ahead, the balance sheet would stay healthy. This would shift investor focus to the company’s operationastrengths and opportunities in the space.Valuations: TV18 trades at 18.7x FY14e proforma EBITDA (incl. pro-rata share of ETV), which is at premium to ZeeEntertainment (17.2x) and Sun TV (12.4x). We believe this premium is justified by TV18’s solid growth profile (60%EBITDA CAGR over FY13-15).Our target price is based on 15x FY15e EBITDA.Key Risks: Delay in cable TV digitisation, intensifying competition.Technical View: TV 18 is all set to make a new high with the uptrend that started from June 2012 and a new 52 week highin November 2012. The stock is trading above 200 DMA, 100 DMA and even the short-term moving average. So traderscan buy at CMP for a short-term target of Rs.40 and long-term target of Rs.60.

********

Berger Paints (Code: 509480) (CMP: Rs.160.20, TGT: Rs.180)Berger Paints stock broke out of a 'Cup & Handle' formation, which is a bullish continuation pattern formed over the las3 months. The break-out comes with very good volumes formed with a fairly bullish candle closing near its high end ofthe range. The stock also made an all time high recently and can be expected to do well in coming months.Berger Paints is the second largest paints company in India with 18% market share in the decorative paints business. Thecompany exclusively owns the Berger brand in India, Nepal and Sri Lanka.The Paint industry volumes have a 1.5-1.6x correlation with GDP. Over the longer term, assuming an annual GDP growthof 7%, Berger expects industry volumes to grow by 11-12% per annum and its own volumes by 100-150bps ahead of theindustry average with a focus on the faster growing premium segment and its expanding distribution.

STOCK WATCH - By Amit Kumar Gupta

ReviewUnited Phosphorus, recommended lastweek, has started its upward journey fromRs.130 to Rs.142. You may see new highs incoming days.




Increased focus on the decorative paints segment (currently 80% of the business) and within that on premium emulsionswill not only drive margin improvement but also improve the working capital cycle and cash flows.Berger is setting up a 320,000 TPA water-based paints plant in Hindpur, which will more than double its existing capacityof 250,000 TPA. The first phase of this expansion will be completed by Q1FY14 and add 80,000 TPA to its capacity.The paint industry is one of the most attractive consumption spaces in India given its increasing growth multiplier toGDP, limited number of pan-India players and sustained price discipline. Berger stands to be a key beneficiary of thisopportunity over the next few years given its focus on the premium segment, a net cash balance-sheet position and apromoter focused on the core business.At the CMP of Rs.160, the stock trades at 26x FY13E and 22x FY14E Bloomberg consensus earnings, which is at a 28%

discount to market leader Asian Paints valuations.********

Bajaj Corp (Code: 533229) (CMP: Rs.252.40, TGT: Rs.295)Bajaj Corp Ltd. (BCL) is a leading FMCG Company with major brands in the hair care category. Its principal product isAlmond Drops, which is in the light hair oil segment. It also produces other hair oils and oral care products.BCL continued to post a robust volume growth of 23.4% in its flagship brand ADHO (Almond Drops Hair Oil) primarilydriven by rural penetration (increased distribution reach). We have incorporated FY15 projected financials from thisquarter and expect revenues to grow at a CAGR of 24.7% to Rs.916.9 crore over FY13-15 on the back of steady volumegrowth (20% avg.) and sustained leadership position in its flagship brand. At a CMP of Rs.252, Bajaj Corp is trading at19.6x and 17.7x its estimated earnings for FY14 and FY15. Prospective inorganic growth, strong cash availability (Rs.477crore) and potential new product are its an added attractions.It reported healthy revenue growth of 32%, led by volume growth of 24% and price hikes. It has expanded value market

share by 60bps to 54.6% and volume market share 100bps to 51.9%, yoy.Its EBITDA margin expanded 360bps due to lower raw material costs. LLP prices were down from Rs.82.86/Kg toRs.79.1/Kg. Glass prices were up 8% while prices of most other raw materials remained stable. Effective income tax rate isup 60bps to 19.8% and net profit is up 46%, yoy.BCL normally hikes prices by 7-8% every April. But considering lower raw material prices and likely fall in inflation, theprice hike this April will be limited. The price hike, if any, will lead to margin expansion in FY14 and help step up brandbuilding activities.Apart from Keo Karpin, two new players have entered the almond hair oil market. Although Dabur has gained a marketshare of 5% and HUL has also introduced Rose and Almond hair oil under the brand name of Dove Elixir. BCL wilcontinue to gain market share on the back of its strong distribution, availability of products at various price points andleadership.We value the stock at target price of Rs.295 at P/E of 24x on FY14E earnings. The company has also declared a interim

dividend of Rs.6.5 per share.Technical View: Bajaj Corp at Rs.254, looks very good for a target price of Rs.295 as the stock made an all time high ofRs.261.8 and closed highest on a daily and weekly basis. Stock is moving in a weekly upward channel with a goodsupport around Rs.235.The stock trades above all major daily moving average 200-DMA (Rs.162), 100-DMA (Rs.198) and 50-DMA (Rs.217)Investors are advised to accumulate the stock for 18% upside return in 3-6 months.

* Aegis Logistics (Code: 50003) (Rs.179.20) , a leader in Oil, Gas and Chemical Logistics., provides logistic solutions forthe Oil, Gas, Chemicals and Petrochemical industries. With its storage tanks at strategic locations, it is a key player in thetotal supply chain management (SCM) services of major customers including Oil PSUs.

It has three operating port-terminals, two in Mumbai and one in Kochi, as well as two state-of-the-art gas-terminals at

Mumbai & Pipavav through which it handles over 2 million MT of Petroleum products and about 400,000 MT of LPG andPropane gas annually.

Key growth drivers:

Its 60,000 KL Liquid-terminal facility at Haldia to be operational in Q1FY14.

Upcoming expansion - 120,000 KL Liquid-terminal facility & 2,700 MT Gas-terminal facility at Pipavav.

Strengthening the distribution network of Commercial gas cylinders.

Expanding the Auto Gas Station network in Tier I & II cities.

FIFTY FIFTY - By Kukku




Recent reforms to boost growth: The cap on supply of Nine domestic LPG Cylinders will curb the diversion ofSubsidized Gas Cylinders for Industrial / Commercial / Auto Gas usage. This opens up a level playing field for thisparallel marketer.

Direct Cash Transfer of Subsidies through UID to eliminate the differential pricing in Domestic Gas Cylinder segmenwill open up a level playing field for this parallel marketer.

For H1FY13, the company reported consolidated sales of Rs.2366 crore while net profit jumped to Rs.41.8 crore fromRs.22.88 crore in H1FY12 yielding an attractive half-yearly EPS of Rs.12.51 on its equity of Rs.33.4 crore.

The book value of the share is around Rs.95 and promoter holding is 68% based on H1FY13 consolidated results. Full yea

EPS is likely to be around Rs.25. Investors can accumulate this stock for decent long-term growth.* Kesar Terminals & Infrastructure (Code: 533289) (Rs.60.55) currently operates two Bulk Liquid Chemical-terminalsat Kandla in Gujarat having a combined capacity of 127,000 kilo litres spread over 64 tanks, which include specializedtanks such as stainless steel tanks, tanks equipped with heating and insulation facilities and coated tanks, which storespeciality products. The company plans to add further capacity at Terminal-1 and has approached the concernedauthorities for the requisite approvals. Further, as a revenue enhancement measure, it has started replacing one of its mildsteel (MS) tank with stainless Steel (SS), which will enhance its marketability leading to revenue augmentation. More suchconversions will be based upon the demand from its customers. With new emerging opportunities, the company hasplanned to expand its presence to Kakinada [Andhra Pradesh], Pipavav [Gujarat] and Pawarkheda [Madhya Pradesh].

Along with its Consortium Member, Kesar Enterprises Ltd. (KEL), the company has won a bid for setting up a 'CompositeLogistics Hub' on 88.3 acres of leased land to be provided by the Madhya Pradesh State Agricultural Marketing Board(Mandi Board) at Pawarkheda in District Hoshangabad, of Madhya Pradesh on a Design, Build, Finance, Operate and

Transfer (DBFOT) basis through Public Private Participation (PPP). This project is likely to be implemented over the nex18 months and contribute good revenue & profits.

It has a strong business model of consistent growth with ROCE of 34%, book value of Rs.60, 25% dividend and likely EPSof Rs.13/14 for FY13. Investors can safely accumulate this stock on dips for good long-term growth.

* Investors can accumulate Gammon India (Code: 509550) (Rs.38.70) on dips. Restructuring plan is likely to help thecompany.

* Kovai Medical Center & Hospital (Code: 523323) (Rs.171): In order to provide more comfort to patients, significanrenovation and upgradation was undertaken last year. This will not only enhance patient care but also facilitate achievingmore operational efficiencies. It has added 7 new operation theaters, Neonatal ICU, separate Cardio Thoracic Unit,Nuclear Medicine Dept., Medical ICU, Modernisation of Surgical ICU, Day Care centers for cancer and cardiac patientsLast year, it added 210 patient beds, an Isolation Ward, two pharmacy outlets etc.

The company is now reaping the benefit of above capex reporting consistent improvement in margins. There is also

promoter buying in the stock, its P/E ratio is around 13/14 compared to the industry average of around Rs.40. Investorscan accumulate this stock on dips for decent long-term growth.

* South Indian Bank (Code: 532218) (Rs.28.35) results are encouraging, investors should continue to hold this stock intheir long term core portfolio for decent long-term gains.

* Karnataka Bank (Code: 532652) (Rs.175.20) is another good stock for investors who have patience. Investors areadvised to hold this stock.

* DCB (Code: 532772) (Rs.48.65) has reported 72% jump in net profit for Q3FY13. Investors are advised to stay investedor accumulate on dips.

* Stocks like Crompton Greaves (Code: 500093) (Rs.113.90), Jain Irrigation (Code: 500219) (Rs.81.35), Unitech

(Code: 507878) (Rs.38.80), Sintex (Code: ) (Rs.), United Phosphorous (Code: 512070) (Rs.141.10) and GeometricSoftware (Code: 532312) (Rs.115.95) are likely to remain in action. Investors can continue to hold the same.

*Note: Reliance Industries has declared encouraging results. Earlier it was Infosys that surprised the street and now with

this, the hands of bulls are now strengthened and will take the markets to new highs in the near future. The questionrises: When to book profits? Investors can stay invested for higher levels, and should start taking out profit when theNifty P/E ratio crosses 23 and reaches around 28. Normally, markets do not sustain P/E ratios above 23 for longInvestors should lock such profits gradually in debt funds or tax-free bonds and preserve this cash for buying in the nexcrash.

RS Software: Poised to rise

EXPERT EYE - By Vihari




RS Software (India) Ltd. (RSSIL) (Code: 517447) (Rs.172.20) has produced better than expected Q3FY13 numberswherein its net profit rose 12% on 5% increased sales. Going by the 9MFY13 trend, RSSIL is all set to post an EPS of Rs.32in FY13. RSSIL has cash & cash equivalent of Rs.54.8 crore (Rs.47.7/share).

RSSIL was incorporated as a private limited company on 2 December 1987 and was converted into a public limitedcompany on 5 February 1992. Over the years, RSSIL has grown with global leaders in the electronic payments industrybacked by strong application management fundamentals that continue to power its core execution engine. RSSIL ispromoted by R.R. Jain.

RS Software’s offices are located in the USA, UK, Singapore and India employing over 900 professionals. Some of its wellknown clients are Visa, Visa EU, Visa CEMEA, Maclane, Pemco, Vignon. It has the ability to scale up and manage largeapplications like development, maintenance, testing, 24x7 support for payment industry companies. Its technologysolutions include Data Analytics, Business Intelligence and Data Warehousing.

During FY12, its net profit rose 30% to Rs.29 crore on 33% higher sales of Rs.264 crore. The EPS stood at Rs.25.1 and adividend of 30% was paid.

During Q3FY13, net profit advanced 12% to Rs.8.5 crore on 5% higher sales of Rs.71 crore leading to a quarterly EPS ofRs.7.4. For 9MFY13, net profit climbed 47% to Rs.27 crore on 23% higher sales of Rs.222 crore and the nine-monthly EPSstood at Rs.23.5.

Its equity capital is Rs.11.5 crore and with reserves of Rs.76 crore, the book value of its share works out to Rs.76. Thepromoters hold 32.3% in the equity capital, foreign holding is 4.2%, PCBs hold is 10.5%, which leaves 52.3% with theinvesting public.

Earlier 15,50,000 convertible warrants

were issued on a preferential basis tothe promoters and the Chairman &Managing Director of the company atRs.51.86 per warrant to be convertedinto equity shares of Rs.10 each in theratio of 1:1. During FY12, 3,90,000convertible warrants were convertedinto equity shares. Further conversionwill raise its capital by Rs.1.16 croreto Rs.12.7 crore in FY13.

With a debt of Rs.3.3 crore, itsdebt:equity ratio (DER) works out to

just 0.04:1. The value of its grossblock is Rs.83 crore. Cash as on 31March 2012 stood at Rs.21.6 crore orRs.18.8/share. RSSIL has madesignificant investment of its businesssurplus for security and returns. Aninvestment of Rs.33.2 crorecomprising Rs.9 crore as noncurrentinvestment in mutual funds andRs.24.2 crore as current investmentsin mutual funds maturing within 12months. It generated a return of 9%from these investments in 2011-12.Thus its cash & cash equivalent stoodat Rs.54.8 crore (Rs 47.7/share).

The electronic payments industry isgoing through a major growthevolution globally, given theintersection of technologyadvancements with cultural changesthat facilitate the shift from papermoney to digital currency. The




volume and the value of electronic payment transactions are projected to grow multifold over the next few years.

Payment appears to be a tremendously ripe area for disruption as new technologies change the relationship betweenconsumers and merchants. The opportunity is extremely large with a market size over $41 trillion in electronic paymentvolume and $300 billion in revenue in the US payment industry alone. The business of payments hinges on the processingand storage of large volumes of transaction data.

RSSIL is building a robust global sales engine that complements the high priority accorded to its prominent customersand leverage the unusual growth potential. Long-term operational and strategic planning is being put in place. Industryexperts feel that the Indian IT industry is expected to grow three fold in the next 10 years. RSSIL hopes to capitalize on thenext wave of growth for Indian companies.

For FY13, RSSIL is all set to post an EPS of Rs.32 on its enhanced equity, which could rise to Rs.40 in FY14. At the CMP oRs.172, the share is trading at a P/E multiple of 5.3 on FY13 estimated earnings and 4.2 on FY14 projected earnings. It hasall the potential to touch Rs.240 in the medium-term and Rs.300 thereafter at a reasonable P/E ratio of 7.5. Recently, itmade a high of Rs.209 due to heavy buying by informed sources.

*******

India Glycols: Fundamentally soundThe share of India Glycols Ltd. (IGL) (Code: 500201) (Rs.166.55) has all the potential to touch Rs.250 in the medium-term because of its improving fundamentals. The share is available at a forward P/E of just 4.9 on FY13 EPS of Rs.35.

Incorporated in 1983 by the Bhartias of Jubilant Organosys and Jubilant Food works, India Glycols (IGL) is one of theleading manufacturers of Glycols and Ethylene Oxide (EO) derivatives, which primarily cater to industries like TextilesAgrochemicals, Oil & Gas, Personal Care, Pharmaceuticals, Brake Fluids, Detergent and Paints. It is one of the few

companies, globally, to produce EO/Mono-ethylene Glycol (MEG) via the organic route. Its flexibility in feedstock usage(Molasses, Ethanol or Sugarcane) depending on their price cycles offers a high degree of insulation from the volatility inraw material prices.

IGL has a controlling stake in Shakumbari Sugar & Allied Industries Ltd. (SSAIL), which has a 5500 tones per day (TCD)of sugar mill along with a modern distillery of 40 KL per day (KLPD) producing high quality rectified spirit, ethanol andcountry liquor in Uttar Pradesh. It also has a bagasse fired co-generation plant of 11.4 MW catering to the captive powerneeds of the sugar and distillery units.

IGL is a leading manufacturer of Ethyl Alcohol (Potable), Natural Gum & Derivatives, Nutraceuticals & Herbal Extractsand Industrial Gases. Its subsidiary, Shakumbari Sugar, is an integrated sugar manufacturing unit. IGL’s Industrial Gasedivision produces Oxygen, Nitrogen and Argon with an overall capacity of 13000 NM3/h. IGL has a 100% ExporOriented Unit (100% EOU) by the name of Ennature Bio-pharma division.

IGL has set up two 45 TPH SLOP boilers, one at Kashipur and another at Gorakhpur for fuel saving and for treatment ofeffluent. It has also expanded its Guar Gum plant capacity in October 2012 to meet the huge demand of Guar oil fieldderivatives in the international market. With increased capacities, the company will position itself in the global market asone of the largest producers of guar gum powder. IGL has the most modern captive distillery in Asia and has a licence fosale of Country Liquor and Indian Made Foreign Liquor (IMFL) in Uttar Pradesh and Uttarakhand and it sells its IMFLbrands to the Canteen Stores Department (CSD) of the Indian Defence Forces. It also bottles Bacardi products at itsKashipur bottling unit. IGL is in the process of introducing IMFL brands in the premium range and an extensive brandbuilding programme will be undertaken.

During Q2FY13, IGL posted 44% higher standalone net profit of Rs.40.6 crore on 37% higher sales of Rs.772 crore. ForH1FY13, net profit has shot up by 39% to Rs.75 crore. For FY12, its consolidated net profit skyrocketed 551% to Rs.67.4crore on 58% higher sales of Rs.2680 crore recording an EPS of Rs.24.2 and dividend of 30% was paid. The splendid FY12performance was a result of higher production and productivity, higher sales realization, better cost management andoperational efficiencies. IGL also achieved an export turnover of Rs.1,255 crore as compared to Rs.705 crore in FY11. IGL

expects reasonable growth in overall export sales in FY13 and has been granted 'One Star Export House' status byGovernment of India.

Its equity capital is Rs.27.9 crore and with reserves of Rs.414 crore, the consolidated book value of its share works out toRs.158. The value of its gross block is Rs.1921 crore, whereas the debt:equity ratio (DER) works out to 1.6:1. The promotershold 55% in the equity capital. With Institutional holding of 4%, PCBs holding of 9% and foreign holding of 2% leaves30% with the investing public.

IGL is pursuing growth opportunities and looking at areas to reduce cost of production. It is also evaluating plans tofurther expand its Ethoxylates capacity to improve its product mix and is also planning to set up a Power Plant to reduceits dependence on external power.




The company is actively pursuing expansion opportunities in areas other than chemicals. It is setting up 10 TPD biomasscapacity pilot plant to convert lignocellulosic agricultural waste biomass to ethanol by using the bench-scale processdeveloped at DBT-ICT Centre for energy Bio-Sciences, Mumbai. The Pilot Plant will use agricultural non-fodderlignocellulosic waste (i.e. Rice Straw, Wheat Straw & Bagasse) as feedstock to manufacture ethanol. The plant will aim atsolving technical roadblocks in Lignocellulosic ethanol Technology in order to improve the overall situation with regardto alcohol availability. The plant is being set-up with the Department of Bio-Technology aid/ loan.

The largest consumer of MEG in India is the polyester fibre industry its growth estimated at 10% p.a. has a significantimpact on the demand for MEG. Removal of quota restrictions has spurred an increase in capacity utilisation in the textileindustry over the last few years.

Thus, the domestic demand outlook for MEG is expected to be stable.

MEG consumption by the polyester industry in FY12 was 18.5 lakh MT of which 1.5 lakh MT came due to the increase inpolyester capacity by 5.5 lakh MT. Domestic production of MEG is 10 lakh MT primarily from Reliance & IOC and thebalance demand is met by imports of 8.5 lakh MT. The overall demand-supply balance has been favourable for MEGproducers in the world market. IGL is the largest manufacturer of Bio-MEG made out of agriculture feedstock i.eMolasses and Ethanol in the world. Bio-MEG has an application, apart from other products, in PET bottles, which is usedfor packaging of beverage products.

For FY13, IGL is expected to post consolidated net profit of Rs.98 crore, which would fetch an EPS of Rs.35. At the currenmarket price of Rs.166.55, the share is traded at a P/E multiple of 4.7. A conservative P/E of 7.5 will take its share priceabove Rs.250 in the medium-term. The 52-week high/low of the share has been Rs.226/119.

Technocraft Industries (India) Ltd.BSE Code: 532804

Rs.73.50

NSE Symbol: TIIL

The Technocraft Group was established in 1972 by some graduates of IIT, Mumbai. Technocraft Industries (India) Ltd.through its subsidiaries, engages in the manufacture and sale of drum closures, steel tubes, scaffolding systems andaccessories, cotton yarns, and garments primarily in India. It produces drum closures including tite seal flanges andplugs, tite seal gaskets, tite seal leak lock plugs, octagon base drum flanges, and auto closure systems; scaffolding systemsuch as T-state scaffolding and related products transoms, frames, scaffolding fittings and accessories. The company alsomanufactures welded steel tubes for use in water supply, housing, structural, agriculture, industry and telecom

applications. It also manufactures and exports cotton ring spun yarn; manufactures and markets active wear productsunder ‘Danube Fashions’ and ‘Haute Chilli’ brand names; and provides engineering services in the field of computer-aided design/computer-aided manufacturing/computer-aided engineering, as well as markets and support softwareproducts, such as RADAN and Strand7. The company exports its drum closure products primarily to Europe, the UnitedStates, the Middle East, and South East Asia.

It has an equity base of Rs.31.53 crore that is supported by reserves of around Rs.428.65 crore, which is 13.59 times itsequity, with a share book value of Rs.134.52. The promoters hold 74.97%, DIIs hold 1.81% while the investing public hold22.93% stake in the company.

TIIL reported 127.75% higher net profit of Rs.16.33 crore in Q2FY13 against Rs.7.17 crore in Q2FY12. Total turnoverrecorded in Q2FY13 was Rs.160.35 crore as against Rs.135.76 crore in Q2FY12.

For H1FY13, it reported a net profit of Rs.38.49 crore on a turnover of Rs.327.56 crore as against a loss of Rs.0.15 crore on aturnover of Rs.257.35 crore in H1FY12. Thus it reported an EPS of Rs.5.18

for Q2FY13 and an EPS of Rs.12.21 for H1FY13.The company has paid regular dividend since many years. It paid 15%dividend for FY10, 10% dividend for FY11, 10% dividend for FY12 and has paid 10% interim dividend for FY13.

Technically, after strong run-up from Rs.40 to Rs.80 in a short time, thestock is now consolidating between Rs.68-78 and is ready to break out ofthis range after its Q3FY13 results. As its current market price of Rs.72, the share price discounts less than 3 times its FY13(E) EPS of Rs.24.42. As the stock is undervalued, some value buying is likely to emerge in this stock. Investors can buythis stock with a stop loss of Rs.62. On the upper side, it will zoom to Rs.90-95 level in the short-term and Rs.120 levelthereafter assuming a P/E multiple of just 5.

TECHNO FUNDA - By Nayan Patel

Last four years performance: (Rs. in crore)

Year Net Sales Net Profit EPS (Rs.

2008-09 432.36 8.83 2.802009-10 401.20 29.78 9.452010-11 490.56 32.18 10.21

2011-12 534.50 18.30 5.812012-13 (E) 655 77 24.00




IRFC tax-free bonds issue opens on 21st JanuaryIndian Railway Finance Corporation Ltd. (IRFC) a dedicated financing arm of the Ministry of Railways (MoR), will openits Public Issue of tax free, secured, redeemable, non-convertible bonds of face value of Rs.1,000 each upto an aggregateamount of Rs.10,000 crore, during the 2012-13. Its tranche I issue is of bonds aggregating to Rs.1,000 crore with an optionto retain oversubscription up to the Shelf Limit and will open on Monday, 21 January 2013 and close on Tuesday, 29

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