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A TIME COMMUNICATIONS PUBLICATION

VOL. XXIII No. 51

Monday, 27 Oct. - 2 Nov., 2014

S
Pages 19

Rs.15

TRADING ON TECHNICALS

Prosperity to continue till Diwali 2015

By Hitendra Vasudeo
A Happy Diwali and a Prosperous New Year to all Money
Times readers and investors!
The journey from Diwali of 2013 to Diwali of 2014 was
very good for investors. All the Muhurat Picks issued at
Diwali 2013 have performed well thanks to the bull
market that we saw with a higher top and higher bottom
formation.
Luckily, we did not have a Diwali Sale on the eve of
Diwali. The correction has halted and crossed the
resistance on the weekly chart. We can say that we had
good offers of sale in the week prior to Diwali week but
the Diwali week was a bonanza of profits for traders.
A swing bottom on the weekly chart appears to have
been formed as per the bias theory after the weekly
movement till Wednesday.
Expect the recent high of 27354 to be tested. A further
sustained breakout and close above 27354 with a bullish weekly candle will be needed to extend the rise. Henceforth,
the Sensex must not fall below 25910.
If we gaze at the yearly chart with each calendar year representing one candle, then we can see that a massive multiyear breakout has already taken place. The breakout point was the 2008 peak of 21206. It took about 5 years to cross it
after multiple attempts but finally it took off in March 2014
to the current level of 27354. The multi-year rally on a
conservative basis will test Sensex 34394 and it is just a
matter of time. The market will go through the motion of
higher top and higher bottom on the daily and weekly
charts.
Following is the table of the four indices that we track
every week from the Yearly Candle point of view: 6 months
and 12 months upper range are mentioned. Corrections to
Centre Point (CP) and L2 are investment opportunities for
active and passive investors. We cannot say whether the
lower levels will come or not but action to be taken is for
A Time Communications Publication

accumulation if the CP and L2 level is achieved. From the multi-year rally point of view, the sky is the limit but it will
vary from investor to investor and how his investment cycle matches the market cycles.
6 months

12 Months

Security Name

Close

2014 Low

L2

CP

from Now

from Now

BSE SENSEX

26787

19963

22049

24702

29440

36832

BSE BANKEX

18823

11373

13806

16390

21407

29008

BSE MIDCAP

9576

6185

7151

8610

11034

14917

BSE SMALLCAP

10504

6164

7328

9340

12516

17704

CNX NIFTY

7996

5933

6559

7370

8806

11053

CNX BANK INDEX

16480

9967

12087

14360

18752

25417

Weekly resistance for the Sensex will be at 26947 and 27396. Weekly support will be at 26658-26498-25910. A deeper
correction in the short-term may be seen below 25910.
BSE Mid-Cap Index
A correction can set in below 9191 and expect a rise to
9699-10068. The momentary bias is to test the higher range.
BSE Small Cap Index
BSE Small Cap index does not provide a feeling of strength.
The resistance level of 10788 needs to be crossed in order to
show further signs of rally to 11322 or above. Correction can
continue below 10233 for BSE Small Cap index.
BSE Bankex
BSE Bankex showed a swing bottom 2 week back and last
week was the follow up move. A further sustained rise above
18973 is essential to extend the rise. But surely banks are set to rise with volatility and occasional sluggishness.
Strategy for the week
Traders long and holding stocks can keep the Sensex stop loss at 25900. A corrective dip to 26658-26498 can be used
for buying with a stop loss of 25900. Profit booking could be undertaken as the Sensex tests the higher resistance of
27354. From the long-term angle, we expect the Sensex to touch 29440 at least and to an outer extent to 36832 within 612 months corrections before that are opportunities for long-term investors to accumulate.

Muhurat Picks for Diwali 2014 to Diwali 2015

By Hitendra Vasudeo

No.

Scrips

1
2
3
4
5
6
7
8
9
10
11
12
13
14

Apollo Tyres
Suven Life Sciences
Gujarat Pipavav Port
Banco Products
Gati
Hindustan Zinc
Federal Bank
Escorts
Petronet LNG
Develop. Credit Bank
Rural Electrification Corp.
IRB Infrastructure Develop
Ashok Leyland
Power Grid Corporation

A Time Communications Publication

Last Close
22-10-14
Buy
Price
220.25
186.15
170.50
148.10
189.75
164.95
141.50
163.05
198.15
86.40
283.70
246.45
44.45
139.50

Level 1

Level 2

Stop
Loss
100.0
67.5
58.5
50.8
43.6
114.8
72.5
102.2
102.5
49.7
166.6
68.1
14.9
93.3

Buy
Price
137.9
92.5
92.0
74.6
86.9
125.2
94.9
121.1
131.3
59.9
172.4
117.8
24.4
106.3

Center
Point
Buy
Price
182.3
161.2
137.0
124.3
146.4
154.6
119.0
144.1
169.3
76.2
277.9
196.7
35.0
126.4

Level 3

Level 4

Book
Profit
264.6
254.8
215.5
197.8
249.3
194.4
165.6
186.0
236.2
102.7
389.2
325.3
55.1
159.6

Book
Profit
391.3
417.1
339.1
321.0
411.8
263.6
236.2
250.8
341.0
145.4
605.9
532.7
85.9
212.8

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 reversal of the Up Trend.
Scrips

Last
Close

Level
1

Level
2

Stop Loss Buy Price Buy Price

SUNDARAM FINAN.
MARUTI SUZUKI
KARUR VYSYA BANK
EICHER MOTORS
INDUSIND BANK

1316.35
3182.00
540.45
11868.00
685.00

1285.8
2950.0
529.0
11401.0
663.0

Level
3

Level
4

Relative
Strength

Weekly
Reversal
Value

Up
Trend
Date

Book
Profit
1337.0
3263.3
547.3
12067.0
693.7

Book
Profit
1383.2
3501.3
563.3
12599.0
717.7

76.6
73.4
72.4
72.4
72.0

1290.6
3014.8
529.8
11574.5
642.7

17-10-14
22-10-14
17-10-14
22-10-14
17-10-14

Center
Point

1290.7
3025.3
531.3
11535.0
669.7

1311.4
3106.7
538.2
11734.0
678.3

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
whatever 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

Last
Close

SUZLON ENERGY
HMT
PIPAVAV DEFENCE
UNITECH
INDBULLS REAL EST.

11.24
29.60
39.75
17.60
65.20

Level
1

Level
2

Center
Point

Level
3

Level
4

Cover
Short

Cover
Short

Sell
Price

Sell
Price

Stop
loss

9.6
27.3
36.6
15.9
57.4

10.7
28.9
38.8
17.1
63.0

11.4
29.7
40.1
17.7
66.5

11.9
30.4
41.1
18.3
68.7

12.0
30.6
41.4
18.4
69.9

Weekly
Relative
Reversal
Strength
Value

33.89
37.13
39.87
41.53
42.70

12.32
29.94
40.03
18.39
66.66

Down
Trend
Date

19-09-14
22-10-14
22-10-14
26-09-14
01-10-14

EXIT LIST
Scrip

Last
Close

Sell
Price

Sell
Price

Sell
Price

Stop
Loss

Target
1

Target
2

BAJAJ FINSE

1009.70

1054.16 1070.57 1086.99 1140.15

915.0

CESC

674.00

694.87

587.9

CMC

1856.00

2002.53 2062.00 2121.47 2314.00 1498.5

CROMPTON GREAVE

187.40

192.94

196.38

199.81 210.95

163.8

G.E.SHIPPING

396.60

408.35

415.25

422.15 444.50

349.9

HCL TECHNOLOGIES

1513.00

1590.84 1626.00 1661.16 1775.00 1292.8

KIRLOSKAR OIL ENG.

248.10

251.47

229.6

MAHINDRA & MAHIN.

1261.00

1282.58 1305.00 1327.42 1400.00 1092.6

707.50

254.05

720.13 761.00

256.63 265.00

BUY LIST
Last
Close

Buy
Price

Buy
Price

Buy
Price

Stop
Loss

Target
1

Target
2

DEWAN HOUSING FIN.

359.15

342.69

335.88

329.06

307.00

400.4

458.2

GAIL

481.40

466.72

460.08

453.43

431.90

523.1

579.4

GUJARAT STATE PET.

97.90

95.51

93.60

91.69

85.50

111.7

127.9

INGERSOLL-RAND

803.00

768.88

750.00

731.12

670.00

928.9

1088.9

IRB INFRAST. DEV.

246.45

235.74

231.70

227.66

214.60

269.9

304.1

RAYMOND

511.95

477.88

466.60

455.32

418.80

573.5

669.1

AXIS BANK

424.05

405.75

398.95

392.15

370.15

463.4

521.0

Scrip

A Time Communications Publication

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.
Scrips

CTL

BSE
Code

538476

Last
Close

Buy Price

110.95

108.75

Buy On
Rise

112.50

Stop Loss Target 1 Target 2

99.90

120.3

132.9

Risk
Reward

0.84

BAZAR.COM

Reforms with a vengeance!

By Fakhri H. Sabuwala
A fortnight back, no one was ready to play the teji card. Weak global cues and the resultant FII outflows weighed
heavily on the market sentiment. Everyone felt the NaMos honeymoon is coming to a close and the market is in for a
technical correction. The achche din were not arriving and the modi magic was waning. The by poll results of July 2014
substantiated such a belief. Amidst such a gloomy outlook, came the MAHApoll in Haryana and Maharashtra wherein the
NaMo effect was visible once again. Coming to power with simple majority in Haryana and emerging as the single largest
party in Maharashtra gave a new impetus to the political force and single party rule and paved the way for the PM to
embark on the road to economic reforms with a vengeance.
This was seen in the President signing an ordinance on the path-breaking reforms in the Coal sector even as the
Central government prepares to ease the process of land acquisition. A new gas pricing formula coming into force after
long procrastination by the UPA and NPA governments shows the new government's firm resolve in tackling delicate
issues. The diesel price deregulation early this week is a landmark signal of the new government's thinking and the
direction it intends to take in coming months.
The coal reforms will spell a bonanza for many sectors and may be a blockbuster for India Inc. All cancelled coal
mines shall be auctioned or given to PSUs.
The key decisions are:
New law shall have an enabling provision to allow commercial mining by private firms.
Companies that have end-use projects will be offered mines in the first round of auction.
Blocks will be identified separately for Power, Cement and Steel segments.
An authority to be set up to decide on the price of land and machinery in existing mines.
Companies that lost their mines can bid again, unless convicted for malpractices.
The outcome of the above decisions is as follows:
Power, Cement and Steel companies will get more and uninterrupted fuel supply.
Auction prices will to be passed on to the consumers.
Prices of Power, Cement and Steel to rise.
Coal mining activity will grow multi-fold.
Such an outcome will bring about a remarkable improvement in overall economic activity.
Last but not the least, auction proceeds shall go to the State governments, giving them a big financial boost.
The next few days may see the repeal of the Land Acquisition Act, which shall ease infrastructure and industrial
development. Development and early introduction to GST will also shape up. The political and economic observers are
keenly awaiting radical policy decisions and changes in education, health, tourism, communication, information
technology and retail segments.
From this Deepavali to the next we may see inflation tamed and so also interest rates giving a new impetus to
economic growth. Little wonder, market pundits have begun to forecast the Sensex level at 30K by December 2014.
Finance Minister (FM), Arun Jaitley is reasonably confident that India will meet its growth target this fiscal despite the
patchy monsoon and sluggish agriculture. He is confident of pushing through the reforms round the year and treat the
budget as a document of direction.
Let this Deepavali celebrate India's becoming a $2 trillion economy. The next trillion ($3tn) mark will be crossed in
2019 or a little earlier. IMF's World Economic Outlook report is worth noting as it reads as... "India has recovered from

A Time Communications Publication

its relative slump thanks in part to effective policies and a renewal of confidence, growth is expected once again to
exceed 5%"

Muhurat Picks
Buy quality stocks before the Modi hurricane hits the market. The reforms announced so far and the ones that are to be
announced will be out rightly positive for the market.
Banks: PSU banks... SBI, BOI, PNB, Dena Bank.
Private Banks: Yes Bank, Axis Bank.
PSUs: ONGC, OIL, BPCL, HPCL, GAIL, BEML, IOC, SAIL.
IT: Wipro, TCS, Infosys, Tech Mahindra and HCL Tech.
Auto Ancillary: Subros, Sona Koya, Exide, Amara Raja Batteries, Motherson Sumi.
Auto: Hero Motocorp, Maruti, Ashok Leyland, Tata Motors.
FMCG: Britannia, Marico, Dabur, Nestle, PGHH, Godrej CP.
Pharma: Sun Pharma, Biocon, Amrutanjan.
Infra: Adani Ports, Adani Enterprises, GMR Infra, IRB Infrastructure.
Capital Goods: Elecon Engg., Grindwell, KSB Pump, Swaraj Engg., ESAB, ING Rand, Thermax.
Cement: Ultra Cement, ACC.

TECHNICAL OUTLOOK

Nifty closes above its 50-day SMA

By Sanjay R. Bhatia
The domestic markets moved higher ahead of the festive season on the back of positive global market cues and the
governments announcement on coal reforms. Sustained buying support helped the Nifty move above its 50-day SMA.
The breadth of the market remained positive amidst lower volumes. The FIIs remained net buyers in the cash and
derivative segments. Domestic institutional investors (DIIs), however, remained net sellers during this week and were
seen booking profits at higher levels.
On the global front, the US stocks rallied on the back of strong earning numbers while the European markets also
rallied on the back of the news of ECB considering to buy corporate bonds. However, the Dollar Index continues to trade
above the 85 mark and remains a cause of concern. On the domestic front, the government moving ahead with the policy
decision on coal auction has boosted the market sentiment.
Technically, the prevailing positive technical conditions helped the markets witness buying support at lower levels.
The MACD, Stochastic, KST and RSI are all placed above their respective averages on the daily charts. Further, the
Stochastic is also placed above its average on the weekly chart. The Nifty is placed above its 50-day SMA, 100-day SMA
and 200-day SMA. Further, the Niftys 50-day and 100-day SMA are placed above Niftys 200-day SMA, which is known
as the Golden Cross breakout. These positive technical conditions would lead to follow up buying support at higher
levels.
However, the prevailing negative technical conditions still hold good and would weigh on the market sentiment
leading to selling pressure at higher levels. The MACD, RSI and KST all are placed below their respective averages on the
weekly charts. Further, the Stochastic is placed in the overbought zone on the daily charts. These negative technical
conditions would lead to selling pressure especially at higher levels.
The +DI line has moved above the ADX line and DI line but all these lines are still converging and a breakout is
awaited that would set the pace of the market trend.
Now, it is important that the Nifty sustains above its 50-day SMA for a sustainable rally to unfold and the Nifty to test
the 8200 level. The markets would continue to witness stock specific activity due to the earnings season. In the
meanwhile, the markets would continue to take cues from the Dollar Index, global markets and the crude oil prices.
Technically, on the upside BSE Sensex faces resistance at the 27112, 27355 and 27600 levels and seeks support at the
26464, 26000, 25329, 24875 and 24163 levels. The support levels for the Nifty are placed at 7874, 7568, 7540, 7422 and
7118 while it faces resistance at 8049, 8142, 8181, 8200 and 8250 levels.
Traders & speculators can buy Arvind Ltd. above Rs.300 with a Stop Loss of Rs.283 and Price Target of Rs.340.

A Time Communications Publication

TOWER TALK
Gujarat Foils may post an EPS of Rs.18 in FY15. The share can be bought for decent gains.
Persons in the know are acquiring the shares of Stylam Industries as this decorative laminates company is all set
post an EPS of Rs.14+ in FY15 and Rs.22 post expansion and diversification into the BPO business. The share may
touch Rs.125 mark.
Nile Ltd is expected to post an EPS of Rs.32 in FY15. The share is likely to touch Rs.250 mark.
One textile analyst strongly recommends Sudar Industries, diversified into textiles and pharma chemicals, as it
posted a consolidated EPS of Rs.20 in FY14 and expects FY15 EPS of Rs.25. The share could touch the Rs.60 mark.
The share of Usher Agro is grossly underpriced. It is likely to touch Rs.60 mark at an estimated EPS of Rs.15 for the
year ended 30 Sept 2014.
One brokerage house is bullish on Jindal Poly Films as it is expected to post FY15 EPS of Rs.50 post its acquisition
of film packaging division of Exxon Mobil. The share is poised to touch the Rs.500 mark.
Hardly has the sentiment improved, brokers are once again at the threshold of cut-throat competition by cutting
broking rates in F&O to abysmally low levels are the brokers heading for trouble once again.
Moodys has welcomed Indias diesel price deregulation and the FIIs have returned!
A reputed investment banker sees oil marketing companies scaling 3-5 fold in 18-24 months. Stock splits and/or
bonus in IOC, BPCL and HPCL are likely.
Narendra Modis meeting with Mukesh Ambani in the new Samvat 2071 will rub on the RIL scrip. Brokers see it
jumps from Rs.1150 to Rs.1350 by next Diwali.
For Muhurat, buy any decent/good stock before the NaMo tsunami hits the shores of Dalal Street. Sensex at next
Diwali may be at 35K to 40K.
An Ahmedabad based technical analyst recommends Bharat Forge, Idea Cellular and Sonata Software as
Muhurat picks for Diwali.

BEST BET

Capital First Ltd.

Code: 532938

Last Close: Rs.298.65

By Amit Kumar Gupta

Capital First Ltd., formerly Future Capital Holdings Ltd., is a non-banking financial company (NBFC). It operates in four
major businesses: retail financial services that includes providing property loans, gold loans, consumer durable loans,
broking and wealth management; wholesale credit business, which uses its balance sheet to build a structured credit
business that focuses on mezzanine finance, promoter and project financing as well as other special situations related
financing; treasury operations, which ensure liquidity for business and manage investment of surplus funds to optimize
returns within the approved risk management framework, and investment advisory services that include investment
analyses, research and investment recommendations. Its other segment includes property leasing and management
services, and vehicle leasing.
In March 2013, it sold Future Finance Ltd. Effective 14 March 2013, Cloverdell Investment Ltd acquired 4.349%
interest in Capital First, which has appreciated by 72% since our initiation on January 2013 and by 116% on a YTD basis
led by a strong growth in the balance sheet and improved profitability. While we believe the company will sustain its
high rate of growth leading to improved RoE, the current valuation (1.8x FY17E) has come closer to the bigger NBFCs
with better operating metrics.
The company has invested significantly to build newer businesses like 2-wheeler loans and consumer durable loans
that are growing at a strong pace. Although execution risks persist in these businesses as defaults are relatively higher in
these segments but stringent credit processes and an experienced management team should adequately weather the
challenges.
With the companys focus on small and medium enterprise (SME) and retail loans, which have a healthy credit
demand, we expect the loan book to grow at a compounded annual growth rate (CAGR) of 26% over FY14-17. Apart
from mortgages, the company has launched short-term loans of 2-3 years as business loans, which have shown strong
traction and constitute around 5% of the loan book. The new segments like twowheelers, gold loans and consumer
durable loans have begun to make meaningful contribution to the overall loan growth and account for ~15% of the

A Time Communications Publication

assets under management (AUMs). Going forward, the SME and retail loans, which together constitute 82% of the AUMs
will be the key driver of the loan growth.
Its asset quality has remained healthy with gross nonperforming assets (NPAs) of 0.54% and net NPAs of just 0.09%
despite the robust growth in its loan book. About 66% of the AUMs is in SME mortgages and 18% in corporate loans,
which are adequately collatorised. While the default rates are relatively high in segments like two-wheelers and
consumer durables, its strong credit processes and experienced management has met the challenges.
Valuation Ratios
FY13
FY14
FY15E
FY16E
FY17E
We have a buy on the stock with a price target of Rs.360,
valuing the stock at 2x FY17E BV. Capital First may benefit
P/E (x)
36.8
51.4
29.6
18.6
13.8
from the operating leverage, which could bring its RoE closer
P/BV (x)
2.4
2.3
2.2
2.0
1.8
to that of its peers by FY18.
P/ABV (x)
2.4
2.3
2.2
2.0
1.8
Technical Outlook: The Capital First Ltd. stock is very strong
EPS (Rs)
9.0
6.4
11.2
17.7
23.9
on the daily chart as it has been making higher highs and
RoE (%)
7.0
4.9
7.6
11.2
13.8
higher lows and is very strong in all time frames. The stock is
RoA (%)
1.0
0.6
0.8
1.1
1.2
also trading above all important moving averages like 200DMA & 100-DMA.
Start accumulating at this level of Rs.299 and on dips to Rs.270-180 for medium-to-long-term investment with a price
target of Rs.350+ in the next 12 months.

STOCK ANALYSIS

Samkrg Pistons & Rings: For smooth gains

By Devdas Mogili
Samkrg Pistons and Rings Ltd is a 29-year old Hyderabad based company established in 1985. It manufactures and
markets a wide array of engineered Pistons, Piston Pins, Piston Rings & Circlips for the automotive market. The
companys three plants are located in Medak and Srikakulam in Andhra Pradesh. Mr. S. D. M. Rao is the chairman and
managing director of the company.
Samkrg commenced operations in 1988 but faced teething problems followed by a recession in the automobile
industry. However, improved performance thereafter helped the company turnaround in 1993-94.
Samkrg is the major supplier to OEMs like Bajaj Auto, LML, Kinetic Honda, TVS Motors, Kinetic Engineering and
Maharashtra Scooters, which contribute 85-95% of sales while the balance comes from the replacement market.
The company concentrates on high value-added and import-substitute products. It has developed sophisticated
piston ring assemblies to meet the requirements of highly fuel-efficient two-wheelers in piston ring materials like IKA
and ductile iron (KVI), in accordance with DIN & JIS specifications.
In 1998-99, it developed sophisticated piston assembles to meet the requirements of highly fuel efficient engines
meeting the pollution norms of 2-wheelers, 4-wheelers, Tractors and Stationary engines.
To supply piston and piston rings, the company has entered into an agreement with Honda Motorcycles and Scooters
(India) Ltd. The company has been using the Japanese expertise for upgrading the technology of Piston Rings and
Pistons for four stroke vehicles. Samkrg is set to extend its product range for diesel engines used in tractors and LCVs.
In 2001-02, it enhanced the installed capacity of Pistons to 50 million, Piston Rings to 100 million and Piston Pins to
50 million at an investment of Rs.6.43 crore. Samkrg supplies Pistons and Piston Rings to Piaggio of Italy for their 2wheelers & 3-Wheelers and is developing them for 4-stroke motor cycles of Tecumseh-Europa for 4-stroke small
engines in 2002-03.
Financial Highlights:
(Rs in lakh)
Clientele: The companys clientele include Particulars
Q2FY15
Q2FY14
H1FY15
H1FY14
FY14
6406.04
5856.45
12495.15
10030.68
20562.72
Honda, Bajaj, Tata Motors, Piaggio, Kirloskar, Total Income
5717.25
5208.81
11191.51
9027.47
18622.64
Mahindra & Mahindra, Force Motors, Total Expense
2.22
14.45
3.48
29.95
20.72
Lombardini, Birla Yamaha, Majestic Auto, LML Other Income
Finance
Cost
92.93
184.33
208.59
290.14
467.81
and TVS.
Tax Expenses
177.46
153.33
337.60
237.90
484.57
Exports: The company is focusing on exports Net Profit
420.61
324.43
760.93
505.11
1074.60
to developed countries like U.K, France, Equity (FV:Rs.10)
982.05
982.05
982.05
982.05
982.05
6563.38
Germany, Brazil and Russia. It has plans to Reserves
4.28
3.30
7.75
5.14
10.94
reach 25% to 30% of the Turnover during the EPS (Rs)
next 2 years.
A Time Communications Publication

Performance: The company notched sales revenue of Rs.205.63 crore in 2013-14 with net profit of Rs.10.75 crore
posting an EPS of Rs.10.94 as against Rs.8.83 recorded in 2012-13.
Latest Results: The company posted highly encouraging results for Q2FY15 ended 30 September 2014 recording total
income of Rs.64.06 crore with net profit of Rs.4.21 crore recording an EPS of Rs.4.28 for the quarter as against Rs.3.30
registered in Q2FY14. The H1FY15 six-monthly EPS stood at Rs.7.75 as against Rs.5.14 recorded in H1FY14.
Financials: Samkrg has an equity base of Rs.9.82 crore with a share book value of Rs.76.83. It has a debt:equity ratio of
0.64 with a RoCE of 16.53% and RoNW of 13.61%.
Share Profile: The companys share with a face value of Rs.10 is listed on the NSE and BSE under the B group. Its share
price hit a 52-week high/low of Rs.182.45/Rs.38.30. At its current market price of Rs.160.55, it has a market
capitalization of Rs.157.67 crore against total revenues of Rs.206 crore, which is highly attractive market cap:sales ratio.
Dividends: The company has been paying dividends as follows: FY14 - 25%, FY13 - 25%, FY12 - 35%, FY11 - 45%, FY10
- 40%, FY09 - 30%, FY08 - 35%.
Shareholding Pattern: The promoters hold 66.88% equity while the balance 33.12% is held by non-corporate
promoters, institutions and the investing public.
Prospects: The Indian auto ancillary industry is growing as a potential global supplier with very good export potential
to the developing countries that are likely to come out of a recession. The company has very good opportunities because
of its valued customers among the domestic OEMs the Replacement Market and Exports because its in-time supplies,
superior quality products and technical expertise of its Japanese & German consultants.
The company has established a very strong distribution network for its aftermarket sales because of imports from
free trade zones and the competition is very stiff and price sensitive.
Further, the company continues its drive for sustainable growth in the growing domestic automotive industry. In
view of its strong distribution network, committed technical and non-technical employees, Samkrg is able to meet and
withstand the challenges of the market.
All cost effective steps have been taken to meet the challenges of competitive pricing, quality, delivery and logistics.
The company expects moderate demand growth in the automobile industry in the current fiscal while the long-term
prospects remain strong in line with the outlook of the OEM segment.
Conclusion: Samkrg Pistons and Rings is an existing, profit making dividend paying company with a good track record
and a reputed customer profile.
At its current market price of Rs.160.55, the Samkrg Pistons share price discounts less than 15 times its FY14
earning of Rs.10.94 against the industry average P/E multiple of about 21. Considering its highly encouraging
performance, good payouts and bright future prospects, the Samkrg Pistons share offers value for money. The share may
be picked up for smooth gains in the medium-to-long-term. However, the share is thinly traded on the bourses.

MARKET REVIEW

Sensex zooms before Muhurat trading

By Devendra A. Singh
The BSE Sensex (30-share index) settled at 26,787.23 soaring 678.70 points (+2.59%) and the CNX Nifty closed at
7,995.90 rallying 216.20 points (+2.77%) for the week ended Friday, 22 October 2014.
Equity markets settled on an upbeat note last week on sound corporate results that aided consolidated buying of
stocks by market participants. The falling Brent crude prices which is hovering around $86/barrel are other crucial
factors that keep dictating market movements. The bourses rose in all the 3 trading sessions for the week.
The Narendra Modi led BJP on Sunday, 19 October 2014 got a clear mandate in Haryana by winning a majority of 47
seats to form the government. Also, the BJP stood out as the single largest party in Maharashtra by winning 122 seats
and is on its way to form the government.
On the inflation front, Indias wholesale price inflation (WPI) eased to a near five-year low in September 2014 due to
fall in food and fuel prices. The WPI rose an annual 2.38% in September 2014 its slowest pace since October 2009.
Indias annual rate of inflation based on the combined consumer price inflation (CPI) for urban and rural India dip to
6.46% in September 2014 from 7.73% in August 2014.
Last week, the Reserve Bank of India (RBI), Governor Raghuram Rajan said, India is seeing a pick-up in economic
growth although more could be done to support that on a sustainable basis while noting that inflation was also easing.
A Time Communications Publication

He further noted, Many market participants were convinced that India could hit the RBIs target of bringing down
consumer inflation to 6% by January 2016.
According to International Monetary Funds (IMF) latest world economic outlook stated that India is poised to
become a $2 trillion economy this year while its GDP size would cross another milestone of $3 trillion after 5 years in
2019.
Indian economy is set to be worth $2.05 trillion in 2014 increasing its size from $1.88 trillion in 2013, data from the
IMF shows. Meanwhile, India is all set to cross the $3 trillion milestone in 2019 with a size of $3.18 trillion, surpassing
Russia, Brazil and Italy. This would also make India the worlds 7th largest economy.
Going by the IMF, United States would remain the worlds largest economy with a size of $17.42 trillion followed by
China with a size of $10.35 trillion. The United States would remain the worlds largest economy in 2019 with a size of
$22.15 trillion, followed by China ($15.52 trillion) and Japan ($5.43 trillion).
The post-election recovery of confidence in India also provides an opportunity for that country to embark on its
much-needed structural reforms, the IMF report noted.
Fitch said on the prospects of the Indian economy that it expects India to have a more positive growth story as the
economy gains momentum over the next 2 years.
The Indian banking system has two main challenges: asset quality and capitalisation with the largest issues residing
with the state-owned banks, the agency said.
According to the ratings agency, the large privately-owned banks are best positioned to capitalise on Indias recovery
with limited asset quality issues and adequate capitalisation together with large scale benefits and low to moderate
funding costs.
On the bank asset quality, Fitch stated that it expects the systems stressed assets or non-performing and restructured
loans to start reducing in 2015 but only gradually as the large stock will take time to resolve.
State-owned banks reported highly stressed assets of around 12% at the end of March 2014 compared to 4% of
private banks and 10% for the overall
financial system.
MONEY TIMES announces
The agency further said that capital
DIWALI BONANZA OFFER 2014
pressures are also substantial. Fitch
of its specialized newsletters
expects Indian banks require over $200
billion in capital to be better positioned
For Medium-to-long-term investors: 6-month Package @ Rs.6000 v/s Rs.8000
for growth and to meet the new Basel III
Roongtas Panchratna 3 & 4 (5 stocks/quarter) and
capital requirements.
Early Bird Gains (1 stock/week)
The state-owned banks will require
For Short-term Traders & Investors: 2-month Package @ Rs.7000 v/s Rs.9000
the bulk 85% of this new capital as they
Techno Funda Plus (3 stocks/week) and
suffer from lower capitalisation higher
Fresh One Buy Weekly (1 stock/week)
stressed assets and weaker earnings, the
agency added.
For Daily Traders: 1-month Package @ Rs.5000 v/s Rs.6500
On the Asian front, the Chinese
Live Market Intra-Day Calls by SMS (4-5 stocks/day) and
economy grew slightly more than
Fresh One Buy Daily (1 stock/day)
expected in the third quarter calming
st
Take advantage of this Diwali Offer, which ends on Friday, 31 October 2014.
fears of a deepening slowdown in the
worlds second-largest economy.
To subscribe, you can deposit cheque/cash or transfer the amount via RTGS/NEFT to
the company bank account:
Global Brent crude oil fell to a 4-year
low below $82 a barrel as growing
(1) Time Communications (India) Ltd - State Bank of India C/A 10043795661, Fort
Market Branch, Fort, Mumbai 400 001 (IFSC: SBIN0005347) or
concerns over the global economy
stretched a 4-month rout. Brent crude
(2) Time Communications India Limited - ICICI Bank C/A 623505381145, Fort
plunged more than 28% since June 2014
Branch, Fort, Mumbai 400 001 (IFSC: ICIC0006235)
on slow demand and abundant supply.
Note: For cash deposit, kindly add Rs.50 extra for SBI or Rs.100 extra for ICICI Bank
Losses have accelerated in October 2014
as cash counting charges levied by the bank.
on signals that the Organization of the
After transfer, please advise us by e-mail mentioning the bank & branch, electronic
Petroleum Exporting Countries (OPEC)
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Contact us on 022-22616970, 22654805 or moneytimes.support@gmail.com.

A Time Communications Publication

Key indices rallied on Monday, 20 October 2014, on the Centres announcement to deregulate diesel prices. The
Sensex jumped 321.32 points (+1.23%) to close at 26,429.85. The Nifty was up 99.70 points (+1.28%) to close at
7,879.40.
Key indices climbed on Tuesday, 21 October 2014, on positive local cues. The Sensex moved above 145.80 points
(+0.55%) to close at 26,575.65. The Nifty was up 48.35 points (+0.61%) to close at 7,927.25.
Key indices surged on Wednesday, 22 October 2014, on extended buying by foreign funds. The Sensex gained 211.58
points (+0.80%) to close at 26,787.23. The Nifty was up 68.15 points (+0.86%) to close at 7,995.90.
Indian stock markets will remain closed on Thursday, 23 October 2014 on account of Diwali Laxmi Pujan and again
on Friday, 24 October 2014 on account of Diwali Balipratipada.
The Sensex advanced 678.70 points to close at 26,787.23 last week. The Diwali Muhurat special live trading session
will be held on Thursday, 23 October 2014. Trading will begin at 6:30 pm and will close on 7:30 pm.
The Indian corporate sector started revealing their Q2FY15 profit earnings. Investors will closely watch the
management results, which could cause revision in their future earnings forecast of the company for the current year.

GURU SPEAK

Happy Diwali!
The stock markets are up once again. Please recall my article last week alerting investors of the games operators and
punters play when the markets were down and the mood despondent.
Both the technical analysts at Money Times had headlined their articles as Markets to remain under pressure or
Support still under pressure. The technical analysts on T.V channels expressed similar worries that since the important
support of CNX Nifty 7850 is broken, the market looks weak while the pink media reported Higher level unsustainable.
On the back of such remarks, forecasts and advisories, investors could hardly hold on to their
positions and building any fresh positions on hopes of the BJP winning the two Assembly elections
in Haryana and Maharashtra was out of the question.
Time and again, I have lamented that the day-to-day forecasts by technical analysts about the
300 to 500 Sensex points move on a week-to-week basis have just no meaning in a market floating
at 27K and with huge volumes of over Rs.20,000 crore in the Cash segment and over Rs.2,00,000
crore in the F&O segment on a daily basis.
G. S. Roongta
But investors memory is indeed very short and confined to daily gains rather than understand
the long-term trend, which has undoubtedly turned bullish, as expressed by me several times ever
since the Sensex crossed its all time high of Sensex 21,206 made on 10th January 2008. From there, it has gained over
6000 points or 25%+, which is indeed very creditable since nothing has changed fundamentally in the Indian economy.
The Rupee is ruling at a high of Rs.61.40 per US Dollar, domestic production or GDP is yet at 5% and corporate results
have not yet flared-up stock prices. Although some mid-caps and small caps zoomed 200 to 250% most Sensex & Nifty
jumped between 50-75%.
The euphoria in the market is on account of the hope of stability with a clear cut majority to the ruling BJP party to
steer the economy. The trend at the Centre has surfaced in regional or state politics too. The Aam Aadmi or common
man has understood the bitter lesson of coalition governments who have looted the country as evident by huge
spectrum or coal allocation scams. Although the outcome of a clean majority government is yet to be witnessed in its
first full-year of functioning, but with goal posts like maximum governance minimum government, stead fast result
oriented functioning, public private participation for growth and transparency in the decision making process do inspire
confidence of a pragmatic government taking charge.
Thus, the rise of 6000 points in the Sensex is all in the hope that pending reforms like the GST increase in FDI limits
and I.T amendment bills will be presented in the winter session of Parliament. The public has developed tremendous
faith in the Modi Sarkar (not BJP Sarkar) and that India can take the lead in the global economy over the next five years
with its GDP rate over 9%, industrial production zooming to 9.5% to 10% and foreign funds flowing into real estate,
industry , trade and finance so-as to wipe out deficit financing.
The Modi wave is, therefore, still on. People have great hopes in Indias economic revival, the process of which has
already begun with the economic wheels put on the right track. They will gather speed soon after the teething problems
of the new changes get over.

A Time Communications Publication

10

I had a clear picture of all these things when I had forecast in July 2014 that the BSE Sensex could touch the 30000
mark in 2014 itself. Other top level analysts thereafter made similar forecasts of the Sensex at 30K by 31 March 2015 or
31 December 2015.
But the Sensex rise has consumed a more time in consolidation than I had anticipated. In a way, that is good to avoid
any vertical fall on the back of some unforeseen situation or circumstances beyond ones control.
The Sensex has encountered 3 to 4 major corrections of 1200 to 1500 points each time ever since May 2014. In view
of such large corrections, the BSE Sensex has delayed its
Diwali to Diwali Performance Review
rise to 30K by Diwali 2014 as I had forecast. But Sensex
30K is sure to be hit, only the process will take a little
of Roongtas Muhurat recommendations
longer on account of the unexpected number of Scrip
Recom. Price
High
CMP
corrections at almost monthly intervals.
01-11-13
achieved
22-10-14
Mid and small cap stocks still have an excellent Shipping Corporation
36
73.25
56.90
chance to flare up as majority of the stocks are available Elecon Engineering
32
70.40
47.55
between P/E ratios of 5 to 10, which is very cheap and Apollo Tyres
74
226.70
220.25
attractive compared to the P/Es of 25 to 30 for A group India Cement
51
134.30
110.90
stocks or Index stocks. Which mid-cap or small-cap
stocks have good prospects were clearly spelt out in our Panchratna newsletter of which three quarterly volumes have
already been published.
Trident Ltd., Essar Ports, and Katare Spinning recommended in the first issue have made new highs even after the
release of the 3rd issue on 1st October 2014.
Trident Ltd. hit Rs.34 in October 2014 from its previous high of Rs.28 & Rs.30 yielding over 80% return from the
recommended price of Rs.18.80 to the subscribers of Panchratna.
Similarly, Essar Ports recommended at Rs.50 in the first issue in April 2014 made a high of Rs.90 till September 2014
and has now made a high of Rs.110 in October 2014. So is the case with Katare Spinning, which has risen to Rs.35.80
from the recommended price of Rs.19.50.
I had, therefore, clearly specified that subscribers should not conclude that the rise in the stock of the first issue is
over. But I say that the rise is not over and they could continue to rise based on their growing fundamentals. That is why
the popularity of Panchratna has increased with subsequent issues.
In the last issue, I had observed that the interest rate will start softening with the RBI meeting scheduled in
December 2014 which will give a big boost to the markets.
The Reform process, which had halted on account of the Assembly elections in Maharashtra and Haryana, have
received a kick-start by deregulating diesel prices and gas prices have been raised by 50% with a simultaneous drop in
petrol and diesel prices. This will help reduce inflationary pressure on prices and the WIP and CIP.
Coal blocks allocation will be completed in the next three months and the government is working fast to remove the
bottlenecks.
The BSE Sensex, which fell below 26K with an intra-week loss of 640 points in the previous week ended Friday, 17
October 2014, has almost recovered the lost ground by closing at 26575.65 on Tuesday, 21 st October 2014, which
coincided with Kubers Dhan Teras. The Sensex gained 145.50 points while the CNX Nifty recovered past its strong
support of 7850 to close at 7927, which was the second day successive rise after a prolonged fall in the previous or two.
This trend continued on Wednesday, 22 October 2014, as the Sensex gained another 211.58 points to close at 26,787.23.
Readers may recall that I have repeatedly exposed the chaalbaazi or operators games in the market. They started
beating down the SAIL stock no sooner its divestment was announced. Unlike other analysts, I did not change my stand
or recommendation because of the weak price induced by this announcement.
Not surprisingly, SAIL has been a star performer in the last few days and hit Rs.82/83 on 22 nd October 2014.
Similarly, Tata Steel, Hindalco and Reliance Industries are set to rise quite like SAIL in the next few days.
Since this is the Diwali issue readers may be expecting some Diwali gifts by way of recommendations. So, I must fulfill
your expectation borne out of my ability, knowledge and experience of the market and the long association with my
readers.
Sensex Stocks: Idea Cellular, Hindalco, Grasim, SAIL and Tata Steel are my favorites because the rise in these stocks is
not commensurate with the golden rise in stock market in Samvat year 2070 or till 22 October 2014.
Sectors: Cement, Steel, Capital Goods, Power, Sugar & Auto Ancillaries will add their presence in the ongoing superfast
rally that began in April 2014 and will last 2-3 years.
A Time Communications Publication

11

Investors who buy the recommended stock should not be afraid of a running correction as experienced after May 2014.
But they must buy in a correction if they have booked profit on a rise. One or two stocks are given in the table from each
sector.
Sector
Stock
CMP 22-10-14
Apart from the above, Graphite India and Tata Global Beverages are Cement
India Cement
110.90
OCL Iron & Steel
27
my long-term choices and the stocks to be fancied are Arvind Ltd. & Steel
Capital Goods
Elecon Engineering
47.55
Bajaj Holdings.
Power
Reliance Power
72.75
Since detailed fundamental analyses is not possible for want space,
Suzlon
Energy
11.24
they can be obtained from various websites or the BSE.
Shree Renuka Sugar
16.45
Finally, I wish all my readers a Happy & Prosperous Deepavali & New Sugar
Andhra Sugar
133.50
Samvat Year.
Auto Ancillary

Clutch Auto
Setco Automotive

23.60
183.15

STOCK WATCH
By Amit Kumar Gupta

Symphony Ltd. (Code: 517385) (CMP: Rs.1655, TGT: Rs.1800)

Symphony Ltd. provides air cooling solutions for domestic and industrial customers in 60 countries across the globe.
The company operates in two segments: home appliances and corporate funds. Its products include air coolers for
residential, commercial and industrial applications. They comprise 23 plastic and 64 metal air cooler models for diverse
residential, commercial and industrial applications, and comprehensive air cooling solutions for industrial applications.
The companys subsidiaries include Sylvan Holdings Pte. Ltd., Singapore, and Symphony Air Coolers Inc. USA. Sylvan has
a subsidiary company in Mexico, Impco S.DE. R.L.DE. C.V. (Impco).
For FY14, its revenues surged 46% to Rs.460 crore with the domestic and export segments registering growth of
45% and 60% respectively. At the consolidated level, the company reported revenue growth of 41% to Rs.530 crore.
Symphonys revenues for Q1FY15 surpassed market expectations with the company posting 35% YoY growth to
Rs.150 crore mainly driven by the domestic segment, which grew 38% YoY to Rs.130 crore, while exports grew at steady
21% YoY to Rs.19.6 crore. EBITDA margin expanded 211 bps YoY to 29.1% driven by favourable change in the product
mix and rise in product prices. EBITDA increased by 46% YoY to Rs.43.9 crore while adjusted PAT rose 26% YoY to
Rs.32.7 crore. For FY14, the EBITDA margin rose 339 bps to 27.1% resulting in 67% growth in EBITDA. Although the
EBITM in the domestic market fell by 80 bps to 28.9%, the export segment reported 511 bps rise in EBITM to 38%.
We expect the domestic air cooler market (organized + unorganized) to maintain the growth momentum at ~15%
p.a. Although the unorganized segment accounts for over 80% of the volume, the introduction of GST can hasten the
conversion from the unorganized to the organized segment immensely benefiting Symphony Ltd. The introduction of
metallic window coolers used mostly in residential units, would enable the company garner a larger market share of the
domestic market estimated at one million units and drive revenues and profitability.
The market size for industrial cooling (IC) is estimated at Rs.2500 crore and is largely unorganized. Given
Symphonys strong brand identity, an increase in market share to ~ 5-6% in the IC segment over the next 3-4 years
could potentially add Rs.150 crore to its revenues.
The export segment, especially exports to the Americas, has recovered the lost ground after the setback in FY13,
while exports to Rest of World (RoW) continue to grow at a fast pace driven by tie-ups with large format stores in
various countries. The mix of domestic and overseas revenues is expected to change to 50:50 over the next 4-5 years
from the current 70:30.
Valuation: We believe that the growth potential of the air-cooler industry in India remains intact given the strong
structural underpinnings such as rising per capita income, rising consumerism and favourable demographics.
Symphonys asset-light business model and its cashand-carry operations ensure strong free cash flow (FCF) generation.
We recommended to buy the stock for a price target of Rs.1,700/share.
Technical Outlook: The Symphony Ltd. stock is very strong on the daily chart as it has been making higher highs and
higher lows and is very strong in all time frames. The stock is also trading above all important moving averages like 200DMA & 100-DMA.
Start accumulating at CMP and on dips for medium-to-long-term investment for a target of Rs.1800+ in the next 6-9
months.
********

A Time Communications Publication

12

A Time Communications Publication

13

CCL Products (India) Ltd. (Code: 519600) (CMP: Rs.124, TGT: Rs.160+)
We had recommended this stock on 28 April 2014 at Rs.54.80. Thereafter, it zoomed to Rs.130.75 giving a smart
return of almost 140% in just 6 months!
CCL Products (India) Ltd. is a manufacturer of soluble instant spray dried coffee powder, spray dried agglomerated /
granulated coffee, freeze dried coffee, as well as freeze concentrated liquid coffee. The company markets its products in
packages, such as jars, cans, sachets, bag-in-box, drums, and bulk boxes. The companys soluble instant coffee is
prepared from Arabica and Robusta coffee beans. In addition to soluble instant coffee, the company supplies flavored
coffee, decaffeinated coffee, organic coffee, rainforest coffee, fair trade coffee, dual taste as well as chicory-coffee mix.
The companys brands include Continental Special, Continental Premium, and Continental Supreme.
With a capacity of 20,000 TPA in India, 10,000 TPA in Vietnam expandable by another 10,000 TPA and 3000 TPA in
Switzerland, CCL Products (CPL) is the largest instant coffee producer and exporter from India. It has expanded its
capacity from ~9000 TPA in FY06 to ~33,000 TPA in FY14 and extended its presence to other global markets to cater to
their specific needs.
The companys new capacity of 10,000 TPA in Vietnam commissioned in H2FY14 is expected to aid its volume
growth from FY15E onwards. Hence, we expect the companys total coffee sales to rise to ~28000 MT by FY17E from
~19,500 MT in FY14.
With the plant in Vietnam, CCL would save ~50% in logistics cost for exports to other Asian countries at US $100150/tonne as the transport cost from Vietnam at $1200-1600/container is much lower than that from India at $30003600/container. Further, with the production capacity near the coffee producing region in Vietnam (Dak Lak), CCLs
transportation cost for importing raw material (30% was sourced from Vietnam) and the lead time for acquiring the
same (two to three months) would also get halved, boosting its EBITDA margin. We expect margins to increase to 23.3%
by FY17E from 20% in FY14.
CCL Products Ltd. has been granted a 4-year tax holiday (from the year it starts making a profit) and subsidised tax at
5% till the 15th year by the Vietnamese government as it is the largest coffee exporter from the region. Hence, we expect
its improving margins coupled with lower taxes to drive earnings growth at a robust 33% CAGR (FY14-17E) to Rs.152.4
crore by FY17E. We value the stock on a weighted average of P/E (15x FY17E EPS of Rs.11.4) and EV/EBITDA (9x FY17E
EBITDA) and have a Buy on the stock with a price target of Rs.150.
Technical Outlook: The CCL Products Ltd. stock is very strong on the daily chart as it has been making higher highs and
higher lows and is very strong in all time frames. The stock is also trading above all important moving averages like the
200-DMA & 100-DMA.
Start accumulating at CMP and on dips to Rs.100 for medium-to-long-term investment price target of Rs.160+ in the
next 12 months.

FIFTY FIFTY
By Rupesh Daga

Kalyani Steels (Code: 500235) (Rs.158)

This stock was earlier recommended on 1st September 2014 at Rs.104 whereafter it went on to make a high of
Rs.161 appreciating almost 55% in just two months. Looking at the recent Q2FY15 results, we recommend buying
the stock even at current levels as it can easily appreciate 50% from hereon.
Kalyani Steels Ltd. (KSL) reported its Q2FY15 numbers on 20th October 2014 wherein it has almost doubled its Net
Profit to Rs.22 crore from Rs.11.8 crore in Q2FY14. Total income during the quarter soared to Rs.315 crore from Rs.247
crore YoY. The EPS for Q2FY15 stood at Rs.5.22 as against Rs.2.71 in Q2FY14.
Kalyani Steels is a part of the over $2.1 billion Pune based Kalyani Group. Established in 1973, it is a leading
manufacturer of forging and engineering quality carbon and alloy steel using the blast furnace route. Over the years, the
company has been continuously upgrading its technology and infrastructure. Today its manufacturing facilities are at
par with any sophisticated steel manufacturer in the world, which has earned it the status of a preferred steel supplier
for engineering, automotive, seamless tube, and primary aluminum industries. Majority of its clients include Automotive
OEMs and Auto Ancillary Companies. With the Auto Ancillary industry booming, Kalyani is expected to post an improved
performance going ahead.
Its clients include Mahindra & Mahindra, Jindal Saw, M.M. Forgings, Tata Motors, BHEL, Bharat Forge, Automotive
Axles, Ford (USA), Volvo (Sweden), Kirloskar, etc. Despite the iron ore mining ban, the company has been steadily
A Time Communications Publication

14

improving its financials. Last week, there were also talks of the mining ban in Goa being withdrawn, which is very
positive for Kalyani Steels.
Other group companies like Bharat Forge and BF Utilities are trading at their 52-week highs and have reached a stage
where the promoters are more likely to shift their focus to smaller group companies and enhance their valuations,
where Kalyani perfectly fits the bill.

********
Blue Star Infotech (Code: 532346) (Rs.228)
This stock was earlier recommended under Best Bet on 25th August 2014 at Rs.212. Since then, the stock went on
to make a high of Rs.252 but has now corrected and come down to Rs.227. However, looking at the Q2FY15
numbers, the stock is again ripe for investment.
Blue Star Infotech is a small sized IT firm part of the Blue Star group, a US $750 million conglomerate with a 70-year rich
history. It is an IT consulting firm that has been in operation for over 30 years. It has offices in the USA, UK, Europe,
India, Singapore and Malaysia. With access to a diverse pool of specialized talent and employee strength of 1300, the
company has partnered 250 technology companies and 300 enterprises across the globe and completed over 800 major
IT projects and delivered over 1600 product releases.
Nearly 50% of its revenue comes from America; Asia contributes 40% and Europe the balance 10%. Its clientele
includes Hewlett Packard, Accenture, Thomas Cook, Cipla and Indoco Remedies amongst others. The company adopted a
new biz model after 2011-12 and changed strategy to move up the value chain by becoming a solutions focused player
from just service offerings.
The company is run by Mr. Sunil Bhatia who acquired a 15% equity stake in mid-2011 with the aim of running it as
the company was struggling to keep pace with the changing business scenario in the IT outsourcing field. He has over 23
years of experience in the IT industry across the globe and is known for building and growing the business in an
aggressive manner, while he held leadership positions at global giants such as IBM, Accenture, Satyam, where he has
managed large businesses and led global teams.
Mr. Bhatia has rejigged the top deck of the management. The company recently declared its Q2FY15 numbers
wherein the net profit soared 83% to Rs.5.7 crore from Rs.3.06 crore in Q2FY14 although net income stood at Rs.56
crore as against Rs.58 crore in Q2FY14. The EPS for the quarter stood at Rs.5.5 as against Rs.2.95 in Q2FY14. Since the
company closed down its unremunerative business, the topline remained flat, but it has streamlined its operations,
which helped reduce costs and thereby boost its profitability.
At the CMP of Rs.227 the stock is available at a forward P/E multiple of 7x and looks attractive for the medium-tolong-term. The company has grown at a CAGR of 46% between 2012 and 2014 and we expect it to grow at a CAGR of
25% between 2015 and 2016. It is a zero-debt company. Its promoters are from a reputed business group and the recent
shift in its business model has led to cash reserves of close to Rs.98 crore i.e. almost half the size of its market cap. One
should add the stock at the CMP and on declines for decent returns in the coming 2-3 years.

EXPERT EYE
By Vihari

RS Software: Great going!

The shares of RS Software (India) Ltd. (RSSIL) (Code: 517447) (Rs.681) can be bought for steady appreciation as this
small cap payment gateway company has come out with robust Q2FY15 and H1FY15 results. The share has all the
potential to appreciate by over 25% in the medium-term.
RSSIL is a vertically integrated technology solutions provider to the electronic payment industry. It operates in four
continents, with its US headquarters in Silicon Valley, offices in United Kingdom and Singapore and corporate
headquarters in Kolkata, India, and employs 100 professionals.
RSSIL has been in business for the last two decades providing solutions to Payment Networks, Processors, Acquirers,
Issuers, ISOs and other major players in the electronic payments domain. It maintains the highest standards of
compliance, security and quality including the ISO 9001:2008, SEI-PCMM Level 3 and ISO 27001:2005 Information
Security certifications. In FY14, USA accounted for 91% of sales while ROW (rest of the world) made up the balance 9%
of revenue.
Incorporated in 1987 and converted into a public limited company in 1992, RSSIL has over the years, grown with
global leaders in the electronic payments industry backed by strong application management fundamentals that
A Time Communications Publication

15

continue to power its core execution engine. Some of the clients it serves are Visa, Visa EU, Visa CEMEA, Maclane,
Pemco, Vignon.
RSSILs offerings include custom application development of platform, cloud, e-commerce and mobile environments
using a comprehensive spectrum of development tools and methodologies including SSAD/OOAD, classic/relaxed
waterfall, classic/relaxed spiral, RUP, agile and prototyping. New payment instruments, mergers, restructuring,
mandates and system migrations put pressure on payment operations creating a near constant need for testing.
RSSIL offers a diverse portfolio of testing services that include functional testing, regression testing, security and
compliance testing, integration testing, performance testing, compatibility testing and test automation. It offers
comprehensive application lifecycle management services that include maintenance of, adding new functionality to and
providing support for existing applications.
For FY14, consolidated net profit after minority interest rose 44.6% to Rs.51.2 crore on 20% higher sales of Rs.381.9
crore. The FY14 consolidated EPS stood at Rs.40 and a total dividend of 60% was paid. In Q2FY15, consolidated net
profit after minority share shot up 43% to Rs.16.6 crore on 5% lower revenue of Rs.99.5 crore and the Q2FY15 EPS
stood at Rs.13. RSSIL has declared a 2nd interim dividend of 15% after 10% already paid after the Q1FY15 results.
RSSILs equity capital is Rs.12.8 crore and with reserves of Rs.163 crore, the book value of its share works out to
Rs.137. RSSIL is a zero-debt company. As at 30 September 2014, its cash & cash equivalent including term deposits,
investments in mutual funds, short-term & long-term loans and other investments stood at Rs.160.7 crore or
Rs.125.5/share. The promoters hold 38.5% equity stake. FIIs hold 2.3%, PCBs hold 10.2%, DIs hold 2.8%, and with NRIs
hold 2% leaving 44.2% with the investing public.
Coming to future prospects, the electronic payments industry is going through its major growth evolution globally.
Given the interesting intersection of technology advancements with cultural changes that facilitate the shift from paper
money to digital currency, the volume and value of electronic payment transactions are projected to grow several times
in the next few years.
RSSIL senses demand recovery in the USA, which bodes well for its growth given its exposure to the global electronic
payments industry with transactional revenues of $900
billion (nearly Rs.54 lakh crore). It puts significant thrust
A Winner all the way!
on innovations and in building competencies through the
Payments Lab and School of Payments. RSSIL is confident
WINNERS of 2015
that given the improving market conditions and the
Since the last nine years, Money Times has been publishing
potential growth in the electronic payments industry, it
an unique annual product called WINNERS that features a
will consistently tread a high growth trajectory.
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of stocks destined to perform in the new calendar
RSSILs sustained focus on the merchant acquisition
year.
aspect of the payment landscape, procedural
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Investors can take a position in these stocks and also trade in
generate strong business response and undertaking
them frequently given their High & Low levels that are aided
initiatives to strengthen its team and processes give
by three quarterly reviews.
visibility to strong revenue growth going forward.
Astute investors have the comfort of knowing the scrips that
Improving margins will spell good profitability going
will be the best performers in the coming year. For example,
forward.
out of the 20 Winners spotted for 2014, 16 have hit their
Based on its H1FY15 results and the bright prospects
First Yearly Target while 6 of them have also hit their Second
of the industry, RSSIL is expected to post an EPS of Rs.58
Yearly Target.
in FY15 and Rs.65 in FY16. At the CMP of Rs.681, the
For new subscribers of WINNERS of 2015, we offer the third
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Astec Lifesciences:
Bright prospects ahead

A Time Communications Publication

Bank of India C/A 10043795661 (IFSC: SBIN0005347) or ICICI

Bank C/A 623505381145 (IFSC: ICIC0006235).
For further details, contact us on 022-22616970, 22654805 or
moneytimes.support@gmail.com.
16

The share of Astec Lifesciences Ltd. (ALL) (Code: 533138) (Rs.70) is recommended for decent gains in the mediumterm because of its improving fundamentals.
Established in 1994, Astec Lifesciences is an Indian manufacturer of agrochemical active ingredients, formulations
and pharmaceutical intermediates. It is a leader in Triazole fungicides and has a portfolio of fungicide and herbicide
technical products for Indian and global markets. The company has been promoted by Mr. Ashok Hiremath and Dr. P. L.
Tiwari.
ALL tapped the capital market for expansion in October 2009 with an IPO of Rs.61.5 crore at a price of Rs.82/share.
The company has multipurpose production facilities at Dombivli (50 kms from Mumbai) and 2 plants at Mahad (180
kms from Mumbai). All its production processes are backed by a Quality Assurance System which is ISO 9001:2000
certified. Astec has undertaken a number of customised synthesis projects for its customers in Europe, Japan and the
USA.
ALL has two multi-product plants at Mahad in Maharashtra, a R&D unit and a pilot plant in Dombivli near Mumbai.
These sites are certified for ISO 9001 (Quality), ISO 14001 (Environment) and OHSAS 18001 (Safety) standards. ALL is a
signatory to the International Council of Chemical Associations Responsible Care Initiative for standards in Quality,
Safety and Environment parameters. Its well-equipped R&D facility has a team of scientists and chemists focused on
product development and process optimization.
The companys products include Tebuconazole, Propiconazole, Hexaconazole, Difenoconazole, Epoxiconazole,
Cyproconazole, Flutriafol, Tricyclazole, Metalaxyl and Lambda Cyhalothrin, 1. 2,4-Dichloroacetophenone, Chloro-4fluoro acetophenone, 4-Methyl phthalic anhydride and Thiobis-4-chloro thymol. These active ingredients are sold to
crop protection formulators whereas intermediates are supplied to technical grade product manufacturers and the
formulations are sold in bulk quantities to companies engaged in retail marketing.
ALLs products are presently retailed in Gujarat, Maharashtra, Karnataka, Himachal Pradesh, Punjab and Haryana. It
has identified the states of Andhra Pradesh, Telangana, Uttar Pradesh and Madhya Pradesh for its next phase of growth.
ALL has 214 product registrations across 32 countries including 139 product registrations in India. It also offers
contract manufacturing services and has long-standing preferred partner relationships with global customers. Through
its 100% subsidiary, Astec Crop Care Pvt. Ltd, ALL markets and distributes branded agrochemical formulations in India
Established in December 2010, Astec Crop Care (ACC) is a wholly-owned subsidiary of the Company involved in the
sale of branded formulations. ACC has a product portfolio of over 30 formulations and a dealership network of 800
dealers across 6 states in India.
ALL has successfully built strong relationships with its clients resulting in significant new customers and revenue
growth across customer accounts. It has a track record of 100% customer retention since inception. Its largest customer
accounted for about 19% of its revenue in FY14. The share of its top 10 customers in total revenue reduced from 68% in
FY13 to 64% in FY14.
The companys concerted efforts to undertake contract research and manufacturing services (CRAMS) will enable a
predictable pattern of growth and profitability going ahead.
For FY14, ALL posted net profit of Rs.8.7 crore on sales of Rs.207 crore and the EPS worked out to Rs.4.7.
In Q2FY15, ALLs net profit soared 74% to Rs.6.1 crore on flat sales of Rs.66 crore leading to a quarterly EPS of Rs.3.4.
For H1FY15, net profit soared 65% to Rs.7.9 crore on 8% higher sales of Rs.118 crore and the half yearly EPS works
out to Rs.4.2.
ALLs equity capital is Rs.18.5 crore and with reserves of Rs.103 crore. as on H1FY15, the book value of its share
works out to Rs.66. The DER as at H1FY15 is 0.64:1. The promoters hold 58% in the equity capital, PCBs hold 8.5% and
with DIs holding 1.2% leaves 32.3% with the investing public.
Exports contribute about 35% of ALLs consolidated revenue and Europe and the Americas are its key markets. ALL
has identified Europe and Latin America as the key growth markets and is seeking product registrations and acquiring
new customers to drive revenues in these regions. As a strategic manufacturing partner to global agrochemical
companies, ALL has entered into exclusive product supply agreements with global customers which provide committed
volumes and high visibility on future revenue.
ALL plans to invest Rs.50-55 crore over the next 3 years to expand capacity to support its fast growing business.
These investments shall be funded largely through internal accruals and long term financing. It hopes to add 2 new
products to its portfolio each year and commercialise 56 new products over the next two years including products
under exclusive arrangement with specific customers.

A Time Communications Publication

17

A strong R&D focus has enabled ALL to introduce a number of unique products. As all its operations are highly
integrated both vertically and horizontally, the company has a very efficient, low cost structure in the market place.
Based on the improving results and bright industry prospects, ALL is expected to post an EPS of Rs.10 in FY15. At the
current market price of Rs.70, the Astec share trades at a forward P/E of 6.9 as against the industry average P/E of 29. A
conservative P/E of just 10 will take its share price to Rs.100. The 52-week high/low of the share has been Rs.79/20.

TECHNO FUNDA
By Nayan Patel

Menon Bearings Ltd.

BSE Code: 523828
Last Close: Rs.133.35
We had recommended this stock at Rs.52.45 on 19 May 2014 with a target of Rs.80. Thereafter, the stock zoomed to
Rs.134 recording 152% appreciation. We are recommending it again as the company has now declared mindblowing results for Q2FY15.
Menon Bearings Ltd. (MBL) manufactures auto components and was founded in 1991 in Kolhapur. It manufactures bimetal engine bearings, bushes, and thrust washers for light and heavy automobile engines, 3-wheeler engines as well as
for compressors, refrigerators, air conditioners. It offers bearings for connecting rods and crank shafts, flanged and
trimetal bearings, bushes for connecting rods, ball indented bushes, cam shafts, rock shafts, rocker arms and washers
with thrust face contours and ring type thrust washers.
It also exports its products to the USA, UK, Italy, France, China, Mexico, Brazil, etc.
MBL has an equity base of Rs.4.67 crore that is supported by reserves of around Rs.31.28 crore, which is 6.69 times
the equity leading to a share book value of Financial Performance:
(Rs in crore)
Rs.38.5. The promoters hold 74.67% while the Particulars
Q2FY15 Q2FY14 H1FY15 H1FY14
FY15 (E)
FY16 (E)
investing public holds 25.33% stake in the Sales
27.60
21.63
51.55
42.63
110
132
company.
Profit Before Tax
4.56
2.08
7.88
3.40
Tax
1.48
0.65
2.56
1.07
For Q2FY15, MBL reported sales of
Profit
After
Tax
3.08
1.43
5.32
2.32
11
13.85
Rs.27.60 crore as against Rs.21.63 crore in
3.30
1.53
5.70
2.49
11.77
14.82
Q2FY14. Despite 127.7% higher provisioning EPS (Rs)
for income tax, net profit zoomed 115.38% to Rs.3.08 crore. The EPS for the quarter stood at Rs.3.30 and Rs.5.70 for the
first half H1FY15.
For full FY15, it may deliver net sales of Rs.110 crore with net profit of Rs.11 crore translating into EPS of Rs.11.77,
which could rise to sales of Rs.132 crore with profit of Rs.13.85 crore and an EPS of Rs.14.82 in FY16.
The Menon Bearings scrip is trading at 10.3xFY15(E) EPS & 8.3xFY16(E) EPS and has paid 60% dividend for FY14.
Investors can buy this stock with a stop loss of Rs.105. On the upper side, it will zoom up to Rs.150 level in the mediumterm and to Rs.225 level in the next 12-16 months.

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Disclaimer: Investment recommendations made in Money Times are for information purposes only and derived from sources that are deemed to
Lane, Mumbai 400 008. Registration No.: 63312/91, REGD. NO. MH/MR/South - 72/ 2006-08
be reliable but their accuracy and completeness are not guaranteed. Money Times or the analyst/writer does not accept any liability for the use of
this column for the buying or selling of securities. Readers of this column who buy or sell securities based on the information in this column are
solely responsible for their actions. The author, his company or his acquaintances may/may not have positions in the above mentioned scrip.

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