GNFC (Gujarat Narmada Valley Fertiliser) is one those fertiliser company where Govt of Gujarat has majority stake. It got battered down in past due to one of the decision of Gujarat Govt to have PSU use part of their savings for the social cause. This created a knee jerk reaction and GNFC was battered down from highs to 150 Rs to 98 now.
If you look at the company, its book value is 112 Rs, current market price is 98Rs. Its industry peers are quoting at price/book value of more than 1.5. This one is quoting at .85 of its book value.
The PE of the company is 5.85 where in industry PE is 9.82. If we put a conservative PE of 7 for this company then also it should be quoting around 161 Rs (23 being the EPS of share as per 2008 results).
Looking at the balance sheet for past years, its top line and bottom line both are growing quite handsomely. With Gujarat increasing its agriculture output year on year, it augurs good news for fertiliser companies especially which are based out of Gujarat.
Based on the current scenario, I recommend a buy of GNFC below 105 Rs, the target being 200 Rs by Dec 2010.
Disclaimer: Do your own due diligence before buying stocks.
Sunday, May 31, 2009
Tuesday, May 26, 2009
Rolta India
This mid cap IT stock has been battered down like anything by the FIIs during the recent fall of the sensex. It was quoting around 180+ and it went down to 45 in two weeks time.
Let us look at the details of this stock here. It book value is 81, and PE is 5.72. While IT industry PE is 12.29. Comparing it with the competition, you can see that it is quoting at discount to other companies. E.g. HCL tech book value 51 (CMP 167), wipro book value 71 (CMP 316).
It has presence in Global Imaging Software, Engineering related work. It is expected to get major orders from the nuclear deal with US.
On conservative estimates, if we consider its EPS to be 20 Rs/share compared to current 16 Rs/share. With PE of about 9 (if not 12 as per industry average), then it should be quoting at 180.
I recommend a buy or hold on Rolta for a target of 180 to 200 in 6 months.
Disclaimer: I have some stocks of Rolta at 56 Rs. Please do your due diligence before buying or selling a share.
Let us look at the details of this stock here. It book value is 81, and PE is 5.72. While IT industry PE is 12.29. Comparing it with the competition, you can see that it is quoting at discount to other companies. E.g. HCL tech book value 51 (CMP 167), wipro book value 71 (CMP 316).
It has presence in Global Imaging Software, Engineering related work. It is expected to get major orders from the nuclear deal with US.
On conservative estimates, if we consider its EPS to be 20 Rs/share compared to current 16 Rs/share. With PE of about 9 (if not 12 as per industry average), then it should be quoting at 180.
I recommend a buy or hold on Rolta for a target of 180 to 200 in 6 months.
Disclaimer: I have some stocks of Rolta at 56 Rs. Please do your due diligence before buying or selling a share.
Friday, May 22, 2009
Hindalco
Hindalco is major aluminum manufacturer of India. In the recent market turmoil, it has been severely battered down by the FIIs. Let us look at its fundamental to gauge where it should be positioned in future.
As per source here, CMP of hindalco is 77 Rs (Closing on 22nd May, 2009). Its PE is 5.40, while the industry PE is 8.48.
The book value of the share is 127 Rs. Current price is at a discount of 40% to the book value.
Lets see its profit loss details as given here. It saw a dip in its operating profit in year 2008. I expect a dip in profit this year too but not substantial as prices of aluminum have more or less stabilised in the year 2008-09. The prices of aluminum are quoting at 10 year low as data given here. With the pick up in infrastructure and housing, the demand for aluminum would go up, resulting in price appreciation. This will increase the margins and profits of Hindalco. If we consider aluminum at conservative 2000 USD/mt in coming year or two, would translate into 40% increase in EPS of hindalco. This would mean the current price is quoting at a PE of only 3 for the year 2010-11.
Considering, the price is below the book value, PE less than industrial average and worst being over for aluminum sector, I recommend a buy on Hindalco with a target of 140 to 150 by March 2010.
Disclaimer: I have some shares of Hindalco at 47 Rs. Please do your due diligence before buying.
As per source here, CMP of hindalco is 77 Rs (Closing on 22nd May, 2009). Its PE is 5.40, while the industry PE is 8.48.
The book value of the share is 127 Rs. Current price is at a discount of 40% to the book value.
Lets see its profit loss details as given here. It saw a dip in its operating profit in year 2008. I expect a dip in profit this year too but not substantial as prices of aluminum have more or less stabilised in the year 2008-09. The prices of aluminum are quoting at 10 year low as data given here. With the pick up in infrastructure and housing, the demand for aluminum would go up, resulting in price appreciation. This will increase the margins and profits of Hindalco. If we consider aluminum at conservative 2000 USD/mt in coming year or two, would translate into 40% increase in EPS of hindalco. This would mean the current price is quoting at a PE of only 3 for the year 2010-11.
Considering, the price is below the book value, PE less than industrial average and worst being over for aluminum sector, I recommend a buy on Hindalco with a target of 140 to 150 by March 2010.
Disclaimer: I have some shares of Hindalco at 47 Rs. Please do your due diligence before buying.
Thursday, May 21, 2009
Central Bank
Central Bank is one of those PSU bank which is very underrated even after the current rally from 43 to 73. Lets look at its peers and see what could be its reasonable or justifiable target.
Open the competition page here from money control.com
As you notice the book value of CB is 76. All the competitors of central bank are quoting at atleast 1.5 times the book value. Assuming the same, central bank should reach 120 to 150 in short period of time.
Note the PE of most other PSU bank is from 15 to 11, while that of CB is only 6. If we factor a conservative PE of 10, the price should be 116. At current market price of 69, it would be a appreciation of approx 50%.
Almost 80% of the shares are held by the govt, with fiscal deficit going up and financials reforms on the card, this bank my be the prime candidate for divestment. If that happens this stock will shot up.
My target of Central bank is around 150Rs by Dec 2009.
Holding source http://money.rediff.com/companies/central-bank-of-india/14030013/share-holding.
Disclaimer: I have stocks of central bank in my portfolio. Do your due diligence before buying any stocks.
Open the competition page here from money control.com
As you notice the book value of CB is 76. All the competitors of central bank are quoting at atleast 1.5 times the book value. Assuming the same, central bank should reach 120 to 150 in short period of time.
Note the PE of most other PSU bank is from 15 to 11, while that of CB is only 6. If we factor a conservative PE of 10, the price should be 116. At current market price of 69, it would be a appreciation of approx 50%.
Almost 80% of the shares are held by the govt, with fiscal deficit going up and financials reforms on the card, this bank my be the prime candidate for divestment. If that happens this stock will shot up.
My target of Central bank is around 150Rs by Dec 2009.
Holding source http://money.rediff.com/companies/central-bank-of-india/14030013/share-holding.
Disclaimer: I have stocks of central bank in my portfolio. Do your due diligence before buying any stocks.
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