Why should we doubt at all? Though SRF is out of F & O counter, there are other modus operandis like circular trading etc. to keep the share price under check.At the current price of CER, ie, Eu.12.5 SRF can generate post tax revenue of around Rs.200 Crores from 3.8Million CERs annually. Where as SRF has concluded many forward contracts for CERs, the rate will be attractive considering that the contracts could be at the sellers risk. Reveue from 3.8 M CERs at the current rate of Eu. 12.5 will generate an annualised EPS of around Rs.33 ( irrespective of the present fluidity of accounting of stock of CERs held) in addition to a conservative minimum EPS of Rs. 7 from core business ( EPS before generation of CER income was Rs.9.31), will generate an annualised EPS of Rs.40. Present sectoral PE being 9, reasonable value could be around Rs.360 which might improve with Higher EPS and higher PE value. Share price movement of SRF, especially after April, 2006 was without any rationale. The journey was like a snail climbing a wall, two steps forward, then 3 steps backward. Few explained that the Core business is not doing well, some others explained that the euphoria of carbon credit has gone and the CER income is only temporary. Be that it may; is an annual income of Rs.200 Cr ( actual figure could be much higher ) and Rs.2000 for a 10 yrs. period from CERs has no value or significance as it is stamped as non core business or temporary income? I don`t think no one will disagree with me when I say that Rs.2000 is a very huge amount by any standards and a windfall profit with out doing any additional effort or any substantial or major investment which could be utilized for modernisation of existing plants, expansion, setting up of new ventures, new acquisitions etc. Additional investment was only around Rs.12 Cr. for the construction of the incerination plant. HFC-23 which is incinerated is a by-product from the manufacture HCFC-22. Incerination expenses include expenses for power, fuel etc. In spite of all these, why SRF continues to be a laggard from April, 2006 even during the boom time. When we examine the reasons for this share not catching up with its reasonable valuations,it is not out of place to anlyse the reasons for the market to allow higher value for a share. Among other reasons, they include 1. Consistency in performance of the Co. 2. Transparency in all areas of operation of the Co. 3. A good communication system with the public. 4. A competant Manangement. 5. Confidence of the ivestors in the Management/Promoters 5. Sharing of profits with the investors. 6. Visibility of future earnings. ( Co. has not made any presentation reg. their future projects and their profitability to enable the leading Analysts to cover the stock ) I feel that SRF is not upto the standard in r/o points 2,3,5&6. A share will sttract higher PE value only when the expetations of futre earnings are high for which necessary information should be made available to the market by the Manangement. Management should come out with their concrete plans and the effects on profitablity and not in peace meal thru occassional press reports. Further the past track record of the Promoters in the field of corporate governance may be looming large over the investors. Finally, imagine - replace ...

it is creating opportunity to buy at lower level,no need to worry,it seems that all the weaker investor of india are in srf counter...

hi CoolBull, your note of caution is worth consideration. ......

The current news on ethanol is reproduced below for information and coments:- CCEA asks oil ministry to ensure 5% ethanol blending by OMCs Press Trust of India / New Delhi November 12, 2009, 16:19 IST The government today asked the Petroleum Ministry to ensure that oil companies compulsorily sell petrol doped with 5 per cent ethanol. In November 2006, the government had mandated that ethanol should be blended in a 5 per cent ratio with petrol to be sold throughout India except in areas like North Eastern states and Jammu and Kashmir Subsequently, it stipulated that the amount of ethanol in petrol may be optionally ramped up to 10 per cent from October 2007 and made compulsory with effect from October 2008. But oil marketing companies (OMCs) -- Indian Oil, Bharat Petroleum and Hindustan Petroleum --could not even implement the 5 per cent blend due to shortage of ethanol. The Cabinet Committee on Economic Affairs (CCEA) today made it mandatory for OMCs to sell five per cent blended petrol. "The CCEA reiterated an earlier decision that there shall be a mandatory blending of five per cent of ethanol. It has instructed the Petroleum Ministry to ensure that all OMCs implement the decision," Home Minister P Chidambaram told reporters here after a meeting of the CCEA. He said in order to ensure that there is no supply dislocation of ethanol, a small group of officials representing the ministries of Food and Consumer Affairs; Renewable Energy and Petroleum and Natural Gas will be constituted. ...

Yes. You are very much right. The future of this company will be decided by Feb 2010. Either they should declare bonus or dividend. If not, we need to think of continuing to hold this scrip or not. ...

CB, if you are making something for one Rupee and someone is paying you two to just burn it, would you like to talk about it ? The silence on CER`s should be understood, not talked about. Anyway, this bonanza ends in 2014. ...

It appears that well deserved rerating process of PSU Banks has started....

It is on my buy list,whether take over or not. The Bank has good quality assets. NPA ratio is less than 0.5%. The growth has been impressive. Fully computerised. Dividend yield of around 4%.With such strengths it is quoting at P/E of just 6. It deserves P/E of atleast 10 to 12, looking to its growth potential....

Agree. But it also has the problem of some body trying to pin down its prices. Hence, till the purpose of manipulators is served, the price may remain subdued. ...

Mutual funds are also gradually increasing their holdings in SRF. Sundarm BNP, a very good MF is having substantial holdings in SRF. One more quarter of solid performance should take SRF beyond Rs.300/-. ...

What I have observed is that there are many stocks like Mangalam, JK Lakshmi, JK Cement,SRF,Andhra Bank,NIIT Tech etc.,which are available at dirt cheap valuations. Operators appear to be busy in slowly accumulating these scrips. They will test patience of Retail investors and accumulate them as much as they can. Afterwards the prices wuill be jacked up. Hence, patience is the key to make money on these counters....

Theoretically you may be right. However, it makes sense for company to keep on declaring regular Dividends. This will keep pressure on management to perform continuously so that enough cash surplus is generated for distribution as dividend. Today there is no pressure on Seamec management. The Management need not borrow, need not distribute Dividend. Business where Seamec is into, is cyclical. Hence,from investors` point of view it makes sense to get periodical returns by way of Dividend. Further Declaration of Dividend also increases faith in the numbers declared by the company. One of the reasons why I did not invest in Satyam of Ramlinga Raju was their track record of poor Dividend pay out compared to other IT biggies.I controlled my urge to invest in Satyam with great difficulty because of Dividend factor. Ultimately it proved out to be a sound decision. To be fair on Seamec Management, they are generating substantial cash surplus only this year. So far their capex requirements were huge. However, if they don`t declare Dividend during this year also, then one must be cautious. ...

Dear Comatose,I understood the logic behind the decision only after I interacted with you on MMB. Prior to that in my mind also doubts were there regarding the purchase of Engg plastics division from SRF Poly. Because the company never bothered to come up with a convincing explanation, even when Media cast aspersions on the decision. The company needs to communicate properly with all stake holders. As I mentioned earlier, lack of proper communication is the main reason for the misunderstanding of SRF....

The way the company is performing, paying liberal Dividends, I feel like agreeing with Comatose. However, there appears to be some communication gap, which gives scope for doubts. One of them is not disclosing the contribution of carbon credits in quarterly profits. Second,instead of adopting out right share holder friendly policies such as declaring bonus, the company keeps on announcing buy backs. While buy back helps to protect share value, it also helps promoters to raise their stake in the company. Hence for being considered at par with Tatas, SRF promoters have to do things differently. Anyway, I agree with Comatose that the promoters are honest and they have not cheated any one....

The risk is only in the short term. Over Medium Term to Long Term, this correction is a great buying opportunity. With RBI tightening norms for Loan Loss provisioning, the Banks would be forced to ensure top grade asset quality. With this great move by RBI depositors and long term investors in Banking sector in India can have more faith. I hope this measure will boost P/Es of Indian Banks. ...

I am not too sure the stock will touch Rs.480/- on Monday itself. But it is a potential 10+ bagger in next two to three years or may be earlier. I was analysing consolidated results. Even in such a depressed scenario sales are Rs.145686 crores.once steel prices firm up across the globe and Corus production goes up the turnover can reach 200000 crores. Firm prices mean, profit margin can be 15% on a conservative basis. That means profit figures of Rs.30000 crores. At this profit EPS would be Rs.400 per share. P/E of 10 at this price gives the share price of Rs.4000/-. Hence with such a great potential, good dividend yield and Tata management, at current price, it is a risk free buy....

It appears IDBI is getting its act together. The Bank has very good technical infrastructure, thanks to erstwhile pvt. sector Bank and project appraisal expertise, thanks to erstwhile FI avatar.Two weaknesses were low NIM and absence of professional risk management. It appears Mr. Yogesh Agrwal has been able to address these two weaknesses too. In that case rerating appears to be happening. If that is happening there is possibility of earnings expansion and PE expansion and this is a potential multibagger....

Moral of the story: Never buy a share at fancy valuations and just because lot of brokerages recommend. The brokerages derive their recommendations based on management`s views. The business is quite different ball game. Whenever, there is high margin in any business competition will surface and margins will normalise and hence valuation of shares will also normalise. Only traders can make money from shares with high valuations and very rarely investors. ...