Feb 25, 2013, 08.50 AM | Source: Moneycontrol.com
Bandyopadhyay helps investors out with their investment queries as part of moneycontrol.com’s initiative Know Your Investment.
Sudip Bandyopadhyay (more)
MD & CEO, Destimoney Securities | Capital Expertise: Equity - Fundamental
Bandyopadhyay helps investors out with their investment queries as part of moneycontrol.com's initiative Know Your Investment.
Below are his answers to questions investors asked us on our Facebook page.
Dr. Jayesh Gaygol: What is a target of Tinplate in six months? Will it cross Rs 55?
A: Tinplate is India's largest indigenous producer of tin coated and tin free steel sheets providing packaging solutions to the food processing industry and also caters to other industries like Chemicals, Paints, Electronics and Defense etc. It enjoys around 35% market share in India. The company reported strong performance in Dec quarter with 65% growth in topline & 33% in bottomline. Since you are looking for a short term horizon - I believe that in the short term it might move upto 55 levels but one should keep a strict stop loss.
Priya Nambiar: What are your views on Cochin Minerals and Rutile ?
A: CMRL's main product is Synthetic Rutile, which finds application as raw material for the Titanium pigment and titanium sponge/metal industry. Other products are by products. Ferric Chloride has applications as an etching agent and is an effective coagulant for drinking water and effluent treatment. Ferrous Chloride is coagulant for drinking water and effluent treatment. Iron Hydroxide (Cemox) clay used for brick and tile making.
During H1FY12, net profit rose by 224% to Rs35.0 crore on 50% higher sales of Rs138.6 crore. OP and NP margin stood at 39.6% and 25.3% Vs 20.4% and 11.7% respectively in H1FY12. H1FY13 EPS works out to Rs44.9 Vs Rs13.8 in H1FY12.”
There has been improvement in the global demand for Synthetic Rutile/and Ferric Chloride in the sea water desalination plant in Gulf countries and for Ferrous chloride in sewage treatment plants in African Countries. It exports more than 80% of its production and in the current scenario where the Rupee is weakening against the USD, the company could benefit out of higher Rupee realization. These give strong visibility to revenue going forward. At the CMP of Rs267, the share is trading at a P/E of 3.2x on FY13E and 2.8x on FY14E.
Mukesh Lovely Thareja: What is your call on Titan ?
A: Titan is a good buy for medium / long term. This is fundamentally a very strong company and will continue to deliver excellent results and growth over the next few years.
Santosh Dubey: I am new in market and want to invest in currency and gold. So please suggest me should I wait some more time to buy gold or should I start buying now?
A: If you are a long term investor, you can start buying gold now. Gold price will keep fluctuating based on multiple factors in the short term. However, in the long run, we believe that there is a secular up trend. But it should also be kept in mind that the return from Gold will not be as spectacular as it was during the last few years. Gold will provide a steady return of 8-12% over the next 12 months.
Varun Bhatia: I have 50 shares of L&T at Rs 1690 a share? What should I do, hold or sell?
A: L&T is an excellent company. We believe that prospect of L&T is good in medium / long term. India’s infrastructure story will help L&T. Being efficient and well managed provides it with an edge.
As soon as the investment cycle starts in India, L&T will be the biggest beneficiary.
Prasad Dhodapkar: What is your call L&T Finance ?
A: L&T Finance is a strong candidate for a banking license. However, this expectation is already factored in by the market and this reflects in the price. Considering the parentage and it’s fundamental strength, we believe that L&T Finance is a good hold for medium / long term.
Chitresh Lunawat: What is your call on Madhucon Projects ?
A: India’s GDP growth has clearly slowed down and both infrastructure and capital goods sectors are suffering the most. The pains points are yet to be removed. From the value perspective, the infrastructure companies look attractive. However, we believe that the time for value buying in these sectors haven't yet come. It is better to avoid Madhucon Project in short / medium term.
Anshuman Chakrapani: What's your view on JP Associates ?
A: JP Associates is a fundamentally strong company. However, the problem ailing the infrastructure and capital good sectors, may also affect JP Associates. At current levels, JP Associates can be acquired for a medium / long term. However, in the short term, till the economic environment improves, JP Associates may continue to struggle.
A: TV18 has corrected significantly in the recent past. At current levels, this looks good. Exposure can be taken in TV18.
Mirza International has improved performance over the last few quarters. However it is better to stick to established large cap and mid cap stocks.
Shalimar Paints is one of the leading paints manufacturing companies of India, reported its financial results for the quarter ended 30th Dec, 2012. The Third quarter witnesses a healthy increase in overall sales as well as profitability of the company. The company’s net profit jumps to Rs.46.90 million against Rs.37.90 million in the corresponding quarter ending of previous year, an increase of 23.75%. Revenue for the quarter increase 14.63 percent.
At the current market price of Rs 136, the stock P/E ratio is at 14.87 x FY13E and 12.99 x FY14E respectively. Earnings per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.9.15 and Rs.10.47 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 16% and 19% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 6.87 x for FY13E and 6.03 x for FY14E. Price to Book Value of the stock is expected to be at 3.18 x and 2.55 x respectively for FY13E and FY14E. We expect that the company surplus scenario is likely to continue for the next years, will keep its growth story in the coming quarters also.
Anuj Khatri: IT majors held out during this recent turbulent ride. Should one go ahead n buy or be at sideline and wait for a dip? Also, I bought drowning Tata Steel at Rs 366. Should I wait for a upswing or get out? Please suggest stop-loss, time horizon?
A: Large cap IT companies have been performing well inspite of the global turmoil. We believe that TCS and HCL will continue to outperform and deliver good results. Exposure can be taken whenever there is a correction.
Regarding small and mid cap, one needs to be extremely careful. While opportunities exist in the market place, performances of these companies are not assured.
TATA Steel has probably seen the worst. We expect that performance will improve hereon. Domestic production is increasing as a percentage of overall production. This should significantly help in overall margins. The long term investor can explore entering or remaining invested TATA Steel at current levels.