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T I M E S

A TIME COMMUNICATIONS PUBLICATION

VOL. XXII No. 16 Monday, 25 Feb.3 Mar. 2013 Pages 18 Rs.12

Market awaits BudgetBy Sanjay R. Bhatia

As indicated in the last issue, the markets remained under pressure as the CNX Nifty inched closer to its 100-day SMASelling pressure continued on the bourses amidst negative domestic and global market sentiment. However, the breadthof the market for the week remained positive amidst higher volumes. The global market sentiment remained subdued onthe back of fresh concerns over the Eurozone and Federal Reserve indicating that quantitative measures would bediscontinued in the future. Incidentally, the FIIs remained net buyers in the cash and the derivatives segments but theyhave also started selling. Domestic institutional investors, however, continued to press sales and were net sellers duringthe course of the week.

Technically, the prevailing negative technical conditions continued to weigh on the market sentiment and continue tohold good. The Stochastic, MACD, RSI and KST are all placed below their respective averages on the daily and weeklycharts. The Nifty is below its 50-day SMA, which is a short term negative for the markets. Moreover, it is likely to breachthe 100-day SMA also in the near future. The negative divergence pattern formed on the Nifty still holds good and a signof worry for the markets. These negative technical conditions would lead to further selling pressure.

However, the prevailing positive technical conditions also continue to hold good. The Stochastic is placed in the oversold

zone on the weekly charts, which would lead to intermediate bouts of short covering. The Nifty is placed above its 100-day SMA and 200-day SMA. The Niftys 50-day SMA is placed above the Niftys 100-day SMA and 200-day SMA, thelatter being called the Golden Cross breakout. These positive conditions would lead to short covering and selectivebuying support at lower levels.

The market sentiment remains negative. Now, it is important that the markets witness buying support at regular intervalsfor the Nifty to move above the 50-day SMA.Till such time, selling pressure is likely to bewitnessed and the markets could test the 5816support level. Pull backs and relief ralliesshould be used as an opportunity to unwindlong positions and add short positions till theNifty closes above its 50-day SMA. Themarkets are likely to remain volatile andchoppy due to the impending F&O expiryand Union Budget both on Thursday 28February 2013. The Union Budget remains thenext big trigger. In the meanwhile, themarkets would take cues from the news flowon the Union Budget, global markets, Rupee-Dollar exchange rate and crude oil prices.

Technically on the upside, the BSE Sensexfaces resistance at the 19603, 19811, 20510, and 21005 levels and seeks support at the 18309, 18290, 17667, 17429 and 17250

ISIEmergingMarketsPDF in-universal from 120.62.27.85 on 2013-03-24 14:04:37 EDT. DownloadPDF.Downloaded by in-universal from 120.62.27.85 at 2013-03-24 14:04:37 EDT. ISI Emerging Markets. Unauthorized Distribution Prohibited.


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levels. The support levels for the Nifty are placed at 5816, 5747 and 5571 while it faces resistance at 5885, 5966, 6158, 6313and 6358 levels.

Investors should wait & watch.

Making sense of the Sensex!!By Fakhri H. Sabuwala

Union Budget 2013-14 is round the corner and almost all sectors are putting forward their demands to revive theirfortunes. The FM will find it difficult to please them all more so when his focus is on trimming the fiscal risks, improvingthe investment climate, reducing interest rates and kick start growth. In short, the market which had run quite well inJanuary 2013 displays a fatigue syndrome and the FM needs to address this urgently.

Since September 2012, the government has shown a resolve to reintroduce reforms in a bid to cut the outgoes and controlthe deficit. The fiscal and trade deficits are two edged swords which the FM needs to hold and tread cautiously. Thereforms agenda, it is believed, may lose pace in the budget as the FM may have to adopt populist measures as this is theCongress last chance before thegeneral polls to woo the voters.

The market is turning listless everypassing day and the FII interest,too is dwindling recording a netoutflow on Tuesday, 19 February2013. This is possibly because ofthe rally in western markets whichattract their funds. The budgetneeds to address together with itsresolve to buoy growth alongwiththe RBI. Markets cannot run aheadof the real economy only for awhile but not for long. If the realeconomy fails to keep the faith ofthe markets, they will run down asquickly as they have run up. Incase such an eventuality, 2013 may

be worse than 2011 and 2012. Theball is now in the FM's court andhe has to ensure that the realeconomy does not disappoint.

What has kept the Sensex andNifty flying high was the robust FIIinflows. The $8 billion inflow inJanuary and February 2013 hasshaped the rally despite thecontinuous sale by DIIs. Thedrastic fall in the holdings of retailinvestors is also a cause of great

worry as it points to the erodingfaith in the allocation of savings toequity. If Indian markets, despitesuch a large population, cannotattract savings to the capitalmarket and increase the footfallson Dalal Street, we shall be at thebrutal mercy of the FIIs.

The Rajiv Gandhi scheme of taxexempt investments lacked all the

BAZAR.COM



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characteristics to highlight the wealth creation strategies and its failure is evident. But improving transparency incorporate governance by company managements can instill confidence among investors and help the fruits of investmentgrow and spread.

The budget this time needs to make the monetary and fiscal policy work in tandem. Reforms can't work if not taken farenough. The multi brand retail FDI bill, over which such a storm was raised, is yet to take off thanks to the conditions forentry being too restrictive. The marginal diesel price hike every month will not have favourable impact on the economy asit lacks the strong dose of slashing subsidies, to decontrol fuel price and deregulate the oil sector.

Hurdles to capital infusion and capex limits on projects must be dismantled to foster investment-led growth. The RBI hasin its recent report listed some of the problems that the economy is saddled with infrastructure deficit, coal shortage,difficult access to green clearances and land. Without regulatory streamlining and promotion of competition, we canexpedite neither industrialisation nor capacity building, be it roads, ports or power installations. In a country with anenviable coal reserves, the coal industry remains a corruption ridden mess. GST has been on the FM's agenda for the lastseven years but is being postponed each time.

The dominance of FIIs in the secondary market reminds one of the days of The East India Company. It is now reckonedthat FIIs own 20% of Indian stocks and this accounts for 44% of the market's free float. That's really huge!

FII ownership of Indian equities is thus at an all time high. From a technical perspective, this highlights the vulnerabilityof Indian stocks to global risk-off trade. The vulnerability extends to the Rupee as well as over large current accountdeficit is funded mainly by capital flows and underscores the need for the government to ensure revival in growth. Butsuch a revival is distant due to the limited policy flexibility, both fiscal and monetary, to stimulate growth in the nearterm.

The parliament session is on and in 34 working days it needs to table over 70 bills. Pray the nation comes beforemudslinging and washing dirty linen in public by political parties. Pray the economy is put back on track and recovers aportion of its lost glory. If this is done, the Sensex may find sense at least. Otherwise, it will be senseless!

Sensex support at 19100 crucialBy Hitendra Vasudeo

Last week, the BSE Sensex opened at 19496.25, attained a high at 19742.41 and fell to a low of 19289.69 before it finallyclosed the week at 19317 and thereby showed a net fall of 151 points on a week-to-week basis.

We had suggested to sell on a rise to 19524-19666 against this we saw a high of 19742 which later fell to a low of 19289Traders who managed to sell at 19524 or above during the week benefited. If the same strategy was applied on the Nifty,

traders would have booked repeat profits.Weekly support will be at 19156 and 18704 while weekly resistance will remain at 19449, 19609 and 19800 levels.

A trend-line and channel breakdown has been witnessed. Therefore, a correction of the last corresponding rally from15748 to 20203 will be seen. The 23.6% and 38.2% retracement of the last corresponding rise is placed at 19149 and 18534respectively. The balance 50% and 61.8% retracement levels are placed at 17972 and 17448.

Stochastic, which is fast to react to price has hit the oversold zone whereas the RSI exited the overbought zone and isfalling. If the Stochastic exits the oversold zone, a pullback may emerge to create a lower top against 20203.

A fall and close below 19100 may extend the slide towards 18534, 17972 and 17448.

BSE Mid Cap Index

A rise and weekly close above 6800 can mark a reversal of the correction.

BSE Small Cap Index

A rise and weekly close above 6850 can mark a momentary end to the correction. Support at 6336 and 6132 will be testedand if a recovery is seen in small caps, then it will be from either of these support levels.

Wave Tree

Wave Tree Month Year Sensex Month Year Sensex Remark

Wave I - - - - Dec 1979 113 Feb 1986 656 -

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

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

Wave IV - - - - Jan 2008 21206 Feb 2012 18523 In progress

TRADING ON TECHNICALS



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

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

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

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

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

Wave IV Wave C B c - Aug 2012 15748 Jan 2013 20203Could have ended

Waiting for Confirmation

Conclusion

Weakness would continue below 19100.

Strategy for the week

Traders short on the Sensex and index related stocks may keep the stop loss at 19800. If the opening is above 19100 andthe Sensex falls below 19100, then sell with the high of the day as stop loss or 19800 whichever is higher.

WEEKLY UP TREND STOCKSLet 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 toLevel 3 or above then look to book profits as the opportunity arises. If the close is below Weekly Reversal Value

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

Scrips Last

Close

Stop

Loss

Level

2

Center

Point

Level

3

Level

4

Relative

Strength

Weekly

ReversalValue

Up

TrendDate

BuyPrice

BuyPrice

BookProfit

BookProfit

SUN PHARMA 811.00 777.0 787.3 800.7 824.3 861.3 69.0 765.3 08-02-13

WOCKHARDT 1931.00 1755.0 1807.3 1878.7 2002.3 2197.3 63.9 1811.3 01-02-13

HCL TECHNOLOGIES 720.00 689.0 695.3 713.7 738.3 781.3 63.4 694.3 15-02-13

BAJAJ HOLDING 970.00 952.0 953.0 969.0 986.0 1019.0 63.3 967.8 22-02-13

BERGER PAINTS 202.05 183.1 186.7 198.4 213.7 240.6 62.6 183.8 18-01-13

WEEKLY DOWN TREND STOCKSLet 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 pricesmoves 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.pmto confirm weekly reversal of the Down Trend.

Scrips LastClose

Level1

Level2

CenterPoint

Level3

StopLoss

RelativeStrength

WeeklyReversal

Value

DownTrendDate

CoverShort

CoverShort

SellPrice

SellPrice

B.O.C. 298.45 246.0 284.8 309.9 323.6 335.0 22.01 320.19 25-01-13

A B B 585.90 489.0 554.7 589.3 620.5 623.9 24.18 621.97 18-01-13

ALSTOM PROJECTS 332.00 247.8 310.7 352.4 373.7 394.0 24.43 346.50 11-01-13

BHARAT FORGE 218.55 199.0 213.5 222.9 227.9 232.3 25.82 223.12 11-01-13

SIEMENS 547.40 504.7 536.4 557.2 568.2 578.0 25.98 594.05 11-01-13

PUNTER'S PICKSNote: Positional tr ade and exit at stop loss or target whi chever is earl ier. Not an in tra-day trade. A deli very

based trade for a possibl e time frame of 1-7 trading days. Exi t at fi rst target or above.

ScripsBSECode

LastClose

Buy PriceBuy On

RiseStop Loss Target 1 Target 2

RiskReward

793REC22 961743 1099.00 1084.00 1099.00 1082.00 1109.5 1126.5 0.62

HIND RECTIFIERS 504036 69.30 65.20 70.00 62.00 74.9 82.9 0.77

CHOICE INTERNAT. 531358 53.00 52.90 53.40 51.70 54.5 56.2 1.12

BUY LIST



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ScripLast

CloseBuyPrice

BuyPrice

BuyPrice

StopLoss

Target1

Target2

BLUE DART EXPRESS 2285.00 2113.55 2057.50 2001.45 1820.00 2588.6 3063.6

MCLEOD RUSSEL (I) 383.00 370.24 365.08 359.91 343.20 414.0 457.7

TATA CONSULT. SER 1454.45 1416.37 1401.97 1387.58 1341.00 1538.3 1660.3

* Cost ofconsumer durableswill rise by 5% to 15% to meet the rising import cost of components and rising labour bills

But margins will improve, which makes this segment attractive.*Tata's Air Asia honeymoon is the turning of a new leaf in the Aviation sector. With the new entity on a firm saddle, the

company will indulge in a lot of M&As in the sector.

* Power will be the new sunrise industry post budget. Power generation, transmission and distribution companies shall

compete in meeting the deadline of raising capacity.

* Gold has seemingly bottomed out around Rs.29K/10gms and silver around Rs.53K/1kg. Both these precious metals

will gradually recover and may give 10% to 20% rise respectively by the end of 2013.

*JP Morgan is bearish on scrips in emerging markets. It recommends option purchases against stock losses and advises

selling scrips that are most sensitive.

* Sun Pharma is in a new stratosphere of its own and insiders believe the scrip is heading to Rs.1000.

* Maruti Suzuki will face competition from Honda and Hyundai who are introducing new models to cut into the

markets of D'zire and Swift.* An Ahmedabad based analyst recommends Daichi Karkaria, Ludlow Jute, Zenith FibreandJenburkt Pharmaas pre

budget hot buys.

* Tulip TelecomsCDR package may be over within the next few months.

* ARSS Infrastructure has come out with a better set of numbers on both the topline and bottomline after the

implementation of its CDR package.

*Analysts are bullish on the Infrastructure sector and IVRCL is a stock to be watched.

*Southern Online Bio Tech has come out with encouraging Q3 results and the stock is expected to rise in 6-7 months.

Firstsource Solutions Ltd. (Code: 532809) CMP: Rs.10.89By Rupesh M. DagaFirstsource Solutions Ltd. (FSL) was promoted byICICI and incorporated as ICICI Infotech UpstreamLtd. in December 2001 to provide BPO services.Over the years, the company grew through variousacquisitions and venture into new verticals andservice offerings. To expand its offerings andcapabilities, FSL went public in February 2007 priorto which it was known as ICICI One Source.

EXIT LIST

ScripLast

CloseSell Price

SellPrice

SellPrice

StopLoss

Target1

Target2

BOSCH9011.00 9029.88 9070.00 9110.12 9240.00 8689.9 8349.9

CITY UNION BANK 55.90 58.74 59.72 60.71 63.90 50.4 42.0

IPCA LABS 475.55 496.18 506.65 517.12 551.00 407.5 318.8

ITC 292.05 298.48 300.83 303.17 310.75 278.6 258.8

JK LAKSHMI CEM. 130.40 134.02 136.62 139.23 147.65 112.0 89.9

KARUR VYSYA BNK 482.30 503.68 511.55 519.42 544.90 437.0 370.3

M&M FINANCE SERV. 199.15 205.33 208.32 211.32 221.00 180.0 154.6

MRF 12358.00 12591.48 12774.50 12957.52 13550.00 11040.5 9489.5

NITIN FIRE PROTECT 64.25 66.29 67.30 68.31 71.60 57.7 49.1

TOWER TALK

BEST BET

Review

Accelya Kalerecommended under Best Bet on 28 January 2013 atRs.335 zoomed to Rs.408 in a short period and has reverted toRs.333. It came out with encouraging Q2FY13 results with sales ofRs.74 crore and net profit of Rs.21 crore translating into an EPS ofRs.14. For H1FY13 ended 31 December 2012, it posted a net profitof Rs.41 crore with an EPS of Rs.27. Our estimated EPS of Rs.50 forFY14 is, therefore, likely to be achieved by FY14 itself. We

recommend hold onto this stock and add more at current levels.



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Recently, the company was acquired by the RP-Sanjiv Goenka group promoted CESC Ltd.

The company offers business process outsourcing (BPO) services across healthcare, banking & financial servicestelecommunications and media industries services include customer acquisition, customer care, accounts receivablemanagement and collections, transaction processing and business research and analytics.

FSL has a very strong business presence in India, USA, UK and Philippines. It opened 6 new centres in FY12 taking thetotal number of centres to 48. The company works on a global delivery model and has 32,553 employees. North Americacontinues to be the key market contributing 61% of its total revenue followed by UK 27% and India 12% in FY10.

Its clientele includes five of the top 10 US banks; eight of the top 10 general purpose credit card issuers in USA, largest

bank and mortgage lender in the UK; two of the top 10 US telecom companies; two of the top 5 mobile service providersin the UK; largest pay TV operator in Australia; three of the top 5 mobile service providers in India; five of the top 10health insurers in USA, and over 800 hospitals in USA.

We believe, post its acquisition by the Sanjiv Goenka promoted CESC, FSL would be able to pursue larger deaopportunities that it could not address earlier due to cash constraints. The companys high gearing resulted from itsaggressive debt funded growth in the past. This is expected to come down significantly, thereby generating cash flowsand an opportunity to improve margins and revenues.

COMPANY PROFILE

FSL is an innovative provider of customer centric business process services. With a network of 48 delivery centres spreadacross US, UK, Philippines, India and Sri Lanka, it provides consulting services with outsourcing solutions toorganizations in the Healthcare, Communications, Banking, Financial Services and Insurance, and Publishing industry.Driven by its right shore delivery model with 70% employees located onshore and 30% offshore, the company ensures

client proximity, better understanding of the domain as well as the market and effective communications for deliveryexcellence.

Based on the industry verticals, FSL has split its business operations into 4 independent business units i.e. Healthcare,Telecommunications and Media, BFSI and Asia Business Unit. This restructuring has resulted in strong vertical domainfocus and ability to address markets and customers.

Clientele: FSL clients include 29 Forbes Global 2000 companies of which 18 are Fortune 500 companies, 6 FTSE 100 and 3S&Ps Nifty 50 companies among others.

Banking & Financial Services:

Eight of the Top 10 general purpose credit card issuers in USA

Leading issuer of prepaid debit cards in USA

UKs largest retail bank and mortgage lender

One of the Top 3 UK motor / auto insurer

Two of the Top 5 Private Banks in India

Healthcare: Five of the Top 10 Health insurance / managed care companies featured in US 1000+ hospitals.

Telecommunications & Media:

Four of the Top 10 Mobile / Wireless companies in developed markets

Two of the Top 4 Broadband / High speed Internet companies in UK

Largest Cable & Satellite TV operator in UK & Australia

Three of the top 5 mobile companies in India.

KEY HIGHLIGHTS

Acquisition by CESC - The RP-Sanjiv Goenka gorups flagship electricity generation and distribution company, CESCLtd. has acquired the controlling stake in FSL for Rs.640 crore in cash. This will help FSL reduce its debt and give the

Goenka group an opportunity to diversify. The deal values FSL at Rs.795 crore on its expanded capital base. At itscurrent stock price, the company has a market capitalization of Rs.737 crore. Most of its woes like low margins andhigh cost debt stemmed from the absence of a single identifiable promoter with whom the bankers could feelcomfortable. With Sanjiv Goenka in, this will change now.

Change in Strategy FSL changed its strategy six months ago and increased its focus on the Asia-Pacific region withfinance, healthcare, and telecom as the major verticals. In the past few months, it has realigned these verticals as keyservice lines. It opened six new centres on a net basis in FY12 and has won new projects worth Rs.900 crore. The costsare expected to rationalise once the investments made in these business centres start fetching returns after thesefacilities come on stream.



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Improved Performance - The company reported improved performance in H1FY13 as revenues grew 32% overH1FY12. Operating EBIT was up by 76% and Profit after Tax was up 102% over H1FY12.

Given the improvement in performance, FSLs share price has also responded positively. If we look at the historicaldata, FSL has consistently grown in all areas like manpower, clients, working centres, etc.Healthcare, which accounts for the largest percentage of revenue compared to other BPO providers, is expected towitness a boom on the back of US Healthcare reforms.

If we look at the Q3FY13 results, FSL may post an EPS of Rs.3.5-4 for FY13. This is likely to rise in coming years andthere are indications of a dividend in FY15. Even if it pays 20% dividend, which is really conservative for the BPOsector, this Rs.10 paid-up share may not be available at such attractive valuations for long.

FINANCIALS

If we compare the performance of 9MFY13 to 9MFY12,the EPS has more than doubled and also surpassed theannual EPS of FY12. Superior performance, backed bya strong group, makes a strong case for investment.

Post its acquisition by the RP-Sanjiv Goenka led CESCLtd., we believe the financial position of the companywould improve considerably because of the backing ofa big group.

CESC, too, was a loss making company, when it wasacquired by the RPG group is today India s first fully

integrated electrical utility company.The main problem facing FSL was its FCCB redemption, which is now behind it. Improvement in its operations andfinancials is expected going forward.

We believe the stock could turn out to be a multi-bagger.

RISKS & CONCERNS

Foreign Exchange Fluctuations - Around 70% of the revenue of the company comes from outside India. Any adversemovement in the foreign exchange market could impact its earnings.

Government Regulatory - As the company deals with various state governments, it faces regulatory and compliancerisk.

Weaker economies of key markets - Global, economies are facing pressures of sustenance and growth. The US & UKare the key markets of the company. However, USA is on the path to recovery and the company has starteddiversification into the Asia Pacific region to mitigate the risks.

GAIL (India) Ltd.: To energise your portfolioBy Devdas Mogili

GAIL (India) Ltd. is a 29-year old New Delhi based company established in 1984 as a Central Public Sector Undertaking(PSU) under the Ministry of Petroleum & Natural Gas (MoP&NG). It is India's flagship gas transmission and marketingcompany with a global footprint. The Government of India (GoI) holds 57.35% stake in GAIL and it enjoys Maha Ratnastatus among PSUs. Mr. B. C. Tripathi is the chairman of the company.

GAIL is engaged in the business of Natural Gas, LPG, Liquid Hydrocarbons and Petrochemicals. The company has alsodiversified into Exploration & Production (E&P), City Gas Distribution and is steadily developing its overseas presence.

Having started as a natural gas transmission company in the late Eighties, the company has grown organically building alarge network of Natural Gas pipelines over 9500 Km with a capacity of around 172 MMSCMD; two LPG Pipelinescovering 2040 Km with a capacity of 3.3 MMTPA of LPG; seven gas processing plants for production of LPG and otherLiquid Hydrocarbons with a production capacity of 1.4 MMTPA; and a gas based integrated Petrochemical plant of410,000 TPA polymer capacity which is being expanded to 900,000 TPA.

GAIL has 70% equity stake in Brahmaputra Cracker and Polymer Ltd. (BCPL), which is setting up a 280,000 TPA polymerplant in Assam. It is a co-promoter with 17% equity stake in ONGC Petro-additions Ltd. (OPaL), which is implementing agreenfield petrochemical complex of 1.1 MMTPA Ethylene capacity at Dahej in Gujarat. GAIL has 31.52% stake alongwith NTPC as equal partner in JV company, Ratnagiri Gas Power Project Ltd. (RGPPL) at Dabhol, which operates thelargest gas based power generation facility in the country and is also setting up 5 MMTPA LNG terminal.

Results: (Consolidated) (Rs. in crore)

Particulars Q3FY13 Q3FY12 9MFY13 9MFY12 FY12

Revenue 713 577 2106 1633 2254Expenditure 661 556 1976 1568 2159Interest 19 16.9 57.5 41.0 51.7PBT 43 9.3 118.8 50.8 76.0Tax 2.9 2.3 12.7 11.5 13.7Net Profit 41.5 6.8 106.4 38.9 62.0Equity 657 430 657 430 430Reserves - - 1011 961 999EPS 0.83 0.16 2.35 0.90 1.44OPM (%) 25.89 7.01 - - 22.18NPM (%) 13.7 10.29 - - 6.01

STOCK ANALYSIS



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Keeping in mind the requirement of growth and consolidation as well as opportunities arising out of New ExplorationLicensing Policy (NELP) of Government of India, the company has moved upstream of the gas value chain i.eExploration & Production and has a stake in 31 E&P blocks including 2 overseas blocks in Myanmar.

GAIL is a pioneer in the City Gas Distribution (CGD) business in India with Indraprastha Gas Ltd. (IGL) in Delhi andMahanagar Gas Ltd. (MGL) in Mumbai. Besides IGL and MGL, GAIL has set up several JVs for CGD to supply gas tohouseholds, the transport sector and commercial consumers in various cities including Hyderabad, Agartala, Kanpur,Indore, Vadodara, Lucknow, Agra and Pune.

In 2008, GAIL incorporated a wholly-owned subsidiary, GAIL Gas Ltd (GGL) to exclusively focus on city gas distributionbusiness. GGL is authorized to implement CGD projects in Kota, Dewas, Sonepat & Meerut in the 1st round of bidding bythe Petroleum & Natural Gas Regulatory Board (PNGRB).

Overseas Presence: As a strategy to expand its global footprint, GAIL has formed a wholly-owned subsidiary, GAILGlobal (Singapore) Pte Ltd. in Singapore for pursuing overseas business opportunities including LNG and trading inpetrochemicals. Another wholly-owned subsidiary, GAIL Global (USA) Inc. in Texas, USA has acquired 20% workinginterest in an unincorporated joint venture with Carrizo Oil & Gas Inc. in the Eagle Ford shale acreage in Texas.

It is an equity partner in two retail gas companies in Egypt namely, Fayum Gas Company (FGC) and National GasCompany (Natgas). GAIL is also an equity partner in a retail gas company involved in city gas and CNG business inChina China Gas Holdings Ltd. (China Gas). Further, GAIL and China Gas have formed an equally owned joint venturecompany GAIL China Gas Global Energy Holdings Ltd. for pursuing gas sector opportunities primarily in China.

GAIL is a part of consortium in two offshore E&P blocks in Myanmar and also holds participating interest in a jointventure company South East Asia Gas Pipeline Company Ltd. incorporated for transportation of gas to be produced

from two blocks in Myanmar to China.To strengthen its foothold overseas, GAIL has made a joint bid with EDF Trading of France for Spanish oil & gas majorRepsol's assets in Trinidad and Tobago. The company is also looking at Repsol's Canaport LNG terminal and Stream, ajoint venture LNG marketing and transport company by Repsol and Gas Natural LNG.

GAIL has a representative office in Cairo, Egypt to pursue business opportunities in Africa and Middle East.

Diversification: As a part of its initiative for reducing its carbon footprint and creating a path of sustainable growth,GAIL is building a portfolio of renewable energy businesses. The company has successfully commissioned wind energypower projects of 118 MW across Gujarat, Tamil Nadu and Karnataka and plans to set up 500 MW wind power capacityover the next 3-4 years. The Company also targets to set up over 300 MW of solar power generation capacity in a phasedmanner.

Performance: Natural Gas continues to be the core business of GAIL. Major supplies of natural gas include fuel to powerplants, feedstock for gas based fertilizer plants and LPG extraction. The Company has around 50% market share in gas

marketing in India.Operations: For FY12, GAIL posted total revenue of Rs.40397.95 crore with a net profit of Rs.3653.84 crore netting an EPSof Rs.28.80.

Latest Results: The companys totaincome rose from Rs.11,294.15 crore inQ3FY12 to Rs.12,504.19 crore in Q3FY13Its net profit rose to Rs.1,284.86 crore inQ3FY13 from Rs.1,091.42 crore inQ3FY12. It recorded an EPS of Rs.10.13for Q3FY13 and Rs.26.84 for the 9 monthsended 31 December 2012 (9MFY13).

Financials: GAIL is a large-cap company

with an equity capital of Rs.1268.48 crore and a share book value of Rs.170.48. It has a low debt:equity ratio of 0.19 withRoCE of 22.07% and RoNW of 17.88%.

Share Profile: The face value of the GAIL share is Rs.10 and it hit a 52-week high/low Rs.401/Rs.303.10. At its currentmarket price of Rs.341, the company has a market capitalization of Rs.43,261 crore.

Dividends: GAIL has been paying dividends as follows: FY12 - 87%, FY11 - 75%, FY10 - 75%, FY09 - 70%, FY08 - 100%FY07 - 100%, FY06 - 100%, FY05 - 80%, FY04 - 80%, FY03 - 70%, FY02 - 45%, FY01 - 40%, FY2000 - 30%, FY99 - 35%, FY98 30%.

The GAIL management has recently approved 40% interim dividend for the FY13.

Financial Highlights: (Rs. in crore)

Particulars Q3FY13 Q3FY12 9MFY13 9MFY12 FY12

Total Income 12504.19 11294.15 35009.12 29909.55 40397.95Total Expenses 10744.49 9696.77 30380.89 25438.34 35373.36Other Income 154.18 21.35 428.76 202.00 431.88Fin Costs 55.18 20.73 140.08 64.14 116.46Tax Expenses 573.84 506.58 1512.89 1438.57 1686.17Net Profit 1284.86 1091.42 3404.02 3170.50 3653.84Equity (FV: Rs.10) 1268.48 1268.48 1268.48 1268.48 1268.48Re Ex Re Reserves - - - - 20356.00EPS 10.13 8.60 26.84 24.99 28.80



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Shareholding Pattern: The GoI holds 57.35% stake in the company while the balance 42.65% is held by the institutions,mutual funds and the investing public. Among mutual funds, ICICI Pru, IDFC, HDFC, Franklin India, UTI, DSP BR,Sundram, Templeton India, HSBC, Tata and SBI PSU Fund have added the GAIL share to their various schemes inJanuary 2013.

Prospects: As per studies, India is expected to be the third largest energy consumer after USA and China with favourableeconomic and social developments by 2025. Currently, India is the fourth largest energy consumer with over 4% of theworld's total annual energy consumption.

India's per capita energy consumption is significantly lower at 500 Kgoe compared to the current world average hoveringaround 1,800 Kgoe. At a GDP growth rate over 8% by 2031-32, it is expected that India's per capita energy consumptionwill be over 1,100 Kgoe.

The share of natural gas in India's energy mix is around 11% against the world average of around 24%. Given the growthplans of the power, fertilizer and industrial segments, there exists a huge potential for increased consumption of naturalgas in India, which has grown faster than any other fossil fuel in recent years.

Natural gas consumption in India has witnessed an impressive CAGR of about 11.5% in the past few years. Power,Fertilizer, LPG, Steel and Petrochemicals have been the key consumption drivers of natural gas. This demand is largelymet by domestic production and imports contributing around 30% as compared to over 75% imports in the case of oilGiven the advantages of natural gas in terms of efficiency, price and environmental impact, the demand for natural gas inIndia may reach 600 MMSCMD by the end of 13 th Five Year Plan in 2022 offering several opportunities for thedevelopment of the gas industry.

Outlook: GAIL has embarked on 7500km pipeline network expansion for about Rs.30,000 crore. Of this, around 2,500

Kms has been completed so far. These pipelines are being built on an open access and common carrier principle. Whencommissioned, the total length of its pipeline network will be over 14,500 Kms with a total transmission capacity of about300 MMSCMD. With the addition of this pipeline network, GAIL will cater to new demand centres and the LNG re-gasification facilities and lead to higher growth.

Conclusion: GAIL is a GoI undertaking enjoying the Maha Ratna status. It is the market leader in the transmission ofnatural gas with about 74% market share.

At its current market price of Rs.341, the GAIL share is discounts less than 13 times its nine monthly (9MFY13) EPS ofRs.26.84. In view of its highly encouraging results, Maha Ratna status, aggressive strategy, good dividend payout andbright prospects, the GAIL share is reasonably priced and may be added to ones portfolio for steady returns in themedium-to-long-term.

Union Budget to lead marketsBy Devendra A. Singh

The BSE Sensex (30-share index) settled at 19317.01 declining 151.14 points (-0.78%) whereas the CNX Nifty closed at5850.30 lower by 37.10 points (-0.63%) for the week ended Friday, 22 February 2013. The BSE Small-Cap index was up+0.11% to close at 6564.76 and the BSE Mid-Cap index ended just higher by +0.02% to close at 6609.03. Both these indicesoutperformed the Sensex.

The bourses settled lower last week on profit booking. The Sensex gained in 3 out of the 5 trading sessions last week.

Prime Minister, Dr. Manmohan Singh, said that credible action is needed from all to ensure that the country is leastaffected by the formidable challenges posed by the global economic slowdown.

Prime Ministers Economic Advisory Council (PMEAC) chief, C. Rangarajan last week said, Amid the widening tradegap the Current Account Deficit (CAD) this year is likely to exceed 4.2% of GDP recorded in 2011-12. We expect the

Q3FY13 figures will also be high but it could come down in the Q4. Trade deficit in January 2013 widened to $20 billion,the second highest rise ever in a month. The biggest trade gap of $21 billion was recorded in October 2012.

India Ratings stated, economic growth may improve to 6.1% in the next financial year from the decade low of 5% in FY13on the back of the reform measures announced after mid-September 2012.

The rating agency also expects the aggregate state governments fiscal deficit to go up to 2.4% against the budget estimateof 2.1%. India Ratings has a stable outlook on state government guaranteed debt programme as it expects the creditquality of state governments to remain stable. This is despite the growth slowdown continuing in FY13. The agencyestimates growth to revive to 6.1% in FY14, it said.

MARKET REVIEW



10/18


India Ratings expects slippage in the aggregate fiscal deficit of the States to be 0.3% of the GDP from the budgeted fiscaldeficit of 2.1% in 2012-13. Unlike the earlier episode of fiscal slippage in 2008-09, the slippage in the current year isexpected to be low on absence of adverse shock of salary revision.

The agency noted that both global and domestic headwinds pulled down Indias economy growth to 6.2% in 2011-12However, the economic reform measures announced in mid-September 2012 have changed the sentiments. Their impacton macro parameters will be felt in 2013-14 while in 2012-13, they will help controlling fiscal slippage.

The aggregate debt of the States in 2013-14 is likely to decline to 21.7% due to improved economic conditions. Howeverthe fiscal slippage would not be significant to lead to debt insolvency, it said.

Industrial growth in FY14 is likely to improve to 4.4% from 3.1% in FY13.On the global scenario, Moodys said the downside risks to the global economy had receded in the past th ree monthsthough a number of dangers still remained. In its latest Global Macro Risk Scenario report, the agency said it expectedeconomic growth to be slow in many countries.

Colin Ellis, Moodys senior vice-president for Macro Financial Analysis asserted, While our central forecasts are littlechanged the downside risks have definitely abated over the past three months. However, we still expect a subdued globalrecovery with sub-trend growth in most advanced economies over the near term alongside a relatively soft pace oexpansion in emerging markets as well.

The ratings agency expects the real growth ofthe G20 countries around 2.9% in FY13followed by 3.3% in FY14. It forecast growth inUSA but expects the Euro area as a whole to

stagnate during 2013.Key indices registered minuscule gains onMonday, 18 February 2013, on positive localcues. The Sensex climbed marginally by 32.93points (+0.17%) to close at 19501.08 whereas theNifty was up 10.80 points (+0.18%) to close at5898.20.

Key indices climbed on Tuesday, 19 February2013 as global stocks closed higher. The Sensexclimbed 134.64 points (+0.69%) to close at19635.72. The Nifty was up 41.50 points(+0.70%) to close at 5939.70.

Key indices settled flat on Wednesday, 20February 2013. The Sensex rose 7.03 points(+0.04%) to close at 19642.75. The Niftyregistered modest gains 3.35 points (+0.06%) toclose at 5943.05.

Key indices edged lower on Thursday, 21February 2013 on profit booking by foreigninvestors. The Sensex skidded 317.39 points (-1.62%) to close at 19325.36. The Nifty was down90.80 points (-1.53%) to close at 5852.25.

Market performance settled flat ending slightlydown on the last day of trading on Friday, 22

February 2013. The Sensex fell marginally 8.35points (-0.04%) to mark a close at 19317.01. TheNifty was down 1.95 points (-0.03%) to close at5850.30.

The Sensex tumbled 151.14 points to settle at19317.01 for the week. The Budget Session ofthe Parliament commenced on Thursday, 21February 2013.

Investment Advisory ServiceBy G. S. Roongta

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On the macro front, The Railway Budget FY13-14 is scheduled on 26 February 2013. The Economic Survey of India is to bepresented on the table of Parliament on 27 February 2013.

The Union Budget FY13-14 is scheduled for 28 February 2013. Market participants will be closely watching it and expectpositive developments from this Union Budget that will help in reviving economic growth and the market sentiment.

Bull & bear tussle on till 28th Feb.

By G. S. RoongtaThe 820-point correction from the recent high of BSE Sensex 20203.66 made on 29 January 2013 witnessed over the earliertwo weeks ended Friday, 16 February 2013, was significant in view of the running correction for the purpose ofconsolidation. This prompted me to headline my last article as Pre -budget panic is over.

My forecast was contrary to what the majority of technical analysts had made. They saw the CNX Nifty correcting furtherupto 5600 expecting a weak undertone last week and further weakness dragging the Sensex down to 19100 or even break

the psychological barrier of 19K.

Strange indeed are the ways of technical analysts who see further weakness even after the markethas already corrected enough in an ongoing bullish trend! As per their technical theory, one mustget out before the market bounces back. As a result, those who had built up a bullish positions endup surrendering at these levels to avoid any further loss and lose out on the recovery, which isbound to surface once the correction is over. Technical experts thus hardly provide any moral

courage to investors when the market witnesses a consolidation or correction.In my last article, I had emphatically stated that the chart theory is losing prominence as majority ofinvestors only follow it for their trades in the F&O segment where it is most important to book profit

or loss rather than sustain a galloping market or take a beating in a two-way fluctuations.

In USA, technical analysts have often proved to be wrong in a two-way market fluctuations and investors have come backto rely on company fundamentals, which do not change frequently as far as corporate earnings are concerned.

Readers are well aware that many punters fabricate chart interpretations for their own convenience or fancy.

A well-known market player has been very bullish on Titan Industries and VIP Industries. But a year or so back, I hadclearly stated that both these stocks were highly priced and recommended profit booking rather than holding onto themfor further gains. Since then, Titan Industries has fallen to a low of Rs.204 from its 52-week high of Rs.314 and is hoveringaround Rs.255. Similarly, VIP Industries has lost its prominence altogether as it fell from a high of Rs.128 and is tradingnear to its 52-week low at Rs.71!

Similarly, a popular TV channel was issuing buy calls for most Vijay Mallya owned company shares knowing fully wellthat his Kingfisher Airlines is in deep trouble incurring huge losses and with a heavy debt burden.

Even after Mallya decided to sell his majority stake in United Spirits and United Holdings to turn into a minority stakeholder, few analysts were still issuing Buy calls for United Spirits, United Holdings, United Breweries and alsoKingfisher. But I was never convinced and recommended profit booking twice in this column as United Spirits (USL) wasoffering to buy-back the shares at around Rs.1400 per share. Yet the USL share kept on making new highs till Rs.2149without any justification at all!

All the United Group shares managed to touch new highs in the past three months but have now fallen considerably.United Spirits, after touching an all time high of Rs.2149 in November 2012 has tumbled to a low of Rs.1740 and is nowtrading at Rs.1813. United Breweries fell to Rs.580 after hitting a high of Rs.1023 in December 2012 followed byKingfisher, which fell to Rs.11 after touching Rs.18 and United Holdings, which was ruling at a high of Rs.150+, is nowtrading near to its 52-week low at Rs.60.

Anybody with financial muscle can rig stock prices and make them rise to dizzy heights temporarily. But it is verydifficult to sustain these high levels in the long run. This is exactly what happened with these stocks as higher levelsproved to be a mirage.

I really fail to understand on what basis were analysts of this popular TV channel recommending the Mallya group sharesat such fancy prices till a few weeks back.

Viewers who bought these shares based on the bullish calls issued by these analysts are now in deep troubled water andmay face further music if they decide to hold onto these shares till the banks take the final decision to sell their groupstock holding in days to come. Because if the banks really start selling the stocks lying with them, the prices of the United

GURU SPEAK - By G.S. Roongta

G. S. Roongta



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Group shares will collapse like a house of cards. SEBI must enquire about such analysts and TV channels and check ifthey had any vested interest in these stocks.

Similarly, the news of the stake sale in Jet Airways to Etihad Airlines resulted in its share price skyrocketing from Rs.410level to touch a 52-week high of Rs.688 in just a few weeks while its 52-week low is Rs.268. This clearly shows that theshare price was rigged by over 150% from its 52-week low level. The stock is now trading at Rs.527.

The companys profitability will not jump by this stake sale as is being said to mislead investors. Besides, airlines arefacing acute competition that has led to 20-25% reduction in air fares.

Similar behaviour was witnessed in the shares of HDIL, Jain Irrigation, Jaiprakash Associates and Jubilant Foodworks,

which tumbled from their recent highs. This is because rigging may impact share prices temporarily but withoutsupporting fundamentals to back them, these stocks are unable to sustain the high levels in the long run.

False promises, price rigging, rumours and investment recommendations are the tools that market players use to woo orattract investors and they exit once the game is over for them. SEBI is trying its best to catch hold of such manipulatorsbut many of them remain unaffected.

In view of the upcoming Union Budget, the market had turned extremely volatile last week. There is no fundamentaljustification in the price movement of shares but the rumours floating around in the market are doing their job and haveaffected the market sentiment.

On Monday, 18 February 2013, the market opened at Sensex 19496.25 and rose to hit a high of 19554.48. But around noonthe RBI Governor remarked that there is no room for reduction in interest rate in March so long as fiscal managementdoes not improve or inflation does not decline further. On this news, the market pared all the gains of the day and fell to alow of 19462.92. Yet it managed to close in the green at 19501 with a gain of 32.93 points.

It may be recalled that when the RBI Governor had made similar statements in mid-January 2013, I had lamented thatsuch market sensitive news misguide investors and affect the market sentiment as a whole, which is indeed unfortunateIf Mr. Subbaraos statement in mid-January 2013 is taken at face value, then why did he bend down to relax interest rate &CRR by 25 basis points. Hence, people in high positions must refrain from comments before the scheduled meetingwhether in favour or against.

Again on Tuesday, 19 February 2013, the Sensex rose further to hit a high of 19671 and closed with a gain of 134.64 pointsto settle at 19635.72. Thus the market gained 30% of its lost ground of the past two weeks in just two trading days.

On Wednesday, 20 February 2013, the Sensex had a gap up opening at 19717.94 and rose further to touch a high of19742.42. But the market was unable to sustain this level and ended the day at 19642.75 with a gain of just 7 points.

However, the market collapsed on Thursday, 21 February 2013 as the Asian market Hang Seng opened in the red bynearly 400-500 points. The exact reason for this was unknown till closing. The Sensex opened in red by nearly 100 pointsat 19549 and kept on losing further ground till it touched a low of 19289.70. The market finally settled at Sensex 19325.36

after losing 317.39 points.The market was in a state of panic with rumours that FIIs had unloaded heavily while few others said that thepresidential speech in honour of the Parliaments opening budget session on 21 February 2013 was not encouraging as faras the economy was concerned.

On Friday, 22 February 2013, the market opened in the positive at 19341.90, rose to touch a high of 19401.75 but fell againto close at 19317 after losing 8.35 points. The Nifty ended the week at 5850.30 after losing 37.10 points on a week-to-weekbasis.

The bulls-bears fight till 28 February 2012 is likely to be severe as 28 February is an important day for the market as it isalso the expiry of the February 2013 F&O contracts and the Union Budget will also have its singular impact on the market.

As cautioned last week, investors should stay away till the first week of March 2013 because by then the impact of thebudget will be fairly clear. In view of these two important events, the market is expected to be volatile this week.

Apollo Hospitals (CMP: Rs.798.85, TGT: Rs.945)

Apollo Hospitals Enterprise Ltd. (AHEL) was incorporated as a public limited company in 1979. Promoted by Dr. PrathapC. Reddy, it is the first company that pioneered the concept of corporate healthcare delivery in India. Today, AHEL is theleading private sector healthcare provider in Asia and owns and manages a network of speciality hospitals and clinics, achain of Pharmacy retail outlets across the country and provides Consultancy Services for commissioning and managingthe Speciality Hospitals. The company also played a pioneering role in helping India become a centre-of-excellence inglobal healthcare. The Apollo Hospitals group today has over 8,500 beds across 54 hospitals in India and overseas,

STOCK WATCH - By Amit Kumar Gupta



13/18


neighborhood diagnostic clinics, an extensive chain of 1350 Apollo Pharmacies, a Medical BPO and health insuranceservices and clinical research divisions that are working on the cutting edge of medical science.

In addition, the group's service offerings include healthcare at the patient's doorstep, clinical & diagnostic services,medical business process outsourcing, third party administration services and health insurance. To enhance itsperformance and service to customers, the company also makes available the services to support the business ofhealthcare; telemedicine services, education and training programmes, research services and a host of not- for- profitprojects.

AHELs Q3FY13 witnessed a healthy increase in overall sales as well as profitability. Net profit rose 24.72% at Rs.80.63crore from Rs.64.65 crore in Q3FY12. Revenue in Q3FY13 rose 19.73% to Rs.855.79 crore from Rs.714.75 crore in Q3FY12Q3FY13 EPS rose 20.54% at Rs.5.80 over Q3FY12. Profit before interest, depreciation and tax (PBIDT) was Rs.154.43 crorein Q3FY13 as against Rs.128.75 crore in Q3FY12.

AHELs EPS for FY13 and FY14 is estimated at Rs.22.28 and Rs.26.66 respectively. Net Sales and PAT are expected togrow at a CAGR of 18% and 27% over 2011 to 2014E respectively. At the current market price of Rs.830, the AHEL stocksP/E ratio is at 37.84x FY13E and 31.62x FY14E respectively. Price to Book Value of the stock is expected to be at 4.47x and4x respectively for FY13E and FY14E. We recommend Apollo Hospital with a buy rating on the stock with a target ofRs.945.

Technical Check: AHEL has given a range breakout, which looks good for the short-term and medium-term as well. Thestock's previous high was at Rs.900.The stock has been making higher highs and higher lows on daily charts and hasmade a trading range formation like rectangle on short-term chart Rs.770-830 and on the long-term chart it can move upwith a strong uptrend and a target of Rs.900 looks possible since it is trading above the major moving averages of 200DMA & 100 DMA, its 6-12 month target is Rs.950.

*******

NavaBharat Ventures (CMP: Rs.187, TGT: Rs.265)

We initiate coverage on Nava Bharat Ventures Ltd. (NBVL) with a BUY recommendation and a price target of Rs.265based on SOTP valuation. NBVL is a diversified company with business interests in Power, Ferro Alloys, Sugar andMining. We believe that its shift towards the merchant power business from ferro alloys will provide stability to itsrevenues. Its overseas foray through coal mining and power generation projects in Zambia and coal mining in Indonesiawill lead the next phase of growth. Ferro alloys will continue as an opportunity business with operating margins guidingthe production numbers. Sugar segment along with its byproducts will perform well, as realizations improve after thesignificant fall in prices earlier this year. However, the improving power supply scenario in India will continue to exertpressure on its power segment margins.

NBVL has reported a good set of numbers for Q3FY13 in line with estimates on the back of robust performance in the

power segment aided by sharp improvement in realisations and growth in volumes. The cost of power generation wasflat declining by 1.4% to Rs.3 per unit. While the topline grew just 13.8% to Rs.265.7 crore, profitability grew at a fast paceby 1.8x to Rs.57.2 crore aided by a sharp rise in merchant power rates in Andhra Pradesh. Firm merchant power rates andscheduled commissioning of its 214 MW power plants will enable NBVL to maintain its growth momentum.

We retain a BUY rating on the stock with a target price of Rs.265 for the following reasons:

Power Segment

Its Q3FY13 PAT of Rs.67.7 crore was in linewith estimates of Rs.67.1 crore. The 28%growth yoy was primarily led by betterprofitability in the Ferro alloys businessdriven by higher realisations and lowercosts.

Higher e-auction of coal led to 24% yoyhigher cost of power generation.Operations resumed at its old 64MWOdisha plant to supply 20MW to GRIDCOat Rs.3 per unit. The new plant will supply64/150MW capacity on demand byQ4FY13.

Coal sale mined in Zambia started fromJune 2012 at an average realisation of USD

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57/MT. It has mined 30,000 MT high grade coal till date. Construction of its 300 MW power plant has started in May2012 and will be completed in 3 years.

We retain FY13E EPS of Rs.30.66 and FY14E EPS of Rs.35. However, the upside is limited until clarity on: (i)offtake/fuel arrangement of new power plants (64/150 MW), (ii) Zambian operations profitability and investment.

Ferro alloys segment: Its Ferro Alloys business registered a subdued performance despite the Ferro Chrome conversioncontract with Tata Steel. This was largely due to a decline in production of Silico Manganese owing to diversion of powerfor merchant sale in its AP unit. Ferro Alloys revenues declined 20.2% QoQ to Rs.115.1 crore, while PBIT improved by9.3% to Rs.9.7 crore. The company sold 16190 MT of ferrochrome in Q3FY13 (+9.3% QoQ) under the conversionarrangement. Average conversion price was around Rs.27000/MT, which includes power supply from its Orissa plants atRs.4.8/unit. The company is expected to earn a fixed margin of Rs.1000/tonne earned on its contract with Tata Steel.

Earnings: NBVL witnessed sharp improvement of 45.2% YoY in EBITDA to Rs.83.9 crore in Q3FY13 on the back ofimproved profitability in the power segment. Decline in interest expenses and flat depreciation resulted in 75.9% highernet profit of Rs.57.2 crore.

Outlook & Valuation: NBVL continues to remain an ideal play in the Indian Power Sector. Massive capacity addition,stable merchant power rates and sale of high grade coal from its Zambian mines will hold the company in good stead. Atthe CMP of Rs.186, the stock trades at a P/E of 5.3x, P/BV of 0.6x and EV/EBIDTA of 4.5x its FY14E earnings.

Technical Check: NBVL is another range bound stock that looks good for the short-term and medium-term. The stocksprevious high at Rs. 220.

The stock has been making higher highs and higher lows on daily charts. It has made a trading range formation like arectangle on short-term chart between Rs.175-200. On long-term charts, the stock has a strong uptrend for a target price of

Rs.250 as it is trading above the major moving averages 200 DMA & 100 DMA.

*Cummins India (Code: 500480) (Rs.493.75)has reported encouraging Q3FY13 numbers.

Net profit rose 66.06% to Rs.234.08 crore from Rs.140.96 crore in Q3FY12 while sales rose 13.71% to Rs.1071.31 crore fromRs.942.17 crore in Q3FY12. Net Profit Before Tax (excluding exceptional items) up by 35% at Rs.262 crore. The companydeclared an interim dividend of 250%.

Investors can continue to hold this stock or even accumulate on dips for decent long-term growth. The stock has alreadygiven decent returns from the levels we recommended.

*We recommended NESCO (Code: 505355) (Rs.766.30)about two years ago as a safe investment. The company has been

performing well and even outperformed the market.

Its Q3FY13 results are decent as net profit rose 29.41% to Rs.25.30 crore from Rs.19.55 crore in Q3FY12 on 26.78% highersales of Rs.43.51 crore as against Rs.34.32 crore in Q3FY12.

Seeing to the overall slowdown in the business, the company has performed well. Investors can continue to hold thestock. A sustained closing above Rs.820 is likely to take the stock to higher levels. This is a good core portfolio stock.

* PI Industries (Code: 523642) (Rs.630) has done exceedingly well in Q3FY13 as net profit zoomed 109.44% to Rs.23.96

crore from Rs.11.44 crore in Q3FY12 whereas sales rose 48.39% to Rs.281.94 crore as against Rs.190 crore in Q3FY12.

The company has plans to split the face value of its equity share from Rs.5 each to Re.1 each subject to the approval byshareholders.

Investors can continue to hold this stock.

*First Leasing Companys (Code: 500145) (Rs.53.25)Q3FY13 profit is flat. With a share book value of around Rs.155, the

stock looks attractive at Rs.50/51 level for investment.

* There is sharp improvement in the Q3FY13 working of VST Tillers (Code: 531266) (Rs.367.30) compared to Q2. Its

Q3FY13 net profit went up by 9.21% to Rs.12.92 crore from Rs.11.83 crore in Q3FY12. Margins of the company haveimproved sharply compared to Q2. The stock is trading near its 52-week low where the downside is restricted. Investorswith a long-term view can think of buying on SIP basis.

* There are signs of improvement in the working of RevathiEquipments (Code: 505368) (Rs.265) on a consolidated basis

At the current level, it seems that the worst is over for the company.

FIFTY FIFTY - By Kukku



15/18


*As per January 2013 data given to the BSE, there is good improvement in cane crushing and sales at EidParry (Code500125) (Rs.155.55). Investors can continue to hold this stock as decontrol of sugar will be a positive for the company.

*We have been recommending ZenithFibres (Code: 514266) (Rs.34.95)for buying from lower levels. The company has

done very well in Q3FY13 as net profit rose 62.34% to Rs.1.25 crore from Rs.0.77 crore in Q3FY12. Sales also rose 26.68% toRs.15.48 crore in Q3FY13 as against Rs.12.22 crore in Q3FY12.

The company recently completed expansion and its capacity has doubled on an investment of just Rs.2 crore. Benefit ofthis expansion will come gradually over a period of time. Investors can accumulate this stock on dips for good long-termgrowth.

*As warned earlier, results ofVulcan Engineers (Code: 522080) (Rs.18.85) are below expectations. For 9MFY13, it posted

a loss of Rs.3.94 crore. The company is facing working capital constraints. On the other hand, it does not have orders dueto stiff competition in the industry. Investors can look for better options.

* Hind Rectifier (Code: 504036) (Rs.69.30),stock has given decent long-term growth to investors as a buy call was

initiated around Rs.40 level last year. The company has reported decent results recently and there is promoter buying inthe counter, which boosts the confidence of investors. Hold on to the stock.

* Ashiana Housing (Code: 523716) (Rs.239.05) , has remained very firm during the recent meltdown of midcaps

Investors can continue to hold this stock because of its unique business model and big expansion plans. Stock is catchingattention of fund managers now. Long-term investors are likely to earn decent returns.

* Deepak Nitrite Ltd. (Code: 506401) (Rs.274), has remained very firm after encouraging Q3FY13 results. The stock is a

good core portfolio choice for investors and is likely to be an outperformer next year.

Note: There has been a sharp fall in many mid/small cap stocks which has shaken the confidence of many investors. Butour recommended stocks like Ashiana Housing, Berger Paints, Hind Rectifier, Cummins, Nesco, Deepak Nitrite have alremained very firm during this fall. Investors are advised to hold them for decent long-term growth. Investors need to bevery selective in stock picking as the market is likely to remain liquidity driven. Although there is overall fear amonginvestors the market is very likely to see new levels in the near future.

DCW Ltd.: Expansion to drive further growthThe share ofDCW Ltd. (FV: Rs.2) (Code: 500117) (Rs.16.25) can be bought for decent appreciation in the long-term basedon its improving fundamentals.

DCW was incorporated in 1939 as Dhrangadhra Chemical Works by Late Shri. Sahu Shriyans Prasad Jain on takeover of asoda ash factory in Dhrangadhra (Gujarat). Expanding its business, DCW set-up a chloralkali plant at Sahupuram inTamil Nadu. Currently, DCW manufactures caustic soda, liquid chlorine, hydrochloric acid, soda ash, poly vinyl chloride(PVC) etc. It also has a power generation plant. The capacity through diesel generator is 124 million KWH and from steamturbine generator is 304 million KWH equivalent to 40 MW.

Its Dhrangadhra unit manufactures soda ash, sodium bicarbonate and ammonium bicarbonate, while the Sahupuram unitmanufactures caustic soda, liquid chlorine, hydrochloric acid, PVC resin and others.

As an established player in the chloralkali and petrochemicals industry, its offerings include caustic soda, liquid chlorine,hydrochloric acid, trichloroethylene, ferric chloride, yellow iron oxide, sodium bicarbonate, ammonium bicarbonate andothers. Its operations are under three divisions viz PVC, caustic soda and soda ash.

DCW is one of the country's five producers of PVC resin and has maintained its market share of nearly 7%. The demandfor PVC is growing at a CAGR of about 10% given the increased government spending on infrastructure, agriculture and

water management.DCW continues to be a major player in caustic soda and soda ash in South India with a market share of about 15%. Thedemand for caustic soda is expected to grow steadily by 4% to 5% given increased demand by alumina manufacturersThe conversion of Mercury Cell to Membrane Cell technology not only results in substantial capacity addition but alsolowers the consumption of power which has helped boost the bottom-line.

In FY12, sales advanced 12% to Rs.1182 crore and net profit rose 6% to Rs.31 crore and the EPS was Rs.1.5. DuringQ3FY13, net profit catapulted 575% to Rs.28.2 crore on 17% higher sales of Rs.362 crore and the quarterly EPS was Rs.1.4For 9MFY13, net profit zoomed 224% to Rs.88 crore on 23% higher sales of Rs.1054 crore and the nine monthly EPS worksout to Rs.4.3.

EXPERT EYE - By Vihari



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DCWs equity capital is Rs.40.6 crore and with reserves of Rs.376 crore, the book value of its share works out to Rs.20.5.The value of its gross block including capital-work-in-progress of Rs.214 crore is Rs.1346 crore and the debt:equity ratio is1.1:1. The promoters hold 43.3% equity stake, foreign holding is 16.3%, Institutional holding is 4.1% and with PCBsholding 6% leaves 30.2% with the investing public.

In FY12, exports jumped 60% to Rs.256 crore from Rs.153 crore in FY11 on account of better realisation on BeneficatedIlmenite coupled with higher tonnage.

The work on the Synthetic Iron Oxide Pigment (SIOP) plant at its Sahupuram facility, utilising waste effluent stream,which is rich in iron (Iron Chloride liquor), is under progress and in an advanced stage of implementation. DCW hasappointed UDHE India, a well-known engineering company, to provide the engineering services for this plant. Themechanical completion is expected to be completed by Q2FY14. Once established this plant will enable DCW to convertits waste into a commercially viable product and Calcium Chloride will be produced from the effluent generated from thenew SIOP Plant.

Both the SIOP and Calcium Chloride facility have been granted 100% EOU status by the Government of India. Thisfacility employs DCW's in-house developed technology. DCW has an agreement with Rockwood Italia SpA Socio Unico,Divisione Silo, Italy (Group Company of Rockwood Pigments of USA) for the manufacture of both Yellow and Red IronOxide pigments. The SIOP capacity will be around 32,000 TPA and the waste steam coming out from the SIOP will beused to manufacture 50000 TPA of Calcium Chloride and pure water.

DCW has signed a Technology Licence Agreement with Arkema of France for putting up a Chlorinated Poly VinylChloride (C-PVC) Plant at its Sahupuram facility in Tamil Nadu and has appointed UHDE India to prepare the detailedengineering of the project. This project will take 12-15 months to achieve commercial production from the Zero Date. Thisproject will help DCW manufacture value added products from its PVC and Chlorine and will enhance the captiveconsumption of Chlorine reducing its dependence on the sale of Chlorine.

DCW manufactures 7200 TPA of Trichloroethylene, which it now proposes to expand by 5000 TPA to help replaceimports. This will also help increase its captive consumption of Chlorine.

DCW has also signed an off-take agreement with Rockwood Italia for 50% of the Synthetic Iron Oxide Pigmentsproduced. The balance 50% may be sold either to Rockwood Italia or other parties. A Balancing Equipment programme isunder progress, which will raise the PVC production from 90,000 TPA to 140,000 TPA and is expected to be completed byQ1FY14.

All these expansions will enhance DWCs revenue andprofitability going forward. For FY13, DCW isexpected to post an EPS of Rs.6, which would furtherrise to Rs.8 in FY14. At the current market price of

Rs.16, its share is trading at a P/E multiple of just 2.7on FY13 estimated earnings and 2 times the FY14projected earnings. A conservative P/E ratio of 5 willtake the DCW share price to Rs.30 in the medium-termand Rs.40 thereafter. The 52-week high/low of theshare has been Rs.27/9.

Camphor and Allied Products Ltd.BSE Code: 500078Last Close: Rs.154.75

In Money Times issue dated 10 December 2012, we had recommended Camphor & Allied Products at Rs.153. Within six

weeks, it zoomed to Rs.199.80 level and recorded 30.50% appreciation. We again recommend this stock for investment atthe current level.Camphor & Allied Products Ltd. (CAPL) engages in the manufacture and sale of Terpene chemicals and other specialityaroma chemicals. It offers various fragrance chemicals including amberone, astromeran, astrone, astrolide, capinone,dihydroterpineol, dihydroterpinyl acetate, fenchone, isoborneol, isobornyl acetate, ketone 101, terpineol, terpinyl acetatecitwanene, isolongifolene and longifolene; pharmaceutical products comprising camphor and terpineol BP. Its industrialchemical product line consists of alpha pinene epoxide, alpha campholenic aldehyde, camphene, camphor, camphor oil,capolene, capolyte CP resin, distilled turpentine, dipentene, para cymene, para menthane hydroperoxide, pinenehydroperoxide, pine tars, pine oils, and sodium acetate trihydrate. Its products find application in flavours and

TECHNO FUNDA - By Nayan Patel

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fragrances, pharmaceuticals, soaps and cosmetics, rubber and tyre, and in paints and varnishes and exports its productsto Europe and USA. The company is based in Mumbai and is a subsidiary of Oriental Aromatics Ltd.CAPL has an equity base of Rs.5.13 crore that is supported by reserves of around Rs.86 crore (after September 2012),which is 16.76 times its equity and has a share book value of Rs.162. The promoters hold 57.66% while the investingpublic holds 42.28% stake in the company.For Q3FY13, CAPLs net profit catapulted to Rs.4.51 crore against a loss of Rs.1.81 crore in Q3FY12 while the turnoverrose about 20% at Rs.54.14 crore from Rs.44.89 crore in Q3FY12. For 9MFY13, net profit skyrocketed to Rs.22.82 crore froma loss of Rs.2.80 crore in 9MFY12 while the total turnover rose just 12% to Rs.160.86 crore from Rs.143.85 crore in 9MFY12.It reported a Q3FY13 EPS of Rs.8.78 and a nine monthly EPS of Rs.44.46.

Market Whispers: The companys expansion is getting completedHence the next quarter of Q4FY13 results may be even better. Thereare reports that P&G (Proctor & Gamble) will either take a stake inCAPL or sign an agreement to buy out its products from the new unit.The company may record a net profit around Rs.27 crore with an EPSof Rs.52.63 for FY13. At its current market price of Rs.153, the CAPLshare price discounts less than 3 times its FY13 (E) EPS of Rs.52.63. The

stock thus appears undervalued and is likely to attract value buying at this level.Technically, the stock has made a strong bottom or base around Rs.150 level and is making higher tops with higherbottoms formation on the chart, which is a positive sign. Also, the stock is trading above its 200 days EMA, which is alsoan encouraging sign. Investors can buy this stock with a stop loss of Rs.135 on a closing basis. On the upper side, the stockwill zoom to Rs.185-190 level in the short term and has the potential to cross Rs.230-250 level in 9-12 months! Its all-time

high is Rs.303.

NHC Foods net up by 192%

NHC Foods Ltd., an ISO 22000-20005 & ISO 9001:2008 certified government recognized Star Export House engaged in themanufacture & export of a wide range of spices, oilseeds and other food products to numerous countries across the globehas shown impressive result for the quarter ended 31 December 2012. Total turnover rose to Rs.31.51 crore from Rs.25.27crore in the previous corresponding quarter. Net profit for the quarter zoomed 192% to Rs.40.08 lakh from Rs.13.76 lakhin the previous corresponding year.

For the nine month period ended 31 December 2012 (9MFY13) total turnover rose to Rs.101.88 crore, from Rs.67.72 lakh in9MFY12. Net profit shot up 58.5% to Rs.140.29 lakh in 9MFY13 compared to Rs.88.51 lakh in 9MFY12.

Year(Rs. in cr.)

Net Sales Net Profit EPS (Rs.)

2008-09 134.93 3.70 7.20

2009-10 166.65 10.24 19.95

2010-11 217.74 7.65 14.90

2011-12 202.55 2.12 4.13

2012-13 (E) 215 27 52.63

MONEY FOLIO

Disclaimer: Investment recommendations made in Money Times are for information purposes only and derived from sourcesthat are deemed to be reliable but their accuracy and completeness are not guaranteed. Money Times or the analyst/writer doesnot accept any liability for the use of this column for the buying or selling of securities. Readers of this column who buy or sellsecurities based on the information in this column are solely responsible for their actions. The author, his company or hisacquaintances may/may not have positions in the above mentioned scrip.

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