BHARAT FORGE Q1FY11 Is Expected Good Stay Invested

BHARAT FORGE Q1FY11 Is Expected Good Stay Invested,


The second largest forging company in the world, Bharat Forge.
It scaled new high of Rs.328.55, since the buzz around this company remains very positive.

Almost all brokerage houses have put out a ‘buy’ for this stock.

The company is making moves to increase its presence in the non automotive sector, which is largely related to energy, infrastructure, marine and railways. The company has entered into deals with Alsthom and Areva and both these are expected to start adding on to the revenues from 2012.

IDFC Yet Another Strong Infra Stock to Invest

After long wait today I made purchase on IDFC. This highly reputed infra company, despite the trying circumstances, has posted a good set of results for the year ended 31st march 2009. Its Net Interest Income (NII) increased by 33% to Rs.922 crore and of this, NII came from infrastructure loans, which increased by 34% to Rs. 758 crore and NII from treasury operations increased by 27% to Rs.164 crore.
After accounting for Rs. 278 crore for tax, profit in associate company and minority interest, net profit for FY09 was stagnant at Rs.750 crore as against Rs.742 crore in FY08.
The biggest concern was IDFCs’ exposure to realty. Total disbursal outstanding to commercial and industrial infrastructure, as on 31st March 2009 stood at less than Rs.3,000 crore, accounting for about 12.9% of its total outstanding disbursements.
Govt continues to hold 20.2% stake in the company as on 31/03/09. FII/FDI holding has come down to 39.5% (46.7%), Mutual funds holding is at 7.7% (8.5%), Corporate Bodies have increased stake to 4.3% (3.5%) and retail has increased the most at 13.3% (7.7%).
Net NPAs was at 0.21% of outstanding loans. Capital Adequacy Ratio was at 23.75% (Tier I – 20.04%; Tier II – 3.71%).
FY09 was a tough year for IDFC and it adopted a cautious approach, adopted a better to be safe than sorry attitude. Now that things have settled, the company is back to concentrating on growth. Given the emphasis to infra, IDFC is poised to do well. thanks.

YUKEN INDIA

Yuken India manufactures hydraulic equipment including hydraulic pumps for industrial and mobile applications, hydraulic valves, mobile valves and complete hydraulic systems to suit customer-specific requirements.
Hydraulic devices are mainly used in the heavy engineering industry for automation. With automation the buzz all around, Yuken’s products have a good demand. This perception of good demand has been reflected in the share price but unfortunately it has not been seen in the financial performance.
For FY09, the company posted net sales of Rs.105.48 crore and on this, it posted a net profit of a meager Rs.99 lakhs. The company had posted a loss in Q3FY09 but it managed to turnaround in Q4FY09 with a tiny net profit of Rs.20 lakhs.
The stock enjoys fancy on account of its brand name. Its been around for the last 31 years, with most manufacturers of Original Equipment using Yuken as their preferred partners for hydraulics. Yet given the current performance, an EPS of Rs.3.30 on a FV of Rs.10/share, a PE of over 18 at the current market price, comes forth as being more than fully priced. thanks

THERMAX Remains a Very Good Investment

The financial performance of Thermax for year ended 31st March 2009 company has managed to keep its head way above the water.
The company showed a 1.75% rise in total income at Rs.3303 crore. Export income, including deemed exports, increased by 35 % to Rs. 912 crore. The consolidated income of the group was lower by less than one percent at Rs. 3501 crore. Net profit rose marginally by 2% at Rs.287 crore. The Board recommended a dividend of 250% (Rs. 5 per share of face value of Rs. 2).
The fourth quarter performance indicates that things are surely improving. In Q4FY09, the company posted an income of Rs. 960 crore, up by 3% on a YoY. Net profit was up 17% at Rs.94 crore.
The Thermax group order book, after consideration of renegotiated orders, stands at Rs. 3078 crore as on March 31, 2009 compared to Rs. 2637 crore in the previous year. During the year, the company has received some prestigious orders for captive power plants, utility boilers, municipal sewage treatment and performance chemicals for the oil sector.
Clearly, things are on the upswing. It will take a while to bounce with vigour but the energy is back. Thermax remains a very good investment– as its orders to the power sector will get a fillip as it remains a priority sector for growth. Specialising in energy conservation systems and captive power projects, Thermax is likely to profit from the growing importance for energy management among its user industries. stay invested. thanks

NOIDA TOLL BRIDGE A Safe Bet in Recession

Why NOIDA TOLL BRIDGE A Safe Bet in Recession?
Warren Buffet has stated that toll bridge companies are always a good stock to hold in one’s portfolio as every time a car passes through, the company earns money and be it recession or boom times, people do travel within the city. So toll bridge companies are always assured of returns, as population always goes up and number of cars plying also only goes up.
Noida Toll Bridge is one such company, probably the only listed toll bridge stock on the BSE. The entire bridge was opened up, even the second phase of Mayur Vihar Project on 19th Jan 2008 and since then, the company has been doing well. It ended 31st March 2009 with a 19% rise in net sales at Rs.79.83 crore. Operating and maintenance costs continue to remain high, infact have gone up in FY09 to Rs.3.48 crore from Rs.1 crore in FY08. The staff costs have also gone up from Rs.6.64 crore to Rs.10.31 crore. The company ended the year with a net profit of Rs.33.53 crore, up 20%. The good part is that the company has always managed to have a consistently good profit margin. For FY09, on an average, its OPM was over 74% and NPM was over 39%.

The company’s biggest asset is its land bank of 235 acres on either side of the bridge – 200 acres on Delhi side and 35 acres on Noida side, valued at around Rs.1000 crore. The company is awaiting permissions to start development. Once that happens, this land bank will be its milch cow. thanks

REC RURAL ELECTRIFICATION CORPORATION Results Analysis

REC - RURAL ELECTRIFICATION CORPORATION Results Analysis
REC - PSU company has done well for itself for year ended 31st March 2009. With an objective of finance and promote rural electrification,
The share of generation segment in the entire loan book has gone up to 35% in FY09 while the share of T&D segment dropped from 63% in FY08 to 57% in FY09.
For the year, the net income rose 40.82% at Rs.4757.17 crore. Its interest outgo was up quite substantially by 40%. What is noteworthy is that REC’s provision for bad and doubtful debts has come down by a whopping 94%. Net profit was up 48% at Rs.1272.08 crore.
Why to invest in REC?
The Govt had launched the ambitious scheme of Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY) to electrify rural India with the aim of reaching power to 1.25 lakh villages and 2.34 lakh BPL families. As per the latest estimates, it will miss the target by 50% and the aim is now to electrify more than 63,000 villages in 2009-10. This may or not be done but the bottomline for REC is that there is immense scope. Power is one commodity which will be scarce in India and till that situation prevails, REC has a secure future.
And The company had gone public in Feb 08’ and had issued shares at Rs.105/share. Today it is quoted at around Rs.140 levels. The Govt has a 81.82% stake and institutional holding is 11.72%. thanks

Noida Toll Bridge Good Share To Hold On

Noida Toll Bridge advised to hold and even buying can be made at the current levels with 6 months view check out why. Noida Toll Bridge had posted better results for year ending 31st March 09 with total income at Rs.79.21 crores against Rs.66.39 crores of FY 08. PBT improved to Rs.39.86 crores against Rs.31.78 crores.
Average daily traffic in FY 09 rose to 99,734 vehicles against 84,261 vehicles in FY 08, registering a growth of 18%. Since, the company collects toll from each vehicle, its income for the year also rose by 19% in FY 09. Average traffic on Mayur Vihar Link, for FY 09, was at 12,350 vehicles per day while it was at 13,632 vehicles in March 09, quarter, showing a case of rising trend of vehicles using it.
PAT of the company, for FY 09 is placed at Rs.33.69 crores (Rs.27.98 crores) resulting in an EPS of Re.1.81 for FY 09. The company adopted guidance note on “Accounting for Service Concession Agreement” issued by ICAI, whereby, Delhi Noida Link Bridge, which was earlier shown as fixed assets, is now shown as intangible asset w.e.f. 01-04-08. Intangible asset is shown at cost, being fair value of construction services. Due to this change, depreciation for FY 09 is lower by Rs.4.97 crores, thus increasing profit to that extent. Earlier, when it was taken as fixed assets, depreciation was provided on straight line method taking life of 62 years, but now, estimated useful life of bridge has been considered as 100 years and intangible assets is amortized over the same life.
Apart from this, the income flow of the company will come from development rights of 235 acres of land, of which, 200 acres are at Noida side while 35 acres at South Delhi side.
Share now ruling at Rs.27 translates into a market capitalization of just Rs.500 crores and even considering debt, the enterprise value works out to, less than Rs.700 crores. Once, the company is able to get clearance of land development, this shows that we will see good rise in share price from Rs.27. Advised to hold and even buying can be made at the current levels with 6 months view. thanks

MOTHERSON SUMI Pick up the stock for the long term

There has been a buzz around this stock for some time now, in anticipation of it completing the acquisition process of Visicorp. Well, it was finally done on 16th March and since yesterday, profit booking has once again come into the stock and it has now settled back in the Rs.50’s levels.
The company, through its JV - Samvardhana Motherson Finance acquired one of the world's leading manufacturers of automotive exterior mirrors, Visiocorp for Rs 176 crore. The acquisition will help Motherson Sumi Group to offer entire range of automotive parts, which would include rear view mirrors, to the global customer base. Only, the auto sector, globally has hit the brakes for now.
For the third quarter ended 31st Dec 2008, the net sales of the company dropped 11% on a QoQ while it rose marginally by 8% on a YoY at Rs.557 crore.The company had a forex loss of Rs.6.96 crore for the quarter.

Pick up the stock for the long term on declines. thanks

BIOCON Biotech Company Q3 Results

For Q3 ended 31st Dec 2008, its consolidated net sales were up 83% at Rs 436.19 crore. German firm AxiCorp GmbH, in which Biocon acquired a 71% stake last April, contributed Rs.280 crore to topline. Its OPM was at 22% versus 25% on a YoY.
It then posted a forex loss of Rs 45.80 crore. This means, in the first nine months of the year, Biocon has lost Rs106 crore on account of this MTM provisioning and cancellation of certain longer-term forward cover. It reported a net profit of Rs 28.20 crore in Q3FY09, while it had a net profit of Rs 291.82 crore in Q3FY08, a fall of massive 90%.
Biocon’s flagship product in the pipeline, oral insulin IN105, will soon enter phase III trial, for which the company has recruited 264 patients. The company hopes to launch the drug for type II diabetes next year.
With pressure on margins continuing despite increase in topline, the share price may take a further beating and may correct to two digits, given the fact that it is barely above Rs.100 right now. thanks

KEC INTERNATIONAL

KEC INTERNATIONAL Has the power
A part of the RPG group, KEC International, a leader in power transmission, engineering, procurement and construction (EPC) business, the stock was in the limelight yesterday on the back of having received huge orders.
The company won an order worth Rs 255 crore for rural electrification from West Bengal State Electricity Distribution Company and another worth Rs 67 crore from Power Grid Corp. It also won a third order worth Rs 43 crore for a turnkey transmission project from Transmission Corporation of Andhra Pradesh.
For the third quarter ended December 31, 2008 it posted a revenue of Rs.886.31 crore as against Rs 708.91 crore during the corresponding period last year, a growth of 25%. During the quarter, the operating margin of the company declined to 8.21% compared with the previous year period. Interest cost increased 67.06% to Rs.29.72 crore while depreciation cost rose 4.82%. Net profit for the third quarter was at Rs.24.97 crore, down 52% on a YoY.
KEC is expected to end FY09 on a robust note. Best to stay invested. thanks

TATA COFFEE results 2009

Tata Coffee is primarily into coffee exports and also has small presence in the Indian coffee market.
Tata Sons has disclosed that it has pledged its entire 100% holding in its group firm Tata Coffee to raise resources. Tata Sons have a 57.48% stake and now it is has been pledged entirely. Yet, the stock price remained firm yesterday at rs.152 levels.

The company had done very well in Q3FY09 where net profit on QoQ rose 61% and YoY by 304% at Rs.12.25 crore. And this is despite a QoQ 34% fall in net sales at Rs.67.14 crore, which YoY has slipped 8%. But this could be attributed to two factors – a high component of other income which during the quarter was at Rs.14.69 crore, which is actually more than the net profit. Secondly, it managed to bring down the operating costs by 34% on a QoQ and 9% on a YoY. As per the practice of the company, a portion of the plantation related costs have been carried forward and will be charged during the period when the crop is harvested.

In the coming months, exports are likely to take a knock due to slowing Russian demand. Plus, the company has cut prices of its instant coffee products in the face of the global slowdown and falling prices of raw material. The price cut is to the tune of 10-15%. If volumes go up, the price cuts would help but if volumes remain low, despite the prices coming down, Q4 could be the toughest quarter of FY09. Plus the pledging of the shares by Tata Sons will weigh on the minds of the market men, indicating an underlying liquidity crunch. thanks

MINDTREE Mid Cap IT Company Stock Results

A mid cap IT company, it was in news after the Satyam scam broke out and there was wide spread speculation that it would be taking over Satyam. The company immediately issued a press release and culled the rumours. But the results it presented for the third quarter ended 31st Dec 2008 were much below expectations. It incurred huge forex losses of Rs.65.79 crore and this obviously pulled down the bottomline right to where it belongs

The company has posted a not-so-good set of results for the third quarter ended 31st Dec 2008. Its software revenues grew by 16.6% on a QoQ and 93.4% on a YoY at Rs.363.80 crore. EBITDA for the quarter was up 28% on a QoQ and showed a YoY growth of 251.6%. But then the forex loss came in and spoilt the party. Net profit was at Rs 8.72 crore, compared with Rs 35.13 crore in the previous quarter, a massive fall of 75.2%.

During the quarter, 22 new customers were added taking the active customer base to 260. It added 299 people on a gross basis during Q3, taking our total people strength to 5,826 as of December 31, 2008.

The guidance is down as it expects slower growth in the year ahead due to the economic crisis affecting its clients. thanks

RS SOFTWARE mid cap IT stock

Right now, when the biggest issue for investors is corporate governance and when they are avoiding companies which have even the slightest hint of any kind of manipulations, there comes the third quarter performance of RS Software.

A tiny software company, it has anyway been between down quite a bit but it was surprising to see that it ended yesterday with a gain of over 3% at Rs.14. Surely, it managed to do this based on the performance of Q3FY09, which YoY has been good but down on a sequential basis. It posted a PAT of Rs.1.60 crore for the quarter ended 31/12/08 and this far exceeds PAT of FY 08, which was at Rs.1.17 crore. But compared to Q2FY09, this was down 6.74%.


There seems to be no correlation between the profitability over the quarters, as also in regard to EPS stated by the company, for various periods. For FY 08, on equity base of Rs.744 lakhs, with PAT of R.117 lakhs, EPS is stated at 16 paise, while for September 08 quarter, on PAT of Rs.178 lakhs, EPS on equity of Rs.744 lakhs is stated at Rs.2.18. And now for the Dec quarter the EPS is at Rs.2.02.

The sole aim of the promoters of the company is to have market operations and to trap the investors at the higher levels. Share now ruling at Rs.14 had its 52 week high of Rs.41 and Rs.10.90 and when established mid cap I.T. companies are available at a PE multiple of 3 to 4 times, who would be interested in these manipulative stocks? thanks

SOUTH INDIAN BANK Results

South Indian Bank has posted a good performance for the quarter ended 31st Dec 2008. It posted a net profit of Rs.144.50 crore for nine months ended 31st Dec 2008 while the net profit target for the fiscal FY09 is expected to be at Rs.190 crore. Aggregate business of the bank rose to Rs 27,778.69 crore. For Q3FY09, net profit was at Rs. 54.20 crore, recording a y-o-y growth of 33.10%. The bank’s EPS on annualized basis improved from Rs 15.75 as on December 2007 to Rs 17.05.

Net interest income (NII) stood at Rs 146 crore as against Rs 92.6 crore.Net interest margin registered an improvement from 2.61% during the Q3 to 3% of the corresponding period of this fiscal. Return on Average Assets (annualized) for the Q3 increased to 1.11% compared to 0.98% in Q3FY08. Capital adequacy ratio was at, after the recent bonus issue of shares, at 14.62% vis-à-vis the regulatory minimum of 9%.


The bank’s asset quality recorded further improvement both in terms of gross and net ratios. Gross NPA of the bank declined to 1.85% as compared to 2.53% a year ago. As on December 2008, net NPA ratio came down to 0.39% against 0.49% in December 2007.


For Q4, the Bank expects to maintain NPAs and profit margins at same levels, if not better. The net interest incomes have gone up due to the fall in the PLRs. 20% of the Bank’s deposits come from NRI’s. Yield on advances have gone up at 11.48%. the Bank will reduce its PLR once the others set the trend but surely, there is one more round of cuts expected.

FIIs are holding 43% while 12% are held by banks, insurance companies, FIs, and MFS and 45% is held by the general public. Prominent shareholders of the bank are Federal Bank (4.94%) IFC, Washington (4.80%) Goldman Sachs (3.93%) LIC (1.77%) Union Bank (1.06%) and SBI 1.02%.


With Malayalam star Mammothy as its brand ambassador, this is another bankable bank for uncertain times. thanks

Nelco Goes With Tata Power

The financial performance of Nelco continues to deteriorate. If its net loss for the first quarter ended 30th June 2008 was at Rs.4.89 crore, t has now gone up in the second quarter ended 30th Sep 2008 to Rs.11.35 crore. This has been like a douche of cold water. From a trailblazing performance and turnaround it reported in Q4FY08, this slipping back into consistent losses disappointed the markets considerably. Yet, its stock price managed to bounce back from the lower levels and is now steady at quoted at Rs.38, indicating that despite the losses, maybe the fact that it comes from the stables of Tata and also that it has a lot of fancy in the market, helped in holding up the share price. And this fancy has been built up on expectations of the restructuring, which is keeping the stock price stable.



For Q2 ended 30/09/08, its net sales rose 49% to Rs 28.59 crore, while QoQ its topline rose 49%. It then went on to report a net loss of Rs 11.35 crore in the current Q2. For Q2FY08, it had reported a net profit of Rs.1.96 crore.



The biggest orders for the company comes from the Ministry of Defence (MoD) and the past trend indicates that the first three quarters of the company are always subdued, the orders from MoD fructifies only in Q4.



The reason why investors have still stuck on to Nelco, despite the losses is due to expectations of a restructuring which would turn around the fortunes of the company. Tata Power is the main promoter of Nelco, it has a 48.64% stake in the company. Tata Power’s Strategic Electronic Division (SED) has an order booking in excess of Rs.200 crore with status of a Prime Contractor with MoD. There has been news doing the rounds for a long time that this SED would be transferred to Nelco as the nature of its business fits in more with Nelco than with Tata Power. Neclo is also on the approved list of MoD. And hence transfer of this SED to Nelco should not pose any problems. Once this restructuring happens, the financial performance of Nelco
would vastly improve.
thanks

Axis Bank One of The Good Banking Stock To Hold

Axis Bank has posted a good performance for the second quarter ended 30th September 2008. The net interest income for Q2 was Rs. 913.47 , a growth of 55% yoy. The Net Profit for the second quarter was Rs. 402.91 crore, up 76.85% yoy. Its Net NPA was at 0.43% of Net Customer Assets. In today’s time maintaining asset quality is very important and on this front, Axis scores high. Its capital adequacy ratio of 12.20% also indicates that its capital is leveraged adequately. The quarterly EPS (diluted) at Rs. 11.07 was 55.04% higher than the EPS of Rs. 7.14 in Q2 of the previous year.

The Bank has reported a Trading Income of Rs. 36.16 crore in Q2, a decline of 42%yoy. The share of Trading Income to Operating Revenue decreased to 2% in Q2 as compared to 6% in the Q2 of the preceding year. The profitability of the Bank is therefore strongly underpinned by sustained core earnings of Net Interest Income and Fees.

The Bank has a wide presence through its 729 Branches & Extension Counters across 442 cities and towns across India. It has an ATM network of 3,082 ATMs, making it the third largest in the country.

Axis Bank has probably reported one of the highest growth rates in the sector, and it is yet to catch enough investor fancy enjoyed by its peers – HDFC Bank and ICICI Bank. The stock was up yesterday over 3% at Rs.559. Banking stocks are expected to do well in the next fiscal and best to accumulate as every dip.
thanks
Tech Mahindra gained 9.6 percent to 311 rupees, the most since Oct. 28. Tech Mahindra has proposed the merger with Satyam, the Economic Times reported today.

RELIANCE COMMUNICATION Paves way for others in FCCB buy back

RELIANCE COMMUNICATION Paves way for others in FCCB buy back
Reliance Communications (RCom) stock surged more than 8% yesterday on news that it will buyback FCCBs at a discount of 52.5% for $25 million, becoming the first Indian company to do so after RBI relaxed the norms. R-Com had issued zero-coupon FCCBs in February 2007, to raise USD 1 billion. The premature buy back does not just reduce the liability, but this would mean that the Rcom after buying back these FCCBs, would now go for new FCCBs at today’s rates, thus keeping its capex plans intact and at the same time, adjusting liabilities to current rates.

RCom is the number two operator in the market of more than 320 million mobile users. And hence its growth is watched with a lot of interest and the pressure of growth and the slowdown seems to have crept in during Q2FY09. This quarter has reported the slowest profit growth rate ever.

For the second quarter ended 30th September 2008, revenue growth was to the tune of 23.3% at Rs. 5,645 crore from Rs. 4,579 crore in Q2FY08. While the company’s broadband business grew by 37.8 per cent, its wireless grew by 16.5% and global practices by 28.6%.

EBITDA was at Rs. 2,302 crore, up 17.3% on a YoY. EBITDA margin was at 40.8%, with strong contributions across all businesses - Wireless, Global and Enterprise. It ended the quarter with a net profit of Rs. 1,531 crore, up higher by 17.3%.

In November 08’, the company added 1.77 million new mobile phone subscribers, taking its total user base to 59.57 million.

The slowing down of profit growth rate was attributed to falling average revenue per user (ARPU), which fell by 3.9% to Rs.271 crore from Rs.282 crore in Q2FY08. The average minutes of use a customer (on a per month basis) was almost flat at 423 against 424 in Q2FY08.

FY09 is the peak of the company’s capex plans, it has spent Rs.4,773 crore during the quarter and these are being funded through long term borrowings and forex bonds. Interest costs would be an area of concern in the coming months. thanks

TANLA SOLUTIONS Good IT Stock To bet On

Tanla Solutions, calling itself a telecom infrastructure solutions providing company, Tanla has done pretty well for itself for the second quarter ended 30th September 2008. The acquisition of a telecom services company in the UK, a software development company in India, and the recent purchase of Openbit, a Finnish mobile payments company has helped fuel this growth.

For Q2FY09, the company recorded consolidated total revenue of Rs.212.41 crore against Rs.168.86 crore in the last sequential quarter, a rise of 90.63%. Overseas revenues were close to 96%, and India was 3.4% whereas other income was 0.6%. Of the total income, products contributed 10.23%, aggregation 70%, professional services 9.23%, while mobile payments contributed around 10.56%. The growth drivers were operations in international markets like UK and other European countries, and Tanla saw sequential network aggregation revenue going up from Rs.125.23 crore to Rs.147.77 crore, an increase of 18%. EBITDA margins stood at 45.66% for the quarter on a consolidated basis. Net profits have jumped 92.83% to Rs. 70.54 crore as compared with the same period last year.

The entire focus of the company currently is on emerging technologies globally and consequent launch in India. It is the first Indian company to offer 3G products and the applications to one of the mobile operators, MTNL, and also for the biggest operator in Sri Lanka called Dialog. Once 3G starts in India, Tanla’s services would include video alert service, video SMS service, video dial service, video blogs and also video conferencing services.
Along with domestic expansions, the company is also keeping its feet firmly on the global markets and has entered new markets like Spain, South Africa, Finland, Sri Lanka, and Germany.

Telecom is one sector which to a large extent has been affected by the global financial crisis and the slowdown in the Indian economy. Tanla is well poised to take advantage and hence makes a good investment even in these troubled times.
thanks

BHARAT FORGE Future looks Brighter

The stock is near at its low of Rs.78 and the reason for this is not far. India’s largest auto component manufacturer is sure to feel the pinch of the slowdown in the auto sector- in India and globally. When auto companies have cut down production, surely there is no way in which Bharat Forge could have remained unaffected.

The company stated that it is planning to cut down production, mainly in Europe where it earns a major chunk of its revenue, as demand has gone down. It also plans to hasten its diversification into high growth areas, including infrastructure and power, to overcome the cyclical nature of auto business. Bharat Forge has three plants in Germany and one each in Sweden, Scotland and the US. It also has two plants in China.

This apart, Bharat Forge’s primary customers in India include Tata Motors, Mahindra & Mahindra, Maruti Suzuki, Ashok Leyland, Bajaj Auto among others. And with all of them cutting production, the going looks tough for Bharat Forge too.

Financially, the company has been showing strains but its more the MTM forex loss which has hastened the fall in the margins. For the second quarter ended 30th September 2008, its total revenue increased 28% but after that the costs have taken its toll. EBIDTA was down on a YoY from 18.2% to 15.2%. Then the company posted a mammoth forex loss of Rs.87.50 crore and this pushed down the PAT, which for the quarter was down at a meager Rs.4.10 crore from Rs.79.10 crore in Q2FY08.

Currently 80% of its revenue comes from the auto sector and taking lessons from this slowdown, it has decided to turn this mix from 80% to 60% by 2012 and to a meager 25% by 2015. The company recently signed a joint venture agreement with power system manufacturer Alstom to make supercritical power equipment. But till then, atleast in the coming few months, FY09 and first half of FY10 looks grim. Thanks

PRAJ INDUSTRIES results analysis

Praj Industries is a global Indian company that offers innovative solutions to significantly add value in bio-ethanol, bio-diesel and brewery plants and related wastewater treatment systems.

The company’s net profit rose 11.41% to Rs 30.18 crore. Its total income rose 18% at Rs 205.70 crore in Q2 September 2008 on a YoY. Despite having provided Rs.12.07 crore for forex losses, the company managed to show an increase net profit, which is indeed commendable. Its current equity is Rs 36.69 crore, with a face value of Rs.2 per share.

A year ago, when crude was ruling around $100 per barrel and the Govt was serious about making another 10% blending of ethanol compulsory from October 08’, the future prospects of the stock had looked very good. The fortunes of this company are closely linked with the increasing acceptance of ethanol-blended petrol and bio-fuels. Now with crude ruling below $40 per barrel and ethanol blending also postponed indefinitely, the going looks uphill for the company. But being a net exporter, the fall in the rupee vis-à-vis the US dollar would go in favour of the company.

The company remains big on ethanol blending and bio fuels. It is setting up its first plant in Louisiana, based on sugarcane juice and if this biofuel gets accepted, Praj would have the whole of North America as a market. In EU, it has a JV - BioCnergy Europa B. V., with Aker Solutions. It has also got orders from European sugar majors such as British Sugar, Suedzucker and Danisco. Its JV in Brazil is expected to help tap opportunities there too but this may take a longer while as not much progress has been made on this JV.

The only enticing aspect of the stock right now remains its shareholders – Rakesh Jhunjhunwala holds 8.48% stake, Tata Capital 7.32%, Vinod Khosla 6.15% and JM Financial which held 5.25% stake in first quarter has reduced its stake to 3.82%.
thanks