IPO Update:ERA Constructions

ERA Constructions : Excuse me please !
Era construction is offering 68 lac shares through a public issue at an offer price of Rs. 72 (fixed price) per share with a face value of Rs. 10.
Issue Opens : June 24,2005
Issue closes : June 29, 2005

Let’s Dig into the Company:
1. The company quotes that the issue proceeds will be used to acquire plant and machinery and augment the long-term working capital.

2. The shares of the company are already listed on BSE and is currently quoting at Rs.85 (lowest Rs. 66 during May2005)

3. Assuming a weighted average price of Rs. 80 till the allotment of shares is done, the issue gives a 10% return on the shares alloted.

4. The company earned an EPS of Rs. 8 per share (3 years weighted average EPS of Rs.6.5). This translates into a P/E of 10. However the P/E after the issue of shares will be 20, which looks expensive.

5. The company is a profit making company since its inception.

6. The company is dependant on few large orders rather than a large customer base.

7. Company has sizeable debtors as compared to its sales. It needs an agrresive strategy to improve its debtor’s turnover.

Though Investment Guru has a positive opinion on the construction sector, the valuations of ERA constructions look stretched.
Investment Guru recommends investors to stay away from this public offer. The stock is already listed and hence the valuations on listing of new shares will not be at par with the other IPO’s.

There are host of other IPO’s coming in the month of July and it is recommended to keep your money parked for those issues which will provide much better returns.
Stay tuned for an update on the forthcoming issues!
Happy Investing!
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Derivatives: Advanced Investment Strategy

Dear Visitors,
Investment Guru introduce a new feature in the blog- Derivatives !
Welcome to the world of Derivatives. Derivatives , future and options to be more precise ,is the need of the hour. It is an effective tool for not only increasing your earning potential but also acts as an effective hedge for your positions in Cash markets and vice versa.
I have made a separate blog to deal with the Derivatives . The blog address is http://futurenoption.blogspot.com and carries the title "Derivatives".

So guys, be ready to learn about the derivatives tools and then I will discuss with you the strategies in derivatives market.
Gear up to be an Investor with an edge of derivatives.
Keep a watch on the Derivatives blog. I have provided a link to the blog on the right hand side bar for your convenience.

Happy Investing !
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IPO Update : Nectar Lifesciences Ltd.

Nectar Lifesciences Ltd. has come in to the orimary markets with an offer of Public issue of up to 38.70 Lacs equity shares .The issue would constitute 26% of the fully diluted post issue paid-up capital of the company. The company has put the price band of Rs.200-240

Looking into the company :

Chandigarh-based Nectar Lifesciences Ltd. (NecLife) earlier known as Surya Medicare Ltd. is amongst the largest manufacturer and exporter of Cephalosporins and Semi Synthetic Penicillins in India.

The Cephalosporins drug segment is growing at a rapid pace and is the largest selling therapeutic segment in India. The company has aggresive plans to maintain its leadership position in this segment.

The company is also venturing into the Non-Antibiotic segment. The drugs to be produced under this segment belong to the category of Cardiovascular (CVS) / Anti-Histamine Therapeutic Segments. They are realtively new drugs and have huge growth potential.

The issue proceeds will be used to set up a new formulation plants at Baddi and derabassi & invest in Research and development activities.

The company has earned an EPS of Rs.20 for the year 2004-05 which converts into a P/E of 12 at the higher price band.

The company has sizeable debtors on its balance sheet which is around 25%of its sales.

Investment Guru recommends Investors to apply in the IPO. The valuations at the offer price looks reasonable in the current market scenario and leaves some scope for the listing gains. However, Investors should not keep their hopes too high with the listing gains. This is also an opportunity for those who wish to hold on for a long term to enter at the IPO levels.

Issue Opens : 22-June-2005
Issue Closes : 28-June-2005
Listing : BSE & NSE

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Market Update: Sky is the limit !

The stock markets continued their 'trecking' and the sensex and nifty touched their life-time high. The positive sentiments on the India story and continuous buying by the FII's helped the sensex to cross this landmark.
The market overtone still looks bullish with slight undertones of profit-booking expected at such levels. However, a landslide downfall is ruled out.

Where is the sensex headed now ?
With Index reaching uncharted territory, it is very difficult to predict the path ahead. However , if we take some clues from the indicators, the markets are expected to remain buoyant till FII's are posing their belief in the India story.

An intresting trend is that Mutual funds are booking profits at these level, which however, will not impact adversely since there are mutual fund offering coming in which will keep the buying spree intact.
Some regular bouts of profit booking is immitent at these levels , however, the markets are expected to keep intact the upward trend on an overall basis for some more time.

What is fuelling the markets ?
Again, the positive sentiments together with the end to the reliance dispute has helped the markets to go up. Reliance is expected to further fuel the markets. Market is expecting some big announcements from the elder brother now , after the younger brother Anil turned the markets sky rocketing with his press conference.
Another Factor is monsoons. FMCG sector is expected to come out of the blues and hence accumulated buying is seen in this sector.
Monsoons are also helping the Auto sector to keep its momentum.
Private banking stocks should continue to do well.
Steel prices are showing some rebounding, however the outlook is not still clear.
Capital goods and infrastructure stocks are expected to continue their rally.

What should small Investors do now ?
Are u feeling left out and want to participate now ?
Are u thinking what to do with your current holdings?

Investment Guru recommends Investors to be stock specific for any further buying in this market. Do not buy on rumors. Wait for the markets to settle down and be patient.
The best strategy in the coming days can be to give more weightage to IPO's than investing directly in markets at this stage. This will help you in getting maximum out of your money.

If any of your holdings has risen very sharply in this rally and their is no compelling reason for it to sustain it, Investor Guru recommend you to offload your holdings in such stocks, at least partly.

So stay tuned to markets and enjoy the ride to the new territory.

Happy Investing!
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Ganesh Forging : Mixed Trends

The Ganesh Forging stock today listed with a great "josh" but failed to maintain it . The stock is currently struggling to maintain itself between 45-49 range. The stock is currently trading at a permium of 56% to the issue price.
One reason for a luke warm listing may be the listing of the stock only on BSE which gives it lesser visibility and participation.

For Investors looking for listing gains, Investment Guru recommends to partly offload at a price of Rs. 50-52 and wait for another one or two days to see how it moves.
The short term outlook for this stock is weak.
Long term outlook for this stock is stable. So any Investor who wishes to hold it for period of 2 years can hold it for better gains.

Happy Investing!
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Ganesh Forgings: Get ready to Gain, Listing Today

Dear Investors,
Ganesh Forging's allotment of shares has been done. You can check your Demat accounts to know how much you got !
The share is going to list on BSE today!
The listing is expected to be excellent given the oversubscription and the market mood.
An update on how to deal with the listing gains will be provided later in the day today on Investment Guru.
So stay tuned!
Happy Investing! Read More!

Investment Idea -5 G E Shipping : Smooth sailing

G E Shipping : Smooth Sailing ahead !
Investment Guru recommends Investors to buy G E Shipping from a medium to long term perspective

CMP : 140.50
Target : Rs. 190 (3-4 Months)

What makes G E Shipping a good buy ?
1. G E Shipping is a high Dividend paying company. The company declared dividend of Rs. 9 last year. This stock is a great pick for Investor betting on dividend yield.

2. The company has earned a profit of Rs. 809 crores last year, which was 72% more as compared to previous year.
3. Total Revenues were up 48% at Rs.2119 Crores
4. The global oil demand is expected to rise by at least 2%. This will result in higher supply for oil and consequently higher business by shipping companies.
5. The tonnage rates are expected to see a marginal drop which will be compensated by the higher volumes.
6. The company has posted a robust EPS of Rs.43.81 per share as compared to Rs.22.63 last year.
7. At current levels the stock is trading at a P/E of just 3.2 which makes it a attractive investment at these levels.
8. Mutual funds are reported to be accumulating the stock at the current levels.

Happy Investing !
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IPO Update: Provogue IPO Oversubscribed ?

Dear Investors,
By now you must be hearing a lot about how much the Provogue IPO has oversubscribed .
You must be hearing somebody saying 19 times, other 20 times and some other forecasting it to even 40 times. So what's the real scenario and does the retail Investor need to be worried about his allotment prospects ?

Provogue IPO - Read the Fine Prints

The oversubscription talked about by people is generally confused by the Investors. It has nothing to do with their prospects for allotment. Actually your prospect for allotment depends on the oversubscription in your category. Most of us apply as individuals and under the retail category.
As per the latest indications the retail category is likely to be oversubscribed by 6-8 times.

The provogue IPO has seen huge subscription from the FII's, Mutual funds and Banks. These categories combined is likely to be oversubscribed by 25 times (indications)

So what does this means for the retail Investors ?
Is this good news or bad news ? Certainly it is good news for retail Investors if the FII and other categories get oversubscribed by a good number.
The reason being that these categories will not get sufficient allotment and will resort to buying from the markets. This will led to good listing of the IPO on the bourses.
So cheer up Investors and be lucky enough to get the allotment !

The word on the street is that the stock is going to list around 300 levels (I think I should stop here...ha ha ha !)

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Beware of Vanishing Companies

Dear Investors,
The issue of vanishing companies has again come to light with CNBC uncovering a story on the Soundcraft. It is very important for a Investor to check the company's credentials before buying into stocks , especially the small and little known companies. This is the only way to save yourself from their traps. The Department of company affairs has hosted a list of such vanishing companies on its website. Interestingly a big chunck of these companies are from Gujarat.
Please click the following link to view the list of companies and their details.
Vanishing Companies

Wish you safe Investing !
Cheers !
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Stock Update:Cybermedia hit Upper Circuit !!!

The Cyber Media stock has reached the 20% upper circuit levels. The stock is currently quoting at Rs. 127 with pending buy order for 5 lakh shares and no sellers.
This a good news for the IPO Investors who are reaping good yield on thier Investment.
The stock has rung up on the news that Fidelity Investments has acquired a large chunck of Cybermedia shares. Fidelity Investments is respected worldwide for its longterm strategy.

Investment Guru recommends you to maintain a hold on this stock for medium term Investors.
For those who only want listing gains may sell this shares tomorrow before afternoon trade after which the stock may see some selling due to acumulated buying by traders.

Happy Investing !!
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IPO Update : Say “NO” to Yes Bank

Yes Bank IPO is hitting the markets as the Issue opens on 15th June 2005. Investment Guru recommends Investors to stay away from the IPO.

Why should I stay away from this IPO ?

1. Yes bank is new to the banking business and does not have any brand value. The success of the bank depends on the brand value it is able to create which is uncertain at this stage for this bank.
2. Yes Bank has posted a Negative EPS for the first year of its operations. This means that the bank is a loss-making bank from sharholder’s perspective.
3. There are a number of good performing private sector banks in the market generating excellent profits. Why should one apply for a loss making bank IPO, that too at a premium of 350% over the face value?
4. The bank is expected to have a tough competition with the existing well-established private and poublic sector banks and the bank has not disclosed what innovative plans it has to compete with these banks.
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CYBER MEDIA lists with a bang !!!

Cyber Media has come up to the Investor's expectation. It has qouted at a price of 109 on NSE on the first day of listing.
Investment Guru recommends Investors to book profit on 50% of your holdings and keep another 50% to taste the upcoming days.

Happy Investing ! Read More!

IPO Update : Provogue (India) Ltd.

Provogue (I) Ltd. - Apply, sell on listing & Enjoy !!
Provogue (India) Limited is offering 40.49 Lacs equity shares at a offer price band of Rs.130-150. Investment Guru recommends investors to apply for this IPO.It is recommended to book profits on listing of the share. The stock is expected to give handsome listing gains.

What makes this IPO offer attractive?
1. Considering the current EPS of the company at Rs.7, the offer comes at a P/E of 21. Now look at the comparison with the existing stocks in same industry :
Shopper Stop's stock is quoting at P/E of 45
Westside Stock is quoting at P/E of 47
pantaloon stock is quoting at P/E of 66
This itself is a sufficient reason to invest in IPO and an indication of handsome listing gains awaiting the Investors.
2. The apparels market has grown by 13% last year. Still, 70% of the market is captured by the unbranded apparel segment. The success of apparel companies depends on how fast can they convert this unbranded market to their advantage
3. The company has received number of awards for its brand value.
4. The cash flow position of the company is reasonably good.
5. Provogue come in Top 5 companies in terms of number of outlets giving it a wider reach as compared to peers.
6. New Quota Regime to benefit the apparel industry
7. Since the Apprael stocks have run up quite high,this sector has become a high risk sector and hence Investor are recommended to sell on listing. The stock is not recommended for long term hold at this stage.
Issue Details :
Issue Opens on : 10-June-2005
Issue Closes on : 16-June-2005
Listing on BSE & NSE
Shares Offered : 40.49 Lacs
Registrar: Intime Spectrum

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IPO Update : CYBER MEDIA Allotment

Dear Investors,
Those of you who have applied for Cyber Media IPO, The Allotments for the IPO has been done.
Please check your respective Demat accounts to check number of shares alloted to you.
The registrar for this issue was Intime Spectrum, but its website still do not show the allotment status for Cyber media. BSE/NSE has not yet issued the circular for listing detail.

Happy Investing !! Read More!

The Third Eye : Metal losing Sheen

The third eye senses the glow dampening out of the Metal Sector. The metal Sector has been in limelight for last six months or so with the prices rising to all time high.

Does it mean that that the metal sector has peaked out?
Since their respective peaks, metals like Aluminium and Zinc have fallen by more than 13%, Copper down by 8% . Nickel appears to be an exception?
One obvious reason is slowdown in Chinese economy, which is already facing a problem of overproduction.
Aluminium was trading at $1742 per tonne with 27 months futures trading at $1672 on the London metal Exchange on June 2.
Clearly, there is a sign of slowdown in prices of Metals and this is going to affect the bottomlines of the companies in this sector for the coming year.
The FII data shows that they were sellers in Metal stocks and moving to other growth stocks.

So, what does this means to the Investors?
Investment Guru is of view that Investors should avoid buying in the metal stocks at this stage as the metal stocks are bound to go southwards.
A wait and watch approach is recommended for at least a three month time period to assess the impact of slowdown on the share prices.

Which company will perform better?
Investment Guru believes that in the steel space, Investors should watch out for stocks like JVSL which was in news for approval to acquire Euro Coke and Energy Pvt. Ltd., Euro Ikon Iron and Steel Pvt. Ltd. and JSW Power Ltd. through a merger with the company.

This acquisition will bring in positive synergy for the company and will help it outperform other stocks in the steel space. The profit before Tax of the company will go up by Rs. 145 Crores due to this merger.

The combined entity will be available to the Investors at cheaper valuations as compared to other steel stocks.

But wait for the slowdown euphoria to die down so that you can enter the stock at attractive price.

Happy Investing!
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The Thrid Eye: Matrix Labs- The winning Combo

The company has announced merger with Strides Lab. The new entity Matrix Strides Lab will become one of the Top Ten Pharma Company. The company will benefit tremendously from the merger and it will give a boost to the growth rate and profitability of the comined entity.
With this merger, Matrix will have access to new International markets.

Now the question is which company’s shareholder will benefit from this merger.
Investment Guru is of view that Matrix Lab shareholder should be the winner in this merger. Howver, the markets reacted otherwise in yesterday’s close when Strides Lab shares went up 13% while Matrix Lab shares went up only 2%. However, the final outcome will depend on the merger ration decided by the two companies.

Both the Shares are expected to show great action in this week’s trade, especially Thursday’s trade. Investment Guru Recommends a stratgey for Investors to gain handsomely form this merger. It is recommended to buy both Matrix and strides Lab shares in ratio of 3:1 i.e, for every two shares you buy for Matrix, buy one share of strides Lab also. This will hedge you in case of any surprise outcome of the merger ratio, which is yet to be decided.
Note : Please read the Disclaimer clause before acting on any recommendation on this blog
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