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February 01, 2015

Chaman Lal Setia Exports - Time for P/E expansion?


The company is in the business of Basmati rice under the brand name MAHARANI and is in business since 1973.

Highlights:
- Sales have grown from Rs 166 Crores in FY 10-11 to Rs 416 Crores in FY 13-14
- Net Profit in the same period has grown from Rs 6 Crores to Rs 18 Crores
- EPS has grown from 6 to 19 in the same period
- Company has been maintaining a regular dividend payout
- The company has a debt of Rs 61 Crores and reserves of Rs 57 Crores
- ROE has been consistently above 25% since the last 5 years
- Promoter holding stands at 74.39%

- Rice industry is expected to grow at 15% annually for coming years

Valuation:

- Currently trading at 74 levels
- The company is trading at a P/E of 3.5
- The dividend yield is 2.3%
- Price to BV ratio is 0.96

- With sales of Rs 416 Crores, the company is available at a market cap of Rs 72 Crores

Concerns:
- Operating margin and Net Profit margin are at 7% and 4.3% respectively.
-  Sector heavily dependent on monsoons and other climatic conditions.
- Debt has been increasing consistently though it is still within a decent ratio when compared to reserves and of the total debt Rs 17.22 Crores is from 3 non executive directors

The stock has seen some accumulation in the recent weeks and in the current market condition it is fairly undervalued. Being a cyclical, one cannot really assign a high P/E to this stock especially as the margins are pretty low. But assigning a P/E of 6 and EPS of 20 for the current year, one can expect levels of 120 in this stock which is approximately a healthy 60% return in this stock in the coming months. Also, the M-cap to sales ratio is quite low. The stock has seen a rise in EPS and the same has driven the stock price higher for the past few months. Rising EPS paired with a little expansion in P/E could drive the stock price higher in coming times. Invest as per your risk capacity and better to allocate only a small portion of your capital in this counter. This is a bull market investment.

January 31, 2015

Man Infraconstruction Ltd



Man Infraconstruction is a construction company in India that has executed construction work for some of the most significant port projects in the country. Highlights include India's first premier private port project for Nhava Sheva International Container Terminal at Jawaharlal Nehru Port Terminal, Navi Mumbai in 1997.
Subsequently, the company has successfully worked on five ports viz., Jawaharlal Nehru Port Trust, Mundra Port, Chennai Port, Vallarpadam Port and the Pipavav Port. Man Infra has successfully executed construction of 3 Residential Towers of 55 storey which is one of the tallest towers’ in western suburb of Mumbai. 
As a natural extension and in line with the aspiration to climb up the value chain, Man Infra (The Group) has entered into Real Estate Development. The Group is currently developing premium Residential Projects with an approximate saleable area of 2.5 million sq. ft. in various suburbs of Mumbai.

Man Infra shares have been picked up in huge quantities by high profile names such as Merrill Lynch, Vallabh Bhansali and Rakesh Jhunjhunwala in the past few trading sessions. The company is a relatively very low debt, high reserves company which for the past many years has seen a stagnation in growth. With the interest rates cycle starting to point south and signs of a revival in the economy, the company could benefit and it's upcoming projects in Mumbai could help sales grow from current levels.

Man Infra - Monthly
Man Infra on the monthly charts is showing potential to go to 67-70 levels from current levels of 45 after showing signs of strong accumulation and 4 years long consolidation. This is our tekno-funda pick and we advise positional traders to do their own research before making any trade decision based on this article. We are personally LONG on the stock from 36 levels and our risk reward is different at this stage.

All these trading techniques and their implementation are part of our technical analysis course which is free for those who open their brokerage account through us.

January 26, 2015

Nifty and Bank Nifty Futures - 27th January, 2015 trade setup

Nifty Futures - 4 Hour chart
Nifty is in a very strong uptrend and thus we will be looking for buying opportunities only in the index futures. Buy above 8880, SL: 8830, Tgt will be 8960+ levels.

Bank Nifty Futures - 4 Hour chart
Bank Nifty future is a BUY above 20185 with a SL of 20085 and TGT of 20385. As the trend is very bullish and new highs being made, we shall look for BUY opportunities only.

All these trading techniques and their implementation are part of our technical analysis course which is free for those who open their brokerage account through us.

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