Which of the Birla Groups is Most Valuable?

Sundaramurthy Vadivelu

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Introduction:

In our earlier article series, “Which of India’s Top 10 “Family Named” Stocks is Most Valuable?” we discussed about ten companies with “Family” names like Birla, Bajaj, Dalmia etc. We also compared Mukesh Ambani and Anil Ambani groups previously in “Mukesh Ambani vs Anil Ambani : Which Brother's Companies are the better Investment?”. Let us now analyze the Birla Groups from a stock market perspective.

Basis for our analysis:

• Only those group companies belonging to Group ‘A’ or ‘B1’ (which are also traded at NSE) will be discussed here. As I have mentioned earlier, some brokers place restrictions in online trading of other group stocks; there is no point in analyzing such stocks if one can’t trade those.

The Birla Family:

The Birla Group was founded by Baldeodas Birla and it is one of the oldest business houses in the country along with the Tatas. Birlas supported the nation during freedom struggle. They were close family friends of Mahatma Gandhi. They are also known for their philanthropic and social work like the Tatas. Birla Institute of Technology & Science is a premier educational institution in the country. Aditya Birla Group’s Tanfac Jan Seva Trust shared half the cost of constructing 119 houses in Cuddalore district of Tamil Nadu, which was affected during the 2004 Tsunami.

Mrs. Rajashree Birla presenting a symbolic key to

Cuddalore district collector Gagandeep Singh Bedi

The Birla Family Tree is shown below.

The following companies are managed by MP Birla group.

• Birla Corporation consisting of Cement Division, Jute Division, Synthetics Division, Carbide and Gases Division, Vinoleum Division & Auto Trim Division

• Universal Cables which manufactures power/instrumentation cables and capacitors

• Vindhya Telelink which is involved in jelly filled telephone cables business

• Birla Ericsson Optical which manufactures fibre optic cables

• Optic Fibre Goa Limited

• Hindustan Gum & Chemicals Limited

• Birla DLW Limited

• Birla Financial Corporation Limited

Summary:

Scrip/NSE Ticker	BSE Group	Scrip Code	Price 15-Nov
Birla Corporation (BIRLAJUTE)	A	500335	321.90
Universal Cables (UNIVCABLES)	B1	504212	98.40
Vindhya Telelink (VINDHYATEL)	B1	517015	243.70
Birla Ericsson Opticals (BIRLAERIC)	B1	500060	23.90

The following table shows the key financial ratios:

Scrip	P/E	P/BV	Gain since 01-Jan
BIRLAJUTE	6.86	3.77	(5.28)
UNIVCABLES	12.87	1.45	(4.37)
VINDHYATEL	112.99	1.29	82.21
BIRLAERIC	-	1.05	4.14

Let us now discuss the medium term technical scenario of these stocks.

• The weekly chart of Birla Corporation suggests that the stock had failed to close above its previous resistance at 372 made during the week ending Jan 26, 2007. It has however, not broken the support trendline as yet. A bearish engulfing pattern was formed near the resistance; however this could not be confirmed during the week that followed. We will need to wait for a technical confirmation in the weeks to come.

• The medium term chart of Universal Cables indicates that the stock had failed to close above the resistance trendline. The support however, has not been broken yet. It had formed one bullish piercing line pattern and two bullish engulfing patterns; but these reversals could not be confirmed. Like Birla Corporation, the current trend is unclear.

• Birla Ericsson Optical has been an unwanted commodity in the stock market since last 18 months. It has fallen from a high of 39.95 in May 2006 to a low of 15.60 in April 2007. This company declared a net loss of Rs.0.63 crores for the financial year 2006 – 07. However, during the last two quarters it has declared meagre profits. The stock has not been able to break resistances at all in the last 12 months or so. It has to close above 25 on a weekly basis for uptrend to begin.

• Vindhya Telelink has formed a bullish inverse head and shoulder pattern and the stock had broken its resistance trendline. It usually takes long periods of time for forming these type of chart patterns and the stocks invariably gain a lot. The medium term technical target for the stock works out to 261 when considering the low of 87.20.

Conclusion:

Apart from Vindhya Telelink, the other three companies from MP Birla Group have been underperformers this year. Their technical picture is also unclear.

Sundaramurthy Vadivelu

Suggested Reading

Which of India’s Top 10 “Family Named” Stocks is Most Valuable? – Part 1 Which of India’s Top 10 “Family Named” Stocks is Most Valuable? – Part 2 of 3 Which of India’s Top 10 “Family Named” Stocks is Most Valuable? – Part 3 of 3 Mukesh Ambani vs Anil Ambani : Which Brother's Companies are the better Investment?

UPDATED Jan 2008! Rakesh Jhunjhunwala Holdings

UPDATED JAN 2008 - Below we have discovered the latest holdings for renowned India investor Rakesh Jhunjhunwala. We will keep this information up to date and the information will refresh on its own as we discover new trades. Please pay attention to the tabs below the embedded spreadsheet as you can click on them to see earlier holding time periods.

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Analysis of Everonn Systems India Limited IPO

Introduction:

Everonn Systems India Limited is a Chennai based information technology education and training company. There are other listed companies in this sector (Aptech and NIIT Limited). While Aptech specializes education in IT platforms such as Solaris, Java and Oracle, NIIT and Everonn have their presence among enterprises, educational institutions like schools and colleges, corporates and working professionals.

Business overview:

The company’s business is based on two main strategies viz:

Institutional Education and IT Infrastructure Services (IEIS) and Virtual and Technology Enabled Learning Solutions (VITELS). The company aims at setting up the necessary infrastructure for IT education / training, creating learning content that is relevant to the current needs of industry and identifying learning opportunities. The company targets to educate 5 million students by 2010.

Institutional Education and IT Infrastructure Services:

Everonn provides computer education services to 8 state governments in India. It has so far trained about 1.2 million students and has about 1900 computer laboratories. The company educates students from schools and colleges on a contractual basis. The services include:

• Supply of hardware, software and other infrastructure needed for IT education;

• Teach the students in English and local language if required;

• Provide stationary and consumables;

• Appoint faculty members at the institutions;

• Train the teachers at the institutions;

• Prepare study materials in English and local language.

The company enters into long term contracts with schools and colleges on a BOOT basis (Build, Own, Operate and Transfer). The assets shall belong to the company till the contract expires and later these shall be transferred to the respective institutions.

The following table shows the number of schools covered:

State	Schools
Andaman	12
Andhra Pradesh	183
Delhi	267
Goa	238
Jharkand	206
Karnataka	216
Uttar Pradesh	223
West Bengal	555
Total	1900

Recently, the company has signed a Memorandum of Understanding with Gujarat Council of Primary education to train 5400 teachers. It will implement computer aided learning in about 1250 schools in the state.

The company has successfully completed providing computer education solutions to all the higher secondary schools in Tamil Nadu as well as in Pondicherry.

Virtual and Technology Enabled Learning Solutions:

This essentially means live interactive learning process. VSAT (Very Small Aperture Terminal) technology is used for interaction between the faculty and the students. An instructor presents the lecture to students through the computer and LCD projector via the VSAT receiver. The instructor and the students can see and interact with each other as if they are in a regular class room. Therefore, a single instructor is able to teach hundreds of students all over the country at the same time, without compromising the quality of learning process. These may be considered as the virtual classrooms.

The above technology is available at more than 200 locations. The focus is on institutions, corporates and retail segments of learning.

The company offers certificate programmes in bioinformatics, software testing and networking for institutions. Retail segment targets franchisees. Corporate initiatives include training and placement.

Comparison between NIIT and Everonn:

Both companies focus on IT education and learning. NIIT has presence in 2000 Government schools in the states of Andhra Pradesh, Tamil Nadu, West Bengal and Karnataka where as Everonn has managed to spread the operations to 10 states (including Tamil Nadu and Pondicherry). NIIT also executes turnkey projects in IT education and infrastructure viz. systems handling, facility management, training etc.

In the stock market, NIIT Limited has performed well. It closed at 179.45 on 31.12.04. On 29.06.07 it closed at 1005. In other words, the stock has appreciated 5.6 times in about 2.5 years which is very good. We will have to see how Everonn performs in the market.

NIIT Limited has a book value of 148.39, diluted EPS of 28.06 and P/E ratio of 25 as on 31.03.07. It reported a net profit of Rs.57.30 crores for the financial year 2006 – 07. Everonn, had a book value of 42.41 and diluted EPS of 5.63. P/E works out to 24.87 at the upper end of the price band Rs.140. There is not much difference in terms of P/E ratio.

Financial performance in the past:

Item	2007	2006	2005	2004	2003
Income	4,304.46	3,093.03	1,942.95	1,616.42	1,601.54
Expenditure	2,541.16	1,655.54	946.79	799.25	868.98
PBIDT	1,763.30	1,437.48	996.16	817.18	732.56
Adjusted net profit	485.64	490.93	151.13	60.59	40.84

All figures in rupees lakhs. PBIDT = Profit before interest, depreciation and tax.

IPO Details:

Issue Period: July 05, 2007 to July 11, 2007

Issue Size: (.) Equity Shares aggregating Rs. 50 crores

Issue Type: 100% Book Building

Face Value: Rs. 10/-

Price Range: Rs.125/- to Rs.140/-

Market Lot: 50 shares

Minimum Order Quantity: 50 shares

Retail Investor cap: Rs.100,000

Application form is available from this link.

Red Herring Prospectus is available at this link.

Conclusion:

Though the company may be smaller compared to NIIT it is also in the same business and has presence in several states. NIIT has a worldwide network of centres and offices, from the United States to Fiji, apart from several locations in India whereas Everonn is primarily an Indian player. However, they may also diversify into other locations in future. In fact, Everonn has plans to set up offices in Dubai and Singapore. NIIT has done reasonably well in the stock market in the last two and a half years; we may expect the same from Everonn. So long term investors may invest in Everonn IPO with the expectation that it would perform well.

SUNDARAMURTHY VADIVELU

Suggested Reading Stock Tip Articles

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India’s Allied Digital Services IPO in a Crowded Field

Introduction:

Allied Digital Services Limited is a Mumbai based IT infrastructure management and technical support services outsourcing company. It uses a combination of on site and remote services to reduce the cost of ownership of the enterprises and service providers. It delivers strategic, personalized, full service technical support services solutions.

Allied Digital has customer base in India and throughout the globe. There are about 1000 employees at 72 locations across India.

Business profile:

The company’s operations include:

Consultancy: Network design, integration and assessment, management and optimization, test and analysis.

Project Management: Project scope, schedule, integration, allocation, coordination, communication and risk management.

Implementation: Installation, system commissioning, site survey and delivery control, documentation, operations training with round the clock support.

Allied Digital provides services and solutions in networking communications, information security, software, information technology (IT), technical BPO and gateways.

In 2004, a joint venture company, Allied CNT was formed after the merger of Allied Digital India and CNT International Limited, Sri Lanka. Allied CNT is the regional distributor for check point software, eSafe antivirus and content security solutions.

Allied digital provides integrated solutions such as safety and security systems (computerized time and attendance, access control entry and exit automation system, closed circuit television system, ATM surveillance and remote monitoring system, fire detection system etc.), video conferencing systems and radio frequency identification systems.

It also provides turnkey IT solutions such as enterprise computing and management, storage, information security, messaging and collaboration, telecom solutions etc.

Management:

The company was incorporated on February 10, 1995 as Allied Digital Services Private Limited under the Companies Act, 1956 and later converted into a public limited company with fresh certificate of incorporation on March 31, 2006.

The management team comprises of Nitin Shah (Chairman and Managing Director), Prakash Shah and Manoj Shah (both executive directors), Bimal Raj (Chief executive officer), Nishith Sheth (Chief operating officer) and Sunil Bhatt (Chief technology officer).

In 1984 they started the office at Fort with just 2 employees. Within 3 years they got their first order from Mafatlal Industries, Mumbai. In 1992 they executed India’s first CAT – 3 for Hindustan Ciba Geigy. In 1996 they were appointed by Dell as the authorized distributors in India. In the same year they were given the maintenance contract of Air India’s travel agent network which continued for five years. In 1997 the company tied up with Microsoft for distribution of the entire product suite. In 2002 they joined hands with Media Gate for their unified messaging solutions on the telecom front. In 2004 the company executed Asia’s largest wireless infrastructure project for Reliance Communications.

Today the company has offices, customer support locations and service centres in many cities and towns in India. Except for the north eastern states of Nagaland, Manipur, Mizoram, Arunachal Pradesh and Tripura it has established presence all over the country.

The company has strategic alliances with IBM, Microsoft, Unisys and Intel to build advanced technology capabilites and deliver comprehensive solutions to the customers.

The company received the following in 2005.

• National and regional gold awards for storage, integrated solutions and networking by DQ Channels.

• Best support organization award by CRN magazine.

• Best system integrator award by DQ week.

The company received the following in 2006.

• Best services company award and most comprehensive solution provider award by DQ Channels.

• National and regional gold awards for integrated solutions by CRN magazine.

• Best system integrator award by Express computer.

• Deal of the year award by IBM India.

Some of the clients include Reliance Industries, Thermax, Maruti Udyog, Larsen and Toubro (manufacturing), Cable and Wireless, British Telecom, Reliance Communications, Tata Teleservices (telecom), ICICI Bank, Citibank, HDFC Bank, NSE, State bank of India (finance), Tata Power, Hindustan Petroleum, Bharat Petroleum, British Gas (oil & energy), TCS, NIIT (software), Jet airways, STAR TV, Oberoi group of hotels, Accenture (services), Air India, Government of Maharashtra (government departments / undertakings), Shoppers Stop, Pantaloon Retail, McDonalds (retail business).

The company plans to raise about Rs. 86 crores (at Rs. 190, the upper end of the price band). About Rs. 33 crores has been earmarked for starting a Global Service Delivery Centre (GDSC), which is likely to serve as a centralized control and monitoring centre for the company’s operations around the country.

Financial Data:

Description	2007	2006	2005	2004	2003
Income	156.42	88.87	51.81	39.62	40.76
Expenditure	123.24	71.49	48.43	37.78	38.94
PBIDT	33.18	17.38	3.39	1.84	1.82
Net profit before tax	31.21	16.02	2.29	0.84	1.24
Net profit after tax	22.93	12.06	1.44	0.77	0.74
Adjusted Profit	22.93	12.02	1.24	0.32	0.76

All figures are in rupees crores. PBIDT = Profit before interest, depreciation and tax.

Details of the IPO:

Issue Period: July 02, 2007 to July 05, 2007

Issue Size: 45,22,435 Equity Shares

Issue Type: 100% Book Building

Face Value: Rs. 10/-

Price Range: Rs. 170/- to Rs. 190/-

Market Lot: 35 shares

Minimum Quantity: 35 shares

Retail Investor cap: Rs.100,000

Red Herring Prospectus can be downloaded from here.

Conclusion:

The company has developed a good business model with operations all over India, extending to Caribbean, UK and Sri Lanka. The services provided are vast and diversified in the IT sector. The company has very good clientele as we have seen above. The 20+ years experience in this field is definitely an advantage.

However, the software industry does face some challenges. There are plenty of software companies in India, particularly in the southern part of the country. There are some huge players like Infosys, Satyam, Wipro, TCS, Polaris, to mention a few. There is quite a bit of competition in IT infrastructure and services. This could affect the profitability, share of business and possibly revenues. But the locational advantages may compensate for the company since it is Mumabi based.

Allied Digital is smaller in scale and quantum of operations when compared to some other larger players. But at the offer price of Rs. 190, the P/E ratio works out to 14.3 with an EPS of 13.3. This is definitely at a discount to their competitors. So it may be a good idea to invest in the IPO at the upper price band with a long term perspective.

SUNDARAMURTHY VADIVELU

5 India Stocks You Should Own for the Next 6 Months

Analysis of select India stocks (medium term perspective)

Disclosure

In this article we shall review five stocks that look technically good for medium term. The patterns and breakouts discussed are based on weekly charts.

Adani Enterprises Limited:

http://groups.google.com/group/theindiastreet/web/ADANIENT.JPG

Yet another classic example of a “cup and handle” breakout. During the first week of December 2004 this stock made a high of 85.45. It consolidated for 18 months. Eventually it broke its previous high in the first week of May 2006 and touched a high of 199.10. The cup and handle pattern usually takes long time to form; it is a bullish continuation pattern. The height of the ‘cup’ on the two sides need not be equal. In this case, though the stock had broken the previous high in November 2006, it didn’t move up further much. That can be attributed to the fact that during the first corrective decline after the long uptrend, it broke its 61.8% retracement but immediately bounced back. The next upmove was too short; the following corrective decline again was not a major one. So, the ‘handle’ formation has taken some 7 months now. This stock has broken the major resistance level of 255.70 this week. The next target for the stock is 310 and medium term target is around 380. There should be a substantial increase in volume on the breakout above the handle's resistance. In this case, the volume has gone up by 2.75 times this week. This is also a confirmation of the breakout.

Godrej Industries Limited:

http://groups.google.com/group/theindiastreet/web/GODREJIND.JPG

One more example of the cup and handle break out. The cup, as I mentioned above, forms as the prices reach almost the bottom of the previous uptrend. In an ideal bull market, 61.8% should be considered as a support during a downtrend. If this level is breached, the stock takes long time to consolidate and over come the selling pressure. That can be seen here. The ‘cup’ formation had taken 29 weeks whereas the ‘handle’ has been formed in 29 weeks. Together it has taken about 15 months! Now since the resistance has been broken, the stock can be expected to reach target of 280.

Hikal Limited:

http://groups.google.com/group/theindiastreet/web/HIKAL.JPG

This stock too, has seen some consolidation phase. It has just broken the previous resistance of 442.95 made during the first week of November 2006. So almost 8 months of consolidation pattern has been successfully broken out. It should be remembered that huge rises follow long periods of sideways movment or consolidation pattern, as we disucssed in the case of Adani Enterprises Limited above. Targets for this stock are 539 and 665.

Tin Plate Company of India Limited:

http://groups.google.com/group/theindiastreet/web/TINPLATE.JPG

This stock had fallen from a high of 106.70 in the last week of April 2006 to a low of 40.10 in mid March 2007. (Once again we remind here: Overall index has been bullish; not all the individual stocks! We have so far seen several cases like this.) It had broken out 3 weeks ago. Once again fell below the previous resistance. However, for the last two weeks it has closed above the resistance line. Watch the support trendline. The lows have so far not breached. Since wave 1 has been short, we can expect wave 3 to be reasonably long. The next resistance is at 72. Once this level is breached we can think of targets around 81.

XL Telecom Limited:

It is relatively a new stock since it got listed in December last year. After hitting a high of 216 in February this year, it fell to a low of 93.60 in March. The first wave’s high of 131.50, (which was the resistance) has been broken this week and the stock has managed to close at 134.25. It can be seen from the chart that 50% retracement works out to 154.75; some resistance will come around this level. 61.8% retracement is 169.18 or around 169 should be the target for this stock. The prices had fallen down consistenly along with volumes soon it got listed (except for one week). If higher highs and higher lows were formed this could have been an excellent signal; but in this case the previous low was broken and so it cannot be regarded so.

http://groups.google.com/group/theindiastreet/web/XLTL.JPG

SUNDARAMURTHY VADIVELU

The India Street

5 India Stocks You Need to Own in the Short Term

Analysis of select India stocks (short term perspective)

Disclosure

In this article let us review some stocks which are technically bullish for the short term. As I have mentioned in my earlier articles these stocks are selected either from A category or B1 category of BSE (Bombay Stock Exchange). This helps in eliminating illiquid stocks, those with listing related issues etc.

Gokaldas Exports Limited:

Technically this stock is looking great for the short term. Yet another incidence of a stock losing more than half its value in this wonderful bull market. It had fallen to a low of 186.65 last month from a high of 407.70 in April 2006. The stock was split into a face value of Rs.5 from Rs.10 during February 2007. The high corresponds to the adjusted value.

Watch the chart below. It is in the third wave and it has broken its short term resistance at 234.

http://groups.google.com/group/theindiastreet/web/GOKEX.JPG

Short term resistance exists for the stock at 280. Medium term resistance is at 332.45. It is a short term trader’s dream stock from a technical point of view.

In weekly charts, it is currently in the first wave. So, after the 5^th wave in daily charts, the stock may either get corrected or consolidate. If the stock is able to move into 3^rd wave in weekly charts, we can view it for a medium term.

Hindustan Construction Company Limited:

http://groups.google.com/group/theindiastreet/web/HCC.JPG

In my earlier article on chart patterns we saw about bullish patterns such as double bottom, triple bottom, cup and handle breakout etc. Here is a classical example. This stock, like the previous one, is in third wave, which many people reckon the best to trade. It broke its short term resistance at 110 on 21.06.07. Today it has gained 7.73%. The next resistance is around 127.60 and after that 149 will be the next. Triple bottoms are very highly reliable patterns of bullishness. In 2005, CCL had a similar triple bottom. After breaking its resistance at 213 on 13.06.2005, it went all the way up to close at 529.15 on 13.01.06. This is only an example; there is no guarantee that it will get repeated in this case.

Orbit Corporation Limited:

http://groups.google.com/group/theindiastreet/web/ORBITCORP.JPG

This is a recently listed stock. If we consider the entire upmove from 110.15 to 264.60 and again a correction to 215.25, a full cycle has been completed in daily charts. The stock has broken its short term resistance. However, today the long upper shadow indicates possible sell off; that can be confirmed by the higher volumes. The stock is currently on first wave. So a decline cannot be ruled out. But it still looks good for the short term.

South Indian Bank Limited:

http://groups.google.com/group/theindiastreet/web/SOUTHBANK.JPG

This has also broken its short term resistance on 20.06.07. A falling window was formed on 02.04.07. Watch the gap between previous day’s low and this day’s high. These gaps, it is often said, are formed only to get closed. After this downward gap formation stock consolidated for a while before breaking out. Once again, the stock has consolidated for about 45 days, eventually before breaking out again. The stock is bullish now in both daily and weekly charts.

Short term targets work out to about 156.

Opto Circuits India Limited:

This stock is bullish in both daily and weekly charts. Watch the huge triangle breakout in daily charts with a triangle height of around 94 rupees. After the breakout the stock went into consolidation. It has once again broken out. Short term target works out to 455. The triangle breakout, again is a very bullish sign.

We will watch out for the stock’s performance.

We shall review the stocks discussed here in our future articles.

http://groups.google.com/group/theindiastreet/web/OPTOCIRCUI.JPG

SUNDARAMURTHY VADIVELU

The India Street

India’s BEML IPO Expected to Skyrocket

Disclosure

BEML is a public sector undertaking (PSU) with headquarters at Bangalore. It was incorporated in 1964 and began operations in 1965. It was fully owned by the Ministry of Defence, Government of India. In 1992, the government divested 25% stake. So far about 40% equity has been divested to financial institutions and general public. BEML is Asia’s second largest manufacturer of earth moving equipments. The domestic market share of the company is about 70%.

BEML’s machinery has plenty of applications in coal, mining, steel, cement, power, irrigation, construction, road building and railway. The product range has been expanded to cover high quality hydraulics, heavy duty diesel engines, welding robots and undertaking of heavy fabrication jobs.

The manufacturing plants are located at Bangalore, Mysore and Kolar Gold Fields. The product range includes:

Earth moving equipment such as bulldozers, dump trucks, hydraulic excavators, wheel loaders, wheel dozers , tyre handlers, pipe layers, rope shovels, walking draglines, motor graders , scrapers, water sprinklers, aircraft towing tractors and backhoe loaders;

Railway equipment such as integral rail coaches, electric multiple units, rail buses, track laying equipment and overhead equipment inspection cars;

Heavy duty hydraulic aggregates and high power diesel engines.

BEML has been granted "Mini Ratna Category - I status" by the Ministry of Defence, Government of India with effect from 29th August 2006.

Key financial data for the year ending 31.03.2007:

Item	Rs. Crores
Gross Income	2479.28
Total Expenditure	2144.11
Net Profit	204.93
EPS (Rs.)	55.77
P/E	22.54
Book value	238.60
Dividend	100%
Market capitalization	4,297.85

Following table gives the shareholding pattern as on 31.03.2007:

Entity	% holding
Central government	61.23
Mutual funds/UTI	13.40
Financial institutions/banks	6.40
FII's	6.26
Corporate bodies	2.55
Retail investors < 1 lakh	5.86
Retail investors > 1 lakh	3.36
NRI's	0.81

Details of the IPO:

Issue Period: June 27, 2007 to July 03, 2007

Issue Size: 49,00,000 Equity Shares

Issue Type: 100% Book Building

Face Value: Rs.10/-

Price Range: Rs. 1020/- to Rs. 1090/-

Market Lot: 5 shares

Minimum Order Quantity: 5 shares

Retail Investor cap: Rs.100,000

Application forms can be downloaded from here.

Red Herring Prospectus is available here.

This stock is already listed and traded at both BSE and NSE. We have discussed the daily chart in Technical review of select India stocks – Part 3.

Now let us analyze the long term trend for BEML.

http://groups.google.com/group/theindiastreet/web/BEML+Monthly.jpg

When Elliot wave theory is applied to the monthly chart of BEML, currently a full cycle has been completed. Watch waves 1 through 5 and a, b and c. As I have mentioned already, an ideal bull market 50% support is maintained in the monthly chart. It managed to break 61.8% retracement exactly a year ago; now since it has closed above 38.2% retracement levels, it can be concluded that the uptrend has begun. The stock will have to close above 1387. After that we can think of stock testing its all time high at 1788.

Wave Analysis:

Wave	Low	High	Gain
1	10.05	114.95	11.44
3	56.05	261.00	4.66
5	96.50	1,788.00	18.53

It can be seen that the 5^th wave has witnessed the highest gain. The first wave, usually is shorter compared to the third and fifth.

Conclusion:

The current market price of BEML is 1180. It is about 90 rupees higher than the IPO high price or by about 7.6%. We have seen in technical reviews that the stock is bullish in short term and long term charts. The company has performed very well in the sector. The key financials are good. IPO looks attractive at the current price levels.

One may wonder that the valuations are very high. But that is exactly how the market has gone in the last 4 or 5 years. We certainly can’t think of stock falling to a very low level now. We have seen in Indian stock market – An Outlook that Steel Authority of India has appreciated nearly 17 times. BEML though, got multiplied 178 times between September 2001 and March 2006.

SUNDARAMURTHY VADIVELU

The India Street

HDIL IPO Expected to be a Winner

Stock is listed at a discount to rivals

Housing Development and Infrastructure Limited (HDIL) is a real estate company with operations in Mumbai and around its neighbourhood areas. HDIL’s business involves construction and development of residential projects, commercial and retail projects, slum rehabilitation and land development. The company also clears slum land and rehouses slum dwellers. The company develops infrastructure on land which is sold to other property developers.

HDIL is part of the Wadhawan Group (formerly Dheeraj Group), and has been involved in real estate development in the Mumbai Metropolitan Region for almost three decades. As of December 31, 2006, the Wadhawan Group has developed approximately 62.1 million square foot of saleable area. It has constructed approximately 16.3 million square foot of rehabilitation housing area under slum rehabilitation schemes. HDIL's promoters are Rakesh Kumar Wadhawan, Sarang Wadhawan, Kapil Wadhawan, and Dheeraj Wadhawan, who, together with the rest of the Promoter Group, hold about 73.2% of the outstanding share capital as of December 31, 2006. Sarang Wadhawan is the Managing Director of HDIL.

HDIL has built groups of apartments, multipurpose townships and towers for sale to individuals. It has also constructed office spaces, multiplex cinemas and shopping malls. HDIL undertakes slum rehabilitation projects under a Government scheme administered by the Slum Rehabilitation Authority in which developers are granted rights in exchange for clearing and redeveloping slum lands, including providing replacement housing for the dislocated slum dwellers.

Apart from Mumbai, they are planning to have presence in Kochi and Hyderabad as well. The expansion plans include building special economic zones, hotel projects and megastructure complexes. HDIL's total land reserves comprise approximately 112.4 million square foot of saleable area to be developed through 32 ongoing or planned projects. They have 21 ongoing projects, which are under construction and development, aggregating to approximately 45.9 million square foot of saleable area, and they have additional 11 projects, which are planned for construction and development in the future, aggregating approximately 66.6 million square foot of saleable area.

Another company belonging to this group, Dewan Housing Finance Corporation is listed in both BSE and NSE. The company offers loans to the lower and middle income groups.

HDIL sponsored the umpires’ shirts during Champions trophy in India in the year 2006 and also during the ICC Cricket World Cup in West Indies in the year 2007.

ICC Cricket World Cup 2007

Umpires Billy Bowden (New Zealand) and Aleem Dar (Pakistan) in a Super Eights match Australia v Bangladesh, Antigua on 31.03.2007

Image courtesy: www.cricinfo.com & Getty Images

Project List (Residential):

Project	Location	Status
Affaire	Bandra (W)	Under construction
Multiplex	Kandivli (E)	Under construction
Dheeraj Apartments	Jogeshwari (E)	Completed
Harmony	Goregaon (W)	Under construction
Row House	Kandivli (E)	Completed
Sneh	Bandra (W)	Completed
Swapna	Bandra (W)	Completed

Project List (Commercial):

Project	Location	Status
Arma	Bandra (E)	Completed
Dreams	Bhandup (W)	Under construction
Dreams The Mall	Bhandup (W)	Under construction
Kaledonia	Andheri (E)	Under construction

Financial performance of the company:

The sales turnover and adjusted profit after tax since 2004 are given in the following table:

Financial year	Turnover	Profit after tax
	Rs. Crores	Rs. Crores
2006 – 2007 *	848.84	367.23
2005 - 2006	434.86	117.29
2004 - 2005	64.93	14.58

* Upto 31^st December 2006

Details of the IPO:

Issue Period: June 28, 2007 to July 03, 2007

Issue Size: 2,97,00,000 Equity Shares (Excluding Green Shoe Option of 44,55,000 Equity Shares)

Issue Type: 100% Book Building

Face Value: Rs.10/-

Price Range: Rs. 430/- to Rs. 500/-

Market Lot: 14 shares

Retail Investor cap: Rs.100,000

Application forms can be downloaded from this link.

Red Herring Prospectus is available at this link.

Conclusion:

As the IPO is priced is at a discount to players of similar size, investors with a risk appetite may think of investing in this issue with a three or four years perspective. At the offer price band of Rs.430 – Rs.500, the P/E is 14 to 16 for the financial year 2006 -2007. Obviously it is difficult to compare this IPO with DLF in terms of issue size. Of late, Indiabulls real estate stock has been moving up in the stock market. We will have to wait for DLF stock to be listed to see how DLF is received by the market. But going by the company’s financial performance in the last few years and their presence in Mumbai area which is the commercial capital of India, stock should be able to do well. Response to DLF issue was not great from retail investors (80% subscription only). We will have to see how they react to this IPO.

SUNDARAMURTHY VADIVELU

The India Street

India's Hottest stocks - Winners and Losers for June 2007

Disclosure

Investing or trading in stock markets, is like any other serious business. Before we invest our hard earned wealth in stocks, we need to do financial analysis, be it fundamental or technical. The investor has lot of options with regard to:

Trading time frame: short term, medium term, long term etc.

Type of trade: long or short, equity shares or futures & options contract etc.

Value of stocks: penny stocks, moderately priced, highly priced and expensive

It is upto the investor to choose a stock or contract based on his investment capital, time frame and type of trade. After doing the analysis and entering a trade, one may find that the stock he ventured into is not going up; or in other words, the crowd is not all that interested. Two stocks with almost similar technical scenario may not be wanted by the crowd equally.

Possible reasons could be:

Vested interests in some stocks by certain entities;

Crowd may be under the impression that the stock is either unfit to enter now or probably waiting for a trigger;

Crowd may be acting based on some other information, such as rumour.

So, technically, it is possible to analyze, apply the theory, evolve a trading strategy and enter a trade. But it is the market and market participants who will decide when the trader will exit from the stock successfully or otherwise.

In this article we shall discuss about “hot” stocks. These are the stocks which are wanted more by the market crowd in case of gainers (or unwanted in case of losers).

Criteria for selecting the stocks:

Stocks are listed based on percentage gain/loss since June 1 in descending order.

Stock shall belong to either A category or B1 category of BSE (Bombay Stock Exchange). The idea is to avoid small companies which are traded in B2 category; others in S, T, TS or Z cateogy may have listing related issues and hence these are not considered.

Table 1: Top Gainers since June 1, 2007

Scrip	% Gain
AARTIIND	87.85
BLUEDART	66.57
AJANTPHARM	48.16
ASIANELEC	41.84
JAYAGROGN	39.01
ASHAPURMIN	35.77
SIL	35.67
OILCOUNTUB	34.09
PARADYNE	34.00
MALUPAPER	31.78

Table 2: Top Losers since June 1, 2007

Scrip	% Loss
IILTD	-23.99
NETFINCO	-23.59
ATLANTA	-23.02
TELEDATAIN	-22.33
RPGCABLES	-20.25
HILTON	-19.26
HINDUJATMT	-19.07
DISHTV	-18.88
CREWBOS	-18.31
GLORY	-17.79

Let us see the technical picture of few of the stocks just prior to the excess demand or supply, as the case may be.

Aarti Industries:

Already we have discussed this stock in the weekly review dated 15/06/07. It is a case of bear trap. As the stock started forming lower highs and lower lows instead of breaking the previous wave’s resistance, bulls pushed up prices higher. This resulted in abnormal increase in price and volume. Just prior to the upmove the 21 day exponential moving average volume was around 20,000. Since 12/06/07 the daily volume has remained more than 400,000 ( highest was on 14^th June, 3.9 million shares on NSE).

Blue Dart Express:

This stock was also a thinly traded one, prior to this unusual demand. The 21 day EMA was around 3000 only. The resistance at 502 was broken on 08/06/07. On 13/06/07 only 482 shares were traded. The very next day 106,097 was the volume. On 20/06/07 the stock witnessed heavy buying with 681,956 shares being traded. It is said that, big moves take long time to consolidate. It has become true in this case. The stock was moving sideways since 09/03/07. After three months, it broke its resistance and the demand for the stock was high.

BlueDart.jpg

Ajanta Pharma:

This stock has been bullish in weekly charts. On 22/06/07 it made a high of 130.70, breaking its previous high of 130 on 01/03/01. In daily charts, “three white soldiers” candlestick pattern was formed on 15/06/07 at a close of 97.70. On next Friday, 22/06/07 the stock closed at 124.90 with a weekly gain of 27.84%.

AjantPharm.jpg

Other stocks:

Scrip	Technical status
ASIANELEC	Bullish in both daily and weekly charts; currently 5th wave in weekly. It has appreciated 66 times since January 2001.
JAYAGROGN	Formed a double bottom around 56
ASHAPURMIN	Like Blue Dart, this was also consolidating for 3 months before breaking out.
SIL	Double bottom around 38.50
OILCOUNTUB	Bullish in both daily and weekly charts
PARADYNE	Bullish “three white soldiers” pattern formed on 01.06.07
MALUPAPER	Broke its previous support of 25.60 on 07.06.07; a case of bear trap.

Stocks that are ‘disliked’ by market participants:

Scrip	Technical status
IILTD	Insufficient data
NETFINCO	Insufficient data
ATLANTA	Very bearish in daily and weekly charts
TELEDATAIN	Bearish in daily charts
RPGCABLES	A case of bull trap; it has broken support trendline
HILTON	Insufficient data
HINDUJATMT	Bearish in daily charts
DISHTV	Bearish in daily charts
CREWBOS	Very bearish in daily and weekly charts
GLORY	Insufficient data

See my other India stock analysis here

SUNDARAMURTHY VADIVELU

The India Street