top stocks report july 2011

8/4/2019 Top Stocks Report July 2011

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1Tanmay G Purohit Gaurav Sharma Swati Saxena Ajay Srivastava

t [email protected] gaurav.sh@religare. com swati.saxena@religare. com ajaykumar.s@religare. com

Top 10 Traded Stocks 04 July 2011

In volatile markets, investors should have an active attitude towards investing and should be ready to try out new

stocks and strategies. Keep a look out for longer-term trends specific to India and be ready to change your mind

and switch stocks when necessary. To help you do that, we at Religare give you a quick rundown of the stock

popular in the week just ended. Use the information to make your trading and investment decision and rebalance

your portfolio if necessary.

*All prices have been adjusted for bonus & split if any.

*All data is of closing of Friday 01st

July, 2011.

List of Stocks

Sr. No Name Of Company Industry

1. RELIANCE POWER Power

2. RELIANCE INDUSTRIES Oil & Gas

3. SUZLON ENERGY LTD. Gensets / Turbines

4. SATYAM COMPUTERS IT Services

5. UNITECH Construction

6. JAIPRAKASH ASSOCIATE Construction

7. NHPC Power

8. RELIANCE COMMUNICATION Telecom

9. ISPAT INDUSTRIES Steel

10. IFCI Finance

mailto:[email protected]





Top 10 Traded Stocks

2

1. RELIANCE POWER

CMP (Rs.): 115.95 EPS (Rs.): 0.98 52 Week High : 192.80

Mcap (Rs. Cr.):32413 Book Value(Rs.):56.67 52 Week Low : 106

Fundamental View :

The first batch of two gas turbines for Reliance Power’s 2400MW gas based Samalkot

expansion project reached Kakinada port from GE in the US. Early arrival of turbines is

expected to help the company to implement the project ahead of schedule. The project

entails an outlay of Rs10,000 cr and will be the largest gas-based power plant in India.

For the quarter ended March 2011, the consolidated revenue of Reliance Power was Rs

495.44 crore up from Rs 20.72 crore in Q4FY10. But its net profit for the quarter more

than doubled to Rs 186.62 crore. Reliance Power has raised around Rs. 4,000 crore of debt from PFC to achieve financial

closure of two ultra-mega power projects (UMPP).

Reliance Power has awarded an order of engineering, procurement and construction

project worth Rs 7,200crore to its group company Reliance Infrastructure for its

2400MW gas fuelled Samalkot Power Plant in Andhra Pradesh.

The company will infuse $5 billion (around Rs 22,000 crore) in two projects in

Indonesia, one each in South Sumatra and Jambi provinces. The investment covers coal

mining, setting up of railway lines, ports and power projects.

Outlook:

The company has mega expansion plans and out of the total power generation thecompany expects that 10% capacity will come from the renewable energy sources.

Technical View:

After touching monthly low of 107.40 last week, the stock has been recovering sincethen. To continue the current rally it is necessary that the stock trades and sustains above118 levels. Above 118 it is having higher potential of touching 122-123 levels in the nearterm.




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2. RELIANCE INDUSTRIES

CMP (Rs.): 861.95 EPS (Rs.):59.81 52 Week High : 1120.50

Mcap (Rs. Cr.): 293857 Book Value(Rs.):446.19 52 Week Low : 828.10

Fundamental View :

Reliance has recently made another natural gas discovery in the D-9 block in the

hydrocarbon rich Krishna Godavari basin. The resource potential of the block is now

estimated at 5.210mn cubic feet (tcf) by RIL’s minority partner Hardy oil.

In Q4FY11, net profit of the company was below expectations due to GRMs being at

$9.2 per barrel, due to impact of FCCU shutdown at RIL for 46 days.

Operating margins of the company fell 240 bps to 13.5% as cost of raw materials as

a percentage to net sales rose 420 bps to 79.4% while purchases during the quarter

fell 70 bps to 0.3%, staff cost fell 10 bps to 0.9% and other expenses fell 80 bps to

6.0%.

RIL has commenced implementation of world scale polyester projects in Gujarat.

The company is planning to set up a 2.3mn tonne purified terephthalic acid (PTA)

plant at Dahej.

Outlook:

The new businesses will not contribute much in the short run and also due to the lack of clarity on E&P the stock many not see full benefit of the improving refining andpetro chemical businesses.

Technical View:

It is trading close to its important resistance of 900. For the stock to move further onthe upside it is necessary that it trades above 900-mark on a sustained basis. As longas it fails to trade above 900 only sideways move is expected.




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3. SUZLON ENERGY LTD.

CMP (Rs.): 49.25 EPS (Rs.): 0 52 Week High : 58.70


Fundamental View :

Suzlon Energy's overseas arm signed a contract for wind project in the south of Italy.

Suzlon Energy has received a new order from the NALCO to set up, operate and

maintain 50.4 MW of wind energy projects in Andhra Pradesh.

For Q4FY11, Suzlon's consolidated sales expanded by 20% to Rs 7,276 crore

compared with a year-ago, while net profits stood at Rs 431.5 crore, from losses

earlier.

The company has signed a contract with African Clean Energy Developments for

supply and full EPC of 76 of Suzlon's S88 - 2MW series turbines, with an option for

ACED to acquire an additional 124 turbines for the Cookhouse Wind Energy Facility.

Outlook:

Although the demand from the Indian and other emerging markets is growing, thesubdued outlook for large markets like the US and Europe will remain an overhang onthe company's consolidated performance in the next few quarters. High debt (net debt

of Rs 9,760 crore) and pressure of generating cash flows to be able to repay at least apart of the debt (other than FCCBs) also remain as challenges.

Technical View:

The stock is in a down trend since it broke below 50 levels and there are no signs of recoveryuntil the stock close above this level once again. Till that happens sideways to negative movemay continue.




5

4. SATYAM COMPUTERS

CMP (Rs.): 84.70 EPS (Rs.): 3.91 52 Week High : 90.70


Fundamental View :

Mahindra Satyam will set up an exclusive technology centre for Defence and securitycompany Saab AB. The two firms have signed an agreement to establish Saab IndiaTechnology Centre (SITC).

Mahindra Satyam has announced the expansion of utility solutions into Smart Grid byinaugurating a Smart Grid Customer Demonstration Centre (CDC) at MahindraSatyam Technology Centre campus in Hyderabad. The CDS will help customers

understand the next generation technology in real-time and evaluate varioustechnologies underlying the smart grid ecosystem.

The company announced that it will begin to tap the $3.7 billion informationtechnology, communications and telecom market in Qatar.

The company has set up a centre for testing of Master card in Kaula Lumpur,Malaysia. The centre would provide support for global testing for Master cardbusiness applications besides application development in Java and businessintelligence.

The company had signed a deal where the company will deliver applicationdevelopment and infrastructure services to a large, Qatar based sports institute.

Outlook:The growth was seen across markets and service offerings, particularly areassuch as enterprise mobility and business platforms. The company focus is nowcompletely on outcome-based pricing and not Full Time Equivalent (FTE) pricing.

Technical View:

The stock has been trading sideways since the last few weeks. So as to move up it isimportant that the stock trades above 86 on a sustained basis. Going past this level, the stock is having potential of touching 89-90 levels.




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CMP (Rs.): 32.65 EPS (Rs.): 1.95 52Week High : 91.95

Mcap (Rs. Cr.):8359 Book Value(Rs.):35.48 52Week Low : 28.00

Fundamental View :

Unitech reported a 15.91% fall in net profits to Rs567.25crore for FY11 even as itstotal income increased 9.18% to Rs3292.12crore.

The company has sold over 300 units worth Rs200crore in its mid-income housingproject at Gurgaon.

The company expects high-end residential properties to account for a quarter of salesin the next couple of years.

Outlook:

The company strategy of focusing on affordable housing continues yielding good

results. It revised its project launch strategy recently to improve realizations by timingthe launches to coincide with the commencement of construction.

Technical View:

The stock has given a trendline break-out on the daily charts. Sustaining above 32 levels willbe positive signal and the stock may run-up to 35 levels in the near term.

5. UNITECH




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Mcap (Rs. Cr.): 17192 Book Value(Rs.):43.23 52Week Low : 70.05

Fundamental View :

In Q4 FY11, OPM of JP Associates declined 410bps to 21.4% resulting in almost flatoperating profits at Rs 850.95 crore. The period saw no benefit on account of exceptional item or adverse impact of extraordinary item. After accounting for priorperiod adjustments and 22% Tax rate against 44% in corresponding period, Net profitrose 24% to Rs 301.95 crore.

The PBIT for the real estate segment grew by 635% from Rs 38.84 crore to Rs 285.5crore, which formed 35% of the total PBIT and 1661bps improvement in PBITmargins to 47.84%.

Hotel and hospitality' PBIT grew 153% to Rs 9.98 crore and recorded 1071bpsimprovement in PBIT margins at 19.3%. Wind power' PBIT was at negative Rs 2.97crore compared to negative Rs 3.49 crore.

Outlook:

The company has huge expansion plans for FY11-12; this will help in improving the financialperformance of the company.

Technical View:

The stock gave a trendline break-out on the daily chart which was backed by good volumesindicating strength in the stock. Continuing the current trend the stock should be touching 85-86 levels in the near term. It is important for the stock to sustain above 77 levels.

6. JAIPRAKASH ASSOCIATES




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7. NHPC LIMITED



Fundamental View :

NHPC reported a 4% rise in its net profit to Rs2166crore for 2010-2011, helped byhigher sales realizations and increase in other income.

The company is planning to bring on stream 1,080MW of hydropower by the end of Eleventh plan (2007-2012).

NHPC Ltd has signed a pact with JSC RusHydro, Russia's largest generating firm, forco-operation in building hydro power projects in India and other countries.

The company is planning to add 14000MW capacity in FY12, which is more than25% of its total existing capacity.

NHPC will invest Rs 2,400 crore on setting up three projects in J&K under a jointventure with the Jammu & Kashmir State Power Development Corporation and PTCIndia.

The company has signed an agreement with Mangdechhu Hydroelectric ProjectAuthority for providing engineering & design consultancy services for MangdechhuHydroelectric Project (720MW) in Bhutan.

Outlook:

In the longer run, the company is expected to behave like other global utility companies,offering steady cash flows and attractive dividends. However, the near-term movement of the stock price may remain subdued.

Technical View:

The stock is trading close to its 100 day moving average which is placed at 24.85 levels; thisis acting as a resistance for the stock. Going past this level, the stock is having potential of touching 26.50-27 levels in the near term.




9

8. RELIANCE COMMUNICATION

CMP (Rs.): 97.45 EPS (TTM): 0.00 52 Week High : 182.80


Fundamental View :

During FY11, RCom's consolidated net profit plunged 71.09% to Rs 1345.65 crorewhile net sales increased by 6.8% to Rs 22089.39 crore (YoY).

Reliance Communications has drawn down US$ 255 million by way of externalcommercial borrowing to part refinance rupee resources used for 3G Spectrum feepayment to the Department of Telecommunications (DOT), Government of India.

The company’s Indian wireless business continues to report declining average

revenue per minute (ARPU) and minutes of usage (MoU) despite growing customerbase. Also, a high-debt burden restricts its ability to seek more financing to growinorganically.

Outlook:

RCom has not been able to give a convincing future growth path to investors.However, it will benefit from implementation of the mobile number portabilityregime.

Technical View:

The stock is very well placed on the weekly charts and is indicating strength. On the dailychart 100 day moving average is placed at 101.75 which should act as a resistance levels forthe stock. Once this level is breached the stock is having potential of touching 114-116 levelsin the near term. It is important for the stock to hold above 93 levels.




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9. ISPAT INDUSTRIES

CMP (Rs.): 19.70 EPS (TTM): 0.00 52Week High : 26.20


Fundamental View :

The company has changed its name from ISPAT Industries to JSW ISPAT Steel.

The total operating income of Ispat Industries grew by 10% to Rs 2721.88crore inQ4FY11.It included gain of Rs 70.28 crore (against Rs 102.24 crore in March 2010quarter) arising from prepayment of portion of deferred value added/sale tax liabilityon NPV basis.

Spurt in raw material costs dragged down the OPM by notable 710 bps to 14.9%.Thus the operating profit fell by 26% to Rs 406.74 crore.

The company is aiming to raise output to 4.2 million tonnes per annum from 3.3million tonnes per annum.

Outlook:

The company needs to revamp its operations to increase the profitability.

Technical View:

The stock is in a down trend and 20.50 levels are acting as crucial resistance for the stock.The stock is expected to recover only if it can manage to cross 20.50 levels on sustained basiselse sideways to negative move may continue.




11

10. IFCI

CMP (Rs.): 48.15 EPS : 9.57 52Week High : 80.50


Fundamental View :

In Q4 FY11, The company’s net profit declined by 4.2% to Rs 233.03 crore (YoY),

despite 7% jump in its total income to Rs 759.30 crore.

IFCI bought 16.34 lakh shares of Tourism Finance Corporation (TFCI) through open

market operations, thereby increasing its stake by 2.02% in the company. After

acquiring 2.02% stake IFCI now hold 34.32% stake in TFCI.

Outlook:

The company’s existing business has witnessed a significant improvement in recentpast. It is planning to get into infrastructure project financing deeply and extensivelyin next three years. It is looking to become a major financier for thermal, hydro, windpower, highways and port sectors. The company is a strong contender for the bankinglicense and acquiring a licence would completely transform IFCI.

Technical View:

After forming a new 52 week low of 42.50, the stock is in a recovery mode. Continuingthe current trend the stock may run-up to 50 in the near term.




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Disclaimer

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top stocks report july 2011

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