Metal and oil sectors appear to be good. Banks, real estate, software sectors can be avoided for time being.
Buy Tata steel:Rs.640/- Target Rs.660/-
PE ratio is around 8 only. This will reduce further due to increase in steel price and reduction in raw material price. So good buy.
Another cost cutting measure taken by Tata steel for profit maximization:
Tata steel management started the exercise of checking viability of all overseas projects one by one in order to achieve optimum profitability. In this direction, Tata Steel Europe has decided to shut down Tata Steel Living Solutions, located at Shotton, North Wales which contributed only loss so far. The unit was established in 2003 and was making modular buildings for the construction industry. The move has put 180 jobs on the block.The operations at Living Solutions are said to be very small compared to Tata Steel Europe and shutting the business will not have any material effect on the company’s financial well being, on the other hand, it can look for buyers of the unit on sale and also reduction in regular pay out as salary.
Dhamra port- 50% equity by Tata steel:
BHUBANESWAR: Dhamra port will be operational soon according to Orissa transport minister Sanjib Sahoo .
Replying to a query by Congress member Bhujabal Majhi, the minister on Friday told the members that the developers had so far invested Rs 2700 crore of the estimated project cost of Rs 3239 crore and nearly 96% of the construction work was over by the end of the last month.(Aug 2010 position)
The port is being developed by Dhamra Port Company Limited, a joint venture of Tata Steel and Larsen & Toubro.
Tata Steel and Larsen & Toubro hold equal stakes in the Dhamra port project, which is being developed on a build, own, operate share and transfer (BOOST) basis.
Mr Sahoo informed that of the 384 displaced people 371 had received compensation and efforts were being made to settle dues of the others at the shortest possible time.
As regards employment generation, the minister said 2881 people were engaged in construction of the port project and the figure would increase once the port becomes operational.
“Dhamra port will be immensely beneficial to the investors in Orissa and its neigbours. It is going to be one of the major ports in the country with 13 berths. Ships having 60 million tons capacity can anchor here,” the minister said.
The construction work for the 62-km rail link from Dhamra to Bhadrak on the main Howrah-Chennai line is almost complete.
Situated between Haldia and Paradip, the port at Dhamra will be the deepest of India with a draught of 18 meters, which can accommodate super cape-size vessels up to 180,000 dead weight tons (DWT).
It is likely to be commissioned in Nov 2010. Looking into the valuation of ports like Mundra, we can guess about value addition to tata steel due to this. So it is a good buy now.
QIP is an issue that is going against the minority shareholders. The promoters easily are getting the approval from AGM as they are in majority.The QIP portion is issued at discount to PE companies. In order to safeguard the small investors, SEBI should intervene in this cases and issue directive that only in extreme cases , they should go to QIP after failing in all other avenues where small investors/minority shareholders are not affected. Investor protection forum also should take up this matter to SEBI.
Coal India IPO appears to be priced slightly high as per some experts.The price band decided is 225-245 with 5% discount to retail investors. It should not go to the way NTPC has gone.
Start buying cheap software stocks like TCS, Mahindra satyam
RBI is likely to intervene in currency and make it depreciate so as to benefit exporters like software firms, textiles
Cairn india:Hold/Sell: 345/-No fresh buy.
Only confusion is prevailing and there is inordinate delay on the part of ONGC/SEBI/Govt. Vedanta says that it will not increase open offer price.
Suzlon: Sell
Wind energy major Suzlon plans to raise up to Rs 5,000 crore from the secondary market and increase its borrowing limit to Rs 10,000 crore from the current Rs 7,000 crore.
A Suzlon notification to the stock exchanges today said its board had approved proposals for shareholders’ nod to increase its authorised share capital from Rs 445 crore to Rs 700 crore and to issue securities (like ADRs, GDRs, FCCBs, non-convertible debentures, convertible bonds, QIP, etc) of up to Rs 5,000 crore. The board also approved the increase of borrowing limits, other than temporary loans and working capital facilities, from Rs 7,000 crore to Rs 10,000 crore.
Suzlon may go for QIP route by offering share at discount. So better to distance from it now.
Suzlon had suspended its large-scale capital expansion plans due to sluggish conditions in the wind energy market and the global economic slowdown. Faced with liquidity problems, Suzlon also had to refinance its loans of close to Rs 10,000 crore with its creditors.
It also sold a 35 per cent stake in subsidiary Hansen Transmission for around $370 million in November last year to reduce its debts.
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