Posts Tagged ‘Stock’

Weekly Update 25th – 29th October

Losses due to profit taking in the Indian markets during initial part of the week were recouped seeing the huge response for Coal India offering especially from the overseas investors. The issue attracted bids that exceeded the combined gross domestic product of Latvia and Iceland. However most of the Asian markets corrected in the week gone by after China unexpectedly raised interest rates to curb inflation and to prevent an asset price bubble in the economy on concerns over regions economic growth.

.

.

 

The move indicates that the consensus has been reached for lower growth. Albeit past experience has shown that initial interest rate hikes does not give much harm to economic growth. China’s economy expanded by 9.6 percent in the third quarterless than the growth experienced in the prior quarter but higher than the median estimates of 9.5 percent.

.

Results of companies from Europe to U.S. supported markets. According to Bloomberg data of the 132 companies in the S&P 500 that reported results since Oct. 7, more than 85 percent have topped analysts’ per- share earnings estimates.Whereas in Europe, of the 46 companies in the Stoxx 600 that have posted results since Oct. 7, 32 have beaten estimates for per-share income.

.

The result season has so far been good in India. Banks have posted decent to strong earnings growth. In the Information technology sector TCS and Infosys surprised positively while Wipro surprised negatively. Auto companies are expected to deliver strong set of numbers on the back of higher volumes with price increase. Higher metal prices are likely to provide good earnings to manufacturer of base metals. Cement companies are likely to post bad set of numbers on the back of lower realization and good monsoon season.

.

Market is eyeing over G-20 finance chiefs meet to try to resolve differences over countries that are devaluing their respective currencies in order to spur economic growth and to endorse market-based exchange rates in a fresh effort to defuse mounting trade tensions before they hurt the world economy. We may see some volatility in domestic markets on account of expiry week.

.

Stock specific activity is likely to play out as the results season is still going on. Nifty has support between 5950-5870 and Sensex between 19640-19200.Good corporate earnings amid falling dollar index are offering opportunities to bulls to keep the momentum in their favour, especially in base metals. 19-commodity Reuters-Jefferies CRB index, which serves as a broad benchmark for commodities investors, was up for a ninth straight week since Aug. 22.

.

Monetary tightening by China could not give much impact on base metals prices. In case of bullions, trend is little different. Bullions prices retreated across the board as dollar index grew stronger and investors opted to sell some of their holdings for aprofit. For the time being bullions should move in a range. Market players appears cautious to some extent ahead of next month’s decision from the Federal Reserve about whether to take steps to stimulate the economy. Even energy pack is moving in a range on mixed fundamentals. Bulls are more active in agricultural commodities owing to the ongoing festive fever.

.

OUR Websites:  http://www.smcindiaonline.com,http://www.smccapitals.com,
http://www.smctradeonline.comhttp://www.smcwealth.com

.

Share/Bookmark

 

Britannia Industries Rises on Fixing Record Date for Stock Split

Britannia Industries is currently trading at Rs 2,100.40, up by 23.45 points or 1.13% from its previous closing of Rs 2,076.95 on the BSE.

.

The scrip opened at Rs 2,025 and has touched a high and low of Rs 2,139 and Rs 2,025 respectively. So far 7,512 shares were traded on the counter.

.

The BSE group ‘B’ stock of face value Rs 10 has touched a 52 week high of Rs 2,380 on 05-Aug-2010 and a 52 week low of Rs 1,496.65 on 24-Sep-2009.

.

Last one week high and low of the scrip stood at Rs 2,350 and Rs 2,025 respectively. The current market cap of the company is Rs 5,036.05 crore.

.

The promoters holding in the company stood at 50.96% while Institutions and Non-Institutions held 27.47% and 21.58% respectively.

.

Britannia Industries has informed that the company has fixed September 09, 2010 as the record date for ascertaining the shareholders of the company who will be entitled to receive five equity shares of the face value of Rs 2 each of the company in lieu of every one equity share of the face value of Rs 10 held by them in terms of the sub-division of shares approved by the shareholders of the company at the annual general meeting held on August 09, 2010.

.

OUR Websites:  http://www.smcindiaonline.com,http://www.smccapitals.com,
http://www.smctradeonline.comhttp://www.smcwealth.com

.

Share/Bookmark

Weekly Update 9th – 13th August

The last week saw good amount of buying in U.S and other markets as the companies reported better numbers than the expectations in the result season. However the concerns remain over the U.S. recovery as the consumer spending, pending home sales and factory orders were all weaker than projected in June indicating moderation in the second half of the calendar year.

.

In China, banking regulator has asked the lenders to conduct a stress test including worst case scenarios of prices dropping 50 percent to 60 percent in cities where they have risen excessively. The test highlights the government concern over the health of property market even after the regulator has tightened the real estate lending to crack down on speculation since mid April.

.

Huge foreign money inflow, strong auto sales and manufacturing data together with good monsoon especially in the fortnight ending 4th August 2010 kept the markets on upbeat note. Life Insurance Corporation said that it plans to invest `2 trillion stocks and bonds in the current fiscal year. So far the Insurance major has invested 390 billion in the first quarter including 100 billion in equities.

.

Approximately 2080 companies that have announced numbers have shown a mixed picture. The combined net profit of all companies fell 9.2% to 57,560 crore on 20.7% rise in sales to 7,07,925 crore in Q1 June 2010 over Q1 June 2009.

.

Stock specific movement in market is likely to continue as some of the major companies like Bharti Airtel, State Bank, Reliance Communication, Suzlon, etc. are coming out with the results in the coming week.

.

Pranab Mukherjee has already expressed concerns over the aggressive interest increase as it may moderate the economic growth. The Index of Industrial Production that saw some moderation in growth in May and also revised downward for the month of April is further expected to show some moderation in the month of June. Six core industries having weight of 26.68 percent in IIP have experienced a 3.4 percent expansion in June compared to 6.3 percent in the prior month. The data scheduled to be released on 12th August is likely to influence the markets and may help in gauging the central bank move in the coming months.

.

Overall trend of world markets is up. Volatility indicators near lows are a sign of concern as it reflects that investors are not worried at all in taking positions. But till the trend of stock market is up, one should be playing on the long side only. US dollar index fall in last 3 months has also contributed to the rise of various asset classes. Nifty has support between 5350-5300 levels and Sensex between 17800-17600 levels.

.

It appears that bulls are dominating bears in commodities. Market is looking very enthusiastic on the back of better results together with buoyant equity market. It is evident by the increased volume of commodity bourses across the globe. Noteworthy decline in dollar index has also supported buying in commodities.

.

However, 80 is very good support for dollar index. The week is full of event risk. Traders may refrain to take large position in bullions before FOMC rate decision meeting. CPI and advance retail sales data of US will provide further direction to the base metals. Ongoing hurricane season is likely to keep crude oil in upper range. Severe drought and the decision to halt the export from 15th August to 31st December have stimulated fresh buying in grains and they are continuously moving up. Oil seeds and edible oil complex is looking promising and investors should utilized every dip as buying opportunity.

.

OUR Websites:  http://www.smcindiaonline.com,http://www.smccapitals.com,http://www.smctradeonline.com,http://www.smcwealth.com

.

Bookmark and Share

PEER COMPARISON: UNCOVERS UNDERVALUED STOCKS

Peer comparison is one of the most efficient and effective methods of equity analysis used by analysts and individual investors. It has proved to be most widely used and accepted method that quickly shows which stocks may be overvalued, and which might make good additions to one’s portfolio. While there are other methods of determining when a stock is worth buying, such as discounted cash flow or technical analysis, peer comparison analysis remains a key tool for uncovering undervalued stocks.

.

Relative Valuation: Relative valuation often considered as starting point in peer comparison analysis; it is a method of valuing a firm by comparing standardized valuation, such as price-earnings (P/E), price-to-book value (P/B), enterprise value / EBITDA (EV/EBITDA), or others that seems relevant to the investment decision metrics with those of similar companies. Let’s see how each company stacks up to the rest in the table 1.

Now the question comes: How should a company’s metrics compare to those of its peers? In other words, how fair is it for the company to carry a higher or lower valuation than the industry average and by how much?

.

However, by simply using these metrics, assuming that all of the companies used for comparison should be valued equally, then naturally investors would avoid/sell PQR. But this simple analysis could be incorrect as each company should be valued differently according to its unique circumstances.

.

And to measure the qualitative aspects of the companies, we use tools such as leverage and profitability metrics.

.

Operating Performance, Leverage and Profitability Metrics: An investor should look at several metrics before making a decision on how a firm stacks up to its peers, including ROE, return on assets (ROA), gross margin, operating margin, profit margin, debt/equity ratio and others that may be relevant for a firm’s particular circumstances or industry. Lower ROE than its peers is a sign that the company may not turn capital into profits as efficiently as its competitors, and should be valued at a lower multiple than its peers.

.

In addition, the expected growth rate of the companies in question is highly significant. Acompany with even slightly higher-than-average profit growth expectations may be valued at significantly higher multiples than its peers. Ultimately, expected profit growth is the main focus, but for young companies and industries, expected sales growth can be heavily weighted also, because these firms may be unprofitable for the foreseeable future.

.

In the table above, we have seen that metrics vary considerably. A higher ROE, ROA, gross margin, operating margin and profit margin indicate better operational efficiency that have a positive effect on valuation. A higher debt/equity ratio indicates more risk due to higher leverage, and thus lower valuation. The most important metric, expected earnings growth, will generally have the greatest impact on valuation and, as we can see PQR with a much higher expected earnings growth than the industry average, is indeed valued higher than the rest by P/E, P/S and EV/EBITDA based on its current stock price (see Table 1).

.

.

Spotting Undervalued Stocks: The next step is to use these metrics in conjunction with current valuation ratios. To do this, analyze the operational performance, leverage, profitability to determine which companies should carry a higher-than-average valuation and compare those predictions with current actual valuations. If the current valuation is lower and seems reasonable based on this analysis, then the security may present a buying opportunity. However, while some investors use quantitative econometric analysis to precisely predict how a stock should be valued based on its metrics, the vast majority view this process as more of an art than a science. So, additionally some qualitative factors must also be taken into account.

.

.

Qualitative Factors

.

Some companies have advantages or disadvantages relative to their peers based on factors not found in their financial statements. Management quality and corporate governance are some of the most widely focused qualitative factors. Corporate governance must be designed to ensure that shareholders’ rights are upheld. Every company depends on its managers for leadership and vision, both of which can affect the bottom line in the long run. The best companies will have a stable management team and enough depth of talent to weather the loss of one or two key managers without causing a major disruption to the firm’s operations or strategy.

Another very popular qualitative aspect is through Porter’s five forces analysis.

These five forces are:

•Threat of new entry

•Threat of substitution

•Bargaining power of suppliers

•Bargaining power of buyers

•Competition in the industry

.

The interaction of these five forces can affect a firm’s long-term prospects for sustainable growth. If the current valuation is lower after taking various valuation metrics and qualitative factors into account, then the stock may be undervalued.

.

Conclusion: Peer comparison analysis is one of the most useful tools for fundamental analysis of a stock. Since the data necessary to conduct the analysis is generally public and readily accessible on financial websites, it is easy for individual investors to employ this method of analysis for knowing undervalued scrips. Moreover, since it takes quantitative as well as qualitative aspects of company operations hand in hand, it leaves minimal room for risk and ambiguity to the investors.

INVEST IN DIVIDEND PAYING COMPANY Final Part :)

Lots of market participants, who wish for regular income by way of dividends, look for stocks which maintain a steady or an upward trend of dividend declaration.

.

Here is a list of few companies.

.

Ideally, a low market price when combined with high dividend payout gives high dividend yields. Dividend yield is an uncomplicated tool for investor to evaluate his investments in stocks and to choose the right portfolio depending on his priority.

.

Here are two things which will be very helpful for investor:

.


Dividend-capture strategy – Investors using a dividend-capture strategy will simply buy the stock prior to the ex-dividend date, and would ensure that they would receive the payment by holding the security until the ex dividend date, and then sell the security. In theory, they should be able to quickly buy and sell a number of securities near their ex dividend dates and capture numerous dividends. However, in practice the truth is that this is not always the case.

.

Dividend Arbitrage – It is an options trading strategy that involves purchasing put options and an equivalent amount of underlying stock before the ex-dividend date and then exercising the put after collecting the dividend. When used on a security with low volatility (causing lower options premiums) and a high dividend, dividend arbitrage can create profits, assuming very low to no risk.

.

Concluding I would like to say that all investors have mainly two objectives. First is earning from capital appreciation and the second is profits from dividends. And, it is the skill of any stock to offer both these incomes that determine its market price. Investors can increase their returns by investing in dividend-yielding stocks, especially following a continuous stream of dividends. Considering the fact that dividends are tax free, it makes all the more sense to target these stocks.

.

WANT GOOD RETURN, LOW RISK – INVEST IN DIVIDEND PAYING COMPANY Part 1 :)

Dividend= Extra Income. Investing in high dividend paying companies is wise decision as dividend paid is tax free at the hand of the investors; but what should be given greater importance is “preservation of capital”. In that case investors have a fine amount of dividend-paying stocks in portfolio. The tax on dividends is rewarded by the company at the time of announcement of the dividend.

.

Well, the price of dividends may differ from company to company depending on profits earned, cash flows, investment and the policies of the company. Company announces a small size of earnings as dividends. The rest is used in business to spend and generate high returns. Final dividends are also a purpose of the future cash requirements of the company.

.

A dividend is always paid on face value of the company. Dividend yield is considered as the ratio of the annual dividends amount announced to the existing market price of the company’s stock. The dividend yield ratio shows what investors earn on their stock. For example, a 10 percent dividend on Rs 100 equity share means a dividend of Re 10 per share.

.

Dividend yield: Dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its share price.In the absence of any capital gains, the dividend yield is the return on investment for a stock. It is often expressed as a percentage. Its reciprocal is the Price/Dividend ratio.

.

To calculate dividend yield is main work to analyze the proper income from an investment. Dividend yield is a major determining factor for stock prices. Dividend yield is calculated as follows:

.

.

It should be clear that dividend yield is not the same to the amount of dividend paid by a tax company. It is the dividend payout with reference to the market price of the company’s stock. While the dividend is received, it is computed as a percentage of the current market value of the share and is termed as the dividend yield.

.

Dividend yield also specifies how an investor is prepared to pay for the predicted dividend stream generate by a single stock. Investor uses the projected dividend values over a period or past dividend values for the analysis.

.

Dividend Payout Ratio The percentage of earnings paid to shareholders in dividends.

.

.


The payout ratio provides an idea of how well earnings support the dividend payments. More mature companies tend to have a higher payout ratio. A dividend payout has a direct effect on the cash balance of a company. Some companies follow the policy of sustaining dividend payouts or gradually increasing them. These companies demand higher values in the stock markets as compared to the companies following erratic dividend payout policies.

.

Preferred Dividend coverage ratio: Preferred Dividend coverage ratio is a coverage ratio that measures a company’s ability to pay off its required preferred dividend payments. A healthy company will have a high coverage ratio, indicating that it has little difficulty in paying off its preferred dividend requirements.

.

.

This ratio gives investors an idea of a company’s ability to pay off its preferred dividend requirements, and also an idea how likely they are to be paid dividends. If the company has a hard time covering its preferred dividend requirements, common shareholders are less likely to receive a dividend payment on their holdings.

CESC Bags 140 mw Hydro Power Project in Himachal

CESC Ltd, the Power utility, has bagged a hydro power project from the Himachal Pradesh government on a competitive bidding process. The company has been allocated one project in Himachal Pradesh at Lara Sumta, Vice Chairman Sanjiv Goenka told.

He also said that the company would make an investment of Rs 46 billion as equity component in its power projects over the next 4-5 years and would require about Rs 100 billion as debt component for its projects.

CESC currently trading marginally lower by 0.58% at Rs 393.05. The stock hit an intraday high of Rs 396.90 till now, as against the 52-week high of Rs. 410. The stock hit a low of Rs 392 during the day. The stock had hit a 52-week low of Rs 180 on 12 March 2009.

The stock opens at Rs. 395.05 at BSE. The total traded volume of the scrip on BSE till now stood at 14147.

Meanwhile today, the BSE Sensex is trading with marginal losses of 7.42 points, or 0.04%, at 17,111.61. It has touched an intraday high of 17,275.19 and low of 17,068.37.

On BSE, 2,876 lakh shares were traded in the counter and out of that 1,110 stocks are in positive while 1,703 stocks are on he sellers” radar.

AB Nuvo has an equity capital of Rs 125.60 crore as of March 2009. The face value per share is Rs 10. At the current price of Rs 393.05, the P/E multiple stood at 11.99 with book Value of 233.87 and P/BV at 1.68.

Considering the current price, the stock had outperformed the market over the past one month till 13 November 2009, rising 5.26% as compared to the Sensex”s return of 1.55% and NSE Nifty”s of 2.09% return. It outperformed the market in past one quarter ending September 14, 2009, gaining 10.14% as against 5.53% rise in the Sensex and 6.13% rise in NSE Nifty.

CESC is a fully integrated power utility with its operation spanning the entire value chain: right from mining coal, generating power, transmission and distribution of power. We serve 2.3 million customers within 567 square kilometers of Kolkata and Howrah, delivering safe, cost-effective and reliable energy to our consumers. Even after 100 years of service, we still feel younger than ever.

The Company has posted a net profit after tax of Rs 1260 million for the quarter ended September 30, 2009 as compared to Rs 1240 million for the quarter ended September 30, 2008. Total Income has increased from Rs 7860 million for the quarter ended September 30, 2008 to Rs 9850 million for the quarter ended September 30, 2009.