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A TIME COMMUNICATIONS PUBLICATION


VOL. XXIV No. 7

Monday, 22 28 December 2014

S
Pages 19

Rs.15

Nifty below its 50-day SMA


By Sanjay R. Bhatia
Mirroring the weak global market cues, the domestic markets continued downtrend. The rising Rupee and year end
festive holidays when FIIs generally exit and book profits did not help matters. Moreover, the governments failure to get
the Insurance bills passed in the Rajya Sabha also weighed on the market sentiment. The only positive factor that
soothed and overwhelmed the jittery markets globally was the US Federal Reserves decision not to increase the interest
rates till March 2015.
The FIIs remained net sellers in both the cash
and
derivatives
segments.
Domestic
institutional
investors
(DIIs),
however,
continued to remain net buyers and were seen
supporting the markets at lowers levels. The
breadth of the market remained weak amidst
higher volumes, which is a negative sign. On the
domestic front, the Rupee has depreciated and
moved above the US $63 level mark and a
further depreciation seems likely.
Technically, the prevailing negative technical
conditions weighed on the market sentiment
leading to selling pressure. The Nifty is still
placed below its 50-day SMA, which is a shortterm negative. The Stochastic, RSI and KST are
all placed below their respective average on the
weekly charts. Further the MACD and KST are
placed below their respective averages on the
daily charts. These negative technical conditions would lead to intermediate bouts of selling pressure.
However, the prevailing positive technical conditions still hold good and would help the markets witness buying support
at lower levels. The Stochastic and RSI are still placed above their respective averages on the daily charts. Further, the
MACD is placed above its average on the weekly charts. The Nifty is still placed above its 100-day SMA and 200-day SMA.
Besides the Niftys 50-day SMA and 100-day SMA are placed above Niftys 200-day SMA, which is known as the Golden
Cross breakout. These positive technical conditions would lead to regular buying support at lower levels.
The -DI line is placed above the ADX line and +DI line on the daily charts and is also placed above the 34 level but has
come off its recent highs indicating that sellers are covering shorts and booking profits regularly.

A Time Communications Publication

The markets are poised crucially. The Nifty is placed below its 50-day SMA and is still placed below its 50-day SMA,
which is a short-term negative. Now it is important that follow-up buying support emerges regularly and the Nifty
moves above its 50-day SMA. Otherwise, the markets could fall further and the Nifty could test the 7700 support level.
The markets are likely to remain volatile and choppy due to the expiry of the derivative segment expiry next week. In the
meanwhile, the markets would take cues from the ongoing Parliament session, economic data from global and
developing economies, crude oil prices and the Rupee-Dollar exchange rate, which is trading above the 63 mark.
Technically, on the upside the BSE Sensex faces resistance at the 27600, 28500, 28766 and 29000 levels and seeks
support at the 27355, 27000, 26752 and 26108 levels. The support levels for the Nifty are placed at 8216, 8180, 7968,
7779 and 7723 but it faces resistance at 8250, 8350, 8536 and 8623 levels.
Investor should wait & watch and book profit at regular intervals.

BAZAR.COM

Sharp swings!
By Fakhri H. Sabuwala
The BSE Sensex by midweek had declined a neat 7% from its record high of 28882 touched on 28 November 2014. The
global growth concerns kept the domestic market under tremendous pressure.
From the first day, the week looked so gloomy that market pundits were making prophecies of Sensex on its way to
correct both in time and value counts. However, the fear was short-lived as the
U.S. Federal Chairperson, Janet Yellen, signalled confidence in USAs growth and
Wall Street, in fact, celebrated the Boxing Day a week in advance. Little wonder,
the Dow Jones managed to mark that session to be the best of calendar 2014 so
far. Taking a cue from it, the world markets stabilized and India too recovered
over 400 points and raised its head above 27K once again on Thursday, 18
December 2014.
At home, the developments were mixed as the paralysis in Parliament over the
conversion issue continues sending important economic bills into cold storage.
The non-BJP opposition got together onto a single platform to defy BJP's
legislative dominance and devised strategies of floor management in the Rajya
Sabha. The approval of the GST Bill by the cabinet and its early entry into Parliament for discussion had a positive
impact on the sentiment and especially the logistics counters, which witnessed a single day jump of over 2-5%.
Clearance of various amendments to the Companies Act by the Lok Sabha, the setting up of a separate unit for early
disposal of transfer pricing case disputes and the government's resolve to amend archaic laws signals its intent to create
an investor friendly environment. Raghuram Rajan throughout the week remained in the news for his sensible stance of
status quo in interest rates and did not succumb to any political pressure despite the WPI touching a near zero level.
The expectations that the FIIs and foreign funds may increase their exposure to Indian equity during the last week of the
year is unlikely to turn true as the constant outflows of the last seven days show. Domestic funds were seen in rescue
acts to arrest the fall in the benchmarks and keeping the flag flying high.
The sharp swings of the previous week shall keep haunting the investors and a slide once again to that level in the
benchmark or at low levels of individual scrips could be revisited. The Sensex may have corrected 7% on the broadly but
at the individual scrip level the loss has been much higher than the mean fall in the benchmarks. It is here that contra
buying needs to be initiated as historical evidence proves beyond doubt that the stocks that fall steep and early too also
rise early with a vengeance.
The winter session of Parliament comes to an end this week and as usual the government functions actively on such
days. No surprise, therefore, if some radical growth and development programmes are taken on hand. Preparations of
the groundwork of the Modi-Obama meet-the second of its kind in less than a hundred days may also propel the Bull
Express. While Santa Claus might skip Dalal Street with the goodies this Christmas as surely Indian investors celebrated
Boxing Day and exchanged boxes on 28 November this year.

A Time Communications Publication

TRADING ON TECHNICALS

Demand Zone: 26550-25910 critical


By Hitendra Vasudeo
Last week, the BSE Sensex opened at 27136.27 and fell to a low of 26469.41. Further, a recovery was seen to register a
high at 27497.11 before it closed the week at 27371.83. The Sensex thereby showed a net rise of 21 points. The recovery
has been significant, which suggests that buying emerged at lower levels.
Last week, we had mentioned that if the Sensex fails to sustain above 27000, then the next support cluster is in the range
of 26550-25910. The demand zone mentioned last week was 26550-25910. The low registered last week was 26469
and support and buying/demand was certainly witnessed from the indicated level.
If we define the trends to be observed on the charts say 10-day variable moving average can be used for Extreme Nearterm to Short-term, Weekly charts for short-term-to-medium-term and monthly/quarterly chart for medium-term-tolong-term. On the weekly chart, we look at the 10-week variable moving average, on the monthly chart we look at 10month and 10 quarter variable moving average to get the larger trend pictures. Price above the respective average in the
respective time frame would define an uptrend and vice versa.
The daily chart trend is still down as the closing on Friday is still below the 10-day variable moving average, which is at
27463. On the weekly chart, closing is above the average, which is placed at 26624. The average on the weekly chart was
tested as the low registered was 26624. In all other higher degree charts like monthly, quarterly and yearly, the trend is
up.
Overall, for the near-term to short-term, we may
witness the Sensex movement between the wider
bands of 28822 to 25910. A pullback of the fall
from 28822 to 26469 is in progress now. The
pullback retracement levels are placed at 27646
and 27915, which are likely to be tested.
On the immediate front, we may now witness the
Sensex clearing the peak of 28822. Higher range
may be used to exit the weak stocks with lower
relative strength. The stocks which clear the
respective peaks, 52-week high and historical
high are the stocks with strength. Any stock or
sector index failing to cross the recent high would
be considered weak for the extreme near-term to
short-term perspective.
The low registered last week across the board for all stocks and all indices is important and its violation would suggest
weakness.
Support point for the week will be at 27112-26728-26469. Weekly resistance will be at 27756-28783.
BSE Mid-Cap Index
Correction on a fall below 9977 was witnessed. The low registered was 9493 but the week closed the mid-cap index at
10000, which is significant from the lower levels. A pullback can be witnessed with the resistance at 10121-10108 and
10355. A further rally can be seen above 10599. Broadly till then, use the rise to resistance levels to exit long positions
and book profit in Mid-cap index related stocks.
BSE Small-Cap Index
A fall below 10979 was witnessed last week and the low registered was 10240. We had indicated about the correction
on a fall below 10979. Recovery was seen to close higher at 10922, which shows that support and buying has emerged.
Overall, further weakness will be seen below 10233. Expect movement of the small-cap index broadly to remain
between 11595 and 10240. Resistance will be at 11000-11100. Pullback will resume on a rise and close above 11100.
BSE Bankex

A Time Communications Publication

The effect of engulfing bear candle was witnessed. Last week was about correction and recovery. Further rally is above
21627. Correction will continue below 20000.
Strategy for the week
The demand zone of 26550-25910 was tested and a recovery was seen. Traders short need to exit the same on a dip
from 27371. Support cluster is in the range of 26550-25910, which is still the demand zone. Downside momentum will
be seen on a fall and close below 25910. Traders can sell on a fall below 25910. Expect the higher range of 27756-28783
to be tested on a pullback. A further rally can resume above 28900. Traders willing to take risk can sell on a fall below
25910 or buy on a decline to 27112-26728 with a stop loss of 25910.
WEEKLY UP TREND STOCKS
Let the price move below Center Point or Level 2 and when it move back above Center Point or Level 2 then buy with whatever low
registered below Center Point or Level 2 as the stop loss. After buying if the price moves to Level 3 or above then look to book profits
as the opportunity arises. If the close is below Weekly Reversal Value then the trend will change from Up Trend to Down Trend.
Check on Friday after 3.pm to confirm weekly reversal of the Up Trend.
Scrips

PFIZER
FORBES & COMPANY
BAJAJ FINANCE
AMARA RAJA BATTERIES
MARICO

Last
Close

Level
1

Level
2

Center
Point

Level
3

Level
4

Relative
Strength

Weekly
Reversal
Value

Up
Trend
Date

2047.00
1845.00
3316.00
797.00
328.25

Weak
below
1880.0
1450.0
3094.0
712.0
312.7

Demand
point
1923.0
1559.7
3150.0
738.0
317.0

Demand
point
2004.0
1735.3
3260.0
771.0
324.0

Supply
point
2128.0
2020.7
3426.0
830.0
335.3

Supply
point
2333.0
2481.7
3702.0
922.0
353.6

69.3
67.8
65.5
64.6
64.5

1953.3
1540.0
3223.5
762.0
325.7

31-10-14
21-11-14
31-10-14
23-10-14
31-10-14

WEEKLY DOWN TREND STOCKS


Let the price move above Center Point or Level 3 and when it move back below Center Point or Level 3 then sell with whatever high
registered above Center Point or Level 3 as the stop loss. After selling if the prices moves to Level 2 or below then look to cover short
positions as the opportunity arises. If the close is above Weekly Reversal Value then the trend will change from Down Trend to Up
Trend. Check on Friday after 3.pm to confirm weekly reversal of the Down Trend.
Scrips

Last
Close

RIL COMMUNICATONS
INDIA CEMENTS
UNITECH
HINDUSTAN COPPER
JAIPRAKASH HYDRO-POW

82.95
74.45
15.45
70.50
11.74

Level
1

Level
2

Center
Point

Level
3

Level
4

Demand
point

Demand
point

Supply
point

Supply
point

Strong
above

70.6
60.4
10.3
57.3
9.8

79.3
70.6
13.8
66.4
11.1

84.3
77.0
15.5
71.3
11.8

87.9
80.8
17.2
75.5
12.4

89.3
83.4
17.3
76.3
12.5

Relative
Strength

Weekly
Reversal
Value

Down
Trend
Date

29.47
34.17
35.28
35.38
37.51

94.50
85.91
17.58
74.09
12.55

28-11-14
14-11-14
21-11-14
14-11-14
28-11-14

EXIT LIST
Scrip

Last
Close

Supply
point

Supply
point

Supply
point

Strong
above

409.08

418.12 447.40

Demand
point

ASTRAL POLY TECHNIK

379.55

400.03

B.A.S.F. INDIA

1162.00

1225.57 1252.00 1278.43 1364.00 1001.6

323.4

BHARAT PETR.COR(BPCL

653.00

675.48

692.00

708.52 762.00

535.5

DALMIA BHARAT ENTERP

439.55

447.71

462.45

477.19 524.90

322.8

DR. REDDY'S LABORATO

3199.00

3289.96 3361.00 3432.04 3662.00 2688.0

GLENMARK PHARMACEUTI

750.00

754.75

769.50

784.25 832.00

629.8

HAVELL'S INDIA

268.30

286.73

298.08

309.42 346.15

190.6

HEXAWARE TECHNOLOGIE

201.85

208.10

212.38

216.65 230.50

171.9

HINDUSTAN UNILEVER

755.00

780.18

789.50

798.82 829.00

701.2

INFOSYS

2002.00

2013.36 2049.00 2084.64 2200.00 1711.4

J.M.FINANCIAL

45.15

48.26

49.32

50.39

53.85

39.2

KAVERI SEED COMPANY

804.15

807.79

819.00

830.21 866.50

712.8

A Time Communications Publication

SANOFI INDIA

3377.00

3430.22 3476.00 3521.78 3670.00 3042.2

THERMAX

977.00

1018.91 1040.50 1062.09 1132.00

835.9

VOLTAS

249.30

256.08

209.3

261.60

267.12 285.00

BUY LIST
Last
Close

Scrip

KARUR VYSYA BANK

570.80

Demand Demand Demand


point
point
point

560.93

553.80

546.67

Weak
below

Strong
above

Strong
above

523.60

621.3

681.7

PUNTER'S PICKS
Note: Positional trade and exit at stop loss or target whichever is earlier. Not an intra-day trade. A delivery based
trade for a possible time frame of 1-7 trading days. Exit at first target or above.
BSE
Code

Last
Close

Demand
Point

Strong
above

Weak
below

Supply
point

Supply
point

Risk
Reward

MEDIA WORKS

532416

14.64

14.16

14.64

12.70

15.8

17.8

VIRINCHI TECHNOLOGIE

532372

31.55

30.25

32.35

29.00

34.4

37.8

MEDIA WORKS
VIRINCHI
TECHNOLOGIE

Scrips

TOWER TALK
Amtek Auto may have a dream run like Motherson Sumi. Watch the stock touch the Rs.300 mark soon!
Idea Cellular has consolidated enough in the Rs.140-145 range and is now ready for a sharp upmove.
While JSW Energy and Torrent Power are touching new 52-week highs, Tata Power has been hammered
unnecessarily by punters. The stock is bound to be a star in the January 2015 series.
Mahindra & Mahindra Financial Services is another dark horse and has seen a large number of shares changing
hands in the past week and can appreciate 20% in a week's time just like DCB.
Hexaware Technologies is likely to announce a Buyback programme at a steep premium to the CMP.
Gujarat Foils is another packaging firm with bright prospects like Essdee Aluminium and counts many FMCG
MNCs as its clients.
The stock of Steelcast has been bought by long-term investors as it is likely to emerge as another AIA Engineering.
Shares of Yes Bank are bought by some funds and FIIs in anticipation of it crossing the Rs.1000 mark based on its
solid Q2FY15 results wherein the net profit rose 30% YoY.
Shares of Hella India engaged in the LED auto lights are being accumulated by persons in the know as this German
MNC is expected to come out with robust FY15 results and the share could rise about 50% in the medium-term.
Stylam Industries is on the radar of discerning investors as this decorative laminates company is diversifying into
the IT sector at an investment of Rs.33 crore. The share is poised to touch the Rs.100 mark.
Knowledgeable persons are accumulating Aban Offshore in anticipation of its FY15 EPS of over Rs.125. Share has
fallen nearly 50% and can be bought for decent gains.
Shares of Power Finance Corp. and Rural Electrification Corp. are being cornered by some funds in anticipation
of a further rise of about 20%.
A Banking analyst strongly recommends Syndicate Bank as the bank is all set to produce decent results in H2FY15
and the share is expected to touch the Rs.160 mark.
An Ahmedabad based technical analyst recommends Associated Alcohol, Elnet Technologies, Investment
Precision Casting, Kolte Patil & Sarda Energy.

A Time Communications Publication

BEST BET

NIIT Ltd
BSE Code: 500304
CMP: Rs.48.50
By Amit Kumar Gupta
NIIT Ltd is a global talent development company that offers learning to students with education and training solutions
for individuals, corporate customers, and schools. It provides learning and knowledge solutions across the globe to
individuals, enterprises and institutions in information technology (IT), business process outsourcing (BPO), banking
financial services and insurance (BFSI), executive management education, school education, communication and
professional life skills and vocational skills training.
For individuals, the company offers instructor-led training, synchronous learning, computer-based training and eLearning programs. For corporations, it offers learning solutions for enterprises, which include managed training
services, learning content, learning administration, learning delivery, learning management systems, learning
technology and demand generation services.
Corporate Learning Services (CLS) is a large market. Removing internal bottlenecks for faster growth, the NIIT
management feels that the CLS segment has significant growth potential and the key constraints limiting growth were
not demand-related but internal bottlenecks such as limited bandwidth in terms of pre-sales, legal review, contract
structuring etc. CLS thus has the potential to grow fast once these internal changes are made.
NIIT believes that the long-term model for ILS will shift to focus on training delivered by expert faculty over the
synchronous learning platform instead of the current model of full-time faculty at individual centres. We continue to
believe in the long-term disruptive power of this method of delivery.
The company management says that it will explore ways to accelerate new course launches in the Beyond-IT streams
by bringing in an ecosystem of partners who will create content and use NIITs platform for delivery.
After the move to convert School Learning Solutions (SLS) into a fully-owned subsidiary, we interpret it as a signal that
the managements focus will be on higher RoCE businesses of CLS and ILS. We think CLS has the potential to grow from
both mining opportunities (NIIT Ltd being awarded responsibility for supporting new geographies or areas by current
clients) and new logos. With working capital from the SLS government contracts set to reduce further over FY16E and
FY17E (currently ~Rs.200 crore in receivables from state governments including legacy dues of ~Rs.70-80 crore from
the erstwhile state of Andhra Pradesh), we continue to believe that cash flow and return metrics will improve from the
current levels.
With CLS likely to scale further, we retain our estimates and continue to value the ILS, SLS and SBS (Skill Building
Solutions) segments together. We do not factor in aggressive margin expansion for any of these segments and value
them at 3x Dec-16E EBITDA and the CLS segment at 0.8x Dec-16E Sales believing that this multiple can expand as this
segment starts winning bigger deals and scales up. We maintain a Buy with target price to Rs.55 to account for a change
in the value of holding in NIIT Technologies.
Technical Outlook: The NIIT Ltd stock is very strong on the weekly chart as it has been making higher highs and higher
lows and is very strong in all time frames. The stock is also trading above all important moving averages like 200-DMA &
100-DMA.
Start accumulating at this level of Rs.48.50 and on dips to Rs.43 for medium-to-long-term investment and price target of
Rs.55++ in the next 6 months.
Valuations:
Y/E March
Book Value
P/BV
EV/EBIDTA
EV/Sales
M-cap/Sales

FY13
40.4
1.3
22.8
1.3
0.9

FY14
39.2
1.3
18.7
1.3
0.9

A Time Communications Publication

FY15E
40.8
1.3
16.4
1.3
0.9

FY16E
44.7
1.2
10.7
1.2
0.8

FY17E
50.0
1.0
8.3
1.1
0.7
6

STOCK ANALYSIS

Simmonds Marshall: For fastened gains


By Devdas Mogili
Simmonds Marshall Ltd (SML) is a 54-year old Pune (Maharashtra) based company manufacturing Industrial Fasteners
used in the Automobile Industry. The companys plant is located at Kasarwadi, Pune, Maharashtra. Mr. S. J. Marshall is
the chairman while Mr. N. S. Marshall is the managing director of the company.
The company manufactures nyloc self locking nuts (industrial fasteners) and its products include cleveloc self-locking
nut, nyloc self-locking nut, u-nuts, wheel nuts, cap nuts, castle nuts, hose fitting nuts, flange nuts, cage nuts and weld
nuts. It caters to the automotive and industrial sectors and supplies to all the automobile manufacturers as well as the
original equipment (OE) suppliers.
The company manufactures a range of Specialised Nylon Insert Self Locking Nuts and other Special Fasteners and has
been augmenting its cold forming capacity to produce over 500 million nuts per annum in a wide range from M4 to M48
diameter and equivalent imperial sizes. These nuts are manufactured either to American, British, Japanese, ISO or Indian
Standards in a variety of thread forms and protective finishes.
The company also has a battery of multi-spindle automatic bar turning centres capable of producing related automotive
components as well. The company is fully equipped to supply a wide range of Bolts from its associated companies
ranging from M5 to M70.
Clientele: The company sells its products to General Motors, Fiat, Honda, Caterpillar, Suzuki, Dana and New Holland.
Performance: The company reported total revenue of Rs.103.14 crore with net profit of Rs.4.39 crore posting an EPS of
Rs.3.92 for FY14.
Financial Highlights:
Particulars
Total Income
Total Expense
Other Income
Finance Cost
Tax Expense
Net Profit
Equity (FV:Rs.2)
EPS (Rs)

(Rs in lakh)
Q2FY15
Q2FY14
3362.85
2599.23
2932.24
2260.98
48.66
16.99
106.93
89.95
(64.85)
(68.00)
307.49
197.29
224.00
224.00
2.75
1.85

H1FY15
6532.72
5786.88
62.35
187.39
(285.78)
399.87
224.00
3.57

H1FY14
4953.57
4384.90
27.32
167.87
(115.00)
313.12
224.00
2.80

FY14
10314.10
9349.63
61.56
331.10
(256.31)
438.62
224.00
3.92

Latest Results: For Q2FY15, it posted total


revenue of Rs.33.63 crore with net profit of
Rs.3.07 crore registering an EPS of Rs.2.75
for the quarter ended 30 Sept 2014.
For the half year HIFY15, EPS stood at
Rs.3.57 as against Rs.2.80 recorded in
HIFY14.

Financials: The company has a tiny equity


base of Rs.2.24 crore with reserves of
Rs.38.45 crore leading to a share book value
of Rs.36.33 (FV:Rs.2). It has a debt:equity ratio of 0.90 with RoCE of 15.86% and RoNW of 13.17%.
Share Profile: The companys share with a face value of Rs.2 is listed on the NSE and the BSE under the B group and hit
a 52-week high/low of Rs.77/17.60. At the current market price of Rs.63.20, it has a market capitalization of Rs.70.78
crore against total sales of Rs.103 crore indicating its attractive market cap:sales ratio.
Dividends: The company has been paying dividends as follows: FY14: 25%, FY13: 25%, FY12: 12%
Shareholding Pattern: The promoters hold 55.94% equity stake while the balance 44.06% is with non-corporate
promoters and the investing public.
Prospects: The present Government with a good majority has indicated its agenda for reviving economic growth. As per
the new Governments first Economic Survey, the India's economy is expected to grow between 5.4% to 5.9% in the
current fiscal and with the measures taken to improve the investment climate and improve governance, it may push up
growth to 7-8% in the coming years. A likely moderation in inflation will ease the monetary policy stance and revive the
confidence of investors.
The Indian Auto Industry is one of the largest in the world and accounts for almost 7% of India's GDP. However for the
last few years, the Auto Industry has been going though low sentiments. But despite the meagre growth in the past, the
A Time Communications Publication

automotive market is expected to return to steady growth in coming years. The Automotive Componenets
Manufacturers Association (ACMA) estimates that the Auto components industry is expected to post 6% growth in the
current fiscal after witnessing a decline last year.
The Indian automobile industry has tremendous potential to grow. India is a very cost sensitive market and has an edge
in cost over the European market. Keeping in view of the potential in Indian market, all leading manufactures are
launching new models and shifting their focus from import of parts to localizing their production and take the advantage
of cost reduction and avoid forex fluctuation. In the coming years, India will be one of the top five vehicle manufacturing
nations. Automobile exports are also promising and India is emerging as global hub for auto components outsourcing.
Conclusion: Simmonds Marshall is an established player in the domestic and overseas markets with a good track record
of growth and dividend payouts.
At its current market price of Rs.63.20, the SML share price discounts around 16 times its FY14 EPS of Rs.3.92 as against
the industry average P/E multiple of about 24 indicating the huge scope for appreciation. The stock of Sundram
Fasteners, which is in the same line of business, is discounted around 27 times whereas Simmonds Marshall is available
at a very reasonable valuation. In view of its decent performance, good product range, attractive market cap:sales ratio,
regular payouts, and bright prospects of the auto fastener industry, the share may be added to ones portfolio for
fastening gains in the medium-to-long-term.

MARKET REVIEW

Fed uplifts financial markets


By Devendra A. Singh
The BSE Sensex (30-share index) settled at 27,371.84 gaining 21.16 points and the NSE Nifty closed at 8,225.20 rising
1.10 points for the week ended Friday, 19 December 2014.
The collapse witnessed in the Indian equity markets and currency markets during the week was triggered by the
economic crisis in Russia. The import of new technologies, goods & services also resulted in widening Indias current
account deficit (CAD) which relates to a hefty burden on the balance of payment (BoP) and depreciation of the Indian
Rupee (INR) against the US Dollar, which is floating around INR 63-64/USD. The US Dollar is strengthening and
becoming stronger against most currencies.
The Russian Rouble sank to a record low against the US Dollar after the drop in crude oil prices hit the sentiment of FIIs
and made them book profits. The Russian apex bank hiked the key interest rate by 6.5% points to 17% on Tuesday, 16
December 2014 in an attempt to stop the Rouble from depreciating further.
Uncertainty still hovers the financial markets in the Euro-zone and China that could hit global markets in future.
However, domestic markets gained momentum in the last two trading sessions of the week in response to the US
Federal Reserve policy statement. The key bourses fell in 3 and surged in 2 out of the 5 trading sessions last week.
On the currency front, the Rupee has declined against the US Dollar for the last one and a half month with the pace
accelerating in the latter part of November and December 2014.
The INR has been depreciating since the beginning of November 2014. Overall, the rupee has recorded 2.9%
depreciation against the US Dollar. Other major currencies globally have also plunged against the US Dollar.
There are many factors pulling down the Rupee such as rising CAD, the US Dollar getting stronger, hampering of
investors sentiment due to global crisis and correction in Brent crude prices.
CARE research agency expects the Rupee to hover between 64-65 per US Dollar in the coming days until there is
intervention by the RBI and the global situation returns to normalcy.
There may also be measures imposed on gold imports in case the available trends suggest a continuation of the trend of
increasing imports, the agency said.
On the macro-economic data, Indias CAD rose to 2.1% of GDP in Q2 ending 30 September 2014 from 1.7% in Q1 ending
30 June 2014. The higher trade deficit was because of deceleration in export growth and increase in imports, the RBI
figures showed.

A Time Communications Publication

Global rating agency Moodys stated that the governments decision to reduce its stake in public sector banks to 52% is a
credit positive.
Last week, the Union cabinet gave its nod to bring down government holding in state-owned banks in a phased manner.
The phased reduction in stake will help PSBs raise up to Rs.1,61,000 crore from the market.
However, the government will continue to hold over 51% stakes in these banks. Of the 11 public-sector banks that
Moodys rates the governments stake ranges from 56% to 84%.
The decision to reduce the stake will help the under-capitalised state-owned banks as government resources to
recapitalise these banks are limited, the agency said.
The large fiscal deficit leaves very little money in the hands of the government to infuse money in PSBs to meet higher
capital requirement under Basel III regime.
Further, the crude oil scenario shows that the Brent crude prices fell below $60/barrel and is hovering around
$59/barrel its weakest level since May 2009 on slowing of Chinese factory activity. The Brent crude has almost halved
since reaching a high of $115/barrel in June 2014 on ample supply and slowing demand.
A report showing Chinese industrial activity shrank for the first time in seven-months in December 2014 added to the
concern about oil demand. China is the second-largest oil consumer after the United States.
The US Federal Reserve (Fed) on Wednesday, 17 December 2014 sent a strong signal that it was on track to raise
interest rates sometime next year in 2015, dropping a pledge to keep rates near zero for considerable time in a show of
confidence in the US economy.
Closing out a two-day meeting on 16 and 17 December 2014 against a backdrop of solid domestic growth but trouble
overseas, the US central bank ditched its long-standing vow and instead said it would take a patient approach in deciding
when to bump borrowing costs higher.
The Fed dropped benchmark rates to near zero in December 2008 as it battled the financial crisis and deep recession.
After a week of turbulence in global financial markets, the US central bank looked firmly beyond economic difficulties in
the Euro zone, Japan and Russia and offered a mostly upbeat assessment of the US economys prospects.
Updated quarterly projections showed policymakers continue to expect the US economy to grow between 2.6% and 3%
next year in 2015. Policymakers also foresee the unemployment rate currently at a 6-year low of 5.8% moving down to
an average of between 5.2% and 5.3% toward
the end of next year.
The Fed officials however, acknowledged
inflation was likely to slow in year 2015 to
between 1% and 1.6%. But core inflation,
which excludes volatile food and energy costs,
is projected to dip only a bit next year before
turning higher to close in on the Feds target
by the end of 2016.
Asked whether the spill over from Russias
crisis could harm the US economy, Janet
Yellen said, The two countries were too
loosely linked to expect any appreciable
impact. I see the spill over as pretty small but
we are obviously watching that closely.
Key indices ended lower on Monday, 15
December 2014 on global worries. The BSE
Sensex fell 31.12 points (-0.11%) to close at
27,319.56. The NSE Nifty was down 4.50
points (-0.05%) to close at 8,219.60.
Key indices toppled on Tuesday, 16 December
2014 on the collapse of the Russian rouble to
a record low against the US dollar as crude oil
A Time Communications Publication

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9

prices fell below $60/barrel for the first time since May 2009 hit FIIs sentiment. The BSE Sensex slumped 538.12 points
(-1.97%) to close at 26,781.44. The NSE Nifty was down 152.00 points (-1.85%) to close at 8,067.60.
Key indices soaked on Wednesday, 17 December 2014 as oil marketing firms booked profits. The BSE Sensex tumbled
71.31 points (-0.27%) to close at 26,710.13. The NSE Nifty was down 37.80 points (-0.47%) to close at 8,029.80.
Key indices advanced on Thursday, 18 December 2014 after the Fed signalled that it was on track to raise interest rates
sometime next year in 2015 cheered market participants. The BSE Sensex jumped 416.44 points (+1.56%) to close at
27,126.57. The NSE Nifty was up 129.50 points (+1.61%) to close at 8,159.30.
Equity markets settled higher on Friday, 19 December 2014 on the US central bank policy outlook. The BSE Sensex
rallied 245.27 points (+0.90%) to close at 27,371.84. The NSE Nifty was up 65.90 points (+0.81%) to close at 8,225.20.
The Sensex edged above 21.16 points to close at 27,371.84 last week. For the Futures & Options (F&O), the near month
December 2014 derivatives contracts expire on Wednesday, 24 December 2014.
The Indian stock market will remain closed on Thursday, 25 December 2014 on account of Christmas.
Investors will keep a close watch on Chinas growth stability data, which is another crucial factor that will decide the
global market movements in near-term.
On the Euro group front, as uncertainty rises over Greeces political turmoil as Athens goes for second voting for
Presidential elections and is scheduled on 23 December 2014.
The bulk of Greeces 240 billion ($294 billion) in loans from the EU run out this year. The European Central Bank (ECB)
has committed to buy the bonds of troubled countries if needed. That could help keep the trouble in Greece from hurting
confidence in other countries.

GURU SPEAK

Market set to revive


The stock market suffered a severe setback in the previous week ended Friday, 12 December 2014, with a net fall of
1107 points- perhaps the highest weekly fall in recent memories as the BSE Sensex closed at a low of 27350.67. The low
of the week was 27320, which means that the market closed at a low in the previous week.
This was followed by a blood bath early last week as panic gripped the market terminating the
ongoing super bull run of the past few months. The Sensex came drifting right from Monday, 15
December 2014 till Wednesday, 17 December 2014 on higher volumes, which led many to believe
that Modi wave had fizzled out and the euphoria from the market was missing.

By G. S. Roongta

On Monday, 15 December 2014, the Sensex opened at 27136, made a low of 27105.04 when it
attracted value buying leading it to recover all the lost ground to rise above the previous days
closing of 27350.67 at 27392 but finally close the session with a loss of 31 points at 27320.

But the all round panic up to mid-session was never seen since May 2014. Technology stock took a knock with Infosys,
TCS, Tech Mahindra lost between 2 to 3% whereas 2nd rank technology stock fell lower. Banking stocks, however
displayed a healthy trend as HDFC closed higher at Rs.1123, Kotak Bank was up by 5% at Rs.1310. ICICI Bank, Yes Bank
and SBI however did not rally. Crude oil stocks also suffered on account of the falling prices.
On Tuesday, 16 December 2014, the market reacted very sharply on the news of Taliban militants storming the Army
Public school at Peshawar killing over 135 innocent children in the terrorist attack. This news spread like wild fire
across the world an sent global markets into a shock and they started tumbling. Indian bourses, which were already in a
corrective mode for the past 5 sessions plunged to a low of 26736.23 thereby losing 2086 points from its all time high of
28822 made on Friday, 28 November 2014. Such a severe jolt in a matter of 15 days or just 8 to 9 trading sessions has
never been seen before.
On Wednesday, 17 December 2014, the stock market made a final ditch as the Sensex fell below 27K at 26490 but
bounced back from this level because of short covering and value buying by long term investors. The final tally of the fall
thus stood at 2157 from its all time high of 28822 made on Friday, 28 November 2014. Considering the intra-day lows,
this fall may have been as high as 2500 points. Although the market recovered an hour before the closing bell to settle at
26710, it did so with a loss of 71 points.

A Time Communications Publication

10

This panic was such that the investors positions were forcibly squared up without notice by bankers, money lenders,
brokerages and fund houses with the result that investors who had made money in the F&O segment since May 2014
were crippled as they suffered severe losses and ran from pillar to post to clear the brokers dues.
This has happened in the past also because of which I had warned small and medium class investors not to indulge in
F&O trading, which may lead to small profits but takes away all the gains at one stroke in such a panic like situation.
Unfortunately, investors greed to make a quick buck when the going is good gets the better of them as they throw
caution to the winds and indulge in rampant speculation. Over time, this turns into a habit that is difficult to shake. The
F&O segment is only meant for the big players who play safe by hedging their cash positions through call/put options in
the F&O segment. Retail investors who play the F&O segment invariably suffer as they have to sell their delivery stocks
to pay off the brokers dues.
Sesa Sterlite, Hindalco, Tata Steel, SAIL, Reliance Industries, Reliance Power, Aditya Birla Nuvo, Grasim and a few
banking stocks suffered heavily in the F&O segment.
In the mid cap category, several stocks like Idea Cellular, Graphite India, GSFC, Sarda Energy, India Cements, Elecon
Engineering etc suffered a severe setback losing between 20 to 30% from their 52-week highs. Small cap stocks too
suffered a similar set back and will take some time to recover.
Investors memory being short, I have keep reminding readers to book profit at higher levels and get ready to buy back
in a correction or a panic situation like last week, which is a god sent opportunity. Hence you will agree that the headline
of my article last week Board the gravy train now was apt and fully justified considering the panic on the first 3 days
and the sharp recovery on Thursday and Friday. Readers who followed my advice must have made fistfuls of money.
It is a well-known fact that the FIIs control our markets by their huge positions but tend to book profit at the end of the
calendar year to boost their balance sheets and personal income by way of bonuses. But investors should not forget that
a correction can set in anytime in a heated market and which is exactly what happened in the absence of any correction
since September 2014. The FIIs had unloaded only a fraction of their holding but just imagine what would have
happened had they divested 10 to 15% of their total net positions?
The other major reason for the correction was the political instability brought about by the logjam in Parliament with
the Opposition out to derail the NDA Governments efforts to pass several crucial bills in the current winter session.
Added to this was the terrorist strike in Sydney followed by the carnage in Peshawar all of which combined to bring
about a badly needed correction since the bulls were
tired. The correction spread across the previous week
Roongtas Panchratna
and the first 3 days of last week has made the market
is almost risk-free at 80:20: :Reward: Risk ratio
more healthy for the future.
What was ironical in the trading scenario last week
was that while the benchmarks suffered losses, the
Nifty futures continued to be in the green
commanding a premium of Rs.40 to 45 whereas the
Nifty has lost 500 points in the December 2014 F&O
series. To my mind, all this is humbug and a punters
game plan to confuse common investors by displaying
the strength in Nifty Futures!
The other controversial feature is the forecast made
by big bull Rakesh Jhunjhunwala on 3 December 2014
projecting the Nifty level at 1,25,000 by the year 2030.
This was purely hypothetical and without any base
but possibly designed to trigger the market sentiment
by leading on lakhs of investors. In the past too,
investors have been mislead by big operators like
Harshad Mehta in 1992 and Ketan Parekh in 2002.
Has Mr. Jhunjhunwala forecast led to the plunge of
over 2000 points in such a short span of time? While
the market show keeps on going, some people will
always be remembered for their foul games in playing

A Time Communications Publication

Although the stocks recommended in the Panchratna


quarterly newsletter launched on 1st April 2014 are for the
long-term upto 3 years, the 15 stocks featured have already
outperformed till 10th December 2014 as follows:
% gains at High
> 100%
76-91%
> 54%
24-35%
> 17%
3.5-8%

No. of stocks
2
3
2
4
1
3
15

Thus all the 15 stocks have gained with some in just a matter
of few days only. Their long-term outlook is even brighter.
Now get your copy of the 4th edition of Roongtas Panchratna
due on 1st January 2015.
To subscribe contact us on 022-22616970 or email us at
moneytimes.support@gmail.com
11

with the common investors psyche.


The markets bounced back on Thursday, 18 December 2014, as the Sensex made a gap up opening at 27053.86, hit a
high of 27180 and a low of 26900.97 before it closed the day at 27126.57 with a gain of 416.44 points. Correspondingly,
the Nifty opened at 8138.90, rose to a high of 8174.30, hit a low of 8084.90 and closed with a gain of 129.50 points to
close at 8159.30.
The Technical Analysts who had started forecasting that the Nifty would hit the 9,000 mark two weeks back were in for
a shock as Sensex hit a low of 8000 and till 17 December 2014 they were seen projecting a level of 7800, which too was
way out as the Nifty hit 8174.30 on Thursday, 18 December 2014, before closing at 8159.30. Similarly, on Friday, 19
December 2014 the Nifty hit a high of 8263.45 before it closed the day and week at 8225.20.
On Friday, 19 December 2014, the market maintained the uptrend and closed with a gain of 245.27 points at 27371.84.
Correspondingly, the Nifty gained 65.90 points to close the day in the week 8225.20.
Although the market has bounced back with double the force, it all depends upon the Parliamentary session wherein
important bills need to be passed. Hence one should adopt a wait and watch policy. The market is sure to rise but the
political chess board will determine its speed and strength.

STOCK WATCH
By Amit Kumar Gupta

Dish TV (Code: 532839) (CMP Rs.62.75) (TGT: Rs.69)


Dish TV India Ltd is in the Direct to Home (DTH) and Teleport services. The DTH services are rendered to customers
through the Consumer Premise Equipment (CPE) used for receiving and broadcasting DTH signals to subscribers. The
company has its distribution footprint and reaches over a 1,00,000 outlets for Set Top Boxes (STBs) and the customers
can recharge from over 25,000 outlets nationally and offers payment solutions for recharge through Interbank Mobile
Payment Service (IMPS). This allows customers to easily recharge their subscription using a simple mobile phone.
The companys subsidiaries include Integrated Digital Network Distribution PTE Ltd. and Dish TV Lanka (Pvt) Ltd.
The recent tussle between Zee Entertainment/ Star Plus and Hathway Cable has ended. Zee Entertainment shall
continue to be broadcast as a bouquet on Hathway's network at a significantly higher rate. Star India has, on the other
hand, chosen to offer all its channels only on RIO (reference interconnect order) basis, to all Multi Service Operators
(MSOs) effective November 2014. This implies that the two major broadcasters shall be able to significantly improve the
terms of agreements with the MSOs.
This is a significant event as DTH players have long argued that the current terms of payments between cable
operators/ DTH players are detrimental to DTH players.
Star has put forward RIO rates for MSOs in DAS areas. These rates are quite high and while concessions are offered in
terms of 'marketing fees' that depend on factors such as penetration and number of channels offered. The marketing fees
may, as we understand from discussions with the industry, may lead to 30%-40% lower rates than RIO rates, and
separate negotiations shall be held with MSOs, it appears that cable realizations for broadcasters are likely to register a
meaningful rise.
Hathway, as also other MSOs have indicated during recent conference calls, that the rates offered by Star will bring
about a significant change in the industry, which will need to offset the impact of higher content expenses with higher
consumer - level payments since squeezing the Licensed Cable Operator (LCO) is not being viewed as an alternative.
Hathway has said, in a conference call, that rise in consumer level payments should be expected soon in a matter of
weeks. In its conference call, Siticable has also stated that the cost to Siticable shall rise by at least 50% (from Rs.20 per
subscriber to Rs.32-33 per subscriber), as a result of the change in Star's pricing. We, therefore, advise a BUY on Dish TV
with a price target of Rs.69.
Technical Outlook: The Dish TV stock is very strong on the weekly chart and has been making higher highs and higher
lows and is very strong in all time frames. The stock is also trading above all important moving averages like 200-DMA &
100-DMA,
Start accumulating at this level of Rs.62.75 and dips to Rs.57 for medium-to-long-term investment and possible price
target of Rs.69+ in the next 6 months.
A Time Communications Publication

12

*******

AurionPro Solutions (Code: 532668) (CMP: Rs.242) (TGT: Rs.270)


AurionPro Solutions Ltd. is an information technology (IT) services provider, which is engaged in the development of
computer software. The companys operations are divided into four business lines: Banking & Financial Services
Technologies (BFST), Supply Chain Management Solutions (SCM), Security & Information Management Services (IMS)
and Consulting & Workforce Solutions. BFST offerings include Cash Management and Internet Banking, Loan
Origination, Payments and Capital Markets. Its SCM business provides product suite called SCMProFit that addresses the
SCM lifecycle, including Freight Forwarding, Warehousing, Distribution, and Project Logistics Services. Security &
Information Management Services is in the process of delivering pre-built, cloud-based Identity Management and Web
Center Portal & Content offerings. Its Consulting & Workforce Solutions business delivers technology and process
solutions.
Services offerings: 1) Oracle & IT services AUPS services offering in this segment is around a developed economy.
The company is among the top Oracle IDM partners. The company reported ~$40 million revenue with operating
margin of ~15.5% in FY14. Of this $40 million, IDM constitutes ~$30 million, Web centre: ~$8 million and Managed
Services: ~$2 million. In terms of geographic spread ~$5 million is from Australia, ~$8 million from UK and ~$27
million from USA. Onsite billing rate for the company in IDM is ~$160/hr and the management does not see any pricing
pressure. In fact, onsite billing rate improved to ~$180/hr in FY15. Moreover, offshore pricing is at around $50/hr.
2) IT Consulting: This segment largely deals with SMAC services with greater focus on North America. In this segment,
the companys work includes mobile payments, salesforce.com implementation, etc. It came out with first P2P mobile
payment solution, which was bought by Nokia. The company delivered revenue of ~$23.4 million with margins of
~12.5% in FY14.
Product offerings: AUPS has product offering in: 1)
Lending Systems: Loan origination, the platform that
provides assessment, workflow, 3rd party views and
odds for assessing. With revenue of ~$11 million
(FY14), the company has 50+ engagements with major
banks in India and abroad. 2) Payments Platform:
With annual revenue of ~$7 million, this platform is
implemented by some top customers. 3) Customer
Communications Solutions: It has ~$8 million
revenue; the company manages bill presentation of
telecom and credit card clients.

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to be ~$120 million with margin of 17.5%. It is
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targeting $170-180 million revenue for FY17 with a
margin of 21-22%. They plan to increase the offshore
workforce from 600 to 1,500, while onsite will remain stable at 450.
We advise a Buy with a target of Rs.269.
Technical Outlook: The AurionPro Solutions stock is very strong on the weekly chart and has been making higher highs
and higher lows and is very strong in all time frames. The stock is also trading above all important moving averages like
200-DMA & 100-DMA.
Start accumulating at this level of Rs.242 and on dips to Rs.224 for medium-to-long-term investment for a price target of
Rs.270+ in the next 6 months.

EXPERT EYE
By Vihari

RS Software: Sure shot gains


A Time Communications Publication

13

The share of RS Software India Ltd. (RSSIL) (Code: 517447) (Rs.492) has declined around 40% due to the subdued
market sentiment from its life-time high of Rs.830 achieved on 23 Sept 2014. With a likely EPS of Rs.55 in FY14 and
Rs.62 in FY16, the share can be bought for decent gains in the medium-term.
The vertically integrated technology solutions provider, RSSIL is exclusively focused on the payments industry since
inception in 1991. Its payments expertise has helped clients address the convergence of payment types, the proliferation
of mobile devices, the move to cloud computing and the introduction of new strategies such as behavioral targeting.
RSSIL has built solutions for Europay, MasterCard, Visa (EMV) and new technologies such as mobile and contactless
payments while mitigating the pain and costs associated with the legacy systems supporting them. It offers a
comprehensive range of services custom application development, quality assurance, testing, maintenance, support
and strategic consulting with an emphasis on availability, scalability and security. RSSIL has been in business for the
last two decades providing solutions to Payment Networks, Processors, Acquirers, Issuers, ISOs and other major players
in the electronic payments domain.
RS Software maintains the highest standards for compliance, security and quality including the ISO 9001:2008, SEIPCMM Level 3 and ISO 27001:2005 Information Security certifications. During FY14, USA accounted for 91% of sales
whereas ROW (rest of the world) 9% of revenues.
RSSIL has posted solid Q2FY15 results led by rising margins. During Q2FY15, consolidated net profit after minority
share shot up 42.2% to Rs.16.5 crore on 5.1% lower revenue of Rs.99.5 crore and the Q2FY15 EPS stood at Rs.12.9.
For H1FY15, consolidated net profit after minority interest jumped 49.1% to Rs.32.5 crore on 1.7% higher sales of
Rs.198.1 crore and the H1FY15 consolidated EPS stood at Rs.25.3. An interim dividend of 15% has been declared apart
from 10% paid in Q1FY15. A total dividend of 60% was paid for FY14.
RSSIL is a zero debt company. The value of its gross block is Rs.90 crore As at H1FY15, the cash & cash equivalent
including term deposits, investments in mutual funds and short-term loans etc. stood at Rs.135.9 crore or Rs.106/share.
Long-term loans and advances are Rs.25 crore or Rs.19.5/share.
The promoters hold 38.5% in the equity capital, FIIs hold 2.3%, DIs hold 2.8%, NRIs hold 2% and with PCBs holding
10.2% leaves 44.2% with the investing public.
Globally, the electronic payments industry is going through its major growth evolution at the same time, given the
interesting intersection of technology advancements and cultural changes that facilitate the move from paper money to
digital currency.
The volume and the value of electronic payment transactions are projected to grow multifold in the next several years.
Payments appear to be a tremendously ripe area for disruption - new technologies are changing the relationship
between consumers and merchants. Globally, the electronic payments industry has seen a huge growth with
transactional revenues in the segment reaching worth of $900 billion (nearly Rs.54 lakh crore). The business of
payments hinges on processing and storing large volumes of transaction data.
RSSIL is engaged in offering both vertical and horizontal services customized for the payments industry. With 85% of
retail payments still being made with paper money, the company is ideally positioned to build and maintain the core
systems infrastructure for the Electronic Payments Industry.
The demand recovery in the U.S. bodes well for RSSILs business given its exposure to the market. RSSIL continues to put
significant thrust on innovations and in building competencies through the Payments Lab and School of Payments.
RSSILs sustained focus on merchant acquiring aspect of the payment landscape, procedural improvements in CRM,
focus on e-mail marketing to generate strong business response and undergoing initiatives to strengthen the team and
process give revenue visibility going forward.
Based on the current going, RSSIL is likely to post an EPS of Rs.55 in FY15 and Rs.62 in FY16. At the CMP of Rs.492, its
share trades at a P/E of 8.94 on FY15E and 7.93 on FY16E. A conservative P/E of just 12.5 will take its share price to
Rs.688 in the medium term and Rs.775 thereafter. The 52-week high/low of the share has been Rs.830/166.
********

Aarti Drugs: Profitable option


A Time Communications Publication

14

This share was earlier recommended at Rs.412 on 5 May 2014 with a medium-term target of Rs.620. Since then,
the share has zoomed 115% to touch a high of Rs.887 on 18 November 2014 and still looks good for investment at
the current levels.
The shares of Aarti Drugs Ltd (ADL) (Code: 524348) (Rs.805) is an excellent buy in the subdued market as this
investment is likely to fetch a decent gain of about 35% in the medium-to-long-term.
Incorporated in 1984, ADL is a part of the Rs.3500 crore Aarti Group of Industries engaged in manufacture and sale of
bulk drugs and its intermediates. It manufactures vitamins, anti-arthritis, anti-fungal, antibiotics, ACE inhibitors, besides
its range in anti-diabetic, anti-cholinergic, sedatives and anti-depressant drugs. Its product profile includes active
pharmaceutical ingredients (API), steroids, pharma intermediates and speciality chemicals.
The APIs include Cardioprotectant, AntiBPH and Traquilizar. API products include Aceclofenac, Diclofenac Sodium,
Clopidogrel Bisulphate, Metronidazole, Ornidazole and Tinidazole. Steroids include Glucocorticoid Steroid, which
consists of Hydrocortisone Sodium Succinate Sterile, Hydrocortisone Acetate and Hydrocortisone Hemisuccinate.
Speciality chemicals include Benzene Sulphonamide, Benzene Sulphonic Acid, Benzene Sulphonic Acid Methyl Ester and
Benzene Sulphonyl Chloride.
With
nearly
three
decades
of
manufacturing
experience
and
strength
of
nine
manufacturing
locations, ADL has
today transformed into
multi-tonne,
multilocation GMP complaint
with the state-of the art
facilities. Strategically
located at Tarapur
(Maharashtra)
and
Sarigam (Gujarat), the
units are currently
capable of making over
50 bulk actives, several
key
intermediates/specialit
y chemicals.
In the domestic market,
ADL has a diversified
client mix including
customers like Cipla
Ltd,
Dr
Reddys
Laboratories,
Cadilla
Healthcare,
Ranbaxy
Laboratories, Alembic,
Piramal
Healthcare,
Unichem Laboratories,
Unimark
Remedies,
Glaxo
Smithkine,
Deepak Fertilizers &
Petrochemicals etc.

Releasing on 1st January 2015

Winners of 2015
Here is the Performance Review of Winners of 2014
th

Like the past 8 years, the 9 year performance of Winners of 2014 was incomparable.
Of the 20 stocks identified 12 months back, 18 have achieved the Book Profit level. The other 2 were
also in profit and may still achieve the target by year end.
Sr. Scrip Name
Close
Book Profit
High of
Profit %
No.
31-12-13
Level
2014
to High
1 Apollo Hospitals Ent.
946
1105.7
1246.50
31.77
2 M&M Finance Serv.
321.05
391.1
342.00
6.53
3 Bata India
1057
1199.3
1413.40
33.72
4 Dr. Reddy's Labs
2533
2817.7
3666.25
44.74
5 Sundaram Finance
625.5
684.7
1400.00
123.82
6 Tata Consultancy Ser.
2170.95
2534.3
2839.70
30.80
7 Accelya Kale Solution
761
943.3
1026.15
34.84
8 IPCA Laboratories
721
822.7
906.85
25.78
9 Bajaj Finance
1574
1788
3385.00
115.06
10 Agro Tech Foods
549.55
614.6
704.00
28.10
11 HCL Technologies
1263
1481.3
1776.25
40.64
12 ING Vysya Bank
611
717
873.00
42.88
13 Havell's India
158
177.14
346.90
119.56
14 KPIT Technologies *
171.55
207.8
191.00
11.34
15 Zensar Technologies
355.85
417.5
685.00
92.50
16 F D C
129.4
155.6
170.70
31.92
17 Apollo Tyres
107.15
128.6
242.95
126.74
18 CMC
1632
1828.3
2407.00
47.49
19 Arvind
136.7
162.7
341.50
149.82
20 Tech Mahindra
1838.05
2177
2734.00
48.74
* On 11-12-14, KPIT Technologies rose to a high of Rs.198 thus gaining 15.42%.

Close
10-12-14
1131.45
322.55
1282.40
3401.60
1250.45
2507.90
996.50
712.25
3195.60
602.55
1572.55
853.35
310.20
182.80
596.60
153.40
227.70
1919.05
272.60
2571.50

Current
Profit/Loss %
19.60
0.47
21.32
34.29
99.91
15.52
30.95
-1.21
103.02
9.64
24.51
39.66
96.33
6.56
67.65
18.55
112.51
17.59
99.41
39.90

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For FY14, ADLs net


profit rose 36.5% to Rs.61.7 crore on 17.6% higher sales of Rs.969.9 crore. The FY14 EPS stood at Rs.51 against Rs.37.4
in FY13 and a total dividend of 130% was paid (Rs.13/share).

A Time Communications Publication

15

For Q2FY15, ADL has posted robust results led by higher sales. For Q2FY15, net profit climbed 36.2% to Rs.8.8 crore on
15.4% higher sales of Rs.286.3 crore. The quarterly EPS works out to Rs.15.5 vs Rs.11.4 in Q2FY14 and an interim
dividend of 50% has been declared. For H1FY15, net profit jumped 40.6% to Rs.36 crore on 17% higher sales of Rs.546
crore. The H1FY15 EPS works out to Rs.29.8 vs Rs.21.2 in H1FY14.
ADLs equity capital is Rs.12.1 crore and with reserves of Rs.239 crore, the book value of its share works out to Rs.207.4.
With borrowings of Rs.342 crore, the debt:equity ratio (DER) works out to 1.4:1. The value of its gross block shot up to
Rs.569 crore in FY14 from Rs.492 crore in FY13. The promoters hold 60% in its equity capital, foreign holding is 1%,
PCBs hold 1.5% and DIs hold 1% leaving 36.5% with the investing public.
ADL facilities are cGMP approved with certifications like USFDA, WHO GMP, EUGMP, TGA and ISO. ADL is constantly
growing its presence in regulated markets by offering series of products from its USFDA; TGA certified plants, as well as
Japanese accredited plants.
Recently, ADL also got cGMP certification from ANVISA of Brazilian authorities and COFEPRIS of Mexican authorities to
cater to Latin American market in two of its major products.
With its focus to access potential US generics business, ADL has already commissioned and made operational its new
multipurpose manufacturing facility strictly designed and built in accordance with USFDA requirements. Such USFDA
approved plants will help increase the regulated market share for drugs that recently went off-patent. ADL already has
14 US drug master files (DMFs) assigned and 8 European COS approvals, which have opened up opportunities in North
American & European markets.
Since inception, ADL has exported to 97 countries worldwide indicating the strong logistics and geographic spread of the
ADL brand. Exports amount to 35% of sales.
The size of the domestic pharmaceutical industry is pegged at about $22.5 billion Rs.1,38,830 crore and is expected to
touch US$ 27 billion Rs.1,66,590 crore in 2016 and rise to $55 billion Rs.3,39,350 crore by 2020 at a CAGR of 15-17%
indicating its scorching growth. (Source: Mc Kinsey).
India produces 20% of the generic drugs in the world and is the third largest producer of drugs by volume and 14th
largest by value. There is thus a huge export potential for Indian pharmaceuticals. The exports of drugs and
pharmaceuticals grew 25% (YoY) to $14.84 billion (Rs.90,500 crore) in FY14.
Emerging markets currently represent 16% of the global market (Source: IMS Health), but are expected to contribute
40% of growth by 2014. India produces 20% of the generic drugs in the world and is the third largest producer of drugs
and 14th largest by volume. Overall, it is expected that the Indian Pharmaceutical Industry will grow by 11-12% in FY14
from 13.5% in FY13.
ADL continues to enjoy economies of scale due to its large production capacities in Anti Diarrhoea, Anti Inflammatory,
Anti Fungal and Anti Biotic segment. A bigger market share will automatically help it to remain competitive in the
market due to lower overheads and better bargaining power.
To cope up with the growing demand, ADL has already expanded its capacities.
ADL has increased the market share of its existing molecules in the Antibiotic and Anti-fungal segments in FY14. With
growing exports of finished dosage formulations to regulated markets, even API facilities must have cGMP certifications.
ADL facilities meet these high-standards and are approved to supply API to many such ready-formulations exported to
regulated markets. Based on the addition of Rs.77 crore in FY14, to its gross block. Going by H1FY15 robust results, ADL
is likely to post an EPS of Rs.66 in FY15, which could rise up to Rs.74 in FY16.
At the current market price of Rs.805, the ADL share trades at a forward P/E of 12.2x FY15E of Rs.66 and 10.9x on
FY16E. A reasonable P/E ratio of just 14 will take its share price to Rs.924 in the medium-term and Rs.1036 thereafter.
The 52-week high/low of the share has been Rs.887/197.
*******

Balasore Alloys: Back on track


The share of Balasore Alloys Ltd (BAL) (Code: 513142) (CMP: 22.95) (FV: Rs.5) can be bought for steady
appreciation in the long-term as the share is traded at a low P/E of just 3 on FY14 earnings.

A Time Communications Publication

16

BAL was incorporated as Ispat Alloys Ltd in 1984 at Balasore in Odisha and has 5 furnaces with a total capacity of 60
MVA to produce 1,00,000 TPA of bulk Silicon & Ferro Alloys known as High Carbon Ferro Chrome (FeCr).
BALs ferro alloys manufacturing facility is located at Balasore, Odisha. Its Quartz Mines and Chromite Mines are also
located in Odisha. Its Manganese Mines are in Madhya Pradesh.
It has a 40MW captive power plant. BAL has ISO 9002, ISO 14000 and ISO 14001 certifications for its plant and ISO-9002
for its mines in Jajpur, Odisha. BALs exports constituted 67% of sales in 2013-14.
Its captive chrome ore mine in Sukinda Valley in Odisha is about 170 kms from the plant and takes care of its chrome
requirements. BAL has been allotted manganese ore mines in the Balaghat district of Madhya Pradesh, which is coveted
for its low Phosphrous and Low Ferrous content. Although commercial operation in the said mines has commenced.
For FY14, net profit jumped 60% to Rs.46 crore on 14% higher sales of Rs.789 crore. The EPS was Rs.7.1 against Rs.4.5
in FY13 and a dividend of 12% was paid.
During Q2FY15, net profit rose by 7.6% to Rs.11.3 crore on 11% higher sales of Rs.221 crore and the quarterly EPS
works out to Rs.1.6.
For H1FY15, net profit was flat at Rs.22.5 crore on 4% higher sales of Rs.420 crore yielding H1FY15 EPS of Rs.3.5.
BALs equity capital is Rs.32.2 crore and with reserves of Rs.324 crore, the book value of its share works out to Rs.55.
Borrowings of Rs.265 crore gives it a debt:equity
ratio of 0.9:1. The value of its gross block is
Free 2-day trial of
around Rs.1345 crore.
The promoters hold 51.5% in the equity capital,
FIIs hold 9.4%, PCBs hold 8.4% and with DIs
holding 0.9% leaves 29.8% with the investing
public.

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Ferro-chrome (FeCr) is an alloy of chromium and


iron containing between 50% to 70% of
chromium. Producers of stainless steel & tool steel
are the largest consumers of Ferro Chrome and
Charge chrome. It is Chromium that confers upon
stainless steel its remarkable corrosion resistance quality.

Going forward, with developed economies like the USA and Europe expected to report healthy growth numbers, the
demand for stainless steel and ferro chrome is set to improve. This will enhance the profitability of BAL as exports
constitute nearly 70% of sales.
The global economy has broadly strengthened and is expected to improve further in 2014-15 with global economic
growth projected to rise to 3.6% in 2014 and 3.9% in 2015 with much of the impetus coming from the advanced
economies. Within advanced economies, growth is likely to be strongest in the USA, at about 3% in 2015 driven by
supportive monetary conditions and lower impact on account of fiscal consolidation.
BALs efforts to achieve overall plant effectiveness by facilitating maximising asset utilization and strategic planning in
the Supply Chain Management (SCM) and Customer Relationship Management (CRM) along with aggressive use of
modern management initiatives namely total quality management (TQM), Six Sigma and just in time (JIT) inventory
practices have contributed in minimizing operating costs and improved shop-floor productivity.
BAL is one of the very few Ferro Alloys manufacturing companies in the country having captive mines, which is a major
competitive advantage since availability of Chrome ore is very uncertain and the price is also exorbitant. Other raw
materials are sourced from both domestic and overseas markets but the products of BAL enjoy international reputation.
In the current year, BAL will focus on enhancing plant capacity by changing the furnace transformer to higher capacity
and executing lining of furnaces and introducing value-added products like low silicon, low phosphorous, low carbon,
high chromium etc. Further, the management is also analysing acquisition opportunities of idle capacities proximate to
the BALs mines and plant. Towards this, BAL has executed an agreement for acquiring the business of Jabamayee Ferro
Alloys Ltd as a going concern on a slump sale basis.

A Time Communications Publication

17

BAL has initiated a project, which will facilitate the underground mining of ore with the adoption of latest technology,
which is expected to boost the ore output, improve the productivity and profitability of the company. More importantly,
it promises long-term business sustainability.
For FY15, BAL is likely to post an EPS of Rs.7.5, which could further rise to Rs.9 in FY16. At the current market price of
Rs.22.95, the BAL share trades at a P/E of just 3.06 on FY15 earnings and 2.55 on FY16 earnings. The share is expected
to touch Rs.32 in the medium-term at a conservative P/E of just 3.5 on FY16E.

TECHNO FUNDA
By Nayan Patel

Vardhman Industries Ltd


BSE Code: 513534
Last Close: Rs.45.90
Vardhman Industries Ltd. (VIL) engages in the manufacture, wholesale supply, and marketing of steel products for
industrial and household applications. The company offers steel ingots, galvanized tubes, coils, steel tubes, steel coils,
steel pipes, sheets, colour coated coils/sheets, profiled and tiled sheets, steel square tubes, corrugated steel tubes, cold
rolled steel sheets, galvanized/black pipes and precision steel tubes sold under the brand name of OSWAL. It exports its
products to Burkina, Somalia, Mozambique, Turkmenistan, and Angola. The company was incorporated in 1984 and is
based in Ludhiana, Punjab.
VIL has an equity base of Rs.7.95 crore that is supported by reserves of around Rs.72.10 crore, which is 9.06 times the
equity. It has a share book value of Rs.101.32 and price:book value ratio of just 0.45, which is highly attractive. The
promoters hold 60.35% while the investing public holds 39.65% stake in the company.
Financial Performance:
(Rs. in crore)
Sales
PBT
Tax
PAT
EPS

H1FY15

H1FY14

FY14

FY15(E)

FY16(E)

147.89
3.78
0.72
3.06
3.88

202.17
2.60
0.52
2.08
2.63

400.27
6.94
1.61
5.33
6.75

330
6.7
8.1

390
9.2
11.64

For H1FY15, VIL reported lower sales of Rs.147.89 crore as against Rs.202.17 crore in Q1FY14. Despite 38.46% higher
provisioning for income tax, profit after tax (PAT) has shot up 47.11% to Rs.3.06 crore. EPS for Q2FY15 is Rs.2.18 and
for H1FY15 it is Rs.3.88.
For FY15, VIL could deliver net sales of Rs.330 crore with PAT of Rs.6.7 crore translating into an EPS of Rs.8.1 while for
FY16, it may deliver net sales of Rs.390 crore with PAT of Rs.9.2 crore translating into an EPS of Rs.11.64.
The scrip is trading at 5xFY15(E) EPS and 3.5xFY16(E) EPS. Investors can buy this stock with a stop loss of Rs.34. On the
upper side, it will zoom to Rs.55 level in medium-term at a P/E ratio of 7 and the share price could touch Rs.81 in the
next 12-15 months. Its all-time high price is Rs.67.

A Time Communications Publication

18

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Disclaimer: Investment recommendations made in Money Times are for information purposes only and derived from sources that are deemed to
Lane, Mumbai 400 008. Registration No.: 63312/91, REGD. NO. MH/MR/South - 72/ 2006-08
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A Time Communications Publication

19

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