Tantia Construction Ltd-- Short Term

Hi Friends
Its time to now have a relook at some of the small cap and mid cap stocks after the butchering of 3 months for these indexes. The Space is looking really hot atleast for the short term.
TANTIA CONSTRUCTION (A Full Fledged Report Card)

TCL is engaged in all types of civil construction works with major presence in sectors like roads, railways, bridges, urban infrastructure development, power
transmission, aviation infrastructure, marine infrastructure, tunnels construction and at times, construction of turnkey projects. Of late, the company has also entered into industrial construction segment. The average value of the projects handled by the company, in the recent past, has been within Rs.50 crore with highest value of the project executed, till date, being Rs.65 crore. For the last few years, the company has started getting involved into relatively high value projects in joint venture with other construction companies or otherwise. The company uses latest technologies (developed by itself), machinery and equipment. In order to benefit the huge job potential in road & railway sectors, the company has formed quite a few joint ventures to make a significant headway in those segments with receipt of higher value contracts. It has formed technical collaboration with RBM Sdn Bhd, a Malaysian company, for executing a road project. The company also has
strategic alliance with Travaux Du Sud Ouest, a French company, to get the benefit of technical know-how, engineering insights and project management skills. In most of the projects executed by TCL, the drawings are either provided by the clients or TCL outsources designing and drawing facility, in consultation with clients.
TCL has an impressive client portfolio, which includes Indian Railways, IRCON International Ltd., RITES, Delhi Development Authority, HUDCO, Airport Authority
of India, Indian Oil Corporation, Balrampur Chini Mills Limited, SAIL, NHAI, Central & State PWDs, NEEPCO, Metro Railways (Kolkata) and various state undertakings of West Bengal. TCL continues to have a healthy order book position. As on June 30, 2007, the value of orders in hand (including on-going projects) was about Rs.1232 crore.
In FY'07, TCL has bagged orders worth about Rs.600 crore mainly in the areas of roads, highways and bridges from Road Construction Department, Govt. of Bihar, Central Public Works Department, New Delhi, Eastern Central Railway, Patna and KMDA. In view of its long & established track record, TCL gets good number of repeat orders significantly.
Now some of the positive triggers...
> The Company has a combined order book of more than Rs.1200 Cr at present. Some 1000Cr orders are on the pipeline
> This is a Core Infrastructure and Construction Company hence it will benefitted due to the additional fund allocation in "Bharat Nirman". The government's thrust on infrastructure development and a favourable Railway budget are positive triggers for the company (It has work from Central and Eastern Railways as well as Metro Railways)
> The company has listed its shares in The National Stock Exchange of India Ltd. last month and this has increased the liquidity in the counter, whic could prompt Mutual Funds and FIIs to stake in the company. This is a great positive trigger for the company and could also take the scrip above Rs.170, with this trigger.
> It is currently implementing 3 construction projects from National Hydroelectric Power Corporation Ltd (NHPC) for construction and maintenance of the road for the five years at Patna in the state of Bihar amounting to Rs 12.50 cr approx.
Two construction projects from World Bank Projects (Roads) U.P.P.W.D, Lucknow for Rehabilitation Road Works under Utter Pradesh Stale Roads Projects amounting to Rs 70.83 crores approx.
A rail work from Eastern Railway for earthwork, blanketing work, construction of RCC bridges between Azimganj Jn station to proposed bridge site across the river Bhagirathi along with the restoration of Rail Link in between Jiaganj (Murshidabad) and Azimganj Ju amounting to Rs 18.77 crore. The total value of work is Rs 102.10 Cr.
Also to be noted, it has also been working for the much hyped Kolkata Tramways Project in renewing the tram tracks all across Kolkata.
> Tantia Constructions Ltd had earlier issued FCCBs to the tune of US$ 7.5 million which had the option to be Convertible at any time on or after July 17, 2007 upto and prior to the close of Business on July 05, 2012 unless previously reduced, converted or purchased and cancelled and except during a closing period.Conversion Price: Rs 140/- per share. It is also expected that the funds raised through FCCBs will ease the level of debt on the balance sheet.

All the above supports are good enough for the stock to reach 150 in short term. And now since the mid cap and small cap space are looking good and attracting buying intrest (after the heavy butchering in the last 3 months)... We are all set to see a some of these companies getting their deserved price.

CMP (97.00)
(BSE: 532738) | NSE: TANTIACONS
Target 150+
Time Frame - 90 days- 180 days (maximum)
*Investors should book profits based on their profit taking appetite.

Long Term Investment - Power Grid Corp

Hi Friends
I have started updating the site once in a week now as I have started recieving so many mails/queries that after replying them I hardly get time to update the site regularly. However what I have been doing is that I have made a list of people who wish to recieve my short term and long term advice and mail them all together once as a call arises.
For the site viewers I would request all to kindly mail me at nishantlakkar@gmail.com to register for free short/long term calls.

I had a chance to talk to the management of Power Grid Corporation and was really excited to know about the progress they are making and planning to regulate the companys telecom business plans.
PGCIL is planning to invest upto Rs 500 billion in the transmission projects in the near term out of which around 52.5 blillion has already been invested. They are expecting to invest the remaining amount by 2012-13. According to the earning estimate reports published by Edelweiss, PGCIL is expected to have a net profit of around 20300 million in FY09E and 26000 million in FY10E. (Including income from tower and consultancy business). PGCILs entry into telecom space is likely to provide boost to its bottomline to the extent of 10-12%.
PGCIL currently has an overhead optic fibre network of 20,000 km, spanning 100 cities in the country. The company has order of over Rs 3,000 mn from various telecom players for leasing the optic fibre bandwidth. It also holds license for national long distance dialing and offering services as internet service provider (ISP); the company has been generating revenues from both these segments over the past two quarters.
I personally believe that it is very good long term buy and the prospects of the company are very attractive. Very few companies are there with a mix of telecom, power, and consultancy and we can see a price of Rs 200 in a years time. It is one of the best Long term Stocks to have in ones portfolio.
If anybody wants to access a report from Edelweiss for PGCIL then please request for the same at nishantlakkar@gmail.com

Happy Investing
Investomaniac
JAIDADIKI

Tax Planning

Hi Friends.
First of all I would like all of you to atleast use this fall (in which most of our investments are in loss) to use it purposefully or smartly in our annual return filing.
Suppose we have invested Rs 1,00,000 in the markets and today the value of that investment is Rs 60,000. There is Rs 40,000 Notional Loss in our accounts which has no meaning untill and unless we hold it for one complete year (because then there will be 0% long term capital gain tax) but then there is no guarantee that after 1 year this 60000 will sur pas our investment value of Rs 1 lakh and give us surplus returns of more then 20-30%. That means this 60000 will now have to double in one year in order to give us 20% Net Profit in One Years time. (ie: 60000 has to become 1,20,000) Instead, I would go ahead and book this loss before 31st March 2007. What will happen in this case is that If you already have made some profits as short term gains in this year then the short term gain will be immediately set off by this loss and there wont be any tax liability at your end for whatever little profit u have made in the accounting year 2007-2008 ending 31st March 2008. Suppose u have made a profit of Rs 40000 during the year, then your tax liability is Rs 4000. But if you book the losses in your current investments which is Rs 40000 then the tax liability is NIL. There is nothing to loose in it because if u want to stick to the same stocks, u sell them today, book ur short term losses, and buy them next day again. There is no problem in that as well, also it gives u the chance to reschuffle your portfolio if u want. Atleast we would be able to save some tax liablity in this case. This is purely legal.. nothing wrong about it. Please consult ur tax planner or a CA if anybody has any doubts regarding the same.

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As far as the markets are concerned, i think we might see some lower bottoms being formed due to various factors like inflation, global cues, political reasons and dismal industrial production and quaterly results from India Inc. We have to be very selective in stock picking. As of now L&T is looking very attractive for long term horizon, untill and unless it breaks 2350-2400 there is nothing to worry about the stock. We can Buy the stock with a stop @ 2350. Any other queries/feedback or suggestions please mail me at nishantlakkar@gmail.com

Investment Idea - Grindwell Norton

Hi Friends
Markets have fallen more then 32% from the top and mid/small cap index is down to more then 50% but still some of our investment ideas are trading just below our recommended price because of very strong fundamentals and valuations. An example of that is Elgi Equipment. Recomended @ 60 the stock is still moving in the range of 52-58. Another Investment idea which I feel would be a multibagger once the market sentiments improve is Grindwell Norton.
Investment Rationale

Ø GNL, 51.33% subsidiary of Euro 43 billion Saint–Gobain (SG) of France and India ’s leading manufacturer of Abrasives, Silicon Carbide (SiC) & High Performance Refractories, has reported excellent performance for Q4 CY 2007. Net sales grew @ 29.2% to Rs. 123.3 crore led by 54.7% spurt in Ceramic & plastic sales of Rs. 34.8 crore (Rs. 22.5 crore). Abrasives sales were up by 19.1% to Rs. 86.7 crore (Rs. 72.8 crore). OPM% enhanced considerably to 17.5% (15.6%) mainly because of strict control on other expenses (20.9% of sales as against 26.2% in Q4 CY 2006) and reduction in power cost (to 7.7% from 9.5% of sales). Further aided by 58.8% spurt in other income of Rs. 5.4 crore, PBT shot up by 59.1% to Rs. 23.7 crore and PAT by 53.5% to Rs. 15.5 crore.
Ø For CY2007, Net sales were up by 18.2% to Rs. 440.8 crore. Abrasives turnover increased to Rs. 330.2 crore (Rs. 285.6 crore), growth of 15.6%, while Ceramics & Plastics turnover grew @ 25% to Rs. 106.5 crore (Rs. 85.2 crore). OPM% declined to 16.6% mainly because of rising raw material and personnel cost. However, strong sales growth coupled with 64.9% jump in other income of Rs. 21.6 crore led to 20.1% increase in PBT of Rs. 82.3 crore and 22.8% increase in PAT (before extra ordinary items) of Rs. 56.5 crore. Net of tax profit on sale of stake in Lincoln Helios (group company) of Rs. 77 crore (NIL) boosted PAT substantially to Rs. 133.5 crore.
Ø GNL caters to diverse industries like construction, automotive, steel, foundry, bearings, fabrication, laminates etc. In view of growing economy, GNL’s all user segments have been doing well and are expected to do well to provide scalable and de-risked growth profile in future. To meet growing demand and to further strengthen its competitive position (market share of ~31%), company is setting up a plant in tax haven in Himachal Pradesh for abrasives products at capex of Rs 37 crore in Phase I. Commercial production is likely to commence in H2 CY 2008. Further capex of Rs.20 crore will be incurred in Phase II. This plant will be key growth driver and it will give GNL an edge over its competitor & unorganised sector in terms of pricing : cost. Acquisition of bonded abrasive business of Orient brasives for Rs 26 crore in CY 2009 resulted in expansion of GNL’s product range and has given it an advantage in terms of new distribution channels, dealers and sales team.
Ø Company has set up 70:30 JV in Bhutan in partnership with Singye Group of Bhutan (30%) to set up Rs.34 crore project to manufacture 20,000 tpa of Silicon Carbide in two phases of 10,000 tpa each. While 1/3rd production will be utilised in-house, 2/3rd would be sold outside. This plant will enable GNL to get SiC at cheaper rates, at the same time, it will be able to sell SiC to outside parties at high EBIDTA of ~25-30%. Full benefits of this project will be available from CY09 onwards.
Ø Because of strong parentage, GNL has access to the best of products and technology and a global base. Company can buy raw materials / products from anywhere in the SG world to bring down costs. China , India and Brazil are 3 low cost manufacturing bases of SG. Over a period of time, SG will rationalize its manufacturing facilities so that GNL could become one of the hubs for certain products and certain markets.
Ø GNL generates strong cash flows and has cash surplus to the extent of ~ Rs 85 crore after having sold investment in a group company that works out to Rs.15 per share.
Ø The company is also declaring a dividend of Rs 4 on the stock for which the record date is 25th Mar to 28th Mar 2008.
All n All its a very good buy at current levels given the business model and the valuations.
Long Term Investors can see a tgt of 250+ within 12-15 months. Its really hard to recommend anything for the short term, but still is the market conditions are good then the stock can cross 160 levels pretty soon.

Happy Investing
Investomaniac
JAIDADIKI

L&T---- Return of 200rs already...

Hi Friends
L&T after making a low of around 2600 yesterday closed well above 2900 today, a again of around 250+ Rs in one day. As i said before that a stock like L&T cannot be available for a cheap price like 2600 for a long time. We can still get an opportunity to buy the stock at those levels if the markets break again in the coming days. Today the FED announced a releief of 200 billion dollars for the economy and the DOW opened up 250+ points. If they sustain above 200 points then we can see some fire crackers tomm in our markets tomm and in that case L&T can blast towards 3200+. As the stock has been recommended for long term, keep holding the stock for good returns.
Sesagoa is another stock which is looking very good at the moment. It can blast upto 3800+ (Risky call, activated only if the markets conditions are positive).

Happy Investing
Investomaniac
JAIDADIKI

L&T-- Investment Idea recommended yesterday

Hi Friends
Yesterday L&T made a low of 2610, down 300+ rs from previous days close. As I recommended yesterday that its a good buy @ 2500-2600 today we might get the chance to enter the stock in panic. We can initiate a BUY position for long term in the panic and we can get a price of even lower then 2500. So one can go ahead and use 25-35% of their money to invest now and the remaining can be entered upon later if the market falls again in the coming days. This is the best stock to enter at these levels. Do remem in panic we can get a price of 200-250 rs down from the last close so take some small position accordingly.

Markets to remain weak till the global pinch is not over.

Happy Investing
Investomaniac
JAIDADIKI

THE BEST INVESTMENT OPPORTUNITY---- L&T

L&T--- The best investment bet (long term).

Larsen & Toubro
CMP - 2,999.0
PER - FY07 48.5 FY08E 32.5 FY09E 23.9
RoE(%)- FY07 26.1 FY08E 29.9 FY09E 31.0
Target - 4400+
Upside - 47%+

* Larsen & Toubro, the largest engineering and construction (E&C) company in India, is a direct beneficiary of the strong domestic infrastructure development and industrial capital expenditure (capex) booms. Consequently, we estimate the order inflows to grow at a CAGR of 20.7% between FY2007 and FY2010.
* The international business is expected to emerge as one of the key drivers going forward with immense opportunities from the Gulf Corporation Council markets.
* There lies innumerable opportunities in the new verticals in which the company is entering, namely ship building, defence, railways, thermal and nuclear power.
* We believe that there is a scope for further improvement in the margins on the back of rising operational efficiencies, larger ticket-size and more complex nature of orders, better raw material sourcing and integration, and higher contribution of its new businesses which carry higher margins.
* We value the core business of L&T at 28x FY2010E earnings, or Rs3,403 per share, while we value the subsidiaries at Rs1,025 per share of L&T. At the current levels, the stock is trading at 18.5x its FY2010E consolidated earnings.

According to us, one can buy the stock at around 2500-2600 in panic and keep it under the long term investmewnt portfolio for atleast 1 year. It is available at a throw away price and any improvement in the market condition and this stock will witness a sharp upside swing.
In these markets giving any kind of short term advice would be very very risky hence we would like you to do the same and wait for the bad wind to get past. The markets have fallen more then 32% from the top from 21206 and the worst hit indices are the small cap and mid cap index coming down almost 70% and 51% respectively. We would advice caution as we have been doing so from the 2nd week of Jan and also not to average at these levels.
RCOM may be coming out with some news on RELIANCE INFRATEL.... RISKY TRADERS CAN KEEP AN EYE ON THIS STOCK>> above 548---- 560 sure shot.

Keep you all posted in the weekends.

Happy Investing
Investomaniac
JAIDADIKI

The Union Budget FY09 (The First Impression)

Hi Friends
Here are the few points which i would like to bring to everybodys attention about this years BUDGET>>>
ST Capital gains tax increase to overshadow fiscal gains
The increase in Short Term Capital Gains tax (STCG)and the indirect increase in
Securities Transaction Tax (STT) will disappoint the markets, in our view. On the
positive side, the Finance Minister has succeeded in more than meeting his fiscal
deficit targets and has forecast a fiscal deficit of only 2.5% of GDP for next year
(though we guess effects of Pay Commission will take it higher).
Payback time for stock markets
Given the strong gains in stock market, the Finance Minister has increased the
STCG from 10% to 15% which will likely disappoint the market slightly. While he
has not increased the STT, he is no longer allowing it as a rebate from the total
taxes but as a business expenditure. We believe this will increase the post-tax
impact of STT.
Waiver of farm loans – Government to compensate banks
The Finance Minister has announced a waiver and a one-time settlement of
agricultural loans that will lead to a write-off of loans upto Rs600 bn. While details are still not clear, the Government has said that they will compensate the banks fully for these write-offs. In some sense, this is a pre-election move and there are demerits of loan waiver on those repaying on time but it also helps in a more inclusive growth by greater allocation of resources towards the poor.
Autos – gain with excise duty cuts, personal tax cuts Autos will gain in the budget with a decrease in excise duty by 4% on small cars, 2-wheelers, buses and CVs. Also, helping autos would be lowering of personal taxes and the impact of the likely announcement of the Pay Commission impact.
ITC, cement – excise duty increases slightly negative
ITC has seen an increase in excise duty but since it is only on non-filter cigarettes
which are a smaller part of their turnover, the overall impact is marginally negative. Cement companies too are hit marginally by increased excise on bulk cement.
Holding companies gain - Double Dividend Taxation set-off
Holding companies can now claim set-off of dividend taxes paid on dividend
received by their subsidiaries. This should help companies like Jaiprakash which
have presently many SPVs (and in future helps companies like Gammon, L&T
etc) as well as finance companies like ICICI, HDFC.

Taxes and Duties
Custom Duties
􀂄 Peak customs duty to remain unchanged
􀂄 Customs duty on project imports reduced to 5% from 7.5%
􀂄 Custom duty on steel melting scrap and aluminum scrap reduced to nil from 5%
􀂄 Duty on convergence products down to 5% from 10%
􀂄 To levy 5% customs duty on naphtha imports by polymer units
Excise Duties
􀂄 General CENVAT reduced to 14% from 16%
􀂄 Excise duty on pharmaceutical sector cut to 8% from 16%
􀂄 Excise duty on small and hybrid cars cut to 12% from 16%; bus and chassis
duty cut to 10% from 16%
􀂄 2 wheeler and 3 wheeler excise duty cut to 12% from 16%
􀂄 Paper and products duty cut to 8% from 12%
􀂄 Abolishes 6% ad-valorem duty on petrol, diesel and replaced with specific
duty of Rs1.35 per litre
􀂄 Zero excise on wireless data cards and puffed rice from earlier 16%
􀂄 Special packaging material to attract 8% excise vs earlier 16%
􀂄 No excise on cold chain end use items with greater than 2t refrigeration capacity
􀂄 Packaged software excise duty increased to 12% from 8%
Service tax
􀂄 To introduce service tax on stock exchange/ commodity exchange/ clearing house services, customized software services
􀂄 Clarifies moneychanger, tour operators and lottery services to pay service tax
Direct taxes
􀂄 Income tax threshold increased to Rs1.5Lakh from Rs1.1Lakh. 10% income tax for Rs1.5-3Lakh, 20% for Rs3-5lakh and 30% for above Rs5lakh income slabs
􀂄 No change in corporate income tax scheme
􀂄 No change in surcharge
􀂄 Short term capital gains tax increased to 15% from 10%
􀂄 Banking cash transaction tax withdrawn
􀂄 Commodities transaction tax for futures, equal to STT, to be introduced
􀂄 A five year income tax holiday for two, three or four star hotels in UNESCO world heritage cities in India announced and completed between April 1, 2008 to March 31, 2013
􀂄 A five year income tax holiday for hospitals in tier 2/3 towns announced and
completed between April 1, 2008 to March 31, 2013
􀂄 Dividend distribution tax on dividend of subsidiaries to parent to be set off in
dividend distribution tax paid by parent company
􀂄 Tax to GDP ratio seen at 12.5%
Others
􀂄 Defense spending to go up by 10%
􀂄 Education spending to go up by 20%; 6,000 high quality schools to be built in FY09
􀂄 Health spending to go up 15%


These were some important points from the budget which i could point out.
For sector wise negatives and positives please mail at nishantlakkar@gmail.com

Happy Investing
Investomaniac
JAIDADIKI