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A Time Communications Publication 1

Caution: Please note that your copy/access to our website is for your exclusive use only. Any attempt to share your access to ourwebsite or forwarding your copy to a non-subscriber will disqualify your membership and we will be compelled to stop your supplyand forfeit your subscription thereafter without any refund to you.

A TIME COMMUNICATIONS PUBLICATION

VOL. XX No.47 Monday, October 3 – 9, 2011 Pages 18 Rs.12

Q2 results to set the paceBy Sanjay R. BhatiaPositive global market cues helped the domestic markets move higher but selling pressure and profit booking was visibleat higher levels. The breadth of the market remained negative amidst lower volumes. FIIs were net sellers in the cashsegment but were net buyers in the derivatives segment. Domestic institutional investors, however, remained net buyersand were seen supporting the markets.Inflation continued to move higher and remains a cause of concern along with the increased government borrowing. TheRBI may raise interest rates again in its forthcoming policy announcement in the last week of October if the inflationarytrend continues. On the global economy front, although the German Parliament has passed the Greece bailout packagethe Euro zone worries remain a matter of concern for global markets.Technically, the Stochastic and KST are placed above their respective averages on the daily charts, which is a positive signfor the markets and would fuel buying support. However, the prevalent technical negatives would continue to weigh onthe markets and would cap the upside gains. The RSI and MACD are placed below their respective averages. Moreoverthe MACD and KST are placed in the negative territory, which would fuel profit taking and selling pressure at higher

levels. The Stochastic, MACD, RSI and KSTare placed below their respective averageson weekly charts. The Nifty continues totrade below its 200-day SMA. Further the50-day SMA is placed below the 100-daySMA. The ADX, +DI line and -DI line aremoving sideways and indicate a rangebound trend. The market sentimentremains cautious as the Nifty has onceagain breached the 4987 support level.Now, it is important that the Nifty movesup and sustains above the 4987 level for it

to test the 4161-4211 resistance zone. IfNifty fails to sustain above the 4987 level,then the markets could drift lower for theNifty to test the 4757 level. The overalltrend is likely to remain range bound.Broadly, the range of the market this monthwould be 4757-5211. The next domestic trigger for the markets would be the forthcoming Q2 results and would set thepace for the markets. In the meanwhile, the markets would take cues from the dollar index, Rupee value, crude prices andglobal markets.

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Technically, on the upside the Sensex faces resistance at the 16650, 16934, 17506 and 18314 levels but seeks support at the16000, 15848, 15790 and 15400 levels. The support levels for the Nifty are placed at 4757, 4563 and 4387 but it facesresistance at the 4957, 5161, 5211 and 5325 levels. Investors should avoid long positions.

Manmohan, please get goingBy Fakhri H. Sabuwala

A statement by Prime Minister (PM), Manmohan Singh last week could well find a place in the column of ‘Thought forthe day’. It reads as follows: ‘A fast growing India can expand the boundaries for the global economy.' Well said Mr. PMbut the key of this engine is with you and till you don't take action, its just inertia.Stock indices the world over indicate bad weather everywhere. In fact, the panic is worldwide. IMF felt that the worldeconomy is in a dangerous terrain and our PM, Manmohan Singh, warned at the UN General Assembly against the threaof protectionism.The US Federal Reserve is raising concerns about the health of the world’s largest economy. Europe is on the global radarand the whole of Eurozone is seen fast morphing into epicentre of renewed global tremors’. China, on whose progress theworld has pointed hopes, of pulling the world out of this mess, shows no meaningful signs of revival.The G20 countries tried to reassure the world markets of their coordinated action as seen in the post Lehman days.Finance Minister, Pranab Mukherjee, recommended investments flowing into the infrastructure segment of thedeveloping world. This will help provide avenues for floating funds besides buoying the global economy. The main

worry of investors the world over is in the way the developed economies tackle indebtedness and the sputtering growthdespite near zero interest rates and growing joblessness. The G20 nations are aware of this difficulty and feel the decisiveaction is as much political as economical. Last but not the least, Europe's dispute on the bailout mechanisms raise doubtsabout Eurozone's survival.While India can boast of comparatively enviable growth rates, it is on a far lower base. As now aspirations have surfacedcomplacency is a strict no-no. An economic slowdown and lack of demand in USA and Europe will surely hit us unlessnew export destinations are found. High inflation in painful conjunction with a creeping slowdown and poor fiscaconsolidation on the back of a high interest rate regime has raised the cost of borrowing and stalling the expansion plansof companies. Worse, there is policy inertia leading to capital flight and a declining rupee!Mr. PM, India's high growth cannot be sustained any longer without kickstarting the choked up reforms process. Rightand timely moves on FDI participation in retail, insurance, infrastructure and other key areas is the need of the hour. Thegovernment needs to bite the bullet and cut wasteful subsidies to garner resources in education and health programmesAn urgent need is also felt in building capacity in the manufacturing sector. A new manufacturing policy needs to beurgently introduced and it needs to be supported by tax and labour reforms. Renewed discussion on introduction of adirect tax code and GST has to be in place for implementation from the new fiscal. All important bills pertaining to tradeand commerce must be passed in this winter session. Such positive steps alone can win the confidence of industry andease direct transaction costs and help generate higher revenues while boosting factory output and employment. Anoverall optimism shall prevail and lift India from the gloom of a global slowdown.There is evidence that the inflationary pressure has resulted in higher wages in China, which will raise their cost ofproduction there and minimise the advantage that it long enjoyed. This will provide India an opportunity to catch up andwe need to prepare ourselves for it.Government need not boost investors confidence by reducing the STT and stamp duty on secondary market contracts buthere is a strong need to woo investors back to Dalal Street by some meaningful incentives on equity investments.'The elephant has awakened' the world had said about the Indian economy. Let us, therefore, demonstrate our sharp andsensitive regulatory systems. Rules governing land acquisitions and environmental clearances should not delay the

projects and make them unviable. Dear PM, let us not make the global gloom an excuse for domestic lethargy. Instead, leus rise in these dark days with hope and a firm resolve. Let this Dassera be the celebration of killing the modern Ravanicdemon called complacency and Government inertia. Manmohan Singh, please get going.

TRADING ON TECHNICALS

Support cluster at 15765-15330By Hitendra VasudeoLast week, the BSE Sensex opened at 16209.19 attained a low at 15801.01 and moved up to 16756.08 before it closed theweek at 16453.76 and thereby showed a net rise of 292 points on a week-to-week basis.

BAZAR.COM

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In the strategy for the week, we had indicated to hold short positions with a stop loss of 17212. The same has not beenviolated yet. Alternatively, we had suggested selling on the rise to 16468-16884. The high registered last week was16756.08 and closed at 16453.76.Volatility between 17212-15700 is being witnessed for the past 5 weeks. The breakdown from the support range of 1731417295 was witnessed in the week ended on 5 August 2011. Since then, the Sensex has not crossed 17314 and continues toremain below it. It tested the support clusterof 15960, 15651 and 15330. Till now, the lowis 15765. The broad defined range is 17314-15765 for about 8 weeks since the

breakdown in the week mentioned above.The RSI has moved up a bit after hitting the‘oversold’ zone. If the resistance of 17314 iscrossed strongly with a weekly positivecandle, we may find the rise gettingextended towards the falling trend line. Thefalling trend line is taken from the lowerhigh of 2064 and 19131. The current value ofthe trend-line is around 18000approximately.Similarly, the low made in the past fewweeks is 15765 and the same was tested last

week as it made a low of 15801. Even if itbreaks 15700, recovery could be witnessedfrom the lower range of 15650-15330, which makes it unclear whether to go short on violation of support.On the daily chart, on Friday, 30 September 2011, we saw an In Day pattern. Therefore, a rise and close above 2 days highor 2 days low may decide the course of movement this week. The 2 days high and low is at 16756 and 16316.On the weekly charts, the lower band of the Bollinger Bands is being tested and if the resistance of 17314 is crossed, thenwe may see an extended pullback. But when we see daily charts, we have too many gaps in the higher range, which doesnot impart confidence about its sustainability in the higher range. We may, therefore, witness a prolonged sidewaysvolatility before it actually cracks down or spikes up.On the wave structure, we may find that Wave b of Wave C may not have ended as the support of 15765 is not yeviolated. Alternately, we may find Wave a of Wave C ended at 15764 may not have actually ended if the fall below 15765becomes vertical.

The support cluster of 15765-15330 may hold the fall unless the crack is vertically below the support level. Weeklyresistance will be at 16872-17212-17314 while the weekly support will be at 16336-15917. A strong weekly close above17314 with a weekly positive candle may mark a near term to short term reversal for a pullback of the fall from 19132 to15764. Wave Tree:

Wave Tree Month Year Sensex Month Year Sensex Remark

Wave I - - - - Dec 1979 113 Feb 1986 656 -

Wave II - - - - Feb 1986 656 March 1998 390 -

Wave III - - - - March 1998 390 Jan 2008 21206 -

Wave IV - - - - Jan 2008 21206 Sept 2011 17211 In Progress

Wave IV Wave A - - - Jan 2008 21206 March 2009 8047 -

Wave IV Wave B - - - March 2009 8047 11-Nov 2010 21108 -

Wave IV Wave C - - - 11-Nov 2010 21108 Sept 2011 17211 In Progress

Wave IV Wave C a - - 11-Nov 2010 21108 Nov 2011 18954 -

Wave IV Wave C b - - Nov 2010 18954 Jan 2011 20664

Wave IV Wave C c - - Jan 2011 20664 Feb 2011 17295

Wave IV Wave C x - - Feb 2011 17295 August 2011 19132 -

Wave IV Wave C a - - August 2011 19132 August 2011 15764

Wave IV Wave C b - - August 2011 15764 Sept 2011 17211In Progress

May have ended –confirmed below 15764

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ConclusionThe band movement spells uncertainty and only another round of decisive moves will decide the course of price action.Strategy for the weekTraders who are short can keep the stop loss at 17314. Cover short positions at 16336-15917-15650-15330 as theopportunity arises.

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 what ever 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 Valuethen the trend will change from Up Trend to Down Trend. Check on Friday after 3.pm to confirm weekly reversal

of the up Trend.

ScripsLast

CloseStopLoss

Level2

CenterPoint

Level3

Level4

RelativeStrength

WeeklyReversal

Value

UpTrendDate

BuyPrice

BuyPrice

Book Profit

Book Profit

IDEA CELLULER 98.80 93.0 94.0 97.8 102.6 111.1 62.6 96.8 30-09-11

A.C.C. 1098.00 1061.0 1071.3 1087.7 1114.3 1157.3 60.1 1059.5 19-08-11

ARVIND 98.30 90.5 92.0 96.8 103.2 114.4 58.9 94.0 02-09-11

HINDUSTAN UNILEV 340.25 325.1 328.2 337.1 349.2 370.1 58.7 336.1 26-08-11

AMBUJA CEMENT 148.60 140.7 142.5 146.7 152.8 163.0 57.7 144.0 12-08-11

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 what ever 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.

ScripsLast

CloseLevel

1Level

2CenterPoint

Level3

StopLoss

RelativeStrength

WeeklyReversal

Value

DownTrendDate

CoverShort

CoverShort

SellPrice

SellPrice

INDIABULL POWER 12.68 10.5 12.1 13.1 13.7 14.2 21.90 14.11 23-09-11

INDIAN OVERSEA BN 92.65 87.1 91.1 93.6 95.1 96.0 22.46 99.22 08-07-11

MMTC 656.00 617.3 645.3 662.7 673.3 680.0 24.08 690.50 23-09-11

IFCI 30.70 26.8 29.6 31.2 32.3 32.8 24.64 33.70 16-09-11

JET AIRWAYS 235.00 187.1 222.5 245.5 258.0 268.5 25.13 264.46 23-09-11

PUNTER'S PICKS Note: Positional trade and exit at stop loss or target which ever 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.

ScripsBSECode

LastClose

Buy PriceBuy On

RiseStop Loss Target 1 Target 2

RiskReward

JAMNA AUTO 520051 140.30 126.65 144.80 123.40 158.0 179.4 1.05

BUY LIST

Scrip

Last

Close

Buy

Price

Buy

Price

Buy

Price

Stop

Loss

Target

1

Target

2ARVIND 98.30 92.51 89.68 86.84 77.65 116.6 140.6

EICHER MOTORS 1600.00 1524.23 1486.00 1447.77 1324.00 1848.2 2172.2

EXIT LIST

ScripLast

CloseSell Price

SellPrice

SellPrice

StopLoss

Target1

Target2

GODREJ CONS. PROD 400.70 412.37 416.50 420.63 434.00 377.4 342.4

GUJARAT GAS CO. 432.75 434.70 440.10 445.50 463.00 388.9 343.1

PETRONET LNG 159.30 163.36 167.18 170.99 183.35 131.0 98.7

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* Reliance Capital was down 12.3% on Friday as it may face problems in getting a banking licence in the wake of the RCom problem in 2G allotments and buyouts.* The Mining Act is doing more harm to mining companies. Coal India , which was considered as the next ONGCstands sharply downgraded. Its fall may accelerate the fall of the benchmarks.* Portfolio management schemes are picking cement shares like Ultratech, ACC, Ambuja Cement. No wonder, they aregaining ground.* ‘Sidhee baat ..... baaki sab bakwaas!’ In case you don't understand, just buy the large caps and leaders of sectors whichare available at or near their 52-week lows.* FMCGs and foreign pharma scrips are safe bets in such torrid times.* PG Electroplast Ltd , a new listed share, surely needs a scrutiny of volumes and identities of buyers and sellers. A lot oskeletons will emerge from its cupboard. Over Rs.1000-crore turnover is generated daily with lot of ills and cunningtrading strategies.* Tata Metaliks is selling its 300,000 TPA of pig iron Redi unit to Goa based Fomento Resources for Rs.180 crore and wilbe left with 350,000 TPA of pig iron capacity. Hold on to your position.* Eveready Industries plans to dispose off 60-70 acres in Delhi, Hyderabad and Bangalore, to pay its debts. Remaininvested.* Geodesic is a value buy at current market cap of Rs.460 crore. An IT expert advises to buy it at current levels and addmore on declines.* Rama Paper is once again making new highs and has crossed a market cap of Rs.100 crore. Book profit & stay away.* The shares of DIC India , an affiliate of Japanese MNC Dai Nippon Chemicals, can be bought for decent gains in themedium-term as it may clock an EPS of Rs.35 in CY11.* An analyst with a reputed brokerage has come out with a buy report on Morganite Crucible (India) with a target priceof Rs.595 in the medium-term as it may post an EPS of Rs.34 in FY12 and Rs.40+ in FY13.* Shree Ganesh Jewellery is the cheapest share in the diamond industry with a likely EPS of Rs.55 in FY12. The sharemay appreciate by 40% in the medium-term.* Fairfield Atlas , in which its MNC parent holds 85% stake, is an excellent buy as it may post an EPS of Rs.9 in FY12.Major expansion will boost its prospects further.* Leather major, Superhouse Ltd., is likely to announce an EPS of Rs.18 for FY12. The share is going cheap.* KPIT Cummins Info is on the radar of funds and HNIs as it is doing well and can post an EPS of Rs.13 in FY12 andRs.18 in FY13 and touch the Rs.180 mark.* The shares of Ambika Cotton Mills can be accumulated for decent killing in the medium-term with a likely EPS ofRs.70-75 in FY12.* A fertilizer analyst strongly recommends Rama Phosphate and Liberty Phosphate two low priced bargains for 50%gain. Both are doing well in FY12.

BEST BETS

Microsec Financial Services Ltd. (Code: 533259) (Rs.29.20) Incorporated in 1989, Microsec Financial Services Ltd. (MFSL) is a non-banking finance company registered with the RBIIt is engaged in financing loans against shares and making investments. However, it is the holding company of theMicrosec Group, which operates as an integrated group and offers various financial products and services to its targetclient base of retail investors, high net worth individuals, companies and institutions. Under investment bankingbusiness it offers a range of merchant banking services like IPO, private equity, institutional placement, corporate

advisory services like M&A, restructuring, tax management and corporate finance service likes debt syndication, crediappraisals, interest swaps etc. Under brokerage, it executes third-party trades for its clients in equities and derivatives, onstock exchanges commodities on currencies on stock exchanges and commodity exchanges as well as depository servicesFurther, the group also distributes third party insurance and mutual fund products and offers wealth management andfinancial planning services such as portfolio management, asset management etc. Recently, it started a research basedretail distribution channel namely ‘Club Kautilya’. Importantly, the groups integrated service platform allows it toleverage relationships across different lines of business by providing multi-channel delivery systems to its clients, therebyenhancing its ability to cross-sell its products and services.Presently, company operates through following 6 subsidiaries and step-down subsidiaries:

TOWER TALK

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Microsec Capital Ltd: engaged in investment banking, brokerage (equity and currency), wealth management, financialplanning and related services

Microsec Resource Pvt Ltd: deals in financing Microsec Technologies Ltd: offers consultancy in equity research and technology support services Microsec Commerze Ltd: involved in commodities broking Microsec Insurance Brokers Ltd: engaged in Insurance broking PRP Techonlogies Ltd: provides support services to distribution, financial planning and other related servicesWith principal offices in Kolkata, Mumbai and Delhi, MFSL is present in around 250 locations in 65 cities in 19 States witha strong presence in eastern India as over 50% of its centres are located in West Bengal of which over 100 centres are in

Kolkata city alone. Backed by extensive branchnetwork and an employee strength of about 650,MFSL services nearly 28,000 individuals, 450corporate clients such as Greenply, Manaksia,Core Projects, Rupa & Co, Emami, Tantia,Ramsarup Industries, Titagarh Wagons, etc andover 16 institutional clients. Among corporateclients, it focuses on mid size companies andbelieves in serving them throughout the course oftheir growth. But in the case of institutional andhigh net-worth individual clients, it focuses on fullclient coverage providing ongoing and innovative

solutions. These strategies have paid off well andtoday Microsec is a well-recognized brandespecially in eastern India.After creating a sound business model andestablishing a good brand image, MFSL is on astrong growth trajectory and has chalked outsome expansion plans. It plans to expand itsbranch network and establish a pan-Indiapresence with operations into smaller cities andtowns that are under-serviced by financial servicescompanies. In the first phase of this expansion, itwill focus on western India followed by the

northern and southern regions. Simultaneously, italso plans to set up 200 exclusive outlets of ‘ClubKautilya’ within the next two years. In addition,the company wants to set up a network of‘Microsec Enterprises’ a network of entrepreneursas channel partners for distribution of financialproducts) and ‘Microsec Network Services’ (anetwork of professionals such as CharteredAccountants as channel partners for distributionof multiple financial products) throughout India.Besides, it plans to develop its research division asa separate profit centre and a knowledge processoutsourcing (KPO) unit to provide research

services to its clients, including brokerage clients.Currently, its in the midst of enlarging its team ofresearch analysts and advisors and dealers tostrengthen its relationships with clients. Thecompany has been allotted a plot of land byWBHIDCO, a Government enterprise in theKnowledge Corridor at Rajarhat in Kolkata, whichit wants to develop as a hub for its centralizedoperations including research. To add to its

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institutional clients, it has set up an institutional desk’ to cater them and has even filed applications for empanelment withseveral foreign institutional investors. On the other hand, it is in the process of setting up an internet-based platform toestablish online trading capabilities to complement its products and services. For this, it has acquired PRP TechnologiesLtd., a company that launched an internet-based personal resource planning application software to provide informationmanagement services to individuals. Moreover, it may also consider growth opportunities through the inorganic routefrom time to time. In fact, it is about to make a strategic investment in a company called MYJOY Fun & Food Pvt. Ltd., afood processing company as it foresees tremendous potential in the integrated food processing business and expects theinvestment to yield good returns in the long run. It is also looking at the education space for some investments.To fund its growth plans, the company had come out with an IPO in September 2010 and raised nearly Rs.150 crore at

Rs.118 per share. Incidentally, the issue received an overwhelming response and was oversubscribed by about 12 times.Although MFSL is in an expansion mode and the future looks promising, it is expected to report muted performance inshort-term considering the current economic scenario. The participation of retail investors in secondary market has driedup, the volume of IPOs, QIPs has also come down significantly and interest rates have hardened considerably and haveaffected the company’s business one way or the other. However under the leadership of veterans like Mr. Banwari LalMittal & Mr. Ravi Kant Sharma, the group is slated to overcome all external and internal challenges and come out as awinner. Fundamentally, the group has done well in FY11 as its consolidated revenue and PAT grew by 35% to Rs.78 croreand Rs.33 crore respectively posting an EPS of over Rs.10 on its equity base of Rs.31.80 crore. However for Q1FY12, itposted bit disappointing performance as the topline declined by 15% to about Rs.15 crore and net profit dropped by 30%to Rs.5.2 crore on a consolidated basis. Still, it recorded an EPS of Rs.1.60 for the quarter. Accordingly, it is expected toend FY12 with a PAT of Rs.25 crore. At the current market cap of less than Rs.100 crore, it is trading grossly cheapInvestors are recommended to buy this stock at current levels and hold it for a year or so for handsome returns.

United Phosphorous: Cultivating growthBy Devdas MogiliUnited Phosphorous Ltd. (UPL) is a 24 year old Vapi, Gujarat, based company established in 1985. It manufacturesagrochemicals, industrial chemicals, chemical intermediates and speciality chemicals and has a captive power plant at

Jhagadia. R. D. Shroff is the chairman and managing director of the company.UPL is a leading global producer of crop protection products, intermediates, speciality and industrial chemicals. It ispresent across value added agri inputs ranging from seeds to crop protection and post harvest activity as it offers a widerange of insecticides, fungicides, herbicides, fumigants, PGR and rodenticides.UPL has 21 manufacturing sites (9 in India, 4 in France, 2 in Spain, 1 each in UK, Vietnam, Argentina, Netherlands, Italy,

China) supported by on-site technical services and quality control. It manufactures and markets Caustic Chlorine, WhitePhosphorus, Industrial Chemicals, Speciality Chemicals and 48.5 MW of power.It has subsidiary offices in Argentina, Australia, Bangladesh, Brazil, China, Canada, Denmark, Indonesia, France, HongKong, Japan, Korea, Mauritius, Mexico, New Zealand, Russia, Spain, Taiwan, South Africa, USA, UK, Vietnam & Zambia.In 2006-07, UPL acquired three products from Bayer Crop Science, AG Germany, which resulted in broadening itsproduct portfolio, and purchased the global business of Propanil herbicide from M/s. Dow Agro Science LLC. This wilhelp the Company achieve growth in North America, Latin America, Europe, Africa and Asia Pacific. In the same year, ipurchased from DuPont Bensulfuron – the methyl business including Londax herbicide and all mixtures throughout theworld, except Asia Pacific Region and also acquired the Cerexagri group of companies, which specialize in themanufacture of fungicides.Recent Acquisitions: During 2010-11, UPL made the following acquisitions:1) The global business of non-mixture Mancozeb fungicide and related assets including inventory, manufacturing and

formulation production facilities from DuPont in Barranquilla, Colombia.Mancozeb is a leading fungicide and this acquisition will help UPL in strengthening its position in the high growthemerging markets of South and Central America. This purchase will enhance its position in the EBDC (Ethylene BisDithio Carbamates) segment.

2) RiceCo LLC, USA, along with its subsidiaries and certain assets of the global business of its affiliate company. RiceCodoes business in over 20 countries with major markets in USA, Mexico, Thailand, Nigeria and Sri Lanka. RiceCocaters to the rice market and has a wide range of product offerings based on the herbicide Propanil for this segmentPropanil is a herbicide used for the control of many important annual grasses, broadleaf and sedge weeds in riceRiceCo thus adds strong brands for the rice segment of UPL’s branded product portfolio.

STOCK ANALYSIS

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3) 50% stake in Sipcam Isagro Brasil (SIB), which is a niche producer and distributor in the Brazilian agrochemicalsmarket. This acquisition will help UPL enter the direct distribution business in Brazil and help target untappedmarkets.

4) It also acquired 51% stake in DVA Agro Do Brasil, which produces crop protection chemicals and specialties in theBrazilian agrochemicals market and had a net revenue of about $130 million for the year ended 3 December 2010.

Performance: The company posted total revenues of Rs.5804.51 crore with a net profit of Rs.557.64 crore netting an EPSof Rs.12.45 for FY11.Financial Highlights: (Rs. in lakh)

Latest Results: During Q1FY12, UPL’s sales rose 30.37% to

Rs.1862.14 crore as against Rs.1468.56 crore in Q1FY11 whilenet profit shot up 30% to Rs.184.31 crore from Rs.141.75 crorein Q1FY11 posting a basic/diluted EPS of Rs.3.99 forQ1FY12.Financials: The company has an equity base of Rs.92.36crore with a share book value of Rs.80.64 (FV: Rs.2). It has adebt:equity ratio of 1.10 with RoCE of 11.48% and RoNW o7.54%.Share Profile: The company’s share with a face value of Rs.2is listed and traded on the BSE under B Group. Its share price

touched a 52-week high/low of Rs.219.70/Rs.125.60. At its current market price of Rs.137.55, it has a market capitalizationof Rs.6763 crore.

Dividends: The company has been paying handsome dividends as follows: FY11 - 100%, FY10 - 100%, FY09 - 75%, FY08 100%, FY07 - 60%, FY06 - 50%, FY05 - 40%, FY04 - 30%Shareholding Pattern: The promoters hold 26.55% stake while the balance of 73.45% is with the non-corporatepromoters, institutions, mutual funds and the investing public. Mutual Funds like Kotak, Sundram, DWS, DSP BR, ICICPru, Taurus, BNP Paribas, L&T, ING, Sahara, Tata, Birla Sunlife, Canara Robeco, Reliance, SBI Magnum have added thecompany’s shares to their various schemes.Prospects: Being one of the largest manufacturers of off-patent generic agrochemicals, it has the largest agrochemicalproduct portfolio in India and ranks among the top five generic agrochemical companies in the world.The Indian agrochemical industry has very good growth potential. Opportunities are increasing owing to the high pricesof agriculture commodities and use of bio fuels and growth in the area of cultivation. Farmers, too, are willing to invest toimprove productivity. Further, there are significant cost advantages in manufacturing various agrochemicals in IndiaThus there is tremendous opportunity for growth of the company. The Indian Agrochemical industry is in a position to

supply quality agrochemicals at an economical price because of which exports are growing every year.Since UPL exports to almost all the countries in the world, the effect of adverse weather conditions in one part isneutralized by diverting sales to other parts of the world.For 2011-12, normal monsoons are forecast in India. This should result in higher sales and improved profitability, whichwill positively impact the performance of the agrochemical industry. With the growing population, food production musgo up and this is possible only by the increased and regulated usage of agrochemicals. Union Budget 2011-12 puts greatethrust on agriculture, infrastructure and education, which will also help improve UPL’s performance in the coming years.Conclusion: UPL is a global generic crop protection, chemicals and seeds company with a combined marketcapitalization of approx $2.5 billion. Its revenue has grown at a CAGR of 26% over the last 5 years.At its current market price of Rs.137.55, the UPL share price is discounts its FY11 EPS of Rs.12.45 less than 12 times.Considering its global status, excellent performance and bright future prospects, the UPL share can be added to one’sportfolio for significant gains in the medium-to-long-term.

Market recoversBy Ashok D. SinghThe BSE Sensex rose 291.70 points or 1.8% to settle at 16,453.76 for the week ended Friday, 30 September 2011. The CNXNifty advanced 75.50 points or 1.55% to end at 4,943.25. The BSE Small-Cap index tanked 2.27% and the BSE Mid-Capindex fell 1.5% for the week. Both these indices underperformed the Sensex. Out of the 5 trading sessions, the Sensexdeclined in 3 and gained in 2 during the week.

Particulars Q1FY12 Q1FY11 FY11

Total Income 186214 146856 580451Total Expenditure 158011 122713 490771Other Income 2257 1863 9365Int & Finance Cost 7137 10036 31199Exceptional Items - - 1400Tax Expense 4660 1563 7308Net Profit 18431 14175 55764Paid-up Equity(FV: Rs.2)

9236 8808 9236

Res Ex Rev Reserve - - 363370Basic EPS (Rs) 3.99 3.22 12.45Diluted EPS (Rs) 3.99 3.08 12.45

MARKET REVIEW

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The market remained volatile last week as traders rolled over positions in the Futures & Options (F&O) segment from theSeptember 2011 series to October 2011 series on expiry on Thursday, 29 September 2011.CRISIL Research expects corporate India to report significant moderation in revenue growth and lower EBITDA (earningsbefore interest, taxation, deprecation and amortization) margins in Q2FY12 primarily due to a decline in consumerconfidence on the back of a stubbornly high inflation, rising interest rates and a slowdown in investment growth. Basedon an analysis of the aggregate financial performance of select companies across 21 industries, excluding banks and oicompanies, CRISIL Research expects around 15% revenue growth in Q2FY12 as compared to 19% growth in Q1FY12 and22% growth in Q2FY11. Although companies have hiked prices, slower volume growth along with high input costs andrising wages will put pressure on corporate margins, says CRISIL. It expects a 100 basis points (bps) reduction in EBITDA

margins in Q2FY12 from 19.5% in Q1FY12. Further with the increase in interest rates, net margins are expected to falleven more sharply.According to CRISIL, sales volumes in consumption linked and interest rate sensitive sectors such as automobiles, realestate, textiles, and retail have been significantly impacted. In infrastructure linked sectors such as cement, capital goodsand construction, order book/volume growth has declined.Monsoon rains were 2% above average till 28 September 2011. India is aiming for record food grain output of over 245million tonnes this crop year that began on July 1 as well as bumper cotton, sugarcane and other crops. A good monsoonseason can typically boost rural farm incomes and impact the wider economy through increased spending on consumergoods as well as reduced food prices.Trading for the week began on a lower note. The Sensex dropped for the fourth day in a row on Monday, 26 September2011 to 1 month closing lows as anxiety of weak Q2FY12 corporate results and data on recent selling by foreign fundsweighed on investor sentiment. The Sensex fell 110.96 points or 0.69% to close at 16,051.10.

The media reports that the finance ministry is considering some tax cuts on equities to lower transaction costs andbroaden participation in the market helped the market snap the 4-day losing streak on Tuesday, 27 September 2011. Arally in world stocks triggered by reports that the European policy makers are considering new plans to supportEuropean countries struggling with debt aided a rally on domestic indices. The Sensex rose 472.93 points or 2.95% to closeat 16,524.03.The Sensex edged lower amid intra-day volatility on Wednesday, 28 September 2011 and fell 78.01 points or 0.47% toclose at 16,446.02.On Thursday, 29 September 2011, it attained the highest closing level in more than a week supported by firm globalstocks and higher US index futures. The Sensex rose 252.05 points or 1.53% to settle at 16,698.07.As world stocks fell on Friday, 30 September 2011, the Sensex fell 244.31 points or 1.46% finally to settle at 16,453.76.The Sensex advanced 291.70 points to settle at 16,453.76 last week. The next week is a truncated trading week. As financiamarkets are closed on Thursday, 6 October 2011 on account of Dassera.

Market Participants will keep focusing the management commentary at the time of announcement of Q2FY12 results,which will provide cues on futures earnings outlook.Stock specific action may be witnessed on the indices ahead of Q2 result season which starts during the second week ofOctober 2011. The advance tax payment by top 100 companies rose a modest 9.9% in Q2FY12 from a year ago against 19%growth in Q1FY12 suggesting corporate profit growth is likely to be muted in the second quarter.Auto and cement shares will be in focus this week as companies from these two sectors start unveiling monthly sales datafor September 2011. Cement sales is likely to pick up as monsoon withdraws. On the other hand, higher interest rates andrecent petrol price hike is expected to adversely impact sales of cars and 2-wheelers during the festive season. The timingof the latest petrol price hike has been bad for auto firms. The festive season started early this month and it will last untiDiwali at the end of October 2011. Sales normally pick up during the festive season every year.

Market is directionlessBy G. S. RoongtaWhy did the BSE Sensex tank by 704 points on Thursday, 22 September 2011 followed by a further fall on Friday, 23September and Monday, 26 September 2011, taking a toll of over 1100 points in just three days? Was it only because ofglobal cues? If so, why did it bounce back 473 points on Tuesday, 27 September 2011 whereas the intra-day gains wereeven higher? The CNX Nifty, too, gained 136 points at 4971 that day. Was this again on account of global cues? No onehas any clear explanation for this sudden fall or rise!I have been repeatedly expressing my concern about the Eurozone crisis, which is a year-old issue and has nothing dowith our markets. Yet whenever the market weakens, the analysts, press and TV channels attribute it to the Eurozone

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crisis or the recession in the US as the reason for the fall. This has become the patent trade mark of these entities andrepeated ad nauseam.Similarly, the bounce back is correlated to the relief package or bailout to debt ridden EU countries. But nothing has beenspecifically confirmed. Thus our economic fundamentals and corporate reasons for growth have been totally ignored andthe market sentiment is dictated by the economic woes of the US or EU!

It is so strange that technical experts start issuing guidelines in anticipation of the markets fallingfurther to touch new bottoms despite being proved wrong time and again by these short-termguidelines. In the week before last, several analysts had started giving calls for the Nifty to hit the4500 mark and the Sensex to test the 15000 level. But once again, they were proved wrong as the

markets bounced back last week on Tuesday, 27 September 2011, gaining 473 points forcing shorsellers to rush and cover up their short positions as quickly as possible before the expiry of theSeptember 2011 F&O series on Thursday, 29 September 2011. As a result, the markets bounced backsmartly without any fundamental merit based on the technical grounds just like it did on Friday, 23September 2011 when it fell down on fears of negative news.

Thus the market has turned extremely volatile based on contradictory position of global cues. Believe it or not, thissluggishness of the market is not on account of the Eurozone crisis or the rising inflation or the US slowdown but onaccount of the excessive speculation in the F&O trading. This, in turn, makes them worry whenever the market declinesor rises beyond their expectations and forces them to cover their outstanding positions fast to cut their losses and dashingtheir hopes of making quick money. Technical experts are the ones that lure such folks to act upon their calls. Butinvestors who indulge in such activities rarely make money and often get stuck in the volatility of the market.Over the last several months, the market has been moving within a range of 2000 points on the Sensex and 600-700 points

on the Nifty forcing this class of gamblers to gain sometimes but lose more often than what they had gained earlier.However, the technical experts always get away with the excuse that their guidelines were for both sides indentifying thedifferent levels for a rise or a fall.As long as traders keep on gambling and do not take delivery, they are unlikely to benefit as they cannot keep theiroutstanding position open for long because of their limited financial strength. Such a scenario results in limited gains buunlimited losses in a severely volatile market as experienced on 23 & 27 September 2011.Readers may recall that that I have been stating this as the only reason for the low cash market volumes, which aredeclining day by day while the F&O speculation is on the rise ever since 2005. More and more people are turning tospeculation while withdrawing from short or long-term investments.On an average, the Sensex fluctuates within 150-200 points and the Nifty within 25-50 points on a daily basis. One cantrade in this range so frequently at reasonable quotes for a buy/sell in a single day and gain of Rs.250 or lose Rs.500 on adaily basis by squaring up the position on a day-to-day basis without any investment. Such traders, however, do not

calculate the extent of loss on a monthly or quarterly basis.Truly speaking, if these traders were making money in speculation, then there was no reason for the markets to fall.Instead they should have gone up as the number of people losing money is in lakhs while those gaining are few innumbers including the speculators. The gambling nowadays is not confined to only stocks but also commodities likecopper, aluminium, steel, silver and gold. Thus speculation has now become more popular and fashionable irrespective othe gains/loss made by investors.Gold and silver prices crashed last week and goldsmiths are reported to be in a very diffcult position as they had boughtthe stocks at very high prices to make ornaments for the festive season. They are stuck in a very tight situation if theprices fall further, they will face a situation similar to that of equity investors who had invested in the stock market a yearago.Last week, one of my HNI clients called and informed me that he had news from a reliable source that gold and silverwas set to rise and hit a new high. Believe it or not, I advised him that gold and silver are already too high as severalcountries had chosen them as a hedge for troubled times and there was little reason to stretch them further. And if they

were stretched further, there is a likelihood of their crashing.This HNI is a staunch reader of Money Times for decades and has never missed an issue. But sometimes gets carriedaway by the advice of people holding high positions in the market such as technical experts, fund managers, etc. Butwhen gold and silver prices crashed last week, he realized that Money Times has a wiser team of analysts compared tothe people holding high ranks and positions in the market.These highly ranked advisors keep on changing their stand according to the market fluctuation on either side without anylong-term vision. But as Money Times readers are aware, I stick to my observations based on corporate news, growth andearnings and hardly ever need to change my outlook.

G. S. Roongta

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I have not made any specific recommendation in the last several issues knowing fully well that investors are in no moodto follow them in a bad market. Scrips like Arvind Ltd., recommended by me a little over a year back at around Rs.32,touched a 52-week high at Rs.101.70 on Wednesday, 28 September 2011. Recently, GSFC has also hit an all time high atRs.465. My other favourites like SRF Ltd.,Sarda Energy, Shanthi Gears, GraphiteIndia, Greaves Cotton, Elecon Engineeringare a few stocks that are performingextremely well compared to other analystswhose recommendations have fallen below

their 52-week lows whether in the A or Bgroup.To deal with the psyche of investors is avery delicate job and analysts must be fairwhile making recommendations based ontrue facts rather than base it on theirpersonal interests. This is how investorsland in a soup when they act upon suchmotivated recommendations, whichultimately fails in the long run even thoughit may record a rise for a while. The marketwill remain volatile till Thursday, 29

September 2011 on account of the expiry ofSeptember 2011 F&O contracts but is likelyto close much higher than last week’s closing.

Mr. Roongta had submitted this article on the evening of Wednesday, 28 September 2011, as he was proceedingoutstation. As per his forecast, on Friday, 30 September 2011, the Sensex closed the week at 16453.76 and the Nifty at

4943.25 higher than last week’s closing of Sensex 16162 and Nifty 4868.

With over 4 decades of fluid engineering expertise, Roto Pumps (Code: 517500) (Rs.75) is a reputedmanufacturer of progressive cavity pumps and twin screw pumps that have very wide applications in agriculturedomestic and industrial sector. Being an integrated manufacturer with its own polymer unit, the company makes all the

critical components in-house thereby ensuring world class quality. Accordingly, it also supplies a wide range of qualityretrofit spares for all major progressive cavity pumps manufacturers. Having warehouse cum marketing offices inAustralia and U.K and backed by a good network of distributors across the globe, it derives over 55% of its total revenuefrom exports and claims to have 4000 satisfied customers worldwide. Recently, the company set up a wholly-ownedsubsidiary in Germany to carry out sales and marketing activities in Germany and adjoining German speaking countriesand claims to have 4000 satisfied customers worldwide. Although, the company caters to several core sectors, the biggesindustry for its main product is wastewater treatment, which is witnessing tremendous growth due to environmental andcompliance factors. Presently company is in the midst of expansion cum modernization of its production facilities toaugment capacities and improve operational efficiencies to cater to the increased demand. Accordingly, it has acquiredindustrial land of 20,000 sq. metres from Greater Noida Industrial Development Authority in Sector ECOTECH – XIISince the infrastructure development work on the land is yet to be completed, the company hopes to start the constructionof its production facilities and office within two months and complete it by December 2012. Further, in order to introduce

more cost effective and efficient products, it has acquired new designs from the United Kingdom. The new design ofpumps are currently under development at the prototype stage and would be launched in the market in the next financiayear. Given the acceptance of its products and growing marketing network overseas, its export turnover is expected torise in future. Although its Q1FY12 was a bit subdued, it may end FY12 with sales of Rs.68-70 crore with PAT of Rs.5.75crore. At the current market cap of less than Rs.25 crore, this niche company stock is trading fairly cheap and deservesmuch better valuation.

******

As per market estimates, the disruption of work at the Manesar plant of Maruti has led to a loss in production of abou

18,500 cars. This has impacted several auto parts suppliers including Bharat Seats (Code: 523229) (Rs.15) which is actually a joint venture of Suzuki Motor Corporation, Japan, Maruti Suzuki India Ltd and the Relan family of

STOCK WATCH

Investment Advisory Serviceby G.S. Roongta

Money Times is pleased to introduce Investment Advisory Service(IAS) by our renowned columnist Mr. G. S. Roongta, who has over 25

years of experience and is well-know for his accurate forecasts since1986.Interested investors can visit Money Times office between 4 p.m. to 6

p.m. on Tuesday or Thursday every week after prior appointmentwith our office. Outstation readers can consult him by e-mail or

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favouring ‘Time Communications (India) Ltd.’ against which amaximum of 5 scrips will be recommended for investment and

reviewed up to a period of three months.Other services like portfolios analysis/restructuring will be charged

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Delhi. Its share price has fallen considerably and is hitting new lows. The company manufactures complete seatingsystems and interior components for the automotive sector and for surface transport. It has the latest state-of-the artequipments for producing the complete range of seating systems such as high pressure polyurethane machines for foammoulding. During FY11, it set up an additional assembly line for making car seats for supplying to the modified Wagon-Rmodel of Maruti Suzuki. It started manufacturing polyurethane (PU) Pads with its newly developed technology calledDual Hardness for more comfort in the seating system. Last year, it even added PU line for making head rest padsFurther. It has also installed an additional assembly system for 2 wheeler seats to cater to the increased demand and hasintroduced a new product range involvingthe technology of swaging and boring on the

frames used in two wheeler manufacturing.To maintain its growth momentum, thecompany has planned further capacityexpansion and is entering into another areaof manufacture of extruded components forthe Maruti range of vehicles. For thispurpose, it has entered into an agreementwith INOAC of Japan and has started settingup the facility at its plant at Bohrakalan. Theproduction is scheduled to commence inFY13. Fundamentally, the company endedFY11 on quite a buoyant note as sales rose

30% to Rs.442 crore but PAT more thandoubled to Rs.8.20 crore posting an EPS ofRs.2.60 on its equity of Rs.6.30 crore havingface value as Rs.2 per share. Even for FY12 itis expected to maintain the same bottomline.Thus the scrip is currently available at a P/Emultiple of less than 6 times. Startaccumulating at declines. The current year isthe Silver Jubilee year of the company, whenit may declare some additional dividend forFY12.

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Themis Medicare (Code: 530199)(Rs.117) has once again posted a dismalperformance for Q1FY12 after reporting ahuge loss in Q4FY11. The reason for such apoor performance was the temporaryreduction in its biotech activities due tosome technical reasons. The company hasnow confirmed that its bio-tech operationshave re-started effective the last week ofMay 2011. Hence the company is expected tocome back on track from Q2FY12. However,on the back of its adverse performance forthe two quarters, its share price has fallenone-third from Rs.300 to the current Rs.100level. Thus, it offers a very good opportunityfor medium to long term investors to buynow. The company is a reputedpharmaceutical company with four state-of-the-art manufacturing facilities at Vapi(Gujarat), Hyderabad (Andhra Pradesh) andHaridwar (Uttarakhand). With a productportfolio of APIs and formulations, it is

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present in the growing therapeutic areas like anti-tuberculosis, anti-malarials, cardiology, pain management, anti-infectives, haematinics, health & nutrition. Its E-MAL brand commands the No.1 position in the anti-malarial segment. Iis also engaged in co-marketing its research based formulations with other pharmaceutical companies in India andabroad. It has a strong field force of over 500 with a nationwide network of over 2000 stockists, which ensures that itsproducts are readily available across the country. Moreover, it has an expanding global portfolio of affiliates in 40countries. Going forward, the company is betting on its Formulations division as the API segment is facing tremendouschallenges from the Chinese market with fluctuating raw material prices. Presently, domestic formulation contributesabout 30% of the total revenue but is expected to touch over 50% in the near future. To achieve this, the company hasrecently launched a new division ‘Luminous’ and stepped into an altogether new but fast growing pharmaceutica

marketing segment of Cosmeto-Dermatology. It has already launched a screen brightening cream and Sunscreen withSPF30 under its LUMIXYL brand. Secondly, it is seeking to enhance its overseas presence and has plans to enter all 29 EUcountries, USA, Canada, Australia with its unique research formulations. Since all its plants have undergone severainternational audits and it has recently received the EDQM approval, its future looks very promising.

******

Despite reporting an excellent performance, the share price of Bilcare (Code: 526853) (Rs.317) has been fallingcontinuously and the scrip is now trading at very attractive valuation of Rs.750 crore and can easily appreciate 50% within12 months. It is a niche player in the pharma packaging industry with expertise in delivering research-based packagingsolutions to global pharmaceutical companies. It is the largest player in India commanding about 60% market share inblister packaging. It has 13 state-of-the-art manufacturing facilities with 25 representative offices across Europe, USA andAsia. Its Singapore facility is the world's largest multi-functional barrier film processing plant and has received thepioneer status from the Government of Singapore for its research initiatives. Its state-of-the-art design studio in Pune is

the first-of-its-kind in pharmaceutical package design. It strongly believes in Intellectual Property Right (IPR) and is theonly company in this space to have filed almost 150 patents for which it has also received an award from CII-DIPP in2009. Apart from packaging, it also offers material support, services and complete project management for clinical trialsBesides, it has also developed a unique security technology called nonClonableID™ that can be seamlessly integrated intoany supply chain system providing totally secure and irrefutable real-time product identification and authentication. InFY10 it took the bold step of acquiring the global film business of the INEOS group in a all cash deal of Rs.600 crore.INEOS is a major player in the world of pharmaceutical blister packaging, films for printing and decoration, shrink filmfor sleeves, capsules and plastic credit cards. After this acquisition Bilcare has emerged as one of the world’s largestpharma packaging company. For FY11, it reported consolidated sales of Rs.2287 crore with net profit of Rs.150 croreposting an EPS of Rs.63.50 on its equity of Rs.23.55 crore. Even for Q1FY12 it has announced a decent set of number withconsolidated revenue at Rs.836 crore and PAT of Rs.39 crore i.e. an EPS of Rs.16.50 for the quarter. For FY12, it is expectedto clock a turnover of over Rs.3,000 crore with net profit of Rs.170 crore. Thus it is trading extremely cheap at forward P/E

multiple of less than 4.50. A solid buy.

By Kukku

Investment Call* Lloyd Electric & Engineering (LEEL) (Rs.50.65) is a leading manufacturer of heat exchanger coils serving the HeatingVentilation, Air-conditioning and Refrigeration (HVAC&R) Industry. The company is an original equipmentmanufacturer (OEM) supplier to AC manufacturers in India and provides customized AC solutions for institutionalclients like the Railways and Defence. It has further expanded into the transport segment and has developed new modelfor the same.Its six modern manufacturing facilities coupled with its robust product development team with significant contributionfrom OEMs and export growth has given the company a cutting edge in manufacturing.

During FY11, it continued to strengthen its brand equity through innovation, quality products and appropriate businesspromotion steps and set-up state-of-the-art manufacturing facility at Ranipet in Tamil Nadu and at Haridwar inUttarakhand. This is in addition to the facility set-up at Pantnagar in Uttarakhand last year. The new facility at Ranipet isstrategically located to cater to the demand in South India and for the export market and has commenced commerciaproduction in February 2011. It manufactures of room air-conditioners, both window type as well as spilt. The other plantat Haridwar was being set-up to cater to the demand for packaged air-conditioning units, RMPU for Railwayapplications, Metro and Commercial Refrigeration units like air-chillers, air cooled condensers, cooling towers and heatexchanger coils. The plant at Haridwar would commence commercial production in the current year.

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After a year of depression, its subsidiary, Lloyd Europe s.r.o, recorded a year of growth. The market demand was boostedby over 20% in the HVAC&R industry in Europe. Higher demand from traditional customers combined with the spobusiness obtained from many OEMs from distant markets calling for urgent expansion of capacity.In this segment, the growth was more in commercial air-conditioning especially on roof-tops becoming more popular inEurope.For Janka Engineering s.r.o., FY11 was the first full year of operations since its acquisition in 2009. This subsidiary had toface many challenges due to unfavourable conditions in the Czech and Slovak construction industry, which had anegative impact on the profitability of the subsidiary. By the close of the fiscal year, this subsidiary witnessed growth inthe industrial cooling products.

On a standalone basis, LEEL’s total income rose 15.32% to Rs.783.63 crore in FY11 as against Rs.679.5 crore in FY10. Profibefore interest and depreciation rose 12.52% at Rs.82.28 crore from Rs.73.12 crore in FY10. The Profit after Tax grew by amodest 4.88% to Rs.36.06 crore from Rs. 34.38 crore in FY10.On a consolidated basis, its total income rose 24% to Rs.1015.84 crore from Rs.819.06 crore in FY10. PAT grew 11.11% toRs.37.57 crore from Rs.33.8 crore in FY10.The penetration of room air conditioners in India is about 3%, which is very low compared to countries like China,Malaysia, Korea, Taiwan etc. and is expected to grow up to 5% by 2015.The market is evolving at a rapid pace and there are several factors favouring the market growth. Changing lifestyles, risein disposable incomes and the ease of availability will aid this growth.The air conditioner market will grow but there will be a change in the mix of volume and price but input cost willcontinue to remain high with added challenges of volatility. While the competitive environment in the air-conditioningindustry is expected to remain intense, the company is focused to defend and strengthen its leadership position and lead

market development by way of categories and channels of future.The company earned an EPS of Rs.3.52 in Q1FY12 on sales of Rs.252 crore and expects that full year FY12 performance islikely to be good.At the current price of Rs.53 and share book value of Rs.138, its P/E ratio is just 5 compared to P/E of 14 of Hitachi and 17for Blue Star. At the current price, the worst is discounted and investors can accumulate this stock on dips for good longterm growth.

Market Guidance* Marathon Nextgen (Rs.200.75) was recommended in this column two weeks back at Rs.170 from where it moved upwell to Rs.288 before correcting to Rs.210. Investors can continue to hold the stock and those who booked profit at highelevels can buy it again below Rs.205 level in corrections.* Valuations of Rishi Lazer (Rs.36.95) look attractive as its market cap is Rs.35 crore and the stock is trading near its last2-year low while book value of the share is Rs.56. Its gross block is around Rs.100 crore.

During the last two years, its debts have reduced from Rs.75 crore to less than Rs.43 crore and it has returned to thedividend list.With 13 manufacturing units across 5 States, the company has one of the largest enterprise-wide infrastructure for Sheetmetal fabrication with 27000 sq. metre of manufacturing area and a sheet steel processing capacity of 46000 TPAInvestors can keep a watch to accumulate this stock on dips.

By Vihari

Kewal Kiran Clothing: Leading the retail boomThe shares of Kewal Kiran Clothing (KKCL) (Code: 532732) (Rs.830) are strongly recommended for decent gain in thelong-term based on its strong fundamentals and continued growth in sales and profitability when other retail stories havefloundered.

Incorporated in 1981, KKCL is among the few large branded apparel manufacturers in India that has sales in Asia, MiddleEast and CIS countries. It designs, manufactures and markets branded jeans, semi-formal and casual wear for men. It iexposed to global standards in quality, technology, marketing and branding. The company’s strong fashion forecastingand trendsetting abilities have created brands which are vibrant, trendy and with an attitude. Each brand has beencarefully crafted keeping in mind the desires and attitudes of the target consumers in specific market segments. Eachbrand is an expression of its customer. Its product range includes Jeans, Cotton Shirts, Jackets, Denim Shirts, Non-CottonShirts, Knitted T-Shirts, Cotton Trousers, Non-Cotton Trousers and Accessories like bags, belts, caps, etc.‘Killer’ the flagship brand of KKCL, is one of the few brands in the country that is over 2 decades old. ‘Killer’ is a vibrantbrand with a strong value proposition. The other brands ‘Lawman Pg3’, ‘Easies’ and ‘Integriti’ have also created nichemarkets and have consistently registered commendable growth year on year.

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‘K – Lounge’ is a trendsetting concept pioneered by KKCL aimed at providing its customers with a fashion destinationwhere the customer can experience all its four brands. Apart from the K-Lounge stores, KKCL has also set up exclusivebrand outlets (EBO) under its existing brands ‘Killer, Lawman Pg3 and Integriti. As on 31st March, 2011, it had 176 retailstores comprising 108 K - Lounge stores, 29 Killer EBOs, 22 Integriti EBOs, 4 LAWMAN Pg3 EBOs, 2 LAWMAN Pg3 cumINTEGRITI EBOs, 7 Factory Outlets and 4 ADDICTIONS stores for accessories spread across the country, which togethecontribute to 27% of the total sales. The company has started appointing master stockiests and master franchisees toservice the company's retail stores across the country.In FY11, while sales rose by 34% to Rs.235 crore, net profit shot up 41% to Rs.46 crore and the EPS stood at Rs.34.7 and itpaid a dividend of 165%. During Q1FY12, net profit has shot up further by 43% to Rs.12.6 crore leading to a quarterly EPS

of Rs.10.2.KKCL’s equity capital is Rs.12.3 crore and with reserves of Rs.185 crore, the book value of its share works out to Rs.160With a debt of just Rs.5.6 crore, KKCL is almost a zero-debt company. The promoters hold 74.1% in the equity capitalInstitutional holding is 16% and PCBs hold of 2.5% leaving only 7.4% with the investing public.On the brand and product front, KKCL has taken several steps to introduce new designs and range of fashion wear andcontinues its thrust on launching innovative and trendy products that have a global appeal. It has already launched‘Vertebrae’, and ‘Yi-Fi’ stitch under Lawman Pg3, which received tremendous consumer response. Next in line from theLawman Pg3 stable is yet another innovative product called 'Emboss' which is ready to hit the markets. KKCL is in theprocess of introducing a range of personal care products in the current year and the ball has been set rolling with thelaunch of Deodorants. It is also positive about the new range of footwear which would be introduced in the coming yearas it had already experimented with footwear two years back.KKCL is optimistic about the long-term potential of the Indian markets and has taken several steps to create a system

driven, high performance organisation by targeting sustainable and profitable growth. KKCL’s vision is to touch Rs.1,000crore net revenue by 2015-16, and it is making every effort to enrich its product portfolio to cater to national andinternational customers. The success of ‘Killer’ has been instrumental in driving its business of brand creation andmanagement to new heights and has spawned the other brands as well as make an entry into the women's casualssegment. KKCL is now focusing on its first accessories extension, ‘Addictions’. These innovations will catalyse into futuregrowth and sustainability.It is also optimistic about its foray into the lifestyle accessories business and foresees a tremendous business potential in itKKCL has already launched deodorants, socks, handkerchiefs, swimwear, footwear, eyewear, to name a few and made athrust in the lifestyle accessories business as it has in the branded apparel segment.KKCL had invested in aggregate Rs.34.5 crore in Joint Venture White Knitwear Private Ltd. (WKPL), which had acquiredland in the Surat SEZ and set up a building for producing knitwear apparels for exports. In view of the sluggish demandin the overseas markets, most SEZ members have shelved their projects and approached the Central Government for de-

notification of the SEZ, which is expected shortly. Post de-notification, WKPL shall dispose off the land and building andrealise the proceeds to return it to its joint venture partners.Estimates of the retail industry in India varyfrom US $300 to 400 billion (Rs.14.5-19 lakhcrore). The rising share of organised retailnow estimated at 6%, is set is grow on theback of rapid urbanisation, improve retailinfrastructure, rise in double income families,increased brand consciousness.India remains among the leaders in the 2010GRDI (Global Retail Development Index) andpresents major retail opportunities. India'sretail market is expected to be worth about

US $410 billion or Rs.20 lakh crore, with 6%sales through organised retail, meaning thatthe opportunity in India is immense. Retailwill continue to grow rapidly to US $535billion (Rs.25 lakh crore in 2013 with 10%coming from organised retail according to theUS-based global management consultingfirm, A T Kearney.

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According to a report titled 'India Organised Retail Market 2010 published by Knight Frank India in May 2010 around 55million sq. ft. of new retail space will be ready in Mumbai, National Capital Region (NCR), Bengaluru, Kolkata, ChennaiHyderabad and Pune during 2010-12. During this period, the organised retail real estate stock will grow from the existing41 million sq. ft. to 95 million sq. ft. and India will continue to attract global retailers.However, the retail sector continues to have restrictions on FDI and many global players are awaiting relaxation in FDInorms to enter India or to enhance their investments in the country. The recent pronouncements about potentiallyallowing upto 51% FDI in multi brand retail, subject to conditions could ease the access of multinational retailers to enterIndia. KKCL believes that while the entry of foreign players will mean more competition, it will also enhance the growthopportunities as the level of fashion consciousness and willingness to spend increases.

KKCL is targeting to provide its customers with a complete lifestyle experience and has introduced 'Addictions' range ofaccessories to complement its core portfolio of products. So far, there has not been any discernible evidence of aslowdown but the biggest threat remains the impact of continued inflationary conditions and rising interest rates thamay impact the customers' wallet share of discretionary expenditure.Despite these challenges, the outlook for the industry is promising largely because of the fast evolving consumptionpatterns and accelerated economic expansion in emerging economies. India is now witnessing a consumption boom, andthis phenomenon is here to stay as the economy continues to expand. KKCL is committed to capitalise on this tremendousmarket potential through enhanced innovation and brand visibility to drive growth and reinforce business sustainability.For FY12, KKCL is expected to post a net profit of Rs.63 crore on sales of about Rs.340 crore, and would fetch an EPS ofRs.51, which could go up to Rs.60 in FY13.At the current market price of Rs.830, the share is trading at a P/E multiple of 16.2 on FY12 estimated earnings and 13.8times the FY13 projected earnings. Looking to its bright future, the KKCL share is recommended with a price target o

Rs.1200 in the long-term. The 52-week high/low of the share has been Rs.875/385.

By Nayan Patel

Elecon Engineering Ltd.BSE Code: 505700NSE Symbol: ELECONLast Close: Rs.76.10Established in 1951, Elecon Engineering Co. Ltd. (EECL) pioneered breakthrough innovations in the manufacture omaterial handling equipment (MHE), industrial geared motors and reducers, mining equipment, casting processes etcand is one of the largest manufacturers of MHE and Industrial gears in Asia. Its recent acquisition of Benzlers - RadiconGroup of businesses from David Brown Gear Systems Group adds to its expertise in manufacturing customizedgearboxes for Steel Mills, High speed Turbines, satellites for the Indian Space Research Programme and Naval aircraftcarriers. EECL has thus expanded its skills and expertise to execute EPC contracts and has successfully transformed itselinto a fully integrated EPC company in areas of its specialization.EECL has an equity base of Rs.18.57 crore that is supported by huge reserves of around Rs.376.03 crore. The promotershold 45.72%, non-promoter corporate bodies hold 7.23%, Institutions hold 12.14% while the investing public holds 31.13%stake in the company.For Q1FY12, it posted net sales of Rs.257.31 crore with net profit of Rs.14.91 crore against net sales of Rs.247.17 crore withnet profit of Rs.13.32 crore in Q1FY11. For FY11, it recorded net sales of Rs.1184.54 crore with net profit of Rs.87.92 croreagainst net sales of Rs.1054.31 crore with net profit of Rs.66.17 crore in FY10. The Q1FY12 EPS is Rs.1.61 while the FY11EPS was Rs.9.47 and it paid 90% dividend for FY11. At the current level, the stock is available at a P/E multiple of just 7.9Investors can accumulate this stock between Rs.73-76 with a stop loss of Rs.68. On the upper side, the stock will zoom toRs.86-91 levels in the medium-term.

Taksheel Solutions IPO closes on 4th Oct.Taksheel Solution Ltd. (TSL) one of the fastest growing IT & Telecom software companies, has entered the capital markewith its IPO of 55,00,000 equity shares of Rs.10 each in the Price Band of Rs.130 to Rs.150 per equity share. The issue,which opened on Thursday, 29 September will close on Tuesday, 4 October 2011, has been graded ‘IPO Grade 2’ by CARELtd. indicating its below average fundamentals and will be listed on BSE and NSE.Focused on the software for the wealth management industry, TSL is a 100% EOU and ISO 9001: 2008 certified companyIt plans to use the proceeds for setting up new software development centres at SEZ in Hyderabad and Warangal,

TECHNO FUNDA

MARKET FOLIO

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acquisitions and other strategic Initiatives, financing the incremental working capital requirements and to meet thegeneral corporate and public issue expenses.For FY11, TSL recorded Total Income of Rs.147.26 crore with PAT of Rs.27.42 crore as against Total Income of Rs.49.50crore with PAT of Rs.8.09 crore.

Indo Thai Securities IPO closes on 5th Oct.Indore based Indo Thai Securities Ltd. (ITSL), engaged in stock broking services is entering the capital market with its IPOof 40,00,000 equity shares of Rs.10 each in the price band of Rs.70-84 per share. The funds raised will be utilized forfinancing the growth of its business and part of the proceeds will be utilized as long-term working capital. The IPO,which opened on Friday, 30 September and closes on Wednesday, 5 October 2011, has been graded ‘IPO Grade 2’ byCARE Ltd. indicating its poor fundamentals and will be listed on the BSE and NSE.

RCF in expansion modeRCF has undertaken to revamp its Thal plant to augment capacity from 1.7 to 2 million MT of Urea. Phase – Iimplementation is complete while Phase-II is expected to be completed by November 2011.It has also lined up other expansion schemes in India and abroad. It plans to expand the Thal Unit by setting up anAmmonia-Urea stream for production of 1.15 million MT of additional Urea at an estimated cost of Rs.4,200 crore. Alongwith GAIL and Coal India, it plans to set up Ammonia-Urea, Nitric Acid and Ammonium Nitrate projects at Talcher inOrissa through Coal Gasification route. Overseas, RCF is exploring possibilities to set up projects in Ghana and IndonesiaFor FY11, Total Income was Rs.5677.25 crore with net profit of Rs.245.12 crore against Total Income of Rs.5826.25 crorewith net profit of Rs.234.87 crore in FY10.

L&T MIP – Wealth Builder FundL&T Mutual Fund has launched L&T MIP – Wealth Builder Fund, an Open Ended Income Scheme, by further expandingthe investment options it offers to its investors. It is an Income Scheme with a debt exposure of 70% - 100% and equityexposure can be up to 30%.Fixed Income allocation of the scheme could be invested in CDs, CPs, government securities, money market and otherdebt instruments which endeavor to generate returns while moderating credit & interest rate risk. The scheme could besuited for those investors who are keen on taking possible advantage of the interest rate movement & the possible

opportunity in the current equity markets.

Disclaimer: Investment recommendations made in Money Times are for information purposes only and derived from sourcesthat are deemed to be reliable but their accuracy and completeness are not guaranteed. Money Times or the analyst/writer doesnot accept any liability for the use of this column for the buying or selling of securities. Readers of this column who buy or sellsecurities based on the information in this column are solely responsible for their actions. The author, his company or hisacquaintances may/may not have positions in the above mentioned scrip.

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