Portfolio Review: 30 October 2010

Many more companies published their quarterly results in the past week. Hero Honda posted biggest drop in quarterly profit in three years. Tata Communications’ consolidated loss widened to Rs 213 crore in the second quarter. Tata Global Q2 net profit slid 82%. KSB Pumps reported a 34% fall in net profit. NTPC’s net profit declined marginally in the second quarter despite a 20% increase in its net sales. Hindustan Unilever Ltd (HUL) beat market expectations by posting a 32 per cent rise in net profit. BHEL Q2 net up 33% at Rs 1142 crore on good revenue from power sector. Glenmark Pharma net up 38% to Rs 112 cr.  Reliance Industries profit Jumped 28% as gas output and refining earnings rise. Mahindra and Mahindra reported 8% rise in quarterly profit.

In the past week, BSE Sensex lost 0.66%, NSE Nifty 0.80% and my portfolio 2.05%. In the month of October, my portfolio made a loss of 0.69% while year to date gain is 12.16%. Many companies in which I have large holding such as Bharti Airtel, Mangalam Cement, KSB Pumps, HUL etc declined 5% to 11% during the month. Dr. Reddys Laboratories, Maharashtra Seamless, Tata Global Beverages helped me to trim the overall loss with a gain of 3% to 15% during the month.

Good buys in my watch list

Script Sector 3 Years Target Current Price Margin
Mangalam Cement Cement 400.00 149.20 168%
Graphite India Engineering 200.00 93.20 115%
KSB Pumps Engineering 1,072.00 503.00 113%
Ess Dee Aluminium Packaging 942.00 471.30 100%
Swaraj Engines Auto Ancil 850.00 468.10 82%
Maharashtra Seamless Metal 743.00 417.20 78%
Hero Honda Auto 3,122.00 1,865.80 67%
HUL FMCG 479.00 294.10 63%
Tractors India Ltd Construction 1,150.00 715.00 61%
Divis Laboratories Pharma 1,095.00 691.85 58%

News Update

Reliance Industries Ltd., India’s biggest company by market value, posted its highest quarterly profit since 2007 after growing fuel demand boosted refining earnings and natural gas production rose. – Bloomberg

Hero Honda on Friday registered a 15% decline in net profit in September quarter, its biggest drop in quarterly profit in three years, on higher raw material costs, capacity constraints and increased competition. Net profit stood at Rs 505.60 crore against Rs 597.14 crore in the same period last fiscal. Net sales increased 11.8% to Rs 4,551.95 crore against Rs 4,069.60 crore in the same period last fiscal. Ebidta margin for the period stood at 13.36%. – The Financial Express

Mahindra & Mahindra India’s largest utility vehicles maker, reported a 7.8 percent rise in second-quarter net profit, as robust volumes in a fast-growing auto market mitigated higher input costs. Costs rose 4-7 percent between April and September, Mahindra’s automotive president Pawan Goenka told reporters on Friday and he expects them to increase further, which may prompt the automaker to pass on some of the rise to consumers, he added. – Reuters

World’s largest electric carmaker Reva Motors, owned by utility vehicle major Mahindra & Mahindra (M&M ), plans to enter China, hoping to cash in on a rising demand for ecofriendly cars as governments push for stricter emission norms globally. The Bangalore-based company looks to introduce its mass market model in China which promotes ecofriendly vehicles through a subsidy programme. – The Economic Times

State-run BHEL reported a 33 per cent increase in its net profit at Rs 1,142.28 crore for the quarter ended September 30 on the back of good revenues from the power sector. The company had posted a net profit of Rs 857.88 crore during the same period last year. BHEL’s revenues from power sector stood at Rs 6,965 crore during the July-September quarter, registering a growth of over 28 per cent against Rs 5,428.3 crore reported during the corresponding quarter of the last year. – The Economic Times

Biocon will invest $161 million in a facility in Malaysia, joining a number of Indian companies that have chosen to establish facilities in the South-East Asian country. This investment would be done through a strategic partnership with a Malaysian firm Biotechnology. – The Economic Times

NTPC’s net profit declined marginally in the second quarter despite a 20% increase in its net sales. This was because of rise in employee cost following pay revision and higher tax burden. The company reported a net profit of Rs 2,107 crore in the September quarter against Rs 2,152 crore in the same period last year. The company’s employee cost for the latest quarter worked out to Rs 709 crore against Rs 504 crore in the corresponding period of 2009-10. The company’s net tax burden for the latest quarter was Rs 9,216 crore against Rs 6,183 crore.  – The Financial Express

State-run NTPC will invest about Rs 20,000 crore to set up a 3,960-megawatt (Mw) coal-based power project in Madhya Pradesh. NTPC had signed a memorandum of understanding with the state government and MP Power Trading Company regarding this, the company said in a filing to the Bombay Stock Exchange. The project is likely to be commissioned during the Twelfth Five-Year Plan Period (2012-17). NTPC currently generates over 32,000 Mw, of which nearly 60 per cent is coal-based. It plans to increase its capacity to 75,000 Mw by 2017. – Business Standard

NTPC Ltd is scouting for tie-ups with global reactor manufacturers for setting up nuclear power projects on its own. The thermal power major, which already has a minority stake in a partnership with its state-owned counterpart Nuclear Power Corporation of India Ltd (NPCIL) for setting up nuclear units, also plans to firm up independent collaborations with global reactor vendors to set up imported Light Water Reactor-based atomic projects. – The Hindu Business Line

KSB Pumps has announced its September quarter results. The company has reported a 6% growth in topline and a 34% fall in bottomline on a YoY basis.

Tata Communications on Thursday reported a consolidated net loss of Rs 213.50 crore for the quarter ended September 30, 2010. The Tata Group company had posted a net loss of Rs 155.54 crore for the same period last year. The company’s total income, however, increased by 8.82 per cent to Rs 2,960.66 crore in Q2, FY’11, from Rs 2,720.48 crore in the same quarter last fiscal. – The Economic Times

Bharti Airtel and Aircel Cellular are interested in buying the yet-to-be-launched Indian wireless broadband business of Qualcomm, industry executives said, an indication that the scales are tilting in favour of the wireless technology being championed by the US-based cellphone chip maker. Bharti Airtel, India’s largest mobile phone company, is primarily interested in Qualcomm’s airwaves and permits for Delhi, complementing the 3G frequencies it won in the circle earlier this year, the executives said. – The Economic Times

Riding on the back of strong growth in domestic sales and R&D innovation, FMCG major Hindustan Unilever (HUL) has clocked a 32.2 per cent jump in net profit at Rs 566 crore in Q2 FY’11 against Rs 428 crore in the year-ago period. Net profit also included an exceptional gain of Rs 40 crore that HUL received through sale of property and restructuring of its closed units. – The Indian Express

Tech Mahindra Ltd has reported a positive earnings surprise for the September quarter, with operating profit adjusted for one-offs rising by 32.1% quarter-on-quarter. But investors are likely to have questions about the sustainability of this growth – The Livemint

Mangalam Cement disclosed a phenomenon drop in standalone net profit for the quarter ended September 2010.  During the quarter, the profit of the company declined 97.58% to Rs 8.57 million from Rs 354.39 million in the same quarter last year. Net sales for the quarter declined 28.08% to Rs 1,157 million, while total income for the quarter fell 27.76% to Rs 1,179.03 million, when compared with the prior year period. – Myiris.com

Swaraj Engines announced that its board has approved expansion program to increase its installed capacity from 36,000 engines to 60,000 engines p.a. The proposed expansion project will entail total capex of around Rs 400 million, which will be fully financed from internal resources. – Myiris.com

For the Sep 10 quarter, Swaraj Engines reported net profit growth of 13% to Rs. 10.82 crore on overall poor performance though partially offset by crash in effective tax rate. The topline grew by 24% to Rs. 86.20 crore on increased sales in engine and high tech components. However fall in OPM by 100 bps limited the growth in operating profit to 17% to Rs. 15.01 crore. The profits were further affected by fall in other income and interest income though partially boosted by crash in effective tax rate. – IIFL

Interesting Reading

Opto Circuits Acquisition of Unetixs Vascular Creates Strong Synergies for Criticare Systems

The acquisition of Unetixs Vascular’s detection and diagnostics products complements and strengthens the existing Opto Circuits (I) Ltd. product portfolio investment in Criticare Systems, Inc.’s vital signs monitoring line and pulse oximetry sensors. Unetixs Vascular is a leader in products aimed at the detection of peripheral arterial disease (PAD), a condition that is affecting a growing portion of the population in both the developed world and in emerging economies.

Read more: http://www.centredaily.com/2010/10/28/2302348/opto-circuits-acquisition-of-unetixs.html#ixzz13rJu5Ctj

Suzlon Energy in a soup

The high-level committee headed by the Chief Secretary that investigated the Attappadi tribal land scam has demanded stringent action against power giant Suzlon Energy Ltd and the provider of the land, Sarjan Realities Ltd, in its report submitted to the government. The committee recommended the dismantling and removal of all the windmills and related accessories from the site. Read more:  http://expressbuzz.com/cities/kochi/suzlon-energy-in-a-soup/219329.html

End of privileges

NTPC is bracing itself for competition as the government mulls starting mandatory tariff-based bidding for power projects allocation from January. The company is taking a fresh look at various cost components of power generation. In the current cost-plus regime, any escalation in cost from project delays gets capitalised. And electricity consumers bear the extra cost, since project delays and cost escalation are not the developer’s headache.  Read more: http://www.indianexpress.com/news/end-of-privileges/701812/

My Portfolio

Return (%)

My Portfolio BSE Sensex NSE Nifty
This Week -2.05% -0.66% -0.80%
This month -0.69% -0.18% -0.20%
This Year 12.16% 14.70% 15.70%
Since 1-1-2009 129.66% 107.65% 103.37%
Since 1-1-2008 54.36% -0.86% -1.02%
Since 1-4-2007 91.77% 53.25% 57.47%

Top 5 holding in my equity portfolio

Company Sector % of Total Value Average Holding Period Absolute Return %
Infosys IT 9 2.99 Years 78
Tata Global Beverages FMCG 6 1.98 Years 133
Bharti Airtel Telecom 5 10 months 15
HUL FMCG 5 4 Months 15
Hero Honda Auto 5 5 months 1

Shares I bought this month

Company Avg Cost
Graphite India 98.12
Mangalam Cement 162.85
Ess Dee Aluminium 499.41
Opto Circuits 313.74
Divi’s Laboratories 727.32
Tech Mahindra 770.31

Top 5 most gain (absolute)

Company Return % Average Holding Period
Gujarat Gas 203 2.5 Years
Dabur India 150 4.5 Years
Tata Global Beverages 133 2.0 Years
Berger Paints 152 3.7 Years
Infosys 78 3.0 Years

Top 5 most loss (absolute)

Company Return % Average Holding Period
KSB Pumps -13 2 months
Opto Circuits -9 1 month
Tata Communication -9 10 months
Mangalam Cement -8 2 months
Ess Dee Aluminum -6 1 month

Archive of previous portfolio reviews


Know the Basic for Stock Market Investing

Don’t put all your eggs in one basket! Don’t put all your savings in stock market! Don’t put all your investment in one company! – Diversify

Diversify into a number of good companies – No body knew precisely beforehand that Satyam Computers, which was fourth largest IT company in India, would end up in such a mess! So how many companies to invest in? Ideal number is 30 companies – 50% in 10 companies, 30% in second 10 and 20% in next 10. If you start with a small amount and add small amount gradually, it is not possible to invest in 30 companies in one go of course! In this case, invest systematically and increase the number to 30 step by step.

Diversify into large, medium and small companies – Large cap companies are safer. Small and medium companies can be multibagger but come with huge risk! How much in each? It depends on your risk appetite. Small and mid cap companies can give huge return, but it comes with huge risk. If you want to be on safer side and more cautious, you may limit your exposure to small-mid cap to 25% of total value of your portfolio or even less.

Diversify into different sectors and industries – No body knew beforehand the dot-com bubble would bust! How many industries and sector to invest in? When you invest 30 companies, make sure that all are not from same industry or few sectors! You can easily select 30 companies from 5-10 sectors! For example, 3-5 companies from Automobile – Hero Honda, M&M, Maruti, Ashok Leyland, Bajaj Auto etc. 3-5 companies from IT – NIIT Technologies, Geometric, Tech Mahindra, Infosys, Wipro etc.

Oh! So shall I buy all those companies selected from the different sectors right away? No, you have to see at what price are you going to buy? The current price may be far too high to enter. While some companies are available at bargain price, some are very expensive! So buy those which are available at a bargain right away and wait for those which are expensive to come down to a reasonable level.

So which is expensive and which is cheap?  A share of Hero Honda is traded at Rs. 1,855.00 while a share of NTPC is traded at Rs. 204.00. Does it mean Hero Honda is more expensive than NTPC? Not really! Wondering why? It looks too complicated for you? It is not a complex theory, it is just common sense. Would you compare the face value of a 1kg packet of rice of one brand with that of 2kg of a different brand? No, you would take the equal weight to compare. What about the face value of 1kg of rice with 1kg of salt? Is it comparable? The same principle applies here.

It is not the share price alone than determines the fair value. How many shares are outstanding for the company? How much is company worth on various parameters and how much is it valued by market? And decide whether buying at current price is really worth?

Building a good portfolio of shares is a gradual process! You need a lot of patience to build wealth through investing in shares!


Portfolio Review: 23 October 2010

In the past week, BSE Sensex gained 0.20 per cent NSE Nifty gained 0.06% and my portfolio 0.27%.

In the year to date, the gain in my portfolio is 14.51%. During the year, top 5 contributor to the gain in my portfolio are Gujarat Gas, Tata Global Beverages (Tata Tea), Infosys, HUL and Dabur India. Suzlon Energy, KSB Pumps, NTPC, Managalam Cement and Tata Communication made loss.

Good buys in my watch list

Script Sector 3 Years Target Current Price Margin
Mangalam Cement Cement 400.00 157.10 155%
Graphite India Engineering 200.00 97.25 106%
KSB Pumps Engineering 1,072.00 524.30 104%
Ess Dee Aluminium Packaging 942.00 479.90 96%
Swaraj Engines Auto Ancil 850.00 443.50 92%
Maharashtra Seamless Metal 741.00 424.70 74%
Tractors India Ltd Construction 1,150.00 680.85 69%
Hero Honda Auto 3,115.00 1,855.10 68%
HUL FMCG 478.00 301.55 59%
Divis Laboratories Pharma 1,095.00 713.05 54%
Bharti Airtel Telecom 510.00 333.40 53%
Opto Circuits Healthcare 450.00 296.70 52%

News Update

Hindustan Zinc today posted 1.47 rise in profit at 948.72 crore for the second quarter of the current fiscal, as against the year-ago period, on improved demand and rising prices. The revenues moved up in Q2 FY11 to Rs 2,162.8 crore, around 21 per cent, as compared to Rs 1,789.5 crore in the same period last fiscal. – The Economic Times

Opto Circuits India, a developer and manufacturer of patient monitoring systems and interventional products, has entered into a merger agreement with US-based cardiology device maker Cardiac Science Corporation. It will acquire all of the outstanding shares of Cardiac Science for $2.30 per share or $54.6 million. – The Financial Express

Medical device manufacturer Opto Circuits Friday said has received quality certification  — CE (Communite European) Mark — from European authorities for coronary bare metal stent brands, enabling it to sell products in the continent. The CE (Communite European) Mark approval has been granted to the company’s German subsidiary Eurocor GmbH for its products eMagic and eFlex, Opto Circuits said in a statement. – Business Standard

Software services and consulting company, Geometric, on Friday said that it was strongly focusing on the European markets and hoped to bag some big orders from there by this year-end. Europe presently contributes around 22 per cent of the company’s total revenues.  It hopes to up this to around 30 per cent next year. The company clocked an 18.5 per cent growth in its revenues in Q2 FY 11 at 151.9-crore as against Rs 128-crore in the year-ago period and added nine new customers in the quarter. It now has a client-base of 108 of which 70 per cent are recurring. Geometric’s PAT grew 35 per cent at Rs 13.81-crore as against Rs 10.23-crore in the year-ago period. –The Economic Times

State gas utility GAIL India on Friday said it has commenced construction of its Karanpur– Moradabad–Kashipur–Rudrapur/Pantnagar natural gas pipeline. “The estimated investment on the project is Rs 250 crore,” it said. The design capacity of the pipeline will be 2.5 million standard cubic meters per day. – Business Standard

Biocon Ltd on Friday reported decent numbers for the quarter ended September.  Consolidated net revenues rose 17% year on year to Rs679 crore, while net profit jumped 20% to Rs89.22 crore, riding on higher growth in profits in its core bio-pharmaceuticals segment. – DNA

Bangalore-headquartered biotech firm Biocon has entered into a $350-million (Rs 1,550 crore) strategic alliance with drug-major Pfizer on Monday for marketing Biocon’s insulin products. The agreement includes the commercialisation of Biocon’s biosimilar versions of insulin and insulin analog products: recombinant human insulin, glargine, aspart and lispro, Biocon said. – The Economic Times

Pharma major Dr Reddy’s Laboratories has reported a net profit of Rs 290 crore for the second quarter ended September 30, up by 32 per cent over the same period last year. Its revenue during the quarter stood at Rs 1,870 crore as against Rs 1,840 crore in the same period last year. – Indian Express

State run BHEL on Wednesday said it has bagged contracts worth Rs 35 crore to set up grid-interactive solar power plants of 1100 kW capacity at eight locations in the union territory of Lakshadweep. BHEL’s scope of work in the contract envisages design, manufacture, supply and installation of new solar power plants of 1,100 kW – The Economic Times

Drug firm Cadila Healthcare today said its consolidated net profit rose by 29.49 per cent to Rs 170.8 crore for the second quarter ended September 30. Total income of the company rose to Rs 1,120.5 crore for the second quarter ended September 30, compared to Rs 949.8 crore in the same period last fiscal. For the six month period ending September 30, 2010, the company net profit was Rs 370.02 crore against Rs 256.71 crore in the year-ago period. – The Economic Times

Mahindra Two Wheelers reported its best monthly sales of 16,569 scooters in September, a whopping 451% increase year-on-year.

IT solutions provider NIIT Technologies said its net profit has increased by 35.6 per cent to Rs 43.5 crore for the second quarter, ended September 30. However, the company expressed concern over currency volatility, terming it “a headache” for the export-oriented Indian IT industry.  – The Financial Express

Interesting Reading

Munjals working on new branding strategy for Hero Honda

With the imminent exit of Honda from its 26-year old joint venture with the Hero group, the Munjals are now working on a new branding strategy for Hero Honda Motors, India’s largest motorcycle maker. The company has initiated talks with its brand managers on the new look of the brand which will drop “Honda” from all its advertising campaign.  http://economictimes.indiatimes.com/news/news-by-industry/auto/two-wheelers/Munjals-working-on-new-branding-strategy-for-Hero-Honda/articleshow/6785632.cms

The Life After Separation

Sometimes heroes decide not to take sidekicks along because they are vulnerable to attacks. But in this story the sidekick (Honda) may be left holding all the aces as the Hero Honda joint venture heads for breakup. The engine and design technology come from Japan. Plus, Honda Motorcycle and Scooter India has already built up its distribution strength of 400 outlets in India and its sales have risen by 37 per cent as of April-September 2010. Hero will have to be wary of this fact because it has a technology review with Honda in 2014. Apart from paying royalties to Honda, which has risen by 28 per cent this year, Hero will have to come up with a product spec on its own if it is going to compete with original equipment manufacturer such as Bajaj and TVS. http://www.businessworld.in/bw/2010_10_22_The_Life_After_Separation.html

Cadila Healthcare: On a booster dose

Strong domestic performance, coupled with impressive growth in the US, helped Cadila Healthcare post revenue growth of 18.1 per cent year-on-year at Rs 1,117 crore in the September quarter. Cardio-vascular and respiratory care segment buoyed domestic revenues by 19 per cent to Rs 466.8 crore. Launch of 10 products during the quarter and a pick-up in the sales of H1N1 vaccine, too, helped earnings. The US business saw the launch of anticonvulsant drug Divalproex generics, which helped Cadila clock a business of Rs 226 crore from the region, up 41 per cent compared to the year-ago period. http://www.business-standard.com/india/news/cadila-healthcare-onbooster-dose/412341/

HUL’s appetite- experiments in marketing

In September 2010, women commuters in suburban Mumbai trains were in for a tasty surprise – they had Hindustan Unilever representatives serving out freshly cooked food prepared with Knorr Ready to Cook spice mixes. The ‘Baje ki Knorr Local’ campaign touched the right chord: the aroma of piping hot food was a treat for consumers enduring hours of travel after a hard day at work. http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fmcg/HULs-appetite–experiments-in-marketing/articleshow/6790074.cms

FMCG firms on launch spree as demand revives

A new consumer product item hit the market every second day so far this year, signalling a bounce-back in new launches in the FMCG space after a couple of dull years. Hindustan Unilever, the country’s largest consumer products player, set the pace with 36 new products and variants as total launches in the first eight months increased 13% year-on-year. Dabur launched 11 products during the period, including Fem gold bleach, Odomos oil, Odonil air fresheners and new variants of Pudin Hara, Hajmola digestives and Vatika shampoo. http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fmcg/FMCG-firms-on-launch-spree-as-demand-revives/articleshow/6795925.cms

My Portfolio

Return (%)

My Portfolio BSE Sensex NSE Nifty
This Week 0.27% 0.20% 0.06%
This month 1.39% 0.48% 0.60%
This Year 14.51% 15.47% 16.63%
Since 1-1-2009 134.48% 109.04% 105.00%
Since 1-1-2008 57.60% -0.20% -0.22%
Since 1-4-2007 95.79% 54.27% 58.73%

Top 5 holding in my equity portfolio

Company Sector % of Total Value Average Holding Period Absolute Return %
Infosys IT 9 2.91 Years 83
Tata Global Beverages FMCG 6 1.90 Years 141
Bharti Airtel Telecom 5 9 months 15
HUL FMCG 5 3 Months 18
Hero Honda Auto 5 4 months 0

Shares I bought this month

Company Avg Price
Graphite India 93.61
Mangalam Cement 160.87
Ess Dee Aluminium 491.95
Opto Circuits 309.05
Divi’s Laboratories 714.23
Tech Mahindra 758.80

Top 5 most gain (absolute)

Company Return % Average Holding Period
Gujarat Gas 215 2.4 Years
Dabur India 160 4.5 Years
Tata Global Beverages 141 1.9 Years
Berger Paints 151 3.6 Years
Infosys 83 2.9 Years

Top 5 most loss (absolute)

Company Return % Average Holding Period
KSB Pumps -9 1 month
Opto Circuits -5 1 months
Tata Communication -6 10 months
Mangalam Cement -4 2 months
Ess Dee Aluminum -4 1 months

Archive of previous portfolio reviews


Portfolio Review: 16 October 2010

Indian share market closed the week in red for the second consecutive week. BSE Sensex slipped 0.62% to end the week at 20,125 points and NSE Nifty slipped 0.67% to end at 6,063. My portfolio lost 0.80% during the week. In the year to date, the gain in my portfolio is 14.21%. During the current month, Hindustan Zinc, Biocon, Dr. Reddy’s, Maharashtra Seamless, and NIIT Technology were the largest gainer in my portfolio while Bharti Airtel, NTPC, Blue Star, Berger and Dabur India contributed to loss!

Good buys in my watch list

Script Sector 3 Years Target Current Price Margin
Hero Honda Auto 3,108.00 1,802.40 72%
Maharashtra Seamless Metal 739.00 435.15 70%
HUL FMCG 477.00 298.10 60%
Divis Laboratories Pharma 1,095.00 717.45 53%
Bharti Airtel Telecom 510.00 334.25 53%
Tech Mahindra IT 1,112.00 752.45 48%

News Update

Wind turbine manufacturer, Suzlon Energy, today announced new orders for developing 168.5 megawatt (MW) wind turbine capacity. Most of these are repeat orders and have come from the corporate and small and medium business segments as well as public sector undertakings (PSU). These orders have come on the back of the Techno group’s order of 202 MW on September 21 and the Altrade group’s order of 30 MW on September 3. – Business Standard, 2010 October 15

Belgium-based gearbox maker Hansen Transmissions, a subsidiary of Suzlon Energy, is planning to sell its industrial gearbox division to Sumitomo Heavy Industries for Rs 465 crore (euro 75 million). The division gets about 16 per cent of Hansen’s revenues; the company is mainly a wind energy gearbox manufacturer. After the transaction, Hansen will become a purely renewable energy company, the statement said. The division had generated revenues of Rs 514 crore (euro 83 million) in 2009-2010 and Rs 580 crore (euro 94 million) in the previous financial year, representing 15.6 per cent and 15.5 per cent of total sales of Hansen. – Business Standard, 2010 October 16

Bharti Airtel, India’s largest telco by both revenues and customers, may have to fork out more than Rs 1,800 crore to buy out Telecom Consultants of India’s (TCIL) 30% stake in its subsidiary Bharti Hexacom, which offers mobile services in six northeastern states (excluding Assam) and Rajasthan. – The Economic Times, 2010 October 16

Top mobile operator Bharti Airtel , which recently outsourced the IT requirements for its Africa operations to IBM, is now close to finalising a deal to outsource its customer support services. The deal could be a landmark in the African continent, where customer support is limited and rarely outsourced. – The Economic Times, 2010 October 15

Infosys Technologies on Friday reported consolidated revenues of Rs.6,947 crore in the second quarter ended September 30, an increase of 24.4 per cent over the previous year. The company made a net profit of Rs.1,737 crore in the second quarter, an increase of 13.2 per cent on an annualised basis. Earnings per share were higher by 13 per cent at Rs.30.41 compared to the previous year. – The Hindu, 2010 October 15

Dr Reddy’s Laboratories said on Saturday it had received an approval from the U.S. Food and Drug Administration for lansoprazole delayed-release capsules. The firm will be launching the capsules, a bioequivalent generic version of Prevacid Delayed Release Capsules, in the U.S. market, it said in a statement to the Bombay Stock Exchange. – Reuters, 2010 October 16

Eli Lilly, the US pharma giant, has sued Dr Reddy’s Laboratories over an alleged patent infringement involving Gemzar. The drug, an injection, is used in treatment for non-small cell lung cancer, pancreatic cancer, breast cancer and ovarian cancer and is estimated to have a market of about $700 million. – DNA, 2010 October 12

Drug firm Cadila Healthcare today said it has launched generic Pramipexole tablets, used for treating Parkinson’s disease, in the American market. The sale of Pramipexole tablets in 2010 is estimated to be USD 632 million according to healthcare information solutions company NDC Health, Cadila said. – The Economic Times, 2010 October 14

Global power equipment major Alstom will tie up with Bhel to supply turbines for Nuclear Power Corporation’s (NPCIL) 700-mw pressurised heavy water reactors (PHWR) based nuclear power plants. A tripartite joint venture (JV) agreement between the French company, Bhel and NPCIL will be signed soon, a senior executive of Alstom Power said. – The Financial Express, 2010 October 14

Interesting Reading

HUL plans ‘Bharat’ packs for rural markets

Hindustan Unilever Ltd (HUL) is going beyond the Shakti Ammas to drive penetration in the rural markets. After witnessing a good monsoon which might lead to increased rural spending, HUL is planning to bring out branded packs called ‘Bharat,’ targeted at the rural hinterland pegged at Rs 25. Considering nearly half the FMCG behemoth’s turnover (Rs 17,524 crore) comes from the rural markets, it is now ready to have customised branded packs with lower-priced SKUs to cater specifically to them. According to industry sources, HUL is now in talks with rural marketing agencies to create a ‘Bharat Pack.’ The pack would comprise smaller SKUs costing Rs 4-5, and consist of toothpaste, shampoos, powder and soaps. http://www.thehindubusinessline.com/2010/10/15/stories/2010101553440900.htm

HUL, P&G, Reckitt, Kellogg’s raise margins up to 25%

Modern retail has taken a lead in its fight against consumer product companies with consumer product companies including Hindustan Unilever and Procter & Gamble increasing retailers’ margins on the wake of tough competition from the latter’s private brands. http://economictimes.indiatimes.com/news/news-by-industry/services/retailing/HUL-PG-Reckitt-Kelloggs-raise-margins-up-to-25/articleshow/6750769.cms

Foreign institutions hike stake in 14 out of 16 Sensex companies

Foreign institutional investors (FIIs), which exert a substantial influence on the Indian markets, have increased their stake in nearly half of the Sensex companies in the past quarter. Among the 16 Sensex firms that have disclosed their shareholding pattern for the quarter ended September 30, 2010, 14 saw a rise in the FII holdings. This shows that FIIs were mostly bullish on large caps in the September quarter. – http://www.financialexpress.com/news/Foreign-institutions-hike-stake-in-14-out-of-16-Sensex-companies/698227/

Infosys Technologies: The Leadership Factory

Barney is the head of leadership development at Infosys Leadership Institute. Never in the storied 29-year history of Infosys has so much hinged on this responsibility. The seven founders, each of them pillars in their own right, have built and run a company that is solid in its business construct and has values that are unimpeachable. But they are leaving, one by one.  In his earlier assignments, Barney helped some of the world’s top companies, including Motorola , AT&T and Lucent Technologies , to identify their next set of leaders. But, with Infosys, he’s working for the first time with founders seeking to pass on the baton.  http://economictimes.indiatimes.com/news/news-by-company/corporate-trends/Infosys-Technologies-The-Leadership-Factory/articleshow/6750920.cms

Paint industry indicates resurgent real estate sector

Economists who perceive sales of paint as an indicator of the state of the economy may be counting the numbers already, but these days business is a shade different. With the rise in disposable income and rapid urbanisation, the seasonality of the business is flatenning out—paints are selling all round the year. http://economictimes.indiatimes.com/features/sunday-et/business/Paints-no-longer-a-seasonal-business/articleshow/6761604.cms

The mystery known as Bharti Airtel

Bharti Airtel. Investors will likely have mixed feelings on hearing this name. Depending on when one has invested in the stock, one will either be thrilled or dejected. Year on year, the stock has returned next to nothing. But for those who’ve invested 3-4 months back, the returns have been fantastic to say the least. http://www.equitymaster.com/detail.asp?date=10/13/2010&story=8

A pure value proposition

The water purification category grows on the back of storage water purifiers with a range of value-for-money models launched by Eureka Forbes and HUL. W hen Shapoor Mistry, Chairman of Eureka Forbes, made a rare public appearance at a press conference to announce the launch of new variant of Aquasure, it emphasised his company’s vision to provide pure and safe drinking water to every Indian home. Today the pioneer and leader in water purification is targeting the mass market with value-for-money (VFM) products. Competing with Eureka Forbes is one of the largest FMCG majors in the country, Hindustan Unilever Ltd (HUL), with its Pureit brand. http://www.thehindubusinessline.com/catalyst/2010/10/14/stories/2010101450030100.htm

My Portfolio

Return (%)

My Portfolio BSE Sensex NSE Nifty
This Week -0.80% -0.62% -0.67%
This month 1.12% 0.28% 0.54%
This Year 14.21% 15.23% 16.57%
Since 1-1-2009 133.86% 108.61% 104.89%
Since 1-1-2008 57.18% -0.41% -0.28%
Since 1-4-2007 95.28% 53.95% 58.64%

Top 5 holding in my equity portfolio

Company Sector % of Total Value Average Holding Period Absolute Return %
Infosys IT 9 2.91 Years 84
Tata Global Beverages FMCG 6 1.90 Years 144
Bharti Airtel Telecom 6 9 months 15
HUL FMCG 6 3 Months 17
Maharashtra Seamless Metal 5 3 months 11

Shares I bought this month

Company Avg Price
Graphite India 93.61
Mangalam Cement 160.87
Ess Dee Aluminium 491.95
Opto Circuits 309.05
Divi’s Laboratories 723.45
Tech Mahindra 768.85

Top 5 most gain (absolute)

Company Return % Average Holding Period
Gujarat Gas 217 2.4 Years
Dabur India 158 4.5 Years
Tata Global Beverages 144 1.9 Years
Berger Paints 156 3.6 Years
Infosys 84 2.9 Years

Top 5 most loss (absolute)

Company Return % Average Holding Period
KSB Pumps -8 1 month
Graphite India -3 2 months
Tech Mahindra -4 0 month
Hero Honda -3 4 months
Ess Dee Aluminum -4 0 months

Archive of previous portfolio reviews

Portfolio Review: 9 October 2010

BSE Sensex dipped 0.95% and NSE Nifty 0.65% in the week after the five-week rally and my portfolio gained 0.35% during the week. In the year to date, the gain in my portfolio is 15.13%. In the year 2010, the 65% of my total gain came from the 5 companies – Gujarat Gas, Infosys, Tata Global Beverages, HUL and Dabur India. Top 5 companies in terms of market value in my holding are Infosys, Tata Global Beverages, Bharti Airtel, HUL and Hero Honda.

Good buys in my watch list

Script Sector 3 Years Target CMP Margin
Maharashtra Seamless Metal 737.00 398.30 85%
Hero Honda Auto 3,101.00 1,833.75 69%
HLL FMCG 475.00 295.85 61%
Divis Laboratories Pharma 1,094.00 726.65 51%
Tech Mahindra IT 1,112.00 765.95 45%

News Update

Tata Communications

Tata Communications on Thursday launched InstaCompute and InstaOffice to offer productivity enhancing services to Indian businesses. This marks the company’s expansion in to the cloud space to deliver self-service, pay-as-you-use IT application and data centre infrastructure services, accessed through the Internet. – The Hindu 2010 October 07

Tata Communications expects its international operations, that contribute 65% to the overall revenues of the company, to turn profitable in the next two years. Its president and COO, Vinod Kumar, said, “We expect to break even in the next two years. The wholesale and enterprise services are expected to grow 25% and these will accelerate our growth.” – The Financial Express, 2010 October 09

Hero Honda

Hero Honda plans to set up a fourth manufacturing unit in the Baddi-Barrotiwala-Nalagarh industrial belt of Himachal Pradesh, on the expectation that it will exhaust its installed capacity in the current fiscal year. The world’s largest two-wheeler maker by volumes has sought the Himachal Pradesh government’s help in acquiring land for the project, which includes a mother plant and ancillary units. – The Economic Times, 2010 October 08

Mahindra & Mahindra

Mahindra & Mahindra (M&M), the country’s largest utility vehicles manufacturer, is planning to launch a sub-100 cc motorcycle. The bike, which will be the first of its kind in India, will help company carve out a niche of its own in the highly competitive motorcycle market in India. – The Financial Express, 2010 October 07

Auto major Mahindra & Mahindra (M&M) on Friday said it has advanced the period for redeeming the outstanding Foreign Currency Convertible Bonds (FCCBs) worth USD 141.2 million to this year from earlier April 14, 2011. – The Economic Times, 2010 October 08

NTPC

Noting that a thermal power plant near human habitat and on agricultural land was not viable, a Central green panel has refused to give approval to the National Thermal Power Corporation (NTPC) to set up a 1320 MW coal-based project in Madhya Pradesh. The Public Sector Unit had proposed 2×660 MW coal based thermal power plant over 1000 acres of land in Jhikoli and Tumra villages in Narsinghpur district.  – The Hindi, 2010 October 08

The Centre will compensate NTPC to the tune of Rs 600 crore for cancellation of its 600 megawatt hydropower project at Loharinag-Pala in Uttarakhand, Power Minister Sushil Kumar Shinde said on Friday. NTPC has so far invested about Rs 600-crore on the project and placed orders worth Rs 2,000-crore for equipment. – The Indian Express, 2010 October 08

State-owned NTPC today said it may invest over Rs 10,000 crore to set up a 2,640 MW thermal power project at Gidarbaha in Punjab. – The Economic Times, 2010 October 08

BHEL

Public sector power equipment manufacturer Bharat Heavy Electricals Ltd. (BHEL) has bagged an order from the Karnataka Power Corporation Limited (KPCL) for setting up 700 MW supercritical Unit-3 at the Bellary Thermal Power Station (TPS) in Karnataka on a turnkey basis. The company won the bid for the Rs.3,700-crore contract in an international competitive bidding process, according to a BHEL release. – The Hindu, 2010 October 08

GAIL

State-owned gas utility GAIL India Ltd today placed orders worth Rs 677 crore for laying a gas pipeline from Dabhol in Maharashtra to Bangalore.  With this, within the last 3 months GAIL has placed orders worth about Rs 2,000 crore for both line pipes and pipeline laying to enable swift project implementation, a company press statement said here. – The Economic Times, 2010 October 06

Suzlon Energy Ltd

Suzlon Energy Ltd., India’s largest maker of wind turbines, said it plans to install 800 megawatts of wind energy plants in South Africa over the next two years as the country looks to reduce its power shortage. – Bloomberg Business Week, 2010 October 06

Dr Reddy’s Laboratories

Dr Reddy’s Laboratories is likely to see a major upside coming its way in the form of olanzapine, a drug to treat schizophrenia and bipolar disorder. Currently being marketed under the brand Zyprexa by Eli Lilly, the drug is seen having sales of $1 billion. Eli Lilly has the patent for it now, but this would expire in 2011, and Reddy’s is expected to launch it in the fourth quarter next year. – DNA, 2010 October 05

My Portfolio

Return (%)

My Portfolio BSE Sensex NSE Nifty
This Week 0.35% -0.95% -0.65%
This month 1.93% 0.90% 1.22%
This Year 15.13% 15.95% 17.35%
Since 1-1-2009 135.74% 109.91% 106.27%
Since 1-1-2008 58.45% 0.21% 0.39%
Since 1-4-2007 96.85% 54.91% 59.71%

Top 5 holding in my equity portfolio

Company Sector % of Total Value Average Holding Period Absolute Return %
Infosys IT 10 2.91 Years 84
Tata Global Beverages FMCG 7 1.90 Years 149
Bharti Airtel Telecom 6 9 months 21
HUL FMCG 6 3 Months 16
Hero Honda Auto 5 4 months -1

Shares I bought this month

Graphite India 93.61
Mangalam Cement 160.87
Ess Dee Aluminium 491.95
Opto Circuits 309.05

Top 5 most gain (absolute)

Company Return % Average Holding Period
Gujarat Gas 212 2.4 Years
Dabur India 168 4.5 Years
Tata Tea 149 1.9 Years
Berger Paints 176 3.6 Years
Infosys 84 2.9 Years

Top 5 most loss (absolute)

Company Return % Average Holding Period
KSB Pumps -6 1 month
Graphite India -5 2 months
Opto Circuits -1 0 month
Hero Honda -1 4 months
Tata Communications -1 9 months

Archive of previous portfolio reviews

Weekly Portfolio Review: 3 October 2010

BSE Sensex closed the week 1.87% higher and NSE Nifty 1.88% and my portfolio gained 1.58%. When the three quarters of 2010 passed, return on my portfolio stands at 14.73%. In the year 2010, the 68% of my gain came from the 5 companies – Gujarat Gas, Infosys, Tata Global Beverages, HUL and Dabur India. Top 5 companies in my holding are Infosys, Tata Global Beverages, Bharti Airtel, HUL and Hero Honda.

Good buys in my watch list

Script Sector Target PoR CMP Margin
Mangalam Cement Cement 400.00 204.00 160.25 150%
Graphite India Engineering 200.00 79.00 92.65 116%
Swaraj Engines Auto Ancil 850.00 428.00 423.40 101%
Ess Dee Aluminium Packaging 942.00 490.00 492.45 91%
Divis Laboratories Pharma 1,094.75 755.00 702.30 56%
Hindustan Zinc Metal 1,730.00 1,203.00 1,110.70 56%
Opto Circuits Healthcare 450.00 316.00 301.00 50%

News Update

Mahindra and Mahindra

Mahindra and Mahindra Ltd (M&M), India’s largest utility vehicle maker by unit sales, on Thursday made its entry into the competitive motorcycle market by unveiling two models—the 106cc Stallio and the 300cc Mojo. The entry-level Stallio, priced at Rs. 41,199 (ex-showroom, Pune), will compete with Hero Honda Motors Ltd’s Splendor and Bajaj Auto Ltd’s Discover, among others. The Mojo, aimed at the premium luxury segment, will cost Rs. 1.75 lakh, (ex-showroom, Pune). M&M has 370 sales outlets for two-wheelers, and is expected to increase the network to 400 by October. –  Livemint.com 30 September 2010

Auto-maker Mahindra & Mahindra reported its highest ever sales in a month at 35,177 units in September, an increase of 23.71 per cent over the same period last year. Total sales of M&M utility vehicles, including Scorpio, Xylo, Bolero and Pick-Ups, stood at 16,537 units as against sales of 15,296 units in September 2009, up 8.11 per cent. Sales of the Logan sedan went up by 96.08 per cent to 1,000 units during the month, compared to 510 units in the same month a year ago. The company said sales of three-wheelers and Gio and Maxximo mini-trucks during September jumped by 40.90 per cent to 6,005 units from 4,262 units during the same month last year. – The Indian Express, 01 October 2010

Auto major Mahindra & Mahindra on Monday said it will raise prices of its all products by up to Rs 8,000 with effect from October 1 due to higher raw material costs and implementation of new emission norms. “This increase would be in the range of Rs 3,000 to Rs 8,000 depending on the model and will be effective from October 1, 2010,” Mahindra & Mahindra said in a statement. – The Times of India, 27 September 2010

Hero Honda

The country’s largest two-wheeler maker Hero Honda today reported a jump of 8.06 per cent in sales in September at 4,33,641 units. Besides, for the 5th consecutive time, the company has recorded more than 4 lakh dispatch sales in a single month. – Business Standard, 01 October 2010

The country’s largest two-wheeler maker, Hero Honda Motors Ltd, today launched a new version of its biggest selling motorcycle, Splendor, priced at Rs 39,950 and Rs 41,950 (ex-showroom Delhi). The new bike, Splendor Pro, has features such as a power start and a new engine and comes in two variants, the company said in a statement. – The Hindu, 27 September 2010

Dr Reddy’s Laboratories

Dr Reddy’s Laboratories expects U.S. revenue to more than double to about $1 billion by fiscal 2013 and is planning to expand its presence in emerging markets like Russia. Dr Reddy’s, India’s No. 2 drug maker by sales, plans to consolidate in Russia by acquiring more prescription generic drugs. – Reuters, 29 September 2010

Hindustan Unilever

Hindustan Unilever (HUL) has forayed into the retail cafes segment to promote its beverages and food brands, in a significant brand extension to capitalise on the increasing trend of eating out. The FMCG major is test-marketing ‘Lipton Cafes’ and kiosks across the education, travel, corporate and leisure channels in key cities. While it is principally a beverages business, the cafés also sell other HUL products like soups. They also offer food items like pastries and cakes at locations in airports and malls. Currently, HUL has over 40 Lipton Cafes (with seating arrangement) and kiosks as pilot models in India. – The Financial Express, 29 September 2010

Suzlon Energy

Suzlon Group Company, REpower Systems, wind turbine manufacturer, said on Wednesday it signed a contract with German wind farm project developer Denker and Wulf AG, to set up, operate and maintain wind power plants with the capacity of generating 74.8 megawatts of power. The 74.8 megawatt (MW) project will be constructed by 2012. The contract includes a 15-year integrated service package, which covers project servicing and maintenance, in addition to delivery and installation of the turbines. – International Business Times, 29 September 2010

Indian wind turbine maker Suzlon Energy is in talks to buy the remaining nine percent stake in German unit REpower Systems AG, its chief financial officer said on Monday. – Reuters, 27 September 2010

Opto Circuits India Ltd

Opto Circuits India Ltd. plans to spend 7.5 billion rupees ($167 million) over three years to set up two medical equipment factories in India and Malaysia as the global incidence of diabetes and heart disease rises. People are becoming more aware of lifestyle diseases, said Vinod Ramnani, managing director at Opto Circuits, India’s largest domestic medical equipment maker. “That is the main driver” for growth, he said. – Bloomberg, 30 September 2010

Interesting Reading

M&M is not a conglomerate; it’s a federation

In an interview, Mahindra answers critics who say M&M is spreading itself too thin by entering too many areas—two- and three-wheelers, tractors, utility vehicles, cars, light commercial vehicles, trucks and even aeroplanes, and offers insights into his leadership style. http://www.livemint.com/2010/09/29205723/MampM-is-not-a-conglomerate.html?atype=tp

Mahindra & Mahindra: The Italian job

Mahindra & Mahindra is set to launch its range of motorbikes by this month-end. It had launched scooters last year, leveraging its Kinetic purchase. With incumbents well-entrenched in the market, Mahindra & Mahindra has started on an offensive even before the launch. “It had to go aggressive with a bevy of bikes because it has to break the clutter,” says PricewaterhouseCoopers Leader (automotive practice) Abdul Majeed. http://www.business-standard.com/india/news/mahindramahindraitalian-job/409208/

Ess Dee set to take on Hindalco in household aluminium foils market

Ess Dee Aluminium, which acquired India Foils from Sterlite Industries in 2008, is poised to mark its maiden entry into the retail market for household aluminium foils, pitching it against the industry leader Hindalco Industries . Ess Dee’s foray into foils comes at a time when global aluminium giants, like Novelis, have decided to shut their foils unit in the UK and consolidate operations across Europe. Earlier, Alcoa too had divested Reynolds, its packaging and consumer business best known for the ‘Reynolds’ foil wrap. http://economictimes.indiatimes.com/news/news-by-industry/indl-goods-/-svs/metals–mining/Ess-Dee-set-to-take-on-Hindalco-in-household-aluminium-foils-market/articleshow/6550191.cms

My Portfolio

Return (%)

My Portfolio BSE Sensex NSE Nifty
This Week 1.58% 1.87% 1.88%
This month 1.58% 1.87% 1.88%
This Year 14.73% 17.06% 18.12%
Since 1-1-2009 134.91% 111.93% 107.62%
Since 1-1-2008 57.89% 1.18% 1.05%
Since 1-4-2007 96.16% 56.40% 60.76%

Top 5 holding in my equity portfolio

Company Sector % of Total Value Average Holding Period Absolute Return %
Infosys IT 10 2.91 Years 86
Tata Global Beverages FMCG 6 1.90 Years 131
Bharti Airtel Telecom 6 9 months 26
HUL FMCG 6 3 Months 21
Hero Honda Auto 6 4 months 0

Shares I bought this month

Top 5 most gain (absolute)

Company Return % Average Holding Period
Gujarat Gas 220 2.4 Years
Dabur India 174 4.5 Years
Tata Tea 131 1.9 Years
Berger Paints 175 3.6 Years
Infosys 86 2.9 Years

Top 5 most loss (absolute)

Company Return % Average Holding Period
Divis Laboratories -3 1 month
KSB Pumps -3 1 month
Graphite India -7 2 months
Swaraj Engines -2 2 months
Tata Communications -8 9 months

Archive of previous portfolio reviews