Tag Archives: Automobiles

Weekly Portfolio Review: 08 January 2011

BSE Sensex lost 817 points (3.98%) to close the week at 19,692 and NSE Nifty 230 points (3.75%) to close at 5,905. My portfolio lost 1.69% in the week. In my portfolio, Opto Circuits lost 10.9%. Other major losers were L&T, Oil Country Tubular, Hero Honda, Bharti Airtel and Biocon which lost 5% to 7%.   Zensar Technology and GAIL were major gainers.

Interest rate hike fears amid raising inflation affected the market negatively and going forward it will be a great concern in the short term. Interest rate hike will affect the overall economic activities in the country while food inflation may continue in top gear due to supply constraints.

Good buys in my watch list

Script Sector 3 Years Target Current Price Expected Margin
Mangalam Cement Cement 400.00 133.25 200%
Tata Sponge Iron Metal 700.00 366.00 91%
Zensar Tech IT 318.00 173.25 84%
Tech Mahindra IT 1,074.00 707.95 52%
Clariant Chemicals Chemicals 1,092.00 751.05 45%

I will be buying Zensar Technologies, Tech Mahindra and Clariant Chemicals in coming week.

Clariant Chemicals is a new entrant to my portfolio. Clariant Chemicals (India) Limited is one of India’s leading specialty chemicals companies and is the No. 1 player in  pigments, textile chemicals, leather chemicals. Its products serve a wide range of industries from consumer goods to oil and gas. . www.clariant.in

Zensar Technologies is a globally focused software and services company spread across eighteen countries across the world. Zensar provides end-to-end services from IT development to Business Process Outsourcing, from consulting to implementation.

Tech Mahindra is part of the Mahindra Group, in partnership with British Telecommunications plc (BT), one of the world’s leading communications service providers. Focused primarily on the telecommunications industry, Tech Mahindra is a leading global systems integrator and business transformation consulting organization. Tech Mahindra expanded its IT portfolio by acquiring the leading global business and information technology services company, Mahindra Satyam (earlier known as Satyam Computer Services). www.techmahindra.com

Interesting Read

New arena for 2-wheeler firms

With global markets open to the Hero Group after its split with Japan’s Honda Motor, the next battleground for Indian two-wheeler companies could be overseas. Until now, the joint venture was restricted from exporting freely to other markets and was forced to ship to a handful of countries through Honda subsidiaries. http://www.business-standard.com/taketwo/news/new-arena-for-2-wheeler-firms/420613/

My Portfolio

Return

My Portfolio BSE Sensex NSE Nifty
This Week -1.69% -3.98% -3.75%
Since 1-1-2010 10.21% 12.75% 13.53%
Since 1-1-2009 125.66% 104.12% 99.55%
Since 1-1-2008 51.68% -2.55% -2.88%
Since 1-4-2007 88.44% 50.64% 54.51%

Top 5 holding in my equity portfolio

Company Sector % of Total Value Average Holding Period Absolute Return %
Infosys IT 7 3.2 Years 102
Graphite India Engineering 6 3 Months 7
HUL FMCG 5 5 Months 19
KSB Pumps Engineering 5 3 Months -5
Divi’s Laboratories Pharma 5 2 Months -9

Shares I bought this month

Company Average Cost
Amara Raja Batteries 195.57
Zensar Technology 170.48
Oil Country Tubular 98.45

Shares I sold this month

Company Average Price

Top 5 most gain (absolute)

Company Return % Average Holding Period
Gujarat Gas 209 2.7 Years
Dabur India 152 4.7 Years
Tata Global Beverages 103 2.2 Years
Berger Paints 148 3.8 Years
Infosys 102 3.2 Years

Top 5 most loss (absolute)

Company Return % Average Holding Period
Opto Circuits -19 2 months
Ess Dee Aluminium -5 2 month
Tata Communication -25 12 months
Mangalam Cement -15 3 months
Divi’s Laboratories -9 2 months

Archive of previous portfolio reviews

Clariant Chemicals (India) Limited represents a valuable repository of manufacturing and marketing experience. Its constituents were all well respected companies who played an invaluable role in the development of the textiles, leather, paints, plastics, printing inks and agrochemicals industries in India. Today Clariant Chemicals (India) Limited is – No.1 in pigments, No.1 in textile chemicals and No.1 in leather chemicals.


Industries: Looking back and ahead

As the year 2010 coming to an end, reports on various industries appeared across the news papers. Here are the links to those reports on the sectors related to our investments.

PHARMACEUTICALS and HEALTH CARE

The pharma story: A decade of transition

The last 10 years were a crucial transition period for the Indian pharmaceutical industry. The next 10 years will be more crucial, predict industry experts. The period between 2000 and 2010 witnessed India’s top 10 drug companies growing from sales turnovers, ranging between Rs 500-Rs 800 crore, to professionally-run multinational generic companies with turnovers ranging from Rs 3,500 crore to over Rs 7,000 crore. If most of these companies earlier relied on bulk drug supplies, small exports to unregulated markets in Africa and Asia and formulation sales in the domestic market, the last 10 years saw them aggressively tapping regulated markets of the US and Europe and penetrating into newer and emerging markets. If the Indian industry had filed only three marketing applications with the US Food and Drug Administration (FDA) in 1998, that number swelled to 148 in 2009. http://www.business-standard.com/india/news/the-pharma-storydecadetransition/420227/

Pharma: Walking the tightrope between affordability, profits

It could well turn out to be a significant year for the over Rs 1-lakh-crore pharmaceutical industry, if clarity dawns on contentious issues facing the sector. Be it implementation of intellectual property laws, signing of free-trade agreements (FTAs), policy of price control on medicines or spate of mergers and acquisitions (M&A) – 2011 will have stake-holders looking to the Government for direction. It all boils down to how the Centre walks the fine line in balancing access to affordable medicines with encouraging industry to maintain healthy bottom-lines. http://www.thehindubusinessline.com/2010/12/31/stories/2010123151610300.htm

YEAR 2010: Acquisitions spurred Pharma, healthcare expansion

Looking healthier on booster dose of global alliances, the Indian pharma and healthcare sectors repeatedly hit headlines this year on account of M&As, but inbound buyouts by MNCs raised concerns over availability of low-cost drugs. Be it Sun Pharma’s victory in acquiring Israel’s Taro after a long drawn battle, or Piramal’s selling off its domestic formulations business to Abbott, or Biocon’s marketing deal with Pfizer, Indian drug makers sought strength from global play. http://www.business-standard.com/india/news/year-2010-acquisitions-spurred-pharma-healthcare-expansion/119573/on

Pharma: On a healthy wicket

The Indian pharmaceutical sector closed 2010 on a high note, what with an impressive stock market performance, driven largely by earnings growth and bettering prospects. And if the sector undercurrents are to be relied upon, good times are likely to continue this year as well. Strong demand growth in the US market, increasing generic penetration worldwide besides a robust domestic market, promise to keep the Indian drug makers in good health in 2011 too. http://www.thehindubusinessline.com/2011/01/01/stories/2011010151720200.htm

FMCG

2010 saw fastest FMCG launches, relaunches

2010 could well figure in the fast moving consumer goods (FMCG) annals as the year of product launches and relaunches. Indeed, the year saw almost every major player launching or relaunching as many as 10-30 products or their variants, either under existing brands or under altogether new brands and categories. http://www.dnaindia.com/money/report_2010-saw-fastest-fmcg-launches-relaunches_1488220

In demand: Iconic consumer brands

Good old brands are finding their way into the portfolios of some of the top FMCG companies in the country. They may be small but that hasn’t prevented them from finding their way into the product portfolios of some of the top fast moving consumer goods (FMCG) companies in the country. Iconic consumer brands are much in demand today. http://www.business-standard.com/india/news/in-demand-iconic-consumer-brands/419643/

Spate of price hikes spells good fortune for FMCG industry

FMCG players seem to be regaining their pricing power, with Hindustan Unilever taking price increases of 5-8 per cent in soaps and detergents, Dabur India hiking prices by 3-4 per cent and Britannia Industries 5-10 per cent on select brands of biscuits over the past six months. After dealing with rampant inflation, bruising competition and parsimonious consumers in 2009 and 2010, listed players in the fast-moving consumer goods (FMCG) segment can now look forward to an easier year ahead. http://www.thehindubusinessline.com/2010/12/27/stories/2010122751610100.htm

AUTOMOBILE

Car industry: Great hopes for 2011

The Indian car industry is looking forward to another promising year, even as the global car market struggles to find its feet after the economic slowdown. With car sales rising over 30 per cent in 2010, the momentum is expected to continue into 2011 on the back of new launches, rising income levels, and the continued availability of cheap finance. http://www.thehindubusinessline.com/2011/01/01/stories/2011010151810200.htm

Indian car makers likely to see slower growth in the new year

Even as global peers struggled with the after-effects of the 2008-09 economic slowdown, Indian car makers enjoyed double digit growth this year and saw their share prices outpace the benchmark market index. But as they enter 2011, they may have to get used to a new normal—slower growth and fiercer competition. http://www.livemint.com/2010/12/29214755/Indian-car-makers-likely-to-se.html?atype=tp

2000-2010: A decade of growth in the auto sector

The noughties or 2000-2010 will be remembered for the rise of Indian auto as a strong and lucrative domestic market. During this period, Indian manufacturers became bold and aggressive with global ambitions to boot in the in the second half. Read more at: http://profit.ndtv.com/news/show/2000-2010-a-decade-of-growth-in-the-auto-sector-132884?cp

INFORMATION TECHNOLOGY

Buoyant Indian IT industry rebounds but remains cautious

Recovering from global tech meltdown, the resilient Indian IT industry returned to high growth during a tumultuous 2010 but is cautiously optimistic about 2011 in view of the economic uncertainty in Europe and the US, which account for 80-85 per cent of its export revenue from software services and back office operations. http://economictimes.indiatimes.com/tech/ites/buoyant-indian-it-industry-rebounds-but-remains-cautious/articleshow/7190235.cms

Mid-size IT companies set to join the party in 2011

The demand for IT services remains strong due to better offshoring sentiment and increased spending by clients . A revival in discretionary projects, together with stable pricing, is likely to continue in the New Year as well. But experts caution that demand visibility has narrowed to only three-six months, given the uncertain economic scenario. http://economictimes.indiatimes.com/markets/analysis/it-mid-size-cos-set-to-join-the-party-in-2011/articleshow/7181987.cms

Infotech looks ahead to high growth, innovation

It’s been a happy 2010 for the tech industry. It ushered in glimpses of recovery, while the second half of the year brought in growth, hiring and resilience , pumping in a sense of confidence back to the markets which were shattered by the global economic meltdown. The highlight was the revival and the resilience it showed. IT companies posted good numbers clearly signalling that the risk of a double dip recession emerging and disrupting growth are now behind us. Besides, hiring plans and increments were back on board, demonstrating the feel good in the sector. So while 2010 was characterized by restructuring , consolidation, pragmatic learning and smart budgeting , 2011 will continue to build on that and move ahead, say industry experts. Read more: http://timesofindia.indiatimes.com/business/india-business/Infotech-looks-ahead-to-high-growth-innovation/articleshow/7170339.cms#ixzz19o9GYqMJ

CEMENT

Cement industry will be weighed down by excess supply

2011 could be a challenging year for cement manufacturers. Though demand for cement will reach higher double-digit growth, it will be insufficient to absorb the entire supply. Rising input prices and excess capacity (and resultant pricing pressures) will continue to depress margins for cement manufacturers. A higher growth in despatches (versus 7 per cent growth this year) will follow good housing demand and the Government’s thrust on infrastructure projects as the eleventh Five Year Plan comes to an end. With GDP growth estimates for 2011 coming at around 8.8 per cent, the cement industry can be expected to report a 10-11 per cent growth in consumption. http://www.thehindubusinessline.com/2010/12/30/stories/2010123052220200.htm

POWER

Power companies seen strengthening foundations for big plans in 2010

From disinvestment to cementing nuclear energy pacts, 2010 saw India’s power sector strengthen its foundations for the massive capacity expansion required to meet the growing needs of the energy-starved nation. The year also saw a shift in the process for awarding power projects to a tariff-based bidding system. These developments augur well for the sector, as India — which is eyeing a GDP growth rate in excess of 9 per cent — aims to add 1,00,000 MW of electricity during the XII Five-Year Plan (2012-17), with the major contribution expected to come from private power producers. http://economictimes.indiatimes.com/news/news-by-industry/energy/power/power-companies-seen-strengthening-foundations-for-big-plans-in-2010/articleshow/7189053.cms

MINING

Hunt for overseas coal assets to intensify

With the Indian economy back on the track after the slowdown, merger and acquisition (M&A) activities in the resource sector are likely to pick up momentum in the coming year. After establishing a foothold in the global oil and gas asset market, India now eyes coal assets. Meanwhile, the Indian government has proposed key changes in the existing mines and minerals development act (MMDR to allow trading of exploration and mining concessions to attract foreign investors. If the these legislative changes are approved, Indian mining sector, especially coal, might see a flurry of M&A activities. http://news.in.msn.com/business/article.aspx?cp-documentid=4742358


Weekly Portfolio Review: 19 December 2010

It is interesting to read the news reports to see the reason for up or down of share market every day – sometimes it is quite funny or weird! The last Monday Sensex closed up 183 points ‘taking support from positive Europe markets’, on Tuesday another 107 points high ‘amid hopes that dip in inflation rate will lead the Reserve Bank to halt the tightening of key policy rates for now’. However the Sensex was down by 151 points on Wednesday ‘reacting to profit booking in global peers. Rate sensitive sectors like realty and banks were under pressure ahead of Reserve Bank of India’s credit policy meet’ and then it closed higher by 217 points on Thursday, ‘after the RBI kept short term lending and borrowing rates unchanged’. Net effect is that the Sensex ended 356 points high at 19,865 and Nifty 91 points at 5,949 for the week.

In fact, one day it was up with the hope that RBI would halt the tightening of rate, next day it was down under pressure ahead of RBI’s meet and following day it went up as RBI kept rate unchanged!

The major news for the market last week was the official announcement of parting of Honda from the join venture, Hero Honda. It has been in the news for quite sometimes now and the uncertainty has ended with this formal announcement. But the ‘analysts’ are still divided on the outcome and long term effect on the company after Honda leaving the JV.

Good buys in my watch list

Script Sector 3 Years Target Current Price Expected Margin
KSB Pumps Engineering 1,072.00 501.15 114%
Graphite India Engineering 200.00 97.80 104%
Tata Sponge Iron Metal 700.00 352.95 98%
Mazda Engineering 207.00 111.80 85%
Tractors India Ltd Construction 1,150.00 631.30 82%
Divis Laboratories Pharma 1,095.00 602.10 82%
Zensar Tech IT 289.00 160.00 81%
Swaraj Engines Auto Ancil 850.00 481.45 77%
Tech Mahindra IT 1,074.00 669.45 60%
Opto Circuits Healthcare 450.00 280.95 60%
BHEL Engineering 3,567.00 2,304.70 55%
HUL FMCG 446.00 294.40 51%

I will be buying KSB Pumps and Tata Sponge Iron in coming week. Graphite India is within my top 5 holding, so not buying now.

News Update

Indian GSM telecom operators added a whopping 17.45 million new subscribers in November, taking the all-India GSM cellular subscriber base to 526.18 million, cellular operators’ association COAI said on Friday. Bharti Airtel, the largest GSM player, added 3.10 million new users in November, taking its total subscriber base to 149.39 million. It had 28.39 per cent market share as of the end of November, 2010, it added. – Indian Express, Dec 16, 2010

Bharti Airtel Ltd. plans to expand its mobile network coverage in Madagascar by about 25 percent in 2011 to attract customers in rural areas. The expansion will offer services to a further 5 million to 6 million people. The company plans to invest $50 million over 18 months and wants to increase customers to 3.2 million in Madagascar within a year from 2 million now. – Bloomberg, Dec 14, 2010

The Hero Group on Thursday announced that it would buyout the entire 26 per cent stake of its partner Honda Motor Company Group in Hero Honda thus breaking its 26-year-old partnership. Hero Honda will continue to produce and sell the existing models, while new models would be also launched. However, all future products will be rolled out under the new licensing agreement between Hero Group and Honda. Hero Honda brand name will also be changed over time. The new licensing arrangement signed between the Hero Group and Honda Motor Co., Japan, would also enable higher growth by giving it (Hero Group) the freedom to develop its own research and development capabilities and exploit global export and manufacturing opportunities.  The two-wheeler major will also start exporting products across the globe and look for manufacturing opportunities.  – The Hindu, Dec 16, 2010

State-run power producer NTPC may approach the government next fiscal for permission to raise funds through a follow-on public offer to part-finance power equipment purchases worth an estimated Rs 1,50,000 crore.  – The Economic Times, Dec 17, 2010

NTPC, the state-run power producer, signed a power purchase agreement (PPA) with the West Bengal government yesterday for a thermal unit it will be setting up at Katwa (Bardhaman district). “The total investment for the 2×800 Mw Katwa project will be Rs 9,600 crore, roughly around Rs 6 crore per Mw. Discussions are also going on for a greenfield (new) project at Santaldih (Purulia district),” – Business Standard, Dec 14, 2010

Public sector undertaking National Thermal Power Corporation Limited (NTPC) today signed a power purchase agreement with Punjab State Power Corporation Ltd (PSPCL) for a 2,640-Mw coal-based thermal power project at Gidderbaha, being undertaken at a cost of Rs 15,000 crore. – Business Standard, Dec 13, 2010

Gujarat plans to treble its cement production capacity in 3-5 years. Proposals have been invited from cement companies like ACC , ABG, Ambuja Cement, Emami , Indiabulls, Adani group, Ultratech and L&T and the state hopes to raise its capacity from 20 million tonnes per annum to 70 million tonne. – The Economic times, Dec 17, 2010

Interesting Read

Record car sales mark 2010 for Indian auto sector

Record sales made 2010 a special year for automakers in India, which also saw the iconic Maruti 800 take a bow from big cities, Hero split with Honda and demand for the promising Nano sputter following a string of accidents. For a country whose economy has been expanding at near 9% rate, it was not surprising that automobile sales broke all records between July and October to average a growth of 30%. Such was the appeal of the country and the appetite of the Indian motorist that Bugatti launched its Veyron 16.4 Grand Sport, which at Rs 16 crore became the costliest car in India, while other niche marques Aston Martin and Spyker Cars said they too would drive in soon. http://www.hindustantimes.com/Record-car-sales-mark-2010-for-Indian-auto-sector/Article1-640211.aspx

Car Trouble In India

India’s automobile industry has raced from a crippling slowdown to scorching growth in less than two years. But a severe shortage of parts is applying the brake in this otherwise rosy journey. http://www.forbes.com/2010/12/15/forbes-india-auto-industry-faces-ugly-turn.html

FMCG cos fastracked expansion in 2010

A total of 13 acquisitions in 2010, mostly global, that is how Indian companies announced their arrival in the global FMCG space as they looked to fastrack their way to international expansion. Led by Godrej, which had seven acquisitions on its account, domestic firms, including Marico (2 buyouts) and Dabur (2 acquisitions) and Emami (1 buyout) went on a global buying-spree during the year. The total valuations of the acquisitions could not be ascertained as the firms decided to keep it under wraps except in one or two cases.  http://www.indianexpress.com/news/domestic-fmcg-cos-fastracked-expansion-via-buyouts/726409/

Food in the fast lane

Although the market for ready-to-eat (RTE) and ready-to-cook (RTC) foods is still nascent, the fact that there is heightened activity from brands in both these segments points to the opportunities they see in them. While there is a lot more in Indian cuisine in RTE, RTC foods are more about non-traditional foods such as soups, noodles and pasta; vermicelli is also popular. For instance, Maggi is seeing some serious competition from big and small, national, regional and retail brands now. http://www.hindustantimes.com/Food-in-the-fast-lane/Article1-637647.aspx

HUL: from survival to revival

A year ago, India’s largest consumer firm by revenue seemed to be floundering. Here’s how the company achieved a turnaround. http://www.livemint.com/2010/12/13220503/HUL-from-survival-to-revival.html

Telcos unlikely to start tariff war in 3G

Consumers awaiting high-speed third-generation (3G) services should be ready to shell out a premium for data as telecom players gear up to rollout their services over the next few months. Industry experts say the price war fought during the 2G days will not hold true for the 3G services considering the hefty prices that operators have paid for acquiring licences. http://timesofindia.indiatimes.com/business/india-business/Telcos-unlikely-to-start-tariff-war-in-3G-/articleshow/7097008.cms

All that’s cheap is not good

Avoid buying stocks based on cost alone. Highly priced stocks may be expensive but provide better returns. Whenever we buy a product or service, we look at its cost. Cheaper products seem more affordable and hence attractive to buy. The same applies to stocks. Low-priced ones attract more buying interest. However, do they give good returns? One must know how to compare stocks, the pricing and how to find value for money. http://www.business-standard.com/india/news/all-that%5Cs-cheap-is-not-good/417884/

My Portfolio

Return

My Portfolio BSE Sensex NSE Nifty
This Week 1.46% 1.82% 1.56%
This month -0.21% 1.75% 1.46%
This Year 8.80% 13.74% 14.38%
Since 1-1-2009 122.78% 105.92% 101.04%
Since 1-1-2008 49.74% -1.69% -2.15%
Since 1-4-2007 86.03% 51.96% 55.66%

Top 5 holding in my equity portfolio

Company Sector % of Total Value Average Holding Period Absolute Return %
Infosys IT 8 3 Years 97
Graphite India Telecom 5 2 Months 1
HUL FMCG 5 5 Months 12
Mangalam Cements Cements 5 3 Months -17
Swaraj Engines Auto Ancillory 5 2 Months 3

Shares I bought this month

Company Average Cost
Tata Sponge Iron 368.41
Graphite India 95.62
BHEL 2,339.58
HUL 302.01
Tractors India Ltd 690.22
Swaraj Engines 491.85

Shares I sold this month

Company Average Price

Top 5 most gain (absolute)

Company Return % Average Holding Period
Gujarat Gas 219 2.6 Years
Dabur India 153 4.6 Years
Tata Global Beverages 115 2.0 Years
Berger Paints 159 3.8 Years
Infosys 97 3.0 Years

Top 5 most loss (absolute)

Company Return % Average Holding Period
KSB Pumps -11 3 months
Honeywell Automation -14 1 month
Tata Communication -25 11 months
Mangalam Cement -17 2 months
Divi’s Laboratories -15 1 month

Archive of previous portfolio reviews

Weekly Portfolio Review: 11 December 2010

Concern of interest rate hike amid rise in food inflation and intensified probe into the 2G scam affected stock market negatively in the last week. Report of strong industrial production growth published on Friday helped to regain some of the loss of preceding three days. During the last week, Sensex lost 2.29% to 19,509 and Nifty 2.26% to 5,857. My portfolio lost 1.64% in the month to date.

Good buys in my watch list

Script Sector 3 Years Target Current Price Expected Margin
Graphite India Engineering 200.00 97.15 106%
Swaraj Engines Auto Ancil 850.00 474.65 79%
Tractors India Ltd Construction 1,150.00 664.75 73%
HUL FMCG 445.00 295.45 51%
BHEL Engineering 3,567.00 2,278.00 57%
NTPC Power 293.00 192.20 52%
Hindustan Zinc Metal 1,730.00 1,150.80 50%

I will be buying Swaraj Engines, Tractors India, HUL and Bhel in the coming week. Graphite India is in my top 5 holding.

News Update

Public sector undertaking NTPC today signed a power purchase agreement with Punjab State Power Corporation Ltd (PSPCL) for 2,640 MW coal-based thermal power project at Gidderbaha for Rs 15,000 crore. The plant consists of four units of 660 MW each, which would be entirely funded by NTPC. – The Economic Times, 11 DEC 2010

Country’s largest power producer NTPC has earmarked a whopping Rs 1,50,000 crore investment for sourcing equipment for its power projects in the next fiscal, the deliveries of which will be made over five years – The Economic Times, Dec 8, 2010

The board of state-run Bharat Heavy Electricals Ltd (Bhel) board has approved the company’s plan of starting a non-banking financial company (NBFC) to finance power projects, said B.S. Meena, secretary, department of heavy industries (DHI). Bhel plans to apply for a licence from the Reserve Bank of India. – Livemint, 10 DEC 2010

The Munjals of Hero Group have initiated talks with lenders to secure bridge financing for the buyout of its Japanese joint venture partner’s equity in Hero Honda. – Times of India, Dec 10, 2010

B.M Munjal promoted Hero group will buyout the Japanese partner Honda from the world’s largest two wheeler producing venture, a deal for which would signed this month. After months of negotiations, Hero group is believed to have reached an agreeemnt to acquire 26 per cent stake of Honda in the 26 year old joint venure but it is not clear at what price. – Economic Times, Dec 8, 2010

The country”s largest two-wheeler maker Hero Honda today said it has hiked the prices of its models in the range of Rs 500- Rs 1500 to offset the rising input costs. – The Economic Times, Dec 8, 2010

The Hero Group is in the process of scouting for technology partners in Europe and South East Asia given that the company has reached an agreement with Honda Motor Co to end its partnership in producing motorcycles. The technology agreement between Hero and Honda for bikes expires in 2014.  – NDTV, Dec 7, 2010

Opto Circuits India has announced that Cardiac Science Corporation, the wholly owned subsidiary of the company and a global leader in automated external defibrillator (AED) and diagnostic cardiac monitoring devices, added two electrocardiographs (ECGs) under its Burdick brand, known for its accuracy, reliability, and ease of use. The ECGs, available only in the US, deliver built-in, bi-directional communication so customers can connect to leading EMRs. – India Infoline, Dec 10, 2010

Andhra Pradesh-based Amara Raja Batteries on Friday said that it is scouting for locations to set up a new manufacturing unit in the Northern part of the country which is likely to be operational by 2012.

Amara Raja Batteries Ltd, the technology leader and one of the largest manufacturers of lead acid batteries in India, today unveiled Amaron Volt TM, a specialized storage battery for the Indian telecom industry in the era of 3G & BWA enabled Data driven market and Mobile Internet.  Availability of assured source of Green Energy even in rural and harsh outdoor conditions is what Amaron Volt TM offers. Amaron Volt TM, a 2V high integrity series product is the latest VRLA offering from Amaron Hi Life range to meet the emerging demanding applications requirement of reliable backup power in Indian telecom market. – Business Standard, Dec 10, 2010

Electric vehicle-maker, Mahindra Reva Electric Vehicles , today launched its Revai priced at Rs 3.10-lakh (ex-showroom Pune) and is targeting tripling its sales in the next 12-18-months. – Economic Times, Dec 10, 2010

GAIL India has proposed to set up 5,500 km of gas connectivity over the next two-three years investing USD 4 billion, a senior company official said today. Economic Times, Dec 10, 2010

State-owned Gas Authority of India (Gail), the country’s largest gas transmission and marketing company, has launched 10-year bond issue to raise funds at an upper cap of 8.9% per annum. The issue, which opened on Tuesday, has got close to Rs 1,000 crore bids between 8.85 and 8.89%. According to distributors, the firm has been negotiating with arrangers for the past few days to raise funds at not more than 8.8%. However, with the cost of funds inching up, it could not get commitment from the arrangers. Interestingly, even at this rate, arrangers were not willing to underwrite the issue on their books. – The Economic Times, Dec 8, 2010

Telecom giant Bharti Airtel Friday launched its IMEWE (India-Middle East-Western Europe) cable system, an ultra high capacity fiber optic submarine cable system to deliver better connectivity requirements of Middle East and European countries to Asia transiting through India. ‘IMEWE will open a second gateway for Airtel’s customers to the European market from Asia via Mumbai,’ the company said in a statement. – Economic Times, Dec 10, 2010

Developing a technology that may change the way the world approaches cancer, Biocon Limited, in collaboration with a US-based research company, is working on creating a “therapeutic vaccine” that will help the body activate the immune system to fight cancer on its own. – DNA, Dec 7, 2010

Agri machinery maker Mahindra & Mahindra today announced a tie-up with Italy based farm equipment company Maschio-Gaspardo S.p.A for getting supply of a complete range of rotary tillage equipment. As part of this agreement between Maschio and Mahindra AppliTrac (part of Mahindra & Mahindra’s farm equipment sector) the Italian company will manufacture rotovators. This will be bearing the Mahindra brand name which will be available through both Mahindra and Swaraj dealerships. Maschio will also manufacture other kinds of rotary tillage equipment for planting, seeding, crop care and crop residue management for Mahindra AppliTrac – The Economic Times, Dec 4, 2010

Interesting Read

Pharma companies line up for clinical trials

Signalling a growing interest in new drug discovery research, some major Indian pharmaceutical firms had applied for conducting clinical trials on at least 12 new drugs in 2010. The most sought therapeutic area is cancer. The numbers are the highest ever in the history of domestic drug discovery initiatives triggered by companies such as Dr Reddy’s and Ranbaxy over a decade ago. http://www.business-standard.com/india/news/pharma-companies-linefor-clinical-trials/417751/

Input, ad costs put pressure on FMCG cos

Several mid-sized fast moving consumer goods (FMCG) companies such as Godrej Consumer Products , Dabur India , Marico and Emami have outperformed their larger multi-national peers over several quarters during the year. Acquisitions abroad and consumers’ shift from high-priced premium products to low-priced mass-market products have helped the companies post good performances. But results of the quarter to September indicate that this stand-out performance could be difficult to sustain. http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fmcg/Input-ad-costs-put-pressure-on-FMCG-cos/articleshow/7068767.cms

Labour shortage in the fields drives farmers to tractors

Pawan Goenka noticed something unusual last year—tractor sales were climbing even though India had its worst monsoon in more than three decades and farm output dropped 2.8% in the three months to December last fiscal. The umbilical cord that tied rainfall patterns and tractor sales seemed to have been ruptured. The president of auto and tractor maker Mahindra and Mahindra Ltd offers an interesting explanation to this puzzle: growing labour shortages in rural India are encouraging farmers to mechanize operations. “The traditional model of predicting growth in the tractor market was only linked to the monsoon and didn’t factor in labour shortages,” says Goenka. http://www.livemint.com/2010/12/06233536/Labour-shortage-in-the-fields.html?atype=tp

Cement loosens grip again

With a meaningful demand recovery expected only around mid-CY11, analysts expect the demand-supply mismatch to prevail and stocks to underperform broader markets in the near term. After a superlative performance in October, when the overall dispatches of the cement industry grew over 18 per cent, the sector has taken a beating in November. In fact, on a sequential basis, the top five cement players have reported a 19.8 per cent drop in combined dispatches, indicating that demand is yet to pick up sufficiently to support prices. While analysts expect a demand recovery by mid-CY2011, most of them currently have a neutral to bearish view on the sector, as the valuations are not cheap. http://www.business-standard.com/india/news/cement-loosens-grip-again/417364/

What next for cement stocks?

The July-September quarter was the worst for the cement industry in the recent down cycle. Sales were unimpressive. Profits fell sharply. Every variable played spoil-sport. The extended monsoons dampened demand as construction activity remained poor. Despatches were further curtailed by unavailability of wagons and shortage of labour. Overhang of excess capacity reduced realizations. Correspondingly, an upsurge in raw material prices hindered profitability. The October-December quarter is expected to bring some relief. The month of October witnessed a sharp rebound in production and despatches. This is a normal trend after a dull monsoon season. Cement realizations also improved significantly. Fear of price hikes led dealers to build-up their inventory. http://www.equitymaster.com/detail.asp?date=12/7/2010&story=4&title=What-next-for-cement-stocks

BHEL adopts strategy to venture into newer areas

Bharat Heavy Electricals Ltd (BHEL), the country’s biggest power equipment company, has adopted a policy of forming joint ventures and concluding technical tie-ups for venturing into newer areas of business. While parking of surplus funds in productive activities is one driver for the approach, attention on diversification and risk sharing seems to be the theme behind all such collaborations. The company has a cash surplus of Rs 10,000 crore. It has floated joint ventures (JVs) and technical tie-ups or started preliminary exercises for entry into nuclear equipment, wind energy, specialised grade steel, transmission, transportation and water treatment businesses. http://www.business-standard.com/india/news/bhel-adopts-strategy-to-venture-into-newer-areas/417525/

Hero may have to play on Honda terms after break-up

Hero Group is believed to have won rights to use the Honda brand till 2014-end. As the final draft of separation between the Hero Group and Honda Motor Company gets readied, concerns are being raised on the Indian company’s ability to promote and sell its indigenous products in the long term, while managing the added burden of royalty payouts to the Japanese company. http://www.business-standard.com/india/news/hero-may-have-to-playhonda-terms-after-break-up/417263/

My Portfolio

Return

My Portfolio BSE Sensex NSE Nifty
This Week -2.35% -2.29% -2.26%
This month -1.64% -0.08% -0.10%
This Year 7.24% 11.70% 12.62%
Since 1-1-2009 119.59% 102.23% 97.95%
Since 1-1-2008 47.59% -3.45% -3.66%
Since 1-4-2007 83.36% 49.24% 53.27%

Top 5 holding in my equity portfolio

Company Sector % of Total Value Average Holding Period Absolute Return %
Infosys IT 8 3 Years 89
Graphite India Telecom 6 2 Months 1
KSB Pumps Engineering 5 3 Months -13
Mangalam Cements Cements 5 3 Months -17
Maharashtra Seamless Metal 5 4 Months -5

Shares I bought this month

Company Average Cost
Tata Sponge Iron 368.41
Graphite India 95.62

Shares I sold this month

Company Average Price

Top 5 most gain (absolute)

Company Return % Average Holding Period
Gujarat Gas 208 2.6 Years
Dabur India 143 4.6 Years
Tata Global Beverages 107 2.0 Years
Berger Paints 127 3.8 Years
Infosys 89 3.0 Years

Top 5 most loss (absolute)

Company Return % Average Holding Period
KSB Pumps -12 3 months
Honeywell Automation -14 1 month
Tata Communication -26 11 months
Mangalam Cement -17 2 months
Divi’s Laboratories -14 1 month

Archive of previous portfolio reviews


Weekly Portfolio Review: 26 September 2010

BSE Sensex closed the week 2.3% higher and NSE Nifty 2.27%. The month to date gain on my portfolio is 6.78% and year to date 13.29%. Gujarat Gas, Tata Tea, Infosys, HUL and Bharti Airtel are the highest gainer in my portfolio so far in this year.  I partly booked profit on Blue Star in the past week with a 47% margin.

Good buys in my watch list

Company Sector Target Current Price Margin
Divis Laboratories Pharma 1,094.75 710.35 54%
BHEL Engineering 3,567.00 2,454.90 45%

News Update

NTPC

–          NTPC is aiming to add capacity at 13% compounded annual growth rate (CAGR) in order to generate 75,000 mw by March 2017 and reduce its carbon footprint by increasing the share of renewable and nuclear power in its energy mix and improving energy efficiency of coal-fired plants. The firm has projects worth 17,340 mw under implementation and has initiated tendering for execution of another 7,092 mw capacity. Projects worth 27,000 mw are under preliminary stages, NTPC has said. – The Financial Express, 27th September 2010

–          The Sri Lankan government has offered a 25-year tax waiver and customs duty concessions to NTPC’s  500 Megawatt (Mw) power project planned at Sampur near Trincomalee in the east coast of the island nation, through a gazette notification earlier this month. The Sri Lanka government said it accorded the special incentive as it was a project under the Strategic Development Projects Act of the country. NTPC and Sri Lanka will finalise the details soon. – Business Standard, September 25, 2010

–          NTPC’s Pakri-Barwadih coal mining project, for which the Union Coal Ministry has allotted coal blocks, has got forest clearance from the union Ministry of Forest and Environment for its stage two work. “With this the stage is cleared for starting Conveyor Corridor, Railway Corridor and starting coal mining production by 2012 as per the revised target fixed by the union government,” Rao, the general manager of NTPC’s coal mining project, told newsmen here on Wednesday. – The Economic Times, September 22, 2010

Suzlon

–          The country’s largest wind turbine manufacturer Suzlon Energy on Friday said it has crossed 5,000 MW (megawatt) of cumulative installations in India, underlining the strong momentum in the country’s fast-growing wind energy market. Suzlon has cum ulatively added over 5,000 MW of wind power capacity for over 1,500 customers in India across 40 sites in eight states. – The Business Line, September 24, 2010

–          Wind power major Suzlon Energy today said it has bagged a Rs. 1,149-crore order from Kolkata-based engineering firm Techno Electric Group. The 202 MW (megawatt)order is a part of Techno Electric Group’s agreement with Suzlon for developing 500 MW of new capacity and is the single largest deal signed by an Independent Power Producer (IPP) in the wind power sector, Suzlon said in a filing to the BSE. – Livemint.com, September 21, 2010

Bharti Airtel

–          Zain Kenya, a unit of Bharti Airtel Ltd., plans to overtake market leader Safaricom Ltd. to become the east African nation’s largest mobile phone operator within three to four years, Managing Director Rene Meza said today. Over the next 18 months, the company plans to spend 28 billion shillings ($345 million) expanding Internet coverage to rural areas and rolling out a third-generation network by year- end, Meza said in an interview in Kenya’s capital, Nairobi. – Bloomberg, September 23, 2010

–          Telecom major Bharti Airtel said on Monday that it has given contracts to Ericsson India, Nokia Siemens Networks (NSN) and Huawei Technologies to set up infrastructure for providing 3G services in the country.  These vendors will plan, design, deploy and maintain 3G-HSPA (third generation, high speed packet access) networks in 13 telecom circles where the company has won 3G licences, Bharti Airtel said in a statement. – The Economic Times, September 20, 2010

–          Bharti Airtel, India’s largest mobile-phone company, forecasts “rapid growth” at its satellite television unit on rising demand in rural areas for Bollywood movies and soap operas. Bharti has signed up 3.8 million customers to gain a 14% market share, said Ajai Puri, chief executive officer of the company’s digital TV services business. Industrywide, as many as 12 million people may take up satellite television this year, Mr Puri said in an interview on September17 in New Delhi. – The Economic Times, September 21, 2010

Dr Reddy’s

–          Promoters of Dr Reddy’s Laboratories have no intention of diluting their stake in the company, its managing director K Satish Reddy said today. “Let me be clear once again. We have no such intention to sell any stake or what so ever. There is no such move (dilution of stake),” Satish Reddy replied when asked on the sidelines of pharma CEOs conclave here. He said they will continue to focus on achieving three billion dollars turnover by 2013. – Business Standard, September 24, 2010

GAIL

–          State-run gas transporter GAIL India will make capital investment of around 400 billion rupees ($8.8 billion) by 2014/15, mainly to expand its pipeline network and boost petrochemicals capacity, its chairman said on Wednesday. B.C. Tripathi also said GAIL was exploring gas sector opportunities in the African market. He was speaking at the company’s annual general meeting of shareholders. – Reuters, September 22, 2010

–          State-run GAIL India on Wednesday imported its first liquefied natural gas (LNG) cargo of the year at around $8.3 per million British thermal unit, about a dollar more than what Petronet LNG paid just four-days ago. GAIL, which bought the cargo from BG Group of UK at around $8.3 per mmBtu, plans to import two more cargoes from the spot market this year. – The Economic Times, September 22, 2010

Hero Honda

–          With arch rival Bajaj Auto gaining ground in the entry level of bike segment, the country’s largest two-wheeler maker Hero Honda has admitted its leadership position will come under pressure. The company, which is currently a subject of speculation over a possible exit of Japanese partner Honda from the joint venture with Munjals, has been witnessing a decline in market share in motorcycles of 75cc and above but less than 125cc category. Its market share declined to 61.62 per cent in the April -August period this fiscal, from 73.85 per cent in the same period of 2009-10. – Business Standard, September 20, 2010

Interesting Reading

Brand Hero eyes life after Honda

With Hero Group’s 25-year old marriage with Japan’s Honda Motor seen drawing to a close, all eyes are on the future of Hero’s brands assiduously built up over the years. Will popular bike brands like Splendor and Passion continue to evoke the same excitement or will the absence of the Honda brand change the fortunes of the company? http://www.indianexpress.com/news/brand-hero-eyes-life-after-honda/686793/

Mahindra & Mahindra’s U.S. Plans Are in Jeopardy

Car buyers expect a degree of haggling when shopping for a new vehicle. Yet the fate of trucks built by India’s Mahindra & Mahindra may be determined in the federal courts and by arbitrators, long before the rugged-looking 4×4s even begin rolling onto dealership lots. Mahindra and its American importer, Atlanta-based Global Vehicles U.S.A., are embroiled in a dispute that could halt plans to bring the first Indian-built vehicles into the American market. http://wheels.blogs.nytimes.com/2010/09/21/mahindra-mahindra-u-s-plans-are-in-jeopardy/

Revving two-wheeler sales to cross 12 m this fiscal

Two-wheeler sales for this fiscal are projected to be in excess of 12 million units, a jump of 20 per cent from around 10 million units in 2009-10. Sources say Hero Honda and Honda Motorcycle & Scooter India will together account for nearly 55 per cent of this number at 6.5 million units, followed by Bajaj Auto with over 3.5 million units and TVS Motor with nearly two million units. Yamaha and Suzuki, which are marginal players in comparison, will add to the overall kitty. http://www.thehindubusinessline.com/2010/09/21/stories/2010092150080300.htm

RIL puts out annual reports of 82 of 96 subsidiaries, still not unravelled many layers

It was big, but secretive. It was clever, but complex. That was Reliance Industries Limited (RIL), India’s largest private sector company, when it came to organising its books of accounts and presenting them to the public. Even as it takes a big leap to become more transparent, all those attributes — in shades of black, white and grey — remain characteristic of RIL. http://economictimes.indiatimes.com/news/news-by-industry/energy/oil–gas/RIL-puts-out-annual-reports-of-82-of-96-subsidiaries-still-not-unravelled-many-layers/articleshow/6617094.cms

Crompton Greaves puts wind in Europe sales

The cold, choppy waters of the North Sea are increasingly playing host to a new creature — the slender-necked, rotor-headed, offshore windmill. Sprouting along the coasts of Germany, Norway, Denmark and more recently Belgium, offshore wind energy farms are the new temples for the 21st century environmentalism sweeping across Europe. They perform the seemingly utopian transformation of a free, non-polluting resource — the wind — into the electricity needed to feed the power-hungry contemporary world. And being offshore, they avoid entanglements in the land-use disputes common in densely populated regions, while enjoying the higher and more consistent wind speeds available over the sea. http://www.business-standard.com/india/news/crompton-greaves-puts-wind-in-europe-sales/408897/

Paint companies: Glossed over

Companies in the paints sector are bracing for the increased demand due to robust economic growth and rising incomes. Berger Paints, the third-largest player, plans to increase its capacity from 250,000 tonnes to 450,000 tonnes in the next two years, while the second-largest Kansai Nerolac will enhance its capacity by 50 per cent to 300,000 tonnes over the next three years. Market leader Asian Paints plans to triple its current capacity of about 600,000 tonnes in the next few years. http://www.business-standard.com/india/news/paint-companies-glossed-over/408755/

Hindustan Unilever’s Bharat Darshan

The new consumers in India’s villages are ambitious and demanding just like their urban counterparts. And Hindustan Unilever is responding to the change with a distribution overhaul. Read more: http://business.in.com/article/boardroom/hindustan-unilevers-bharat-darshan/17462/1#ixzz10fSQE554

My Portfolio

Return (%)

My Portfolio BSE Sensex NSE Nifty
This Week 1.13% 2.30% 2.27%
This month 6.78% 11.54% 11.40%
This Year 13.29% 14.77% 15.71%
Since 1-1-2009 131.97% 107.79% 103.39%
Since 1-1-2008 55.91% -0.80% -1.01%
Since 1-4-2007 93.70% 53.34% 57.48%
Since Beginning 124.31% 54.93% 60.69%

Top 5 holding in my equity portfolio

Company Sector % of Total Value Average Holding Period Absolute Return %
Infosys IT 10 2.85 Years 82
Tata Global Beverages FMCG 7 1.80 Years 134
Bharti Airtel Telecom 7 8 months 27
HUL FMCG 7 3 Months 23
Hero Honda Auto 6 4 months 1

Shares I bought this month

Company Average Price
Dr Reddy 1,363.00
KSB Pumps 562.99
Hero Honda 1709.70
Maharashtra Seamless 378.95
Hindustan Zinc 1140.86
HUL 279.15

Top 5 most gain (absolute)

Company Return % Average Holding Period
Gujarat Gas 214 2.3 Years
Dabur India 164 4.4 Years
Tata Tea 134 1.8 Years
Berger Paints 172 3.5 Years
Infosys 82 2.9 Years

Top 5 most loss (absolute)

Company Return % Average Holding Period
Mangalam Cement -6 1 month
KSB Pumps -6 1 month
Graphite India -5 2 months
Hindustan Zinc -4 1 month
Tata Communications -4 9 months

Archive of previous portfolio reviews


Hero Honda 4th Quarter result

Hero Honda Motors Ltd., India’s biggest motorcycle maker, reported a better-than-estimated 49 percent increase in fourth-quarter net income as sales climbed. Profit totalled 5.99 billion rupees in the three months ended in March from 4 billion rupees a year earlier, the company said in a statement today. The company’s operating profit margin  was 17.2 percent in the quarter, according to the statement.

For the entire 2009-10 financial year, the profit soared by 74.1 per cent to Rs 2,231.83 crore. The total turnover in the last fiscal stood at Rs 15,860.51 crore, up 28.1 per cent compared to that in 2008-09. During FY 2010, the company’s total sales increased by 23.6 per cent to 46,00,130 units. The company, which had set a target of selling 40 lakh units in 2009-10, had launched nine new models and variants across segments in last fiscal.

Hero Honda will pay a final dividend of 30 rupees a share.

Related Links:

Hero Honda’s Net Income Gains 49% on Indian Motorcycle Sales: Business Week

Hero Honda’s profit up 50 per cent in Q4: Hindustan Times

More updates

Hero Honda’s Net Income Gains 49% on Indian Motorcycle Sales


Hero Honda

The Hero Honda is a joint venture between the Honda Motors Co., Japan and India’s Hero Group. Honda Motors Co., Japan is among the pioneers of the global motorcycle industry. The Hero Group has a long track record of mass manufacturing and distribution from the days of Hero Cycles.

Hero Honda has been the largest two wheeler company in the world for eight consecutive years. The company crossed the ten million unit milestone over a 19-year span. In the new millennium, Hero Honda has scaled this to 15 million units in just five years! As one of the world’s technology leaders in the automotive sector, Honda has been able to consistently provide technical know-how, design specifications and R&D innovations. This has led to the development of world class, value – for- money motorcycles and scooters for the Indian market. Hero Honda is recognized today as one of the most successful joint ventures in the world.

Two positive indicators for Hero Honda are the company is efficient in managing capital and it has an excellent track record of rewarding shareholders by paying out dividends. Its management is shareholder friendly though largely a family managed entity.  It enjoys strong brand equity and distribution network. The brand Hero Honda is associated with fuel efficiency.

The company also has a strong distribution system. Hero Honda’s bikes are sold and serviced through a network of over 3500 customer touch points, comprising a mix of dealers, service centres and stockists located across rural and urban India. Hero Honda has world-class manufacturing facilities at Dharuhera and Gurgaon in Haryana and a most sophisticated plant at Haridwar. The company is able to introduce a variety of models cutting across the entry (100 cc), deluxe (100 to 125 cc) and premium (125 to 250 cc) segments.

Competition is strong and it has no pricing power. It may be noted that Indian motorcycle industry has become extremely competitive. Undoubtedly, the new competitors pose a formidable challenge in the premium segment with dazzling models, which will attract the affluent metro crowd.  However it is difficult to beat Hero Honda in the entry and deluxe segments. These segments cater to India’s value conscious smaller centers where the company’s distribution network, service capabilities and goodwill are unmatched.

Hero Honda has been consistently generating returns on equity well above 35% in the last 10 years. Over the past 5 years, the company has posted returns of around 41% on an average. Importantly, the rapid increase in return on equity has not been fuelled by debt. During this entire time, it has utilised little or no debt. The company is able to generate funds from the internal accruals for the capital expenditure. Same time it has a good track record of paying handsome dividends to its shareholders.

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