GRASIM, ACC

GRASIM @ 1180 (231008) gets 1257 pancha-tattva points and should be bought for long term.

ACC @ 442 (231008) gets 1011 pancha-tattva point and is OK for long term investment.

BIRDINFO Stock Rx – A prescription for stock market

Buy GRASIM on dips for long term

GRASIM @ 1837 on 25/0708 gets 1224 panch-tattva points and it’s safe to buy on dips for long term.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix – What media reports is mostly with an angle to serve and the gullible are taken for a ride

By krsna Khandelwal – A veteran market analyst

Friends,

I have been pointing out to you that what media reports is mostly with an angle to serve and the gullible are taken for a ride. This time I am taking up to discuss the piece title ‘ACC:it could get worse’ under the column ‘COMPASS’ and done by Shobhana Subramanian and Amriteshwar Mathur appearing in Business Standard today i.e. 14th May 2008.

It is going to a detailed dissection and sentence-by-sentence. The first sentence goes like this ‘Cement stocks Ambuja Cements and Grasim were close to 52 -weeks lows on Tuesday with govt. wanting to control prices.’ This gives an impression that the scope for cement stock is worst and particularly for ACC while the fact is that the ACC is at the moment at its three year low while the referred two stocks are way above their three-year. Naturally, ACC has hardly to loose value in future even if the realisation for cement goes further down.

The next sentence is ‘the industry, however, grappling with rising costs of power and fuel: domestic coal prices, at Rs 1700 per tonne, have risen by nearly 15 per cent over past year.’ It is not clarified that the raw material costs in fact has not gone up for cement industry as the main raw material for them is lime stone and most cement companies have captive mines. Besides the ‘fly ash’ from coal power plants and slag from the steel plants have not gone up in prices but are mixed with clinker for cement production. Rates for power and fuel have gone up and so also, the cement prices per bag. The OPM is therefore maintained for most companies making them turn in larger PAT.

The third sentence says: ‘That’s why India’s biggest cement manufacturer, the Rs 7067 crs ACC’s March 2008 numbers were tad below expectations.’ What a confusing way of saying things here. The performance for March 08 quarter was in fact the best in the ACC’s history in terms of gross sales and PAT. By saying that it was tad lower than the expectation, the focus has been tried to be misplaced.

The fourth sentence goes like : ‘While the numbers are not strictly comparable , ACC’s operating profit margin (OPM) slipped 410 basis points to 26.2% even as net sales rose just over 7 per cent to Rs 1796 crs.’ Here by the analysts own admission the fall in OPM is less than half percent while the sales are up 7% to off set any impact. But it has been shown as weakness and the fall from high of 1300/- per share by more than 40% is tried to be justified and chances of further fall have been implied.

The first sentence in second para is: ‘In better times during CY 07, ACC’s consolidated operating profit margin expended 350 basis points to 27.3 per cent, as it kept tight check on operational costs like freight.’ It is clear that the sentence does not convey any meaningful substance. If ACC could keep check on costs in 2007, it has been able to do so in March 08 quarter in still more efficient way as the coal price jump of 15% could hardly damage the OPM or PAT.

The second sentence in second para goes like this :’Rival Ultratech Cement’s OPM improved 260 basis points to 30.5 per cent in March 2008 quarter, helped by realisation that grew an impressive 16 per cent to Rs 3372 per tonne.’ Very right, but it only shows that the havens are not going to fall for cement industry.

‘ACC’s cement dispatches in Q CY 08 were higher by 7 per cent though net realisations at Rs 3300 per tonne levels were flat.’ This was the third sentence in second para. The difference of Rs 70/- per tonne in realisation for ACC is well justified for it is a company having plants all over the country and this average realisation is a matter of appreciation rather than of concern.

The fourth/fifth sentences in second para conveys: ‘Going forward, the underlying concern is addition to cement capacity, as the industry is expected to add another 20 million tonnes in capacity over the next 12 months. In addition, the recent ban on cement and clinker exports could add another 4-5 million tonnes to supply.’ Here also see the bright side. The govt’s concerns will be over when additional supply comes in market and the users have plenty of cement. Further, the ban on exports will be lifted as it is not a permanent resolve of the govt. and the cement prices will see stability. The realisation on exported cement will be better as the rupee has had a good fall.

The fourth para says that:’that might well result in a surplus of 10-11 million tonnes in the market, observe the industry watchers, predicting that the prices could come off by as much as 10 – 15 per cent. At Rs 683, the stock ACC trades at 10.4 times estimated FY 08 earnings and should be under performer. Ultratech at Rs 666, trades at 12 times estimated FY 09 earnings and is expensive given the less than promising outlook for the sector.’ Here again a bad light is thrown on ACC while it has better discounting. The cement prices have had a good run up and hence the potential consumers must have been postponing consumption and that demand would come back if the prices ease only slightly. The glut situation in cement may not come for decades together. Can you ever expect to supply enough of cement to an economy growing by 8-10% per year? The infrastructure thrust ensures that any single bag of additional availability of cement will be a shot in arm.

Cement is a commodity, which does not have the threat of dumping by the foreign cement producers because of the high component of transportation costs in the consumer end prices. It is also a commodity which is susceptible to get damaged in certain weather conditions and if stored for long time.

ACC as also other cement companies have been able to rationalise their old plants and have put up new ones all out of earnings and have reduced their leveraging. The interest outgoes do not therefore damage their earnings as much as was the case earlier. If you consider the replacement costs of the present capacities of ACC, I think it will be enormous. In Harshad times a share of ACC sold for as much as Rs 10000/- (Rs 100 paid up). The reverse is happening today i.e. it is selling for less than half its intrinsic worth.

What is more of concern to me is the possibility of the deliberate misguidance and spreading of scare in respect of one of the most promising sector of economy. It may be that some quarters are pushing down the prices and there would be bulk deals between some smarties on one hand and the Indian institutional investors on the basis of average of past six-month prices or some such basis worked out to give a feeling of fairness in deals. The insiders apart, there are people who can shoot even sharper without regulatory bodies having an inkling. I am pained to see such reporting in a business daily of repute. There is no doubt that there is a bias in the whole write up.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

GRASIM @ 2404 as on 30/04/08

GRASIM @ 2404 as on 30/04/08 gets 1168 panch-tattva points and should be bought for long term.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

GRASIM @ 2862 as on 22 Jan 2008 after Q3 results

GRASIM @ 2862 (220108) gets 1125 post result panch-tattva points and you may buy this for long term.

Previous Recommendations:

@3842(29/10/07) :1139 points-Sell off.
@3190(06/09/07) :1140 points-Book profits on surges.
@2860(30/07/07) :1168 points-Buy for long term.
@2437(25/04/07) :1066 points-Buy for long term.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix: Branding and interest rates

By krsna Khandelwal – A veteran market analyst

Friends,

Grasim is entering personal care products segment with its own brands. This seems strange that a company in to commodities should decide to do so but there is some benefit to it in diversifying this way. Brands require a lot of expenditure to develop and this expenditure can be written off against the profits of a company. Grasim is in a position to afford it and save on tax. Grasim may eventually spin off the consumer care product business , but it will have shun ‘marwari’ mindset and leave brand building in hands of a professional team. Brand building is possible with deep pocket and with long haul.

SBI has decided to raise interest on deposits by about 25 bps to 175 bps for different maturities. In the mean time FM has reportedly said that the deposit as well as lending rates should be brought down. I don’t think its just now possible in India. India is a capital starved nation inspite of foreign dollars pouring in. The foreign capital comes with the a fickle character and may not entirely replace Indian capital. Banks are seeing reduced flows toward themselves as a percentage of savings which are being attracted by IPOs, MFs, secondery markets, and insurance companies. Also the banks have hit ceiling as far as advances go , in terms of percentage of deposits. Banks are being pressed for lowering of charges too besides the competition is growing . In this light the banking sector may not improve upon past performance by a greater degree. I am noticing reports to the contrary which seem to be delusion and with motive behind it.

The world market cap at $ 60682 billion allows India a share of 3.06 %. The three percent mark has been crossed for the first time. Indian enterprise and public are capable of achieving 10% share in a decade or so provided right type of govt policies are ensured in the mean time.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

ACC, ABB, BHEL, BAJAJAUTO, GRASIM, DRREDDY Panch Tattva points after results and now

By krsna Khandelwal – A veteran market analyst

ACC @ 1038 (18/10/07) gets 1042 panch-tattva points and is good for purchase till next result.
(@1044 on 16 Nov 07 it gets 1048 points and same strategy.)

ABB @1436 (261007) gets 727 panch-tattva points and may be sold off
for the time being , buy back on good correction in a few strokes.
(@1647 0n 16 Nov 07 it gets 756 points and may be sold off only at this stage for buy back wait till next quarterly result)

BHEL @2615 (291007) gets 846 panch-tattva points and may be sold for
good till the next advice, do not buy on correction even.
(@2786 on 16 Nov 07 it gets 880 points but still to be sold and waited till it gets signal to buy in terms of panch-tattva points. This carries too eskewed risk reward ratio hence risk averse people may not touch it.)

BAJAJAUTO @ 2507 (19/10/07) gets 872 panch-tattva points and should be
sold now and bought on correction.
(@2315 on 16 Nov 07 it gets 908 points and may be bought moderately and added more on declines but profit should be booked on part qty on jumps.)
.
GRASIM @3842 (291007) gets 1139 panch-tattva points and may be sold for the time being and bought on correction for up to next result.
(@ 3821 on 16 Nov 07 it gets 1114 points and you may have already entered at the lower rates after selling as price touched point lower than 3500. Repeat the strategy.)

DRREDDY @630 (241007) gets 851 panch-tattva points and may be sold for
now, buy later on declines.
(@620 on 16 Nov 07 gets 870 points and sell on surges and buy on declines and retain a small part.)

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Panch Tattva: Update: GRASIM

By krsna Khandelwal – A veteran market analyst

Friends,

Please have at look at the updated Panch Tattva points for GRASIM:

GRASIM @3190 (06/09/07) gets 1140 points and is now ripe for booking profits on surges. If you refer to the past six recommendations on this site regarding this scrip you will not fail to acknowledge the efficiency of the panch-tattva system. It is after almost 50% gain that you are now being advised to book profits on surges.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Panch Tattva: Post Result: RELIANCE, JKCEMENT, DALMIACEM, GRASIM, MOSERBAER, SBIN, ARVINDMILL, UCOBANK, BANKBARODA

By krsna Khandelwal – A veteran market analyst

Friends,

Please note the Panch Tattva points for the following after the results and against the closing prices on 27 Jul 07:

RELIANCE (RIL) @1867 gets 928 points and should be sold on surges and bought on good declines.

JKCEMENT @164 gets 1265 points and may be bought in moderation.

DALMIACEM @365 gets 1388 points and may be bought and preferably so.

GRASIM @286 gets 1168 points and may be bought for long term.

MOSERBAER @312 gets 804 points and may be sold off.

SBIN @1418 gets 1027 points and is good for investment only on declines.

ARVINDMILL @48 gets 1010 points and buy it on regular basis in small strokes and book profits along the way.

UCOBANK @27 gets 1019 points and should be bought on declines regularly.

BANKBARODA @288 gets 1090 points and should be regularly bought on declines.

The markets gave a real jolt on Friday , the 27th July 07, when Nifty lost around 174 points and those of you paid heed to the continuous advice about reducing exposure over last many a posts, would be feeling pleased. The worst is yet not over. The US markets and economic conditions are really as cause of worry. In such times you should be having not more than one third of your investible funds in to equity.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Panch Tattva: Post Result, IDFC, GRASIM, SRF, REL, DENABANK,GODREJCP,BINANIIND at CMP on 25 Apr 2007

By krsna Khandelwal – A veteran market analyst

Friends,

Please note the following the Panch Tattva post result points against closing prices on 25 Apr 07 for companies that have announced results:

IDFC @103 gets 1161 points and is good bet for purchase but please keep booking profits.

GRASIM @2437 gets 1066 points and should be bought and retained till nest result.

SRF @160 gets 1368 points and should be bought in a few strokes and retained till next result , also please keep stop loss in mind.

REL @524 gets 952 points and should be bought on declines and kept for long-term.

DENABANK @36 gets 1340 points and seems safe to buy but only moderately.

GODREJCP @144 gets 921 points and it is better to invest in it after the next result.

BINANIIND @259 gets 1383 points and is in speculative category,however, deal it with purchase first and remain watchful.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market