uljk stock buy ideas

Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd(NSE) ULJK Securities Pvt. Ltd.(BSE) ULJK Commodities Pvt. Ltd.(MCX)

ULJK Stock Buy Ideas

Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd


Institutional ResearchULJK Securities Pvt Ltd


Date: 16-Mar-2009

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Nifty - Daily



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Tata motors - Daily



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Tata MotorsCMP : Rs. 165 MCAP : Rs.85298.9mn

Significant increase in commercial vehicle segment: On Y-O-Y basis the company’s market share has increased significantly. For MHCV Trucks the company has market share of 69.9% (+4.3%), MHCV Buses 52.9% (+7.5%), LCV Trucks 61.5% (+0.2%), LCV Passenger Carriers 86.3% (+17.9%). This reflects the companys command over its offerings.

Rising market share in passenger vehicles: The company has market share of 13.2% in Q3 FY09 Vs 13.0% in Q2 FY09 and 12.9% in Q3 FY08. Small car market share improved sequentially from 11.5% in Q2 FY09 to 12.6% in Q3 FY09.

Tie-ups with financial institutions: Tata Motors has recently tied-up with State Bank of Travancore State Bank of Mysore and Union Bank for financing its range of passenger and commercial vehicles. With interest rates seen falling and fiscal stimulus announced by the government to facilitate infrastructure sector the commercial vehicle sales will improve.

Tata Motors is India's largest automobile company, with revenues of US$ 8.8 billion in 2007-08. Through subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land Rover, a business comprising the two iconic British brands. It also has a strategic alliance with Fiat. With over 4 million Tata vehicles plying in India, Tata Motors is the country’s market leader in commercial vehicles and among the top three in passenger vehicles.

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Raised Rs 1,000 crore from LIC: The company has raised ~Rs1,000 crore from state-owned Life Insurance Corp. of India to part-refinance borrowings that funded the acquisition of Jaguar-Land Rover (JLR) from Ford Co.

Tata Nano – The People’s car! The car is manufactured for the Indian middle class. He bookings for this car will commence from second week of April. We expect good anticipation from the Indian middle class for this car, which will boost sales of the company.

Pressure from Jaguar Land Rover: Land Rover sales were severely impacted due to significant weak markets in US and UK. The company has initiated certain steps like production cut and reducing inventory through shift cut backs, extended breaks to employees and significant headcount reduction. Initiatives have also been planned to accelerate measures to reduce costs, increase operational efficiency and maintain vehicle quality. The U.K. government pledged 27 million pounds ($37 million) to help Tata Motors Jaguar Land Rover subsidiary develop a greener vehicle. The grant will contribute toward the 400 million-pound cost of the program and is separate from the state aid package to help automakers weather the recession.

Outlook: The company focuses on de-leveraging its business. It will realign its capital expenditure plans, reduce the working capital cycle and continue to realign production to demand.

Year Total Income Net Profit EPS P/E2008A 354132 20534 47 3.512009E 325379 10364 21 7.862010E 324487 8367 18 9.17

Financials (Rs million)

(Source: Bloomberg)

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Relcapital - Daily



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Reliance Capital Pvt LtdCMP : Rs.310 MCAP : Rs.76269.0mn

Reliance capital Ltd is the fastest growing non banking financial services company in India having presence in Asset Management, Insurance, Consumer finance, Equity Broking and Distribution of financial products and investments.

Consistent growth in all business segments:

•AUM of Reliance Mutual fund of Reliance AMC stands at Rs.81627cr by the end of Feb 2009. •It’s life insurance business premium grew by 86.7% during 9MFY09. It general insurance business is also growing and the gross written premium at the end of 9MFY09 stands at Rs.14951.9mn. 58% of the general insurance premium comes from the auto insurance.•Reliance Money, The broking arm is among the top 5 equity brokers and has pan India presence through 10,392outlets across 5165 locations.•Its broking arm has established its presence in Ireland which will help it to cater to approx 2mn NRI and PIOs in Europe. •The NBFC has posted a consolidated net profit of Rs.7110.7mn during 9MFY09.

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Opportunity for business growth:•Mutual fund in India are still in the nascent stage as far as penetration is concerned. The AUM of the Reliance AMC has come down due to the current market turmoil, but as we feel market has showing a direction for trend reversal, the AUM of the fund will again pick up its momentum.•Approx 3% of the Indian population invests in mutual funds as compared to 33% in the US. This shows the opportunity lies in the asset management business.•Insurance business is also very low penetrated as the premium to GDP ratio is 5% in India as compared 16% in UK and 10% in Japan. Reliance insurance is expected to scale up its insurance business on back of product innovation and aggressive marketing strategies. •This provides an exponential growth opportunity to expand RCAP’s asset management and insurance distribution business.

Valuation: At the CMP of Rs.310 the stock is trading at P/BV of 1x and 0.9x on FY09E book value of Rs.300 and FY10E book value of Rs.329 respectively.

Year Total Income Net Profit Book Value P/BV2008A 41105 9150 247 1.262009E 56574 9711 300 1.032010E 62261 11163 329 0.94

Financial Summary : (Rs.mn)

(Source: Bloomberg)

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Aban - Daily



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Aban OffshoreCMP : Rs.263 MCAP : Rs. 996.85 cr

Aban Offshore is into drilling and oil field services for offshore exploration and production of hydrocarbons to the oil industry in India and abroad. It is India's largest offshore drilling contractor in the private sector and ranks among the top 10 globally. Aban has ownership of around 23% of all offshore rigs operating in India.

Huge Asset base: The Sinvest acquisition almost doubled Aban’s fleet size. The company will have 21 vessels, which includes 17 jack up rigs, 3 drillships and a semi submersible. It acquired Sinvest at an enterprise valuation of $2.2 billion, largely with debt.

Refinance risk: Aban’s total debt stands at $3.1 billion. The company may have to reschedule some portion of the of debt that is due to mature this year and the next. USD148 mn Norwegian Kroner bonds (from Sinvest) will mature on Dec 2009. Slowing global economy implies few and expensive funding options available. The company is highly leveraged and has high interest costs which takes away significant amount of its cash flows.

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Implication of downturn: Four of Aban’s rigs have not been in use for the past 3-4 months. Further delays in getting contracts for these rigs will add to the pressure on the firm’s revenue. Also, the fate of five more rig contracts coming up for renewal over the next six months adds to the uncertainty.

Day rates are seen weak on account of fall in oil prices and credit crunch globally has led to reduction in demand for exploration services. Presently oil price is above USD 45 per barrel after hitting an all time high of USD 147 per barrel.

Global supply of jack-up rigs is increasing. About 70 new jack-up rigs are expected to enter the market this year; another 109 such drilling units are under construction at various global shipyards.

Year Sales Growth % EPS Growth % P/E 2008A 25078.8 252% 117.6 - 25.6 2009E 34648 38% 208 77% 1.2 2010E 53575 54% 304 46% 8.6

Financial Summary : (Rs.mn)

(Source: Bloomberg)

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Wipro - Weekly



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Wipro CMP : Rs. 212 MCAP : Rs.32869.3mn

• For the 3Q FY09, Wipro shown an income growth of 4.6% with a mark of Rs. 6618 cr and YoY was 25%. The EBITDA margins has decreased from the levels of 22.14% to 21.17% on the QoQ basis. PAT levels recorded at the levels of Rs.1004 cr with a QoQ growth of 7.1% and a YoY growth of 18%.• The newly added client base was 31 by the company.•The pipeline comprising total of 20 deals, which are well distributed both across verticals as well as across geographies.• IT services business includes revenues from the acquisition of Citi Technology Services.

(Source : Bloomberg, ULJK research)

Key Highlights

Wipro Ltd. provides IT services, product engineering, technology infrastructure services, Business Process Outsourcing and consulting services and solutions. The company offers services such as application development, deployment & maintenance, business intelligence, business consulting, CRM, etc. Wipro's has clients across a spectrum of industries such as consumer electronics, finance, Government, insurance, manufacturing, media & entertainment, etc.

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We expect that the Indian IT industry would continue to face challenges in the near quarters at least, for the obvious reasons like •Increasing cross currency risk, decreasing dollar denominated results.•Increasing challenges in the sectors like BFSI, Manufacturing, etc, •Increasing pricing pressures, delaying clientele budget decisions, increasing SG&A expenses, etc.

However, we expect the negative impact of the cross currency fluctuation on Wipro will be lower as the dollar exposure of the company is lower. We stand very cautious on the IT sector as the large cap companies are making the contracts with lower rates of nearly 15%-20%. We expect the companies to play completely volume game as the pricing pressures are increasing.

Outlook

Year 2007 2008 2009(E) 2010(E)

Sales 150694.90 197923.60 256045.50 275949.40

EBITDA 34453.50 38802.80 49620.30 52101.60

PAT 28757.50 32543.60 36550.10 37851.60

EPS 20.06 22.32 25.11 25.87

P/E 11.17 10.04 8.92 8.66

Valuation Matrix Rs. In Million

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DISCLAIMER

This report has been prepared by the research department of ULJK Securities Pvt Ltd. and is for information purposes only. This report is not construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It is for the general information of clients of ULJK Securities Pvt Ltd. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. The report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon. ULJK Securities or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. ULJK Securities or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations. ULJK securities and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. Opinions expressed are our current opinions as of the date appearing on this material only. While we endeavor to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report. 15

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tata vehicles

commercial vehicles

passenger vehicles

land rover sales

companys market share

small car market share

tata nano

rising market share