Fin Min writes to EPFO on suspension of LIC Hsg Fin invsts

The Finance Ministry has written to the Employees Provident Fund Organisation of India (EPFO) board on the suspension of investments in LIC Housing Financing. The EPFO board had suspended Rs 392 crore worth of investments plan till the inquiry is in progress.

The Finance Ministry asked the EPFO to look at LIC Housing Financing & Parent as a company and not as individual acts. An organisation cannot be discredited on an individual misdemeanour, it said. LIC Housing Financing is AAA Rated and is fully backed by LIC.

The ministry said that all assets in LIC Housing Financing were secure and none impaired.

TRAI wants 69 telco licences cancelled

The Telecom Regulatory Authority of India (TRAI) has recommended cancelling 69 telecom licences, the government said on Friday, confirming earlier media reports in a case running parallel to an investigation into one of the biggest corruption scandals to hit India this year.

The regulator has recommended cancelling 38 licenses of companies including the Indian joint ventures of Telenor, Sistema and Etisalat's for failing to meet network rollout requirements, the government said.

TRAI wants 69 telco licences cancelled

The TRAI also recommended cancelling 31 other licences "after legal examination," Minister of State for Telecoms Sachin Pilot said in a written reply to a question from an MP.

The TRAI's recommendations are not binding, but the telecoms ministry has said it would send notices to companies that have been named by the regulator, asking them to defend their licences.

The ministry is also sending notices to companies involved in a telecom scam in which firms were allegedly given telecom licenses and spectrum at rock bottom prices, possibly costing the state USD 39 billion in revenue. Many of those companies are accused of being ineligible for the licenses.

The case, which revolves around the sale of telecom licenses at low prices, has led to the resignation of the telecoms minister, and, according to an official audit, has possibly lost the state USD 39 billion in revenue.

It has also frozen the country's parliament for nearly a month as opposition parties have demanded a full parliamentary investigation.

The government has decided to set up a one-man committee of former Supreme Court judge Shivaraj Patil to examine the allocation of licences and spectrum from 2001 to 2009, Telecom Minister Kapil Sibal said on Thursday.

A government auditor said in its recent report that licences were given too cheaply and 85 licence holders were ineligible to get them as they had suppressed facts and submitted false documents.

Sibal said on Thursday his ministry would send notices to all the companies by the end of this week, asking them to explain why their licences should not be cancelled.

He had earlier said there were 119 licencees who have not met rollout requirements.

Telecoms licencees in India are required to cover 90% of the service area in metro cities and 10% of the main town in other parts within the first year.

The cancellation recommendations include 10 licences held by Sistema Shyam Teleservices, eight of Telenor's India joint venture called Uninor, 14 of Loop Telecom, four of Aircel and two of Etisalat DB Telecom.

The 31 licences which the regulator wants cancelled after a legal examination include 13 held by Etisalat DB, 10 of Videocon Telecommunications, six of Loop Telecom and one each of Aircel and Sistema Shyam.

Last month, a source with direct knowledge had told Reuters that the regulator had recommended cancelling 38 licences for not complying with rollout requirements, and to legally examine 31 other licences which had "just met" them.

November: FII flows hit record Rs18519 cr

The foreign institutional investors (FII) flow year-to-date touched a record high at Rs 18,519.90 crore. The overseas flow in the capital market during the month of November alone was a startling Rs 1,190.70 crore. They made a gross purchase of Rs 5,380.60 crore and gross sales of Rs 4,189.90 crore.

This is the third highest inflow by FIIs in the year 2010. Highest inflow was in September, which was Rs 29,195.80 crore and second highest in October, which was Rs 24,770.80 crore.

In an interview Mark Mobius of Templeton AMC had said that he expects USD 450 billion worth of investments in new issues in emerging markets like India.

However, Ashish Gupta, Director - Equity Research, Credit Suisse said India had been attracting a disproportionately high share compared to its index weight. “Compared to the pace at which it has come to India or the share that India has had total inflows into Asia, we expect moderation. But given the global liquidity environment, we are actually hopeful that foreign inflows into Asia in absolute terms will also be larger than last year. So, we expect 2011 inflows into Asia to be better than the inflows Asia saw in 2010. Although India’s share in that will come down, we are not expecting a major slowdown in the absolute level of flows.”

L&T Q2 net profit up 31% at Rs 765 cr

L&T posted a better-than-expected result for the second quarter after its net profit rose 32 per cent. The company said that its net profit rose to Rs. 764.98 crore in quarter ended September 30, beating the average estimate Rs. 663 crore

The engineering and construction major’s net sales rose 17.66 per cent to Rs. 9,260 crore during the second quarter, topping the estimates of analysts who saw it at Rs. 8,644 crore in an NDTV poll.

GDP to grow by 9.2% in 2010-11: CMIE

The Indian economy is expected to grow by 9.2 percent in 2010-11 following impressive growth in the manufacturing and services sectors, Centre for Monitoring Indian Economy (CMIE) said here.

"We maintain that the Indian economy will grow by 9.2 percent in 2010-11, as we expect impressive growth in the manufacturing and services sectors as well," CMIE said in a statement.

The Index of Industrial Production (IIP) dropped dramatically to 5.6 percent in August, after growing by 13.8 percent in July. It had recorded a growth of 11.2 percent in the June quarter, but we believe that the growth was much higher than 11.2 percent, CMIE said.

This is because sales revenues of the manufacturing companies rose by 23.8 percent, while the rate of inflation in manufactured products (including petroleum products) was 8.2 percent, implying that sales volumes grew by about 14.4 percent.

The IIP has a very old base year (1993-94), outdated weights and a fixed frame of products and companies, and had miscalculated industrial growth for the preceding two years (2008-09 and 2009-10) as well. It is therefore imperative that the index is corrected at the earliest to enable meaningful analysis, CMIE said.
In August, the rate of inflation touched a six-month low of 8.5 percent. It was calculated as per the new series released on 14 September with 2004-05 as the base year. A moderation in the prices of primary food articles, manufactured food products and paper & paper products helped keep inflation in check.

We expect WPI-based inflation to moderate to 7.9 percent in 2010-11, as compared to our earlier projection of 8.5 percent based on the old series, it said.

CMIE expects that the agricultural production to grow by 7.2 percent pc in 2010-11.

The withdrawal of the southwest monsoon has been delayed this year, and the plentiful rain across large parts of the country has encouraged farmers to bring more land under cultivation.

As of October 7, kharif sowing was completed across 1,022 lakh hectares, which was 64 lakh hectares more than the acreage reported in the corresponding period of 2009.

Cumulative rainfall for the season (June-September) is 102 percent of the long period average, according to the India Meteorological Department's end-of-season report.

Agricultural production is therefore expected to grow by a healthy 7.2 percent in 2010-11, after recording a 6.6 percent decline in the preceding fiscal, CMIE said.

Coal India issue price band set at Rs 225-245

The price band for Coal India’s initial public offering (IPO) will be between Rs 225 and Rs 245 apiece, coal minister, Sriprakash Jaiswal said on Tuesday.

The company will offer 5% discount to the issue price to its employees and retail investors.

The government will put on block 631.64 million shares, of which 63.16 million shares will be reserved for employees. At the higher end of the price band, the company will mop around Rs 15,500 crore, making it the largest ever IPO in the Indian capital market history. So far, the biggest IPO to hit the Indian capital market is Reliance Power, which raised Rs 11,563 crore in January 2008.

The IPO will be open between October 18 and October 21. It will close a day earlier for the qualified institutional buyers (QIBs).

At this price band, the issue price is at a discount to its global peers. The company price-to-earnings multiple based on its FY10 EPS works to 15.73 times at the upper end of the price band, while it is 17.65 for China Shenhua, and 31 for Peabody Energy, USA’s leading coal producer, based on its December 2009 earnings. On listing, Coal India could become the second most valuable coal producing company with a market capitalisation of $35 billion compared with $84.7 billion for China Shenhua, as per Bloomberg data.

The issue comprises 10% of the post-offer paid-up share capital of the company. About 50% of the issue will be allotted to QIBs on a proportionate basis, 15% to non-institutional bidders or high net worth individuals (HNIs) and the rest to retail individual bidders.

The government may allocate up to 30% of the QIB portion to anchor investors, of which at least a third will be reserved for domestic mutual funds. Citigroup, Deutsche Bank, Bank of America, Enam Securities, Kotak Mahindra and Morgan Stanley will manage the IPO. Three rating agency, Crisil, Icra and CARE, have assigned the highest grade of 5/5 to the IPO, indicating strong fundamentals.

SAIL achieves best ever Q 2 sales

The July-September quarter of 2010 has been the best-ever Q2 for Steel Authority Of India with sales of 3.17 million tonnes (MT) achieved during the period, sources in Rourkela Steel Plant said Saturday.

In comparison to sales in Q1 SAIL achieved a growth of 30 percent. The previous best Q2 in respect of sales was 3.08 MT achieved in 2009-10, they said.

During this year's Q2 SAIL sold 8.5 lakh tonnes of special and value-added steel products, showing a growth of 10.1 percent over the corresponding period last year. Special steel constituted 30 percent of the total domestic sales achieved in Q2.

Sales growth in Q2 was mainly due to higher intake by construction and manufacturing sectors. This was reflected in higher sales of products such as wife rods, rounds and bars, structurals, CR sheets/coils and galvanised items, the sources added.

Career Point Infosystems, debutes 104% up

Tutorial services provider Career Point Infosystems which listed today has registered a massive gain of 104%, or Rs 322.35 to close at Rs 632.35 on the BSE. It listed at Rs 461.10 as against issue price of Rs 310. The company raised Rs 115 crore through the issue, which opened for subscription during September 16-21, 2010. It was subscribed 47.39 times. Career Point's market capitalisation stands at Rs 1,146.64 crore.

The company intends to use issue proceeds for construction and development of an integrated campus facility; expansion of classroom infrastructure and office facility; acquisitions and other strategic initiatives; and to meet expenses towards general corporate purposes.

In an exclusive interview Pramod Maheshwari, CMD and CEO of Career Point today said that the company will continue to grow at its historical run-rate of 25% year-on-year. He said in terms of the revenues, the company would end the current fiscal with Rs 80-85 crore. He is also hopeful that the company would post Rs 25 crore in profits for the fiscal. He added that Career Point would be adding facilities for about 2,000 students as part of its capacity expansion plans in FY12.

JPMorgan cuts Mahindra Satyam to neutral

JPMorgan said on Thursday it had downgraded Indian outsourcer Mahindra Satyam to "neutral" from "overweight" as restated financials restored normalcy but the progress was likely to be slow.

It also slashed the price target on the stock to 90 rupees from 140 rupees earlier.

Mahindra Satyam shares were down 6 percent at 92.95 rupees by 0333 GMT in a slightly firm Mumbai market.

Late on Wednesday, Mahindra Satyam reported a net loss for 2009 and 2010, giving the first view of its financials nearly two years after it was hit by India's biggest corporate fraud.

Sensex scales 20K peak after 32 months; FIIs fuel rally

Upbeat foreign investors Tuesday pushed the stock market benchmark Sensex above the 20,000 points-mark for the first time in 32 months, as they bet on companies that are driving the India growth story.

The barometer closed 95.45 points, or 0.48 percent, up at 20,001.55 - its best closing since January 15, 2008, when the index ended at 20,251.09 points.

Similarly, the 50-share National Stock Exchange benchmark Nifty breached the psychological 6,000 mark and ended at 6,009.05, up 28.6 points, or 0.48 percent.

Some brokers, however, feel that a short-term correction may be round the corner, but would nonetheless provide good investment opportunities.

Happy with the market milestone, Finance Minister Pranab Mukherjee told reporters in New Delhi: "We all know that the Sensex is always a little bit unpredictable. (But) I am happy that for the first time after January 2008, it has crossed 20,000."

Analysts said the rally in Indian market is propelled by strong inflows from overseas fund houses, which have made a net investment of over Rs 71,000 crore in local stocks so far in this year.

"Sensex gushing past 20,000 mark, stands testimony to the attractiveness of India as a preferred investment destination.

With Indian economy structurally well placed for an 8 to 9 percent GDP growth over a long period, domestic equities are in a structural bull run," Angel Broking CMD Dinesh Thakkar said.

Tuesday's close marked the third straight session of gains.

Significantly, the Sensex has completed its journey from 17,971 points on August 31 to 20,000 in just 15 trading days.

Tuesday's gain was fuelled by a smart gain in blue-chips like L&T, HDFC, HDFC Bank, TCS, Infosys and BHEL.

Infosys rose 0.9 percent, TCS 2.5 per cent and Wipro 2.7 percent. Equity analysts said IT stocks rose after IBM Corp announced a USD 1.7 billion takeover.

L&T zoomed 2 percent, Cipla 1.92 per cent and BHEL 1.73 percent. With a net gain of 2.93 percent, Tata Power was the best performer in the Sensex pack.

In the BSE-30 pack, 16 stocks ended with gain, while rest 14 closed in the red.

Even in the broader market, 2,123 stocks declined against 883 advances.

Reliance Industries Ltd, which holds the maximum weight in the Sensex, acted as a drag, closing 0.60 percent lower at Rs 1,033.5.

ITC plunged 2.58 percent and led the losers' pack. Other major losers include Jaiprakash Associates 1.52 percent, DLF 1.38 per cent and Hindalco 1.22 percent.

Asian stocks rose after US homebuilder Lennar Corp posted better-than-estimated profit, boosting optimism in the economic recovery worldwide.

US stocks advanced on Monday, sending the S&P 500 Index to a four-month high on Lennar Corp's profit forecasts and IBM Corp announcing a USD 1.7 billion takeover.

BSE commences mobile-based trading

The Bombay Stock Exchange Ltd (BSE), India's oldest stock exchange launched mobile-based trading Tuesday through its 33 leading brokers, a senior Exchange official said.

"We have started providing user-friendly mobile-based trading from today. The top 33 brokers of BSE commenced mobile trading for their clients," BSE's Managing Director & CEO, Madhu Kannan told reporters here.

Leading BSE stock brokers namely, Angel Broking, Motilal Oswal Securities, Marwadi Shares & Finance, BCB Brokerage, Asika Stock Broking, Geojit BNP Paribas Financial Services, SMC Global Securities, ICICI Securities, India Infoline, Kotak Securities, Standard Chartered STCI Capital Markets are among those who started providing mobile based trading facility to its clients.

The mobile trading service will be extended to all the investors through its 900 active brokers soon. Mobile trading is essentially an extension of internet based trading.

Kannan said the security on mobile trading will be same as on internet trading. Brokers will have full control of the risk parameters since orders submitted by client on his mobile will be sent via the broker's servers to the exchange.

Brokerages bullish on Eros International Media

The Rs 350 crore IPO of Eros International Media, part of the Eros Group, which is a global player within the Indian media and entertainment sector, has been subscribed nearly 50%, as per data available on NSE website.

It has fixed a price band of Rs 158-175 per equity share for the issue, which closes on September 21, 2010.

Why are brokerages bullish on Eros International Media?

Experts as well as brokerage firms look bullish on this issue and advised subscribing the same. Investment Advisor, SP Tulsian says, the issue seems to be fairly priced. "Those looking to take an exposure in this sector, can go for it!"

KRChoksey says, "Considering potential growth in Film industry and expanding exhibition platform in India, we see strong opportunity for increase in theatrical revenues, thereby providing opportunity for movie content and distribution players. Also we are sanguine about rapid analogue to digital migration and emergence of new digital media platforms which have provided the opportunity to de-risk the movie business model through pre-sale of rights. Eros with 30 years of experience in acquiring movie rights and strong movie distribution network in India is expected to largely benefit."

"In addition, Eros has partnership agreement with Eros plc which gives ready exposure to international revenues. On upper price band, the issue is priced at 13.8x of consolidated FY11E EPS of Rs 12.6 which is at significant discount compared to its closest peer UTV Software, trading at FY11E P/E of 33x. We recommend a subscribe to Eros International Media IPO," according to its report.

Analysts see bullish days ahead for Sensex

With the BSE benchmark Sensex breaching the 19,000-level and still going strong, analysts believe that Indian markets have entered a bull phase and persistent FII inflows may push the index past the 20,000-mark in the coming days.

"Investors are sitting on huge cash piles and as the market is rising, they cannot sit sideways for long. A large chunk of cash is coming in the market and in such a scenario, hitting the 20,000-mark seems easy," CNI Research CMD Kishore Ostwal said.

"By October the Sensex is likely to cross the 20,000-mark and by November, I see it at the 21,000-level," Ostwal added.

The Sensex had touched an all-time high level of 21,206 in January, 2008, a year that saw the benchmark index of the Bombay Stock Exchange record an over 80 per cent jump.

Echoing a similar opinion, Network Stock Brokings Head of Institutional Sales & Strategy Prakash Diwan said hitting the 20,000-level would not be a big deal in the coming days.

"The market is driven by strong liquidity and FII inflows are expected to continue in the local stock market. Hitting the 20,000-level by Sensex would not be a big deal. Soon the Sensex will be able to reach that level," he said.

On Monday, the Sensex zoomed by more than 408 points to cross the 19,000-level for the first time in 32 months.

"Investors have faith in the India growth story and in the coming days, the Sensex will touch new highs," Diwan added.

The index has risen 122.3 percent so far this year, from a low of 8,701.07 in October, 2008, on account of the global economic crisis.

"I do not see any reason why markets should not move up. It is a liquidity-supported rally and unabated FII inflows would further push local markets," SMC Global Securities Equity Head Jagannadham Thunuguntla said.

"India is one of the hot spots for overseas investors and those fund houses, which were still watching the situation, now are interested to pick up local stocks as global equities are rebounding," Thunuguntla added.
The Sensex took just five days to reach the 19,000-level from the 18,221.43 mark. On September 3, the index had settled at 18,221.43.

Three banking stocks -- SBI, ICICI Bank and HDFC -- accounted for about 70 per cent of the Sensex's rise from 18,000 to 19,000.

"Banks are on a rising streak on optimism that lending will pick up in a fast-growing Indian economy and that they are well capitalised," IIFL Vice-President (Research) Amar Ambani said.

"Banking stocks jumped as regulators gave firms more time than expected to meet capital requirements (the Basel norms)," another analyst added.

However, equity analysts did not rule out a correction in the markets, as they felt stocks are overvalued.

"Investors should take cautious approach about the market this time. A fall from this high cannot be ruled out," Unicon Financial CEO Gajendra Nagpal said.

The BSE benchmark Sensex was up by 153.39 points at 19,361.72 Tuesday, with just an hour left before the close of trade.

IFGL Refractories: Stock that gained 16% in buoyant trade

IFGL Refractories gained 15.83% or Rs 8.15 to close at Rs 59.65. It touched an intraday high of Rs 61.80 and an intraday low of Rs 54.10. There were pending sell orders of 496 shares, with no buyers available.

Why the run up?
The company has acquired two US based companies EI Ceramics LLC and CUSC International Ltd for a total of USD 13 million. The acquisitions will be partly funded by equity and partly debt with the major portion being debt. The deal is expected to help the refractories manufacturer expand its capacity.
EIC designs, manufactures and supplies isostatically pressed continuous casting refractory to several major steel-makers in North America, which would provide the Indian refractory firm with a lot of synergies.
In an interview, KamalSarda, COO, IFGL Refractories said,"At the current level, at half year, the two companies had about USD 6.5 million. We expect to add about USD 13 million to USD 14 million this year. We hope it would substantially increase after we have absorbed everything." The company sees a 15-20% growth on current operations in the current fiscal.
The company is engaged in the manufacture of specialised refractories and requisite operating systems for the steel industry. The IFGL Group of companies is focused on the global markets and sells in European Community, Americas, South East Asia, Oceania, Middle-East, South Africa, Egypt, Algeria, Nigeria, Russia, Kazakisthan, Singapore, Japan, Taiwan and Phillipines.

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Article on: How to analyze the company

Following are the points to be considered for value investing and getting decent returns, please note that if you are investing refering this article, then you should consider all the following points mentioned in this article

• What is Fundamental Analysis
• Invest in Good Company
• Earnings
• Current Valuations of the Shares
• Future Earnings Growth
• Debit status of the Company
• Company’s Announcements

What is Fundamental analysis?
Fundamental analysis is basically done for long term and mid term investment which is also called as delivery based investment or trading.
The main important aim behind is to study and understand the company in which you are planning to invest your hard earned money and get excellent returns.

How to analyze the fundamentals of the company? Basically one should be able to judge at least how the company has done in past years, its debit status, its current valuation, its future growth prospects, its earning capacity etc
So that based on these terms he can at least decide whether to invest in this company or not.

What you should look for in a company to invest?
1. About Company -
What the company is doing and what are its businesses?
How is the current demand for their products and how the demand will be in future like in next 3 to 5 years and so? (It is difficult to analyze the future demand yourself so you can visit financial websites or contact us)

2. Earnings -
This is very important parameter. Broadly look into its last 5 or 10 years earnings whether the company has posted profits or losses.
It’s all about earnings. The bottom line is investors want to know how much money the company is making and how much it is going to make in the future.
To find the earning status ratios used are EPS - Earning per share

3. Current valuation -
This is another very important factor which most of the investor forgets while doing their investments.
Generally most of the investors invest at higher valuations of shares and when share prices start coming down then they keep worrying, so this should not happen.
Before investing one should check the current valuation of the share price and invest only when the share price is at right price and not at over priced share.
This is what happened in January 2008. Most of the people invested at very high valuations and later on the share prices started to correct (falling down).
To find the current valuation of the stock the ratios used are
PE ratio - Price to earning ratio
Book value
PB ratio - Price to book value ratio

4. Future earnings growth -
It is very important to analyze how the company is going to do in future. How will be its returns or its profits etc?
Basically most of the investors invest in shares taking into consideration Company’s future growth prospects.
To find the future growth of the stock the ratios used are
PEG ratio - Price to earning growth ratio
Current EPS and Forward EPS
Price to sales ratio

5. Debit status -
For any company to perform well in the future it is very important to be debt free or less debit because if company is having large debits like borrowings, loans then it becomes difficult for it to plan for any acquisitions, expansion plans take over plans, dividend payout and very important its most of the net profit goes in paying the interest and loans and other debits.
So in other words if the company is having fewer debits or no debit then they are having lots of cash in hand and they are free to take any decision in coming future.
To find the debit status of the company the ratios used are
Debit ratio

So to accomplish above parameters fundamental analyst follow certain ratios which are mentioned below.



Earnings
Earning Per Share - EPS
EPS plays major role in investment decision.
EPS is calculated by taking the net earnings of the company and dividing it by the outstanding shares.

EPS = Net Earnings / Outstanding Shares
(Nowadays you will get this ready made, no need for you to do calculation.)

For example -
If Company A had earnings of RS 1000 crores and 100 shares outstanding, then its EPS becomes 10 (RS 1000 / 100 = 10).
Second example -
If Company B had earnings of RS 1000 crores and 500 shares outstanding, then its EPS becomes 2 (RS 1000 / 500 = 50).

So what is that you have to look in EPS of the company?
Answer - You should look for high EPS stocks and the higher the better is the stock.

Note - You should compare the EPS from one company to another, which are in the same industry/sector and not from one company from Auto sector and another company from IT sector.

Before we move on, you should note that there are three types of EPS numbers:

Trailing EPS - Trailing EPS means last year’s EPS which is considered as actual and for ongoing current year.
Current EPS - Current EPS means which is still under projections and going to come on financial year end.
Forward EPS - Forward EPS which is again under projections and going to come on next financial year end

But the EPS alone doesn’t tell you the whole story of the company so for this information, we need to look at some more ratios as following.
It’s not advisable to make your investment decisions based on only single ratio analysis.
EPS is the base for calculating PE ratio.

Importance of Earnings -
Earnings are profits. Quarterly or yearly company’s increasing earnings generally makes its stock price move up and in some cases some companies pay out a regular dividend. This is Bullish sign and indicates that the company’s is in growth.

When the company declares low earnings then the market may see bearishness in the stock price and hence its share price starts deceasing and corrects further if the company doesn’t provide any sufficient justification for low earnings.

Every quarter, companies report its earnings. There are 4 quarters.

Quarter 1 - (April to June and earnings will be declared in July)
Quarter 2 - (July to Sept and earnings will be declared in Oct)
Quarter 3 - (Oct to Dec and earnings will be declared in Jan)
Quarter 4/final - Also called as financial year end - (Jan to Mar and earnings will be declared in April)

Now by this time you would have understood how earnings are important for a stock price to move up or down. But depending only on earnings one should not make investment or trading decision. To make decision more risk free you should look into more tools as mentioned below so that your investment decision becomes more solid and you should get excellent returns in future.

Conclusion - Keep a close watch on quarterly earnings and trade or invest accordingly or manipulate your investing.

Following are the most popular and important tools/ratios to find excellent growth stocks which focuses on earning, growth, and value of the company’s.

Current Valuations of the shares
Price to Earnings Ratio - PE ratio
PE ratio is again one of the most important ratio on which most of the traders and investors keep watch.
Important - The PE ratio tells you whether the stock’s price is high or low compared to its forward earnings.
The high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. This generally happen in bull market and share price keeps on increasing. Basically in bull market share prices keep increasing without giving more importance to its current valuation and once market realizes that it is over priced then they start selling.
In bear market the low PE stocks having high growth prospects are selected as best investment options.

But, the P/E ratio doesn't tell us the whole story of the company.
Generally the P/E ratios are compared of one company to other companies in the same sector/industry and not in other industry before selecting any particular share.

The PE ratio is calculated by taking the share price and dividing it by the companies EPS.
That is
PE = Stock Price / EPS

For example
A company with a share price of RS 40 and an EPS of 8 would have a PE ratio of 5
(RS 40 / 8 = 5).

Importance - The PE ratio gives you an idea of what the market is willing to pay for the companies earning.
The higher the P/E the more the market is willing to pay for the companies earning.
Some investors say that a high P/E ratio means the stock is over priced on the other side it also indicates the market has high hopes for such company’s future growth and due to which market is ready to pay high price.
On the other side, a low P/E of high growth stocks may indicate that the market has ignored these stocks which are also known as value stocks. Many investors try finding low P/E ratios stocks of high value growth companies and make investments in such stocks which may prove real diamonds in future.

Which P/E ratio to choose?
If you believe that the companies has good long term prospects and good growth then one should not hesitate to invest in high P/E ratio stocks and if you are looking for value stocks which prove real diamonds in future then you can go with low PE stocks provided that companies has good growth and expansions plans.
At all if you would like to do PE ratio comparison then it has to be done in same sectors/industry stocks and not like one stock from banking sector and other stock from pharmacy sector.
So now you would have come to know how to choose stocks based on PE ratio.

What is book value?
Book value is the total value of the company's assets that shareholders would theoretically receive if a company were liquidated (closed).
By being compared to the company's market value, the book value can indicate whether a stock is under priced or overpriced.
So in other words if the share price is trading below its book value then it is considered as under priced and good for value investing.

Price to Book Ratio - PB ratio
Basically PB ratio is mostly utilized by smart investors to find real wealth in shares, so investing in stocks having low PB ratio is to identify potential shares for future growth.

A lower P/B ratio could mean that the stock is undervalued.

Like the PE, the lower the PB, the better the value of the stock for future growth.

Some of the investors become quite wealthy by holding stocks for the long term of such companies whose growth is based on their businesses instead of market and one day when every one notices this stock the value investor’s pockets are full of profit.

PB ratio is calculated as
PB ratio = Share Price / Book Value per Share.

Generally, if the ratio comes below 1 then it is considered as value investing. But this doesn’t mean that the ratio coming to 1.2 or 1.5 is not value investing. It also depends on its future growth prospects.

Future earnings growth

Projected Earning Growth ratio - PEG ratio
Because the market is usually more concerned about the future than the present, it is always looking for companies projected plans, financial ratios, and other future announcements.

The use of PEG ratio will help you look at future earnings growth of the company.

PEG is a widely used indicator of a stock's potential value.
Similar to the P/E ratio, a lower PEG means that the stock is more undervalued.

To calculate the PEG the P/E is divided by the projected growth in earnings.

That is PEG = P/E / (projected growth in earnings)

For example -
A stock with a P/E of 30 and projected earning growth for next year is 15% then that stock would have a PEG of 2 (30 / 15 = 2).
In above example what does the “2” mean?

Lower the PEG ratio the less you pay for each unit in future earning growth. So the conclusion is you can invest in high P/E stocks but the projected earning growth should be high so that companies can provide good returns.

Looking at the opposite situation; a low P/E stock with low or no projected earnings growth is not going to give you good returns in future because its PE is low means investors are not ready to pay high and its PEG is also low because companies do not have any good future growth or expansion plans so investment in such stocks could prove less or no returns.

A few important things to remember about PEG:
It is about year-to-year earnings growth.
It relies on projections, which may not always be accurate.
It’s forward earning estimation which market analyst or company calculates.

Following two ratios are again the projection or estimation done by either market analyst or by company resources.

Current EPS - Current EPS means which is still under projections and going to come on financial year end.
Forward EPS - Forward EPS which is again under projections and going to come on next financial year end.

Price to Sales Ratio
The question is, is it that companies having no current earnings are bad investments?
Answer is Not necessarily, because such companies may be new and trying to grow and expand but you should approach such companies with precaution.

The Price to Sales (P/S) ratio looks at the current stock price relative to the total sales per share.

You can calculate the P/S by dividing the market cap of the company by the total revenues of the company.

You can also calculate the P/S by dividing the current stock price by the sales per share.

That is
P/S = Market Cap / Revenues
or
P/S = Stock Price / Sales Price per Share

Conclusion - To find under valued stocks you can look for low P/S ratios.

The lower the P/S ratio the better is the value of the company.


Debit status of the Company

Debit Ratio
This is one the very important ratio as this tells you how much company relies on debit to finance its assets.
The higher the ratio the more risk for company to manage going forward. So look for company’s having low debit ratio.
Generally it is considered that debit ratio less then 1is good investment option. But even some investor considers higher debit ratio provided the company is having good growth prospects.

If company has fewer debits then company can make more profit instead paying for its debits like interests rates, loans etc.

Dividend Yield
If you are a value investor or looking for dividend income then you should look for Dividend Yield figure of the stock.
This measurement tells you what percentage return a companies pays out to shareholders in the form of dividends. Older, well-established companies tend to payout a higher percentage then do younger companies and their dividend history can be more consistent.

You calculate the Dividend Yield by taking the annual dividend per share and divide by the stock’s price.
That is
Dividend Yield = annual dividend per share / stock's price per share
For example
If a company’s annual dividend is RS 1.50 and the stock trades at RS 25, the Dividend Yield is 6%. (RS 1.50 / RS 25 = 0.06).

Important Note -
Any single tool or ratio should not be used to make your investment or trading decision nor will they provide you any buy or sell recommendation. All tools should be used to find growth and value stocks.
After making use of above all tools you will get excellent stocks which will give you excellent returns in mid term to long term.
You will find all these ratios in any financial website or you can contact us.


Company’s announcements
Always keep a close watch on stocks you are interested to buy or you already bought for any mergers, take over, acquisitions, stake sells, new product launch etc. This would make the major impact on company. This is important point

Profit after Tax
Check out company’s PAT (profit after tax) of every quarterly if you are short term to mid term trader and if you are long term investor then check out its yearly PAT. The company should have posted consistent growth.

VLS Finance Hotel Case should be in VLS Finance favour

VLS Finance: There is talk floating around of a favourable outcome in an ongoing case over Sunair Hotels. According to a report in Business India magazine, in 1995, VLS invested in Sunair Hotel and for Rs70 million, it got a 25% stake in this five-star hotel in Delhi, which runs the Metropolitan Nikko at Connaught Place. The balance Rs220 million was brought in by the promoters, the Gupta family, while a Singapore-based hotel chain, Accor Asia, was to bring in Rs10 million at a premium of Rs90. VLS also mobilised loans of Rs850 million, agreed to manage the public issue, and gave Sunair a security deposit of Rs100 million at an interest rate of 20%. VLS claims that within a year, Accor withdrew, and Sunair was not paying the quarterly interest on the deposits. VLS and the Guptas are mired in a legal battle over the property which, in 2007 itself, was valued at Rs8 billion. VSL says that according to the agreement, it would become the majority stakeholder.

Govt moots relaxation in FDI rules on JVs

The government on Friday proposed a major relaxation in FDI rules to allow foreign firms to bring in new technology and set up new independent business without clearance from their existing local partners.

The move is aimed at attracting foreign direct investment (FDI) into the country, which has recently slowed down.

Under the present dispensation, a foreign player who had set up a joint venture (JV) in India before January 12, 2005 but now wants to open a new business independent of the existing domestic partner faces barriers.

The foreign player not only needs the government approval but also a 'no-objection certificate' from the domestic partner to the effect that the new forays would not "jeopardise" interest of the existing JV.

"The proposal is a welcome move it will attract more and more FDI and will also bring in high quality products for Indian consumers at competitive price," Naresh Makhijani, Executive Director, KPMG said.

The FDI rules proposed to be relaxed were not applicable to the joint ventures entered after January 12, 2005. Thus, the changes would help foreign investors who entered JVs before this date.

Suggesting abolition of this rule, the Department of Industrial Policy and Promotion (DIPP) said in a discussion paper, "There is a need to examine whether such a conditionality continues to be relevant in the present day context."

Alternatively, it has suggested that the stipulation of no-objection from the domestic partner should not be applicable to JVs which are 10-year old.

It has invited comments from the stakeholders till October 15.

The move follows representations from foreign investors pointing out that their domestic partners were using a string of press notes since 1998 "as a means of extracting unreasonable prices/commercial advantage. These press notes had become a stumbling block for further FDI coming into the country."

The DIPP, the nodal agency for FDI related matters, said India has entered into a number of free trade agreements and several others are under negotiations.

"In such a scenario if an industry (FDI) is discouraged from being set up in India, it could be set up in a neighbouring country with whom a trade agreement exists or is being negotiated," it said.

India received USD 25.8 billion FDI in 2009-10.

After a pick up in the first two months of the current fiscal, the inflows have slowed down for June and July.

10% blowout rally possible from here: Samir Arora

Indian markets are on a swing and the great moves will continue as long as FII flows continue. Claiming that recent inflows into the markets were the result of reallocation of existing funds, Samir Arora of Helios Capital told that these flows will continue if markets grind higher. He said he has turned bullish on India in the past three months and sees a 10% blowout rally from here. However, "a 15% rally is unlikely," he said.

Speaking on specific stocks and sectors, Arora said Delta Corp remains his top midcap pick, and he continues to hold S Kumars. "I remain short on telecom," he said.

KRBL: Stock that gained 54% in 5 days

The catastrophic floods which have destroyed Pakistan's rice crop seem to have opened doors for India's Basmati rice producers. One of the beneficiaries has been Basmati rice exporter KRBL. Its stock price gained 54% over the last five days. Today, however, it managed just 1.80% or Rs 0.65 to end at Rs 36.80. It touched an intraday high of Rs 38.50 and an intraday low of Rs 36.05 and touched a 52-week high of Rs 38.50.

Why the run-up?

The most devastating floods in Pakistan’s history has destroyed crops and damaged infrastructure severely. A rice exporters’ group in Pakistan has forecast that exports may plunge significantly for the year.

In an interview, Anil Mittal, CMD, KRBL said, "The rice prices have increased by about USD 100 in the last 10-15 days. This is primarily because Pakistan floods have helped India to boost their prices. Since Pakistani prices have also increased by USD 100-150 in the last one month, that is the reason Indian prices have been boosted by USD 150 per tonne.

India, the second largesst producer of rice, had put into practice a trade ban on non-Basmati rice in April 2008 to increase the country's domestic supplies. The drought in 2009 further compounded issues for the government with a double-digit fall in rice production forcing it to continue with its restrictions in 2009.

Mittal however expects relaxations on export parameters for non-Basmati rice any time soon. "Looking at the monsoons and looking at the prospects of non-Basmati crop, I am quite confident that by October, the government will take the position of the crop and will definitely open the exports of non-Basmati rice."

As compared to about 2.8 million tonne of the total Indian export, KRBL's export this year is about 140,000 tonne. "We are expecting a 20% rise overall. The Indian exports of Basmati will jump by 20% this year because of the Pakistani floods," said Mittal.

What experts said during the week:

Rahul Mohindar, viratechindia.com told, "KRBL is pretty good from a long term count. But the stock has obviously run up to a good degree. It had a significant price and volume breakout over the last couple of weeks, which certainly makes this very potential longer run. But again if you are worried about the short term, Rs 36 to Rs 38 is a resistance area. We are still sitting in that zone where we might knock off 8% or 10%. So unless you are really worked out about the very short term I would still recommend holding on to the stock. We see this as a candidate for about Rs 52 and one has to be prepared that the stock can correct to something like Rs 31–32. So keeping that downside cushion, one should continue holding on to KRBL. It has made a case with the kind of volumes and price breakouts that we have seen over the last week where it shows that there is a lot more potential to come."

He added,"I am obviously looking at a timeframe of about 6 months plus. It’s a stock which can give you one of those sudden momentum moves. But again one should keep a timeframe of approximately 6 months in mind."

Mitesh Thacker, Technical Analyst, miteshthacker.com said, "We have seen a strong run-up in all the rice stocks. KRBL though it is difficult to give a price target on it, because it has broken into all time highs, but if we look at the momentum and the technical setup, there is at least a 15% upside, and Rs 40-42 should be easily tested probably even higher."