PICK OF THE WEEK

Info Drive Software Ltd

BSE Code: 530703

CMP: Rs.27.10

EPS: Rs.1.63

Introduction: Info-Drive Software Limited [BSE: INFDS, 530703], is a multi-dimensional Technology and Business Services Company offering:

* Specialized expertise in Applications Deployment and Banking Solutions

* Remote Infrastructure Management

* Biometric Solutions at enterprise level and

*Back-office transaction processing in Healthcare and Benefit Administration domains.

The company serves the high-growth banking in the Middle East and Far East markets segment by providing turnkey systems integration solutions entailing custom software implementation, hardware optimization and data center maintenance. Through a unique synthesis of organic and inorganic growth model on top of highly specialized offerings in the IT, Infrastructure and BPO verticals, it has established a well-balanced portfolio of services catering to the mainstream, uncontested, and emerging markets globally.

With headquarters in Chennai (India), Info-Drive has service delivery centers across India, Kuala Lumpur (Malaysia) and Dubai (UAE) supporting the business development centers in the USA (Sunnyvale and New York), and Singapore. These also support the multiple systems integration centers pan-India.

Its corporate culture is driven by:

* A strong sense of client-centricity

* Empowered decision-making with high accountability

* Sustained investment in domain expertise for continual differentiation in offerings and

* A constant focus on identifying green field opportunities for steady value creation for the company.

These attributes have fuelled Info-Drive’s rapid growth in the chosen markets, helping it become a truly ‘niche’ provider of both scale and specialized services. Partnering on an integrated or discrete engagement model, we are able to unlock measurable savings for clients globally.

Its portfolio of services entails:

* Business Process Outsourcing services

o Healthcare (Data Capture, coding and billing)

o Benefit Administration services (Life cycle of Qualified Pension Plans and IRS filing)

* IT Services

o Lifecycle Development Services

o Product Support and Customization Services

o Platform Porting Services

o Product Migration Services

* IT Infrastructure Management Services

o Remote Infrastructure Management

o Data Center Management

* Biometrics

o Avant Guard-Auto

o Avant Guard-IT

o Avant Guard-Access Control

o Avant Guard- 32 Bit E-Kit

Shareholding Pattern: The promoters hold 18.50% while private corporate bodies hold 16.51%. The non-promoter holding is 81.50%.

Share Holding Pattern as on :	31/03/2010		31/12/2009		30/09/2009
Face Value	10.00		10.00		10.00
	No. Of Shares	% Holding	No. Of Shares	% Holding	No. Of Shares	% Holding
PROMOTER'S HOLDING
Indian Promoters	5408456	18.50	5407956	18.50	5372208	18.37
Sub Total	5408456	18.50	5407956	18.50	5372208	18.37
NON PROMOTER'S HOLDING
Institutional Investors
Mutual Funds and UTI	800	0.00	800	0.00	800	0.00
Banks Fin. Inst. and Insurance	7600	0.03	8000	0.03	8000	0.03
FII's	91689	0.31	91689	0.31	91689	0.31
Sub Total	100089	0.34	100489	0.34	100489	0.34
Other Investors
Private Corporate Bodies	4827674	16.51	4836407	16.54	4859177	16.62
NRI's/OCB's/Foreign Others	4015445	13.73	2989783	10.23	3920618	13.41
Others	1026589	3.51	1001917	3.43	1002828	3.43
Sub Total	9869708	33.76	8828107	30.19	9782623	33.46
General Public	13860637	47.40	14902338	50.97	13983570	47.83
GRAND TOTAL	29238890	100.00	29238890	100.00	29238890	100.00

Financials: For FY09, the net sales of the company came out to be Rs.13.65 Cr as against Rs.4.25 Cr in the same period previous year. The other income of the company came out to be Rs.97 lakhs as against Rs.49 lakhs in the same period previous year. The operating profit of the company for FY09 came out to be Rs.4.77 Cr as against Rs.2.64 Cr in the same period previous year. The Gross profit of the company for FY09 came out to be Rs.5.55 Cr as against Rs.2.95 Cr in the same period previous year. The net profit if the company for FY09, came out to be Rs.5.22 Cr as against Rs.2.28 Cr in the same period previous year.

The EPS of the company for FY09 came out to be Rs.1.79 as against Rs.0.78. The net profit in FY09 would have been much higher if the employee expenditure and other expenses have not shot up by so much. The employee expenditure increased to Rs.1.64 Cr in FY09, as against Rs.72 lakhs in the same period previous year. The other expenditure shot up to Rs.7.24 Cr as against Rs.90 lakhs in the same period previous year. The depreciation has also increased significantly during FY09, as against FY08.

For Q3FY10, the total sales of the company came out to be Rs.5.19 Cr as against Rs.6.46 Cr in the same period previous year. The operating profit of the company nearly doubled to Rs.1.84 Cr in Q3FY10 as against Rs.1.03 Cr in the same period previous year. The net profit of the company for Q3FY10 came out to be Rs.1.62 Cr as against Rs.1.01 Cr in the same period previous year. The operating profit margin of the company increased to 35.51% in Q3FY10 as against 15.85 % in the same period previous year. The GPM of the company increased to 32.7% as against 17.57% in the same period previous year. The NPM of the company increased to 30.95% (almost double) in Q3FY10, as against 15.19% in the same period previous year. The EPS of the company for Q3FY10 came out to be Rs.0.55 as against Rs.0.34 in the same period previous year.

For the nine months ending December, 2009, the total sales of the company came out to be Rs.10.69 Cr as against Rs.119.4 Cr in the same period previous year. The net profit of the company during the period came out to be Rs.4.20 Cr as against Rs.3.98 Cr in the same period previous year. The operating profit margin of the company also increased to 43.96% as against 34.77% in the same period previous year. The NPM of the company during the period came out to be 38.81% as against 31.74% in the same period previous year. The EPS of the company for the nine months ending December, 2009, came out to be Rs.1.44 as against Rs.1.36 in the same period previous year.

However, a little concern is given by the fact that during the nine months ending December, 2009, the employee expenditure almost doubled to Rs.2.64 Cr as against Rs.1.19 Cr in the same period previous year. But this is offset by the significant decrease in the other expenses to Rs.3.35 Cr as against Rs.6.6 Cr during the nine months ending December, 2009.

Triggers:

• There is a big change in the global economy and the Company has been able to adapt well and march along with overall improved performance. Keeping in mind the Company’s future outlook and the avowed objective to reward the Shareholders, the Board shall maintain its policy of returning a portion of its free cash flow to its shareholders at a level it considers prudent in light of the current economic and financial environment. The Board recommended a Dividend of 5% (Rs.0.50 paise) per share for FY 08-09. The Board is confident of ensuring sustainable returns to the Shareholders for now and many years to come.
• The Company continued to win new engagements and grow existing relationships in the traditional area of Hardware Sales & Maintenance, Systems Integration and has strengthened its presence in areas such as IT Consulting and IT Infrastructure Management services. The broad range of services enables the Company to provide end-to-end solutions to its clients - combined with its geographical spread provided comprehensive and high value added services to its clientele.
• The Company in FY 08-09 has chalked out a new strategy and has realigned its operating structure and enhanced technology offering. The revised organizational operating structure paves the way for more accountability & performance by casting a P&L responsibility on Heads of Operations. The Company today is much more focused and is executing at a higher efficiency than a year ago.
• The synergies between the subsidiaries which have been acquired in the past are yielding results in making InfoDrive as a group, provider of end-to-end comprehensive solutions.
• The Company’s Income from operations in FY09 grew by 221% to Rs.13.65 Cr from Rs.4.25 Cr in 2008, thus making further growth in 2009. The corresponding Total expenditure including depreciation is Rs.9.28 Cr in 2009 from Rs.1.87 Cr in 2008. Correspondingly the Profit after Tax increased by 129% to Rs.5.22 Cr in 2009 as compared to a profit of Rs.2.28 Cr in 2008.. The Company’s Stand alone operations have shown substantial growth. The company seeks long term engagements with clients while addressing their Outsourcing requirements. Its customer centric approach has resulted in high level of client satisfaction. The demand for the Company’s services continues to look robust, and the relentless focus on niche areas within Business Process Outsourcing (BPO) and Information and Communication Technology (ICT) services continues to resonate with target customers.
• The Company’s chosen target segment in BPO space does not have any exposure to the recession in USA and has not seen any slowdown in demand from its US clients. USA continued to be the largest market for its BPO operations and hence any improvement in the fundamentals of the US is positive for the company. The company derived 75 percent of its BPO revenues from repeat business. The Company continues to believe that, for the nature of services it provides, growth is predicated on superior service delivery execution, ongoing value enhancing workflow and domain competency rather than on vagaries of macroeconomic market forces.
• The Company’s investments in uncontested market opportunities and innovation have enabled it to conceptualize and undertake a large, end-to-end critical project in Digi-Life segment. As part of this practice initiative, the Company has won several high-value contracts in Information and Communication Technology (ICT). It has rapidly established itself as industry leader in creating a truly unique e-Living Practice that provides automation, digital life-style, and community networking & unified integration of media, telecom and internet for homes and community.
• The quality of revenue and the annuity nature of its client contracts make its growth plans highly predictable and sustainable over a longer time horizon, relative to its sector peers. The global economic events and the resultant slow- down has created enormous headwind to the growth of services industry in general and offshore outsourcing industry in particular. The Company’s investments in new growth engines like e-living, specialized service offerings in BPO like Benefits Administration Services and value centricity in the large Systems Integration projects have helped convert today’s challenging market environment into opportunities for growth.
• Even in this difficult environment, the Company continues to make substantial investments in developing its domain expertise and strengthening its technology competencies. The Company is focused on Intellectual Property (IP) led growth strategy in some of the chosen service offerings and as a testimony have built several tools like InsTIL, CampIT, industry pioneering Biometrics solutions and are actively offering these to several blue-chip clients, as an integral part of its service offerings. As a result of these initiatives, the Company is well equipped to benefit when the global economy, especially the US, is revving.
• Though the current external macroeconomic conditions continue to be uncertain, however it is widely believed that the company’s performance bulwarked by a professional management team will continue to surpass the expectations, as witnessed over the last few years.

· Info-Drive Software Limited (Singapore Branch) was incorporated in November 2007, to expand its business in Hardware Sales & support services business in Singapore. The Company in FY09 has signed a reseller agreement with Hewlett Packard Singapore (Sales) Pte Ltd (HP) for selling the entire line of HPs Products in India.

• Subsidiaries: The Company today is a global corporation having presence in 5 countries :

           Subsidiary                                                                         Country of Incorporation

       Info-Drive Software Inc                                                         United States of America

       Info-Drive Systems Sdn Bhd                                                   Malaysia

       Info-Drive Software LLC                                                         United Arab Emirates

       Precision Infomatic (Madras) Pvt Ltd                                       India

       Info-Drive Software Pte Limited                                             Singapore

       Info-Drive Software Limited                                                   Canada

       Precision Techserve Private Limited                                        India

       Precision Galaxy Private Limited                                              India

       Precision Techconet Private Limited                                        India

       Legend Systems Private Limited                                              India

       Technoprism Inc                                                                      United States of America

       Technoprism LLC                                                                     United States of America

During FY09, InfoDrive Dubai has made good progress on its strategy to target multi-year deals with end to end ownership of customer systems and processes. This initiative has helped the Company further its objective of long term partnership with the customers. Within few months of launch of Digi-life practice, InfoDrive Dubai secured its first multiyear million dollar order in ICT space for InfoDrive, India. The scope of work includes providing community datacenter, call-center & e-Living experience. Hardware Platform, Software Drivers & Applications are developed in conjunction with several OEM & technology giants including Microsoft and Cisco. The phase one of the project which includes e-Living thrill ideation, e-Living commerce blueprints, infotainment solution architecture has been successfully delivered in FY09.

• Info-Drive Software Ltd has informed last month that it is entering into the S A S, and Risk Management Practices. These Practices are advanced and analytical practices in the areas of operational risks, anti -money laundering, fraud analytics, and customized fraud solutions. The company hopes to derive significant revenues from it.
• Last year, Info-Drive Software LLC, an IT services provider and a subsidiary of Chennai-based Info-Drive Software and Xerox had formed a "go to market" strategic partnership for offering to the customers paperless office products and total document solutions of Xerox in the UAE. In a statement, Info-Drive said the tie up will help medium and large enterprises to conserve cash by eliminating wastes and business-non value -adds at department and organization level while retaining core business value adds. It is one of the few who has become a member of the business partner program of Xerox Solutions & products in the UAE.

Conclusion: Considering the points mentioned above the scrip could be purchased at the CMP of Rs.27.10 for a target of Rs.31-31.5 in the very short term. MACD, Bollinger Bands, Stochastics, etc are in buy mode and cross over could take the scrip upto Rs.35 in the short to medium term, unless the world markets further crashes. The candle stick chart pattern is indicating good upward movements in the days to come. Moreover, volume built-up was seen in the counter in the last trading session. But on the negative side the scrip is still below its 50 and 200 DMA. In case of any market crash please put a Stop Loss at Rs.24.5.

Note: The stock was recommended to the Paid Groups on this Sunday (9th May, 2010) in the Sunday Report.

Disclaimer: Though due care has been taken while preparing this report but no responsibility will be assumed by the author for the consequences what so ever, resulting out of acting on these recommendations or after reading the report.

The calls made herein are for informational purposes and are not recommendations to any person to buy or sell any securities. The information is derived from sources that are deemed to be reliable but its accuracy and completeness are not guaranteed. The author does not accept any liability for the use of this column for buying and selling of securities. Readers of this column who buy or sell securities based on the information in this column are solely responsible for their actions. The author, his acquaintances, his company or his family members may or may not have positions in the Scrips mentioned in this column. Investors should take their own decisions while buying and selling the shares/securities.

Not

Pick of the week:

MANJUSHREE TECHNOPACK

BSE Code: 532950

CMP: Rs.42.85

Introduction: Manjushree Technopack Limited is an integrated packaging solution provider, delivering its customers with innovative cutting edge plastic packaging solutions.

Founded in 1997 by Vimal Kedia, Manjushree started as a small umbrella manufacturing unit in Guwahati, Assam and thereafter in 1984 forayed into manufacturing of Plastic Flexible packaging. Manjushree come up with its first IPO in 1995 to diversify into the PET bottles manufacturing unit in Bangalore. Today, Manjushree is the largest converter of PET and Preforms in India with an installed capacity of 30,000 MTPA and caters to the packaging needs of the FMCG fraternity. Besides PET, Manjushree also manufacturers oxygen barrier Retortable Multi layer and Stretch Blow Moulded bottles - both of these were brought into India for the first time by Manjushree.

Manjushree’s sales network consists of 6 marketing offices in all the major metros in India with two manufacturing facilities in Bangalore, with over 30,000 sq. meters of built up area, employing over 500 people and using the best of Japanese and American Technologies. Company produces over 120 million containers per annum, for 5ml-15litre capacities in over 240 designs, shapes and sizes.

Company’s clientele includes multinationals from a wide variety of industry segments: UNI-LEVER GROUP, NESTLE, HEINZ, PEPSICO, GLAXOSMITHKLINE, LOTTE, P&G, COCA-COLA, CADBURYS, RECKITT BENCKISER, WRIGLEYS, PERFETTI VAN MELLE AND ARYA VAIDYASALA to name just a few.

Shareholding Pattern: The promoters hold 57.15% while the general public holds 42.85%. The promoters have been steadily increasing their stake since the last few quarters.

Triggers:

• Overall installed capacity of plant has gone upto 21,740 MTPA in view of expansion cum diversification project completed during the year, as compared to 9120 MTPA as at previous year end. The major capacity additions have been for the manufacture of PET Preforms to the tune of 11100 MTPA and the balance capacities have been added for the containers. The actual production of containers and performs during the FY09 amounted to 6722 MT (2008 - 4410 MT) excluding conversion jobs of 1757 MT (2008 - Nil) resulting in a capacity utilization of 39% of year-end installed capacity on absolute basis, which is due to the fact that the major capacity additions have been made only towards the fag end of the year. The turnover of manufactured items was 6657 MT (2008 - 4200 MT).
• The company has now embarked upon further expansion of PET / Monolayer containers / Preforms manufacturing capacity during current and next year at an estimated capital outlay of Rs.30 Cr to be fully financed out of internal accruals--as a result of which the overall plant capacity is likely to increase by 7000 MTPA by the end of FY 2011.
• The Company continues to have a strong focus on innovation, research and development for sustained growth while enjoying a preferred supplier status with most of its MNC clientele in FMCG, Parma and allied sectors. It has a dedicated team of technically qualified / trained personnel and professionals manning different operational segments in a decentralized environment.
• The company is completely focused on its niche of rigid plastic packaging where the growth opportunities are tremendous. It is confident of seeing a 30% CAGR in its business, for the next 5 years. What is important to note is that capital Expenditure has been doubling every year from last 3 years--from Rs.8 Cr to Rs.16 Cr, to Rs.32 Cr in FY09. The company has announced a Rs.64 Cr Term Loan for acquisitions of fixed assets in the current year.
• Manjushree has an equity base of just Rs.13.55 Cr that is supported by huge reserves of around Rs.45.91 Cr leading to a share book value of Rs.43.9. The promoters hold 57.15%, non-promoter corporate bodies hold 16.41% while the investing public holds 25.45% stake in the company. For Q3FY10, it recorded net sales of Rs.39.35 Cr with net profit of Rs.2.63 Cr against net sales of Rs.27.48 Cr with net profit of Rs.1.98 Cr in Q3FY09. For the first 9 months of FY10, it recorded net sales of Rs.108.64 Cr with net profit skyrocketing 42% to Rs.7.60 Cr against net sales of Rs.82.59 Cr with net profit of just Rs.5.50 Cr in the corresponding period previous year. The quarterly EPS was Rs.1.94 while the 9 monthly EPS was Rs.5.61. At the current level, the stock is available at a forward P/E multiple of just 6. MTL paid 10% dividend for FY09.

Conclusion: The stock has been trading between Rs.42-47 for quite sometime, taking Rs.42 as the support. It is unlikely that this support zone would be broken unless there is a crash in the markets. Investors can buy this stock with a stop loss of Rs.42. On the upper side, the stock can zoom up to Rs.55-56 levels in the short-term and Rs.67-69 level in the medium-term.

Disclaimer: Though due care has been taken while preparing this report but no responsibility will be assumed by the author for the consequences what so ever, resulting out of acting on these recommendations or after reading the report.

The calls made herein are for informational purposes and are not recommendations to any person to buy or sell any securities. The information is derived from sources that are deemed to be reliable but its accuracy and completeness are not guaranteed. The author does not accept any liability for the use of this column for buying and selling of securities. Readers of this column who buy or sell securities based on the information in this column are solely responsible for their actions. The author, his acquaintances, his company or his family members may or may not have positions in the Scrips mentioned in this column. Investors should take their own decisions while buying and selling the shares/securities.

Note: The stock was recommended to the Paid Groups, last week, on Sunday (02-05-10).

Illegal madrassas: A breeding ground of terror
Vicky Nanjappa

Intelligence agencies are worried about nearly 9,000 illegal madrassas which have mushroomed across India without requisite approval by the authorities.
India has over 21,000 registered madrassas approved by the respective state governments and the Wakf Board.
IB sources say efforts are on to shut down illegal madrassas and the state authorities have been warned about their operations. Intelligence officials suspect Pakistan-based outfits may be using these illegal madrassas to carry out their operations in India, after the crackdown on terror modules and sleeper cells.
IB officials say nearly 3,000 illegal madrassas have been set up in the last year, with Maharashtra [ Images ] and Kerala [ Images ] having the maximum concentration. They claim that Pakistan's Inter Services Intelligence has managed to pump in nearly Rs 20 crore to fund these illegal institutions.
These institutions do not report to the Wakf Board and their syllabus is the same as the one followed in madrassas in Pakistan, say IB sources. The syllabus is based on the Anwar al-Awlaki school of thought, which has been adopted by Lashkar-e-Tayiba's [ Images ] front organisation Jamat-ud-Dawa, and speaks of 44 different ways to perform jihad
At class V level in these madrassas, students are taught that Hindus helped the British set up their empire in India. In class 6 and class 7, the students are clearly told that there is no way in which they should reconcile with India, since the only way to attain total freedom is by fighting and becoming martyrs.
Earlier, the various terror outfits concentrated on recruiting people for sleeper cells and modules, but soon realised that the concept of jihad needed to be introduced at an younger age to encourage fundamentalism. The illegal madrasas want to ensure that the students learn to internalise the jihadi school of thought.
Tracking such madrassas poses a problem for intelligence agencies, as they keep shifting base, and the fact that most of their students are children invariably shields them from any kind of suspicion.

Pick of the Week:
Rane Brake Linings
BSE Code: 532987
CMP: Rs.110.80
EPS; Rs.14.14
P/E: 7.84
Industry P/E: 23.63
Dividend: 20%
Market Cap: Rs.87.7

Introduction: Rane Brake lining, established in the year 1964, is a part of the Rane Group which is one of the leading Auto Component Groups in the country. Rane Group has eight group companies and has access to best technologies.

Rane Brake Linings Ltd has technical and financial collaboration with Nisshinbo Industries, Japan for manufacturing Asbestos Free Brake Linings, Disc Pads and Clutch Facings. It had won the Deming Application Prize in 2003. The complete spectrum of products from Rane Brake Lining is manufactured in 3 plants located at Chennai, Hyderabad and Pondicherry. The plant at Pondicherry is an exclusive Asbestos Free Facility.

It has a wide range of products and is a preferred supplier to major OEMs in India and abroad. It also exports to 20 countries and has access to best technologies. It serves a variety of industry segments: : Passenger Cars, Multi Utility Vehicles, Light Commercial Vehicles, Medium & Heavy Commercial Vehicles, Farm Tractors, Three-wheelers, Two-wheelers and Stationary Engines.

It hopes to remain a market leader in India and a global player in friction material composites through environment friendly technology & people competence.

Shareholding Pattern: The promoters hold 62.01 % while the general public holds 37.99%. Among the general public DIIs hold 9.76% of the shares of the company.

Financials: For Q3FY10, the company came out with very good numbers. The total income of the company came out to be Rs.60.04 Cr as against Rs.42.84 Cr in the same period previous year. The net profit of the company came out to be Rs.3.11 Cr as against a loss of Rs.1.82 Cr in the same period previous year. The EPS of the company for Q3FY10 came out to be Rs.3.93 as against (-) Rs.2.52 in the same period previous year.

Triggers:

• In Q3FY10, the company achieved a significant growth of 102% in the domestic OE market and 28% growth in domestic replacement market. Few new OE business acquisitions and introduction of few low cost models in the domestic Replacement market was also done in Q3FY10.
• In future the company hopes to get good growth in sales. It will continue with its focus on Cost Management initiatives (like lean factory management and TPM) and efficient working capital management. The low interest rate environment is already working wonders for the company.
• Last year (Q1FY10) the new state of the art plant at Trichy, Tamil Nadu commenced production and is now working at 90% of its phase I capacity. The state of the art plant is expected to play a significant role in the coming years in improving the sales revenue and profitability of your Company.
• The company last year started to supply brake linings to Mahindra Navistar, GM Tavera and MSIL Ritz. Supplies of asbestos free brake linings to Tata Motors for their commercial vehicle segments are likely to grow in future. The company is presently implementing some export orders for Egypt.
• Nisshibo Brake Inc (NISB) who has been the technology partners of the company since 1996 have increased their shareholding to 20%. This will help the company in further advancement of research and development to meet the new technology requirements of the future. Indian automotive industry is dominated by Japanese and Korean auto manufacturers. The increased co-operation with Nissihinbo Group will not only serve the Japanese and Korean manufacturers but also other European and domestic car companies in India. The technical inputs and greater co-operation from Nissinbo Group would thus be beneficial to the Company in terms of business potential and customer relationship.
• The continuance of global majors in USA and Europe showing keen interest in sourcing auto components from India based on cost and quality, presents an opportunity for the company to grow its exports market further.
• The company hopes to ride on the recovery in the domestic market while consolidating its operations. It has already taken a couple of initiatives to sharpen its cost competitiveness. The company hopes to do better in the following quarters due to expected less volatility in the commodity prices.
• The company could review its plans for setting up an assembly, finishing and delivery facility at Sanand, Gujarat for supplying components for Tata Motor’s “Nano”.
• It has Green Material Policy to ensure products meet stringent eco norms. Its design centre has Computer Aided Design (CAD) and sophisticated test equipment like full-scale inertia dynamometer, thermo gravimetric analyzer, pyrolysis gas chromatograph, etc.
• The company is already supplying friction material brakes to armoured vehicles and tanks. The company is exploring synergistic opportunities in Railways, aerospace, power, etc.
  Rane Brake Linings Ltd (RBL) and its shareholders will stand benefitted by RBL becoming a subsidiary of Rane Holdings Ltd. (RHL). RBL as a subsidiary is having closer association and greater backing of RHL.

Caution:

• Further slow down in the domestic economy.
• Slow recovery of Commercial Vehicles segment in India.
• Worsening of global recession especially in US and Europe adversely affecting export market.
• Competition from the MNCs who are setting up production facilities in India.
• Volatility in Commodities and Foreign exchange rates.

Conclusion: The Rane Group will now manufacture in-house those components that were earlier being imported from Japan. This is indeed an encouraging development. Moreover the continuance of the low interest regime is also positive for the company.

From the charts it has been found that most of the parameters are in buy mode. The stock could be purchased above Rs.106, for an immediate target of Rs.115—125. In the long term the stock could reach Rs.170—200.

Note: The stock was recommended to the Paid Groups on 14-03-2010, as Pick of the Week.

Pick of the Week:
Raj Television Network Ltd: Long term Gold:
BSE Code: 532826
CMP: Rs.54.30
Book Value: Rs.86.75
Market Cap: Rs.70.47 Cr

Introduction: Raj Television Network Limited is one of the largest Tamil television and broadcasting company in southern region. The company incorporated in 1994, broadcasts five channels presently in various southern languages. Raj TV, its flagship television channel launched in 1994 was the first general entertainment channel of the company. Besides Raj TV, the Company promotes Raj digital plus, an exclusive movie channel, two Raj Musix, 24X7 Music Channels, one in Tamil and other in Kannada and one 24X7 News Channel. Raj TV and Raj digital plus are free to air in Chennai and pay channels outside Chennai.
Other Channels are free channels. The company gets its revenue primarily form advertisement and subscription of channels. The Company has also rolled into movie production and distribution business.
Shareholding Pattern: The promoters hold 72.48% while the general public holds 27.52%. In the general category, FIIs hold 4.07%.
Triggers:

1. As a part of potential external growth strategy, Raj Television Network Ltd has ventured into movie distribution platform for distributing theatrical rights of movies from time to time. The company has acquired distribution rights of upcoming Tamil movie, “Kutty” for some specified areas in Tamil Nadu, Starring one of the top line Tamil Star Dhanus. The movie is expected to be released all across shortly. The company is hopeful of getting better revenue from such distribution.
2. The company has entered into the business of movie production and produced few movies from time to time. Some of is upcoming movies are almost in the post production stage and awaiting for release.
3. Since the Indian movie sector have started recovering from the market slowdown and more and more movies are being produced and released in India , within a very short span of time, the Company feels that it can manage to recover it’s investment in few weeks of release of the movies and also there is substantial scope to grow further as Tamil movie market is expanding both geographically and economically across the world.
4. The subscription revenue of the company are expected to grow because of availability of various distribution platforms like cable, CAS, DTH, IPTV, VOD etc. Further, the increasing spends on advertisement by the industry houses will boost the further growth. It is to be noted that the Company's channels are now available in DTH, IPTV and other digital platforms besides cable distribution.
5. The Company is continuously making efforts to entertain the viewers with good programs and quality contents. The company always experiments on the viewer’s demand and choice and designs its contents and programs in the viewer’s prospective. The Company shall look forward to give better and quality entertainment to strengthen its brand and popularity in future.
6. As part of future projection and strategy, the company is spreading its subscription base by way of launching new channels. During fiscal 2008-09 the Company aunched one 24X 7 music channel in Kannada and has pipelined few more new channels in various languages. This will add substantially to revenue base of the company. The Company has already got the approval for one overseas channel RAJTV-ASIA from Ministry of Information and Broadcasting (MIB) and working on for airing of the same in overseas market. In order to compensate against the sluggish market, the Company is innovating few low budget programs to have cost effective benefit.
7. Against the total projected utilization of Rs.52.81 Crores from the IPO funds, an amount of Rs.38.67 Crores has been utilized towards Acquisition of contents, strengthening facilities, purchase of new equipment, up gradation of existing equipment, production of Movies, Construction of Studio and general corporate purpose. This is expected to generate good revenues in the next few quarters.

Conclusion: Considering the above mentioned condition, the stock of Raj Television Network Ltd can be purchased for the medium to long term for a target of Rs.90. In the short term, the stock could drift towards, Rs.57—60 mark. However, the scrip should be purchased with a long term play in mind. The company has huge potential and considering this the scirp looks undervalued at this point of time.
Note: The stock was recommended to the Paid Groups (and this report sent to them) on this Sunday (7th March, 2010). The stock has already hit its target.

PICK OF THE WEEK:
Moser Baer Ltd
BSE Code: 517140

CMP: Rs.77
Book Value: Rs.100.02
Market Cap: Rs.1276.60 Cr
Dividend: 6%

Introduction: Moser Baer, is one of India's leading technology companies. Established in 1983, Moser Baer successfully developed cutting edge technologies to become the world's second largest manufacturer of Optical Storage media like CDs and DVDs. The company also emerged as the first to market the next-generation of storage formats like Blu-ray Discs and HD DVD.
Recently, the company has transformed itself from a single business into a multi-technology organisation, diversifying into exciting areas of Solar Energy, Home Entertainment and IT Peripherals & Consumer Electronics. Moser Baer has a presence in over 82 countries, serviced through six marketing offices in India, the US, Europe and Japan, and has strong tie-ups with all major global technology players. Moser Baer has the distinction of being preferred supplier to all top global OEM brands.

The company manufactures the entire spectrum of optical storage media products including Recordable Compact Discs (CD-R), Rewritable Compact Discs (CD-RW), Recordable Digital Versatile Discs (DVD-R), Rewritable Digital Versatile Discs (DVD-RW) and blue laser discs (Blu-Ray).
Shareholing Pattern: The promoters hold 16.17%, while the public holding is 83.71%.
Financials: Revenue for FY09 stood at Rs.23, 924.4 million, profit before depreciation, interest, exceptional items and tax stood at Rs.4, 530.3 million and losses after tax was Rs.1, 508.7 million. Turnover was impacted during the year by the difficult economic environment, partially offset by weakening of Rupee. The Company was able to hold its operating margin through production efficiencies and control on working capital. The Company continues to generate gross cash flow and the same was Rs.3, 462.8 million in FY09.

For Q3FY10, the total sales of the company came out to be Rs.59.2 Cr as against Rs.65.52 Cr in the same period previous year. The net profit of the company for Q3FY10 came out to be Rs.3.23 Cr against a net loss of Rs.25.6 Cr in the same period previous year. Also both the net and operating profit margins improved considerably.
Triggers:

• Moser Baer launched a digital video processing and authoring facility in Chennai. Moser Baer announced successful trials of first Gen 8.5 Thin Film plant.
• The company will set up one of India's largest rooftop solar PV Installations in Surat.
• The Company continues to focus on both extension of geographic reach in emerging growth markets as well as on development & growth of new customer accounts across major product lines globally to cement its leading position on storage media. These efforts will renew focus following the recent royalty settlement and resultant increased levels of Business certainty.
• Moser Baer signed exclusive home video licensing deal with UTV Motion Pictures. The company concluded a strategic tie-up with LDK Solar.
• Moser Baer's thin film solar modules are now IEC (International Electrotechnical Commission) certified. It also launched 600VA UPS with improved features for better performance, MP3 players, TFT Monitors, LCD TV, etc.
  With the significant reduction in input costs, and relatively stable pricing, the optical media business is a strong cash generator for the group.
• Moser Baer’s range of products makes it one of the world’s largest manufacturers and technology innovators in the optical media space. Its products are sold in 82 countries and it has six marketing offices in India, the US, Europe and Japan. In the Indian market, Moser Baer made its foray into the domestic optical storage market with the launch of the Moser Baer label in 2003. The company has blazed a new trail by introducing technologically innovative and truly world-class products in the Indian market.
• A notable development in 2008 was the emergence of Blu-Ray as the future high definition format, with Toshiba announcing the discontinuation of HD DVD investments. Blu-Ray offers a considerable increase in storage capacity with its 25 to 50 GB data capacity. Moser Baer, the first non-Japanese company to have developed its own technology for manufacturing Blu-Ray, stands to benefit from the exponential growth that will inevitably come in sales of advanced formats in the coming months. The company is set to leverage its R&D strengths to establish leadership position in terms of supply of Blu-Ray media for global consumption.
• The Company last year settled its long drawn licensing and patent dispute with Phillips. The amicable settlement has paved the way for Moser Baer to maintain and strengthen its market leadership position as the worlds leading manufacturer of optical storage media products.
• Moser Baer is also investing in nano technologies, which are in the R&D phase. This is a futuristic technology and because it will use very little material, it has the potential to bring down the cost of electricity generation considerably.
• The solar energy sector is increasingly realising its potential as a cost-effective alternative source of power. In the last fiscal, Moser Baer Photovoltaic Limited has consolidated its production facilities by installing 80 MW Module line and 80 MW Cell line manufacturing capacity. The cumulative efforts have resulted in it achieving a growth of more than 100% over FY08. Despite an increasingly difficult environment for Solar especially in 3rd & 4th quarter of the year, as the credit market froze, it continued to execute its strategy to make the Company, a global provider of high quality solar solutions. While the solar industry has grown astonishingly over last decade, however, it is still in a nascent stage of growth. Market structures differ between countries primarily on account of subsidies in place, ownership of installation, nature of customer and variability of grid connection. In FY09, Germany & Spain continued to dominate in Solar market and governments across the world have increasingly announced subsidies to promote renewable energy industry in general and solar, in particular.
• While the financial crisis has created a challenging environment in short term for the Industry, the fall in prices of Silicon and solar modules has helped the industry to accelerate towards grid parity and therefore, create greater opportunities for the company.
• The company would benefit from the following provision in the recent Budget:
  (a) In FY11, the renewable energy plan outlay up by 61% at Rs.10 billion.
  (b) To set up National Clean Energy Fund. Rs.5 billion has been set aside for the setting up solar and small hydro units.
  (c) To set up 20, 000 MW of Solar Power by 2022.
  (d) To waive excise duty on photovoltaic cells and solar panels.

Conclusion: Considering all the facts mentioned above it has been found that the scrip is highly undervalued and should move up in the days to come. Medium and long term investors can buy the scrip at any price above Rs.70 for a short term target of Rs.92. In the long term the scrip could make new highs and could cross Rs.200 in the days to come.
From the charts it has been that most of the parameters are in buy mode. Besides this the stock is in the highly oversold territory and a bounce is expected very soon.

Note: The stock (This report was also sent to them) was recommended to the Paid Groups in this Sunday (28th February, 2010) .

Refex Refrigerants: Updates:

Refex Refrigerants Ltd came out with better than expected results for the Q3FY10, though the net sales dipped a bit. The total sales of the company the Q3FY10 came out to be Rs.6.92 Cr as against Rs.10.16 cr in the same period previous year. But what is amazing to note is that Profits from ordinary activities before tax is Rs.20.23 lakhs against a net loss of Rs.7.83 Cr in the same period previous year.

Also the net profit for the Q3FY10 came out to be Rs.12.16 lakhs against a net LOSS of Rs.4.57 Cr in the same period previous years.The company's wind farm project is going on smoothly and hopefully the company hopesa to complete the project within the next 6 months time frame. The company is also expected to free its pledged shares within a very short time. According to the sources close to me, it could get freezed in the next 3 months time frame.

The company's season has started and hopefully from the Q1FY11, Refex Refrigerants would start to show better performance.......

It is presently not using its full capacity due to economic downturn, which affected both its top and bottomlines. However, it is hoping to show better performance in the days to come, as the economy gathers steam. Its products are envionment friendly and hence it has a long way to go in the days to come. HOPING IT SHOW THE 2007--2008 PERFORMANCE GOING FORWARD. Meanwhile they have updated their web-site and you can go through the same in your free time.

Pick of the Week:
Alok Industries Ltd

BSE Code: 521070

CMP: Rs.24.6

Book Value: Rs.35.47

EPS: Rs.3.41

Market Cap: Rs.1490 Cr

Introduction: Alok Industries Ltd is a fully integrated textile company and is amongst India’s largest textile manufacturers. It was established in 1986 as a private limited company, with its first polyester texturing plant being set up in 1989. It became a public limited company in 1993. Over the years, it has expanded into weaving, knitting, processing, home textiles and garments. And to ensure quality and cost efficiencies it has integrated backward into cotton spinning and manufacturing partially oriented yarn through the continuous polymerization route. It also provides embroidered products through Grabal Alok Impex Ltd., its associate company.
Alok Industries Ltd, has recently entered the domestic retail segment through a wholly owned subsidiary, Alok Retail India Limited, with a chain of stores named ‘H&A’ that offer garments and home textiles at attractive price points. It has also ventured into the realty space through wholly owned subsidiaries with investments in some prestigious projects in Mumbai. The company has focused on world class infrastructure, best-in-class technology, uncompromising quality standards and dynamic product innovation. Added to these has been its constant desire to surpass customer expectations. Today, Alok Industries Ltd represents the future of India’s textile industry.
Shareholding Pattern: The promoters hold 36.69%% while the general public holds 63.20% of the shares of the company. The FIIs hold 20.92%, while the DIIs hold 12.59% of the shares of the company.
Financials: For Q2FY10, the company came out with good set of numbers. The total sales of the company for Q2FY10 came out to be Rs.975.5 Cr as against Rs.698.14 Cr in the same period previous year. The net profit of the company for Q2FY10 came out to be Rs.57 Cr as against Rs.42.15 Cr in the same period previous year; however, this on an expanded equity capital of Rs.605.08 Cr as against Rs.196.97 Cr in the same period previous year.
Triggers:
• The company charting out strategies under which it would open stores in Malls after analyzing the cost effects.
• The company has a blue chip international customer base comprising of world renowned retailers, importers and brands. With commencement of spinning of cotton yarn, the company has achieved complete integration.
• The Terry Towel project, which was part of Phase I & II, was commissioned in FY09. The Company has also successfully commissioned Continuous Polymerisation (CP) Plant at Saily (Silvassa). Phase III and Phase IV of the expansion of the Company's capacities, aggregating to Rs.1, 100 Cr and Rs.1, 180 Cr stands largely completed; the balance portion is progressing well and is expected to be completed very soon.
• The Company's textiles operations have shown encouraging growth trends, both in the domestic and in the exports markets. The capacity expansions which the Company had been putting in place for the past few years are nearing completion and the volume increases are starting to be reflected in operations and sales.
• Marketing initiatives across the world have both de-risked Alok Industries Ltd as well as contributed to a healthy order book. The Company believes that its scale of operations and integration across the textile chain will, in future, offer significant advantages in both cost and revenue.
• Given the increasing spending capacity of the middle-class consumer segment in India, retail remains an exciting prospect over the medium term. The Company's retail initiative is operated through its wholly owned subsidiary Alok Retail India Ltd., which has opened ninety 'H&A' stores across India. The Company wishes to expand the 'H&A' footprint to over 300 stores during the current financial year.
• The Company's investment in Grabal Alok (UK) Ltd, as part of the Group's overseas retail foray is now starting to show improved results. The stores, which are spread across the UK and offer quality apparel and fashion products at affordable prices, are also in the process of being rebranded from “qs’ to “Store Twenty One”. The second half of FY 2008-09 has reflected improved topline--thanks to cost rationalization and efficiency maximization measures, the 'middle line' has also shown improvement. This encouraging trend has been carried on during the first quarter of the current financial year as well.
Conclusion: From the charts it has been found that the stock is trading above it 50 and 200 days moving averages, which is encouraging. Considering the other chartical parameters it can be concluded that the stock can be purchased at any price above Rs.24 for a target of Rs.31—32 in the next 30 days time frame.

Note: The stock was recommended to the Paid Groups on 19th January, 2010, in the Sunday Report.