Stock Released Today : If you missed buying Titan and Page Industries, no issue at all, but you can’t afford to miss this...

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There has been a huge polarization in Indian markets over the past 2 years. Domestic Consumption based shares at trading at very high P/E multiples (25-30X Earnings), whereas Infrastructure, Investments or Manufacturing related companies have been beaten down severely and quoting at very low P/E Multiples. Everyone accepts that Indian Secular growth story is still strong and the opportunity for well run consumer focused companies in India is very high. But, its difficult to earn strong returns – If you are buying an already fairly valued share. Any appreciation is possible only on the basis of earnings growth and the risk of de-rating erases the Margin of Safety in the stock.


But here we have a company which is highly efficient with a Robust business model, Domestic consumption stock, Strong Return parameters, Good Management and still Quoting at attractive Valuations. C*** company in no way can be classified as a Tier-2 Consumption stock, as its Financials are comparable with the Marquee names. The stock has the double booster of Strong Earnings growth in the coming years combined with a Potential P/E re-rating, which makes it a strong candidate for generating Multi-bagger returns.


C*** company with its strong Base built over 20 years, is well positioned to reach its ambitious Revenue target of 1000 Cr by 2015-16. Even if the company’s management is able to achieve 70% of its growth targets, the Share will be at much higher levels when compared with the current prices. Moreover, we feel that the Quality of C*** growth with sustainable margins is highly attractive.


C*** at the present price quotes around 11X its one-year forward earnings, which is attractive for a company which generates greater than 24% ROE and 30% ROCE. More importantly, C*** has a lot of factors to maintain such high Return ratios and also improve on it during Good Environment. This provides a strong case of Re-rating of the stock.  Investors are advised to take a small exposure to the stock at current levels and accumulate it over the next few months, to generate strong compounded returns over the next 3-5 Year time frame.

- Team HBJ Capital

Technofunda Call - Best time to buy this "Technofunda" stock is NOW....

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Let us understand the concept of Box Theory.


Always remember that stock movements are not completely haphazard. Stocks did not fly like balloons in any direction. As if attracted by a magnet, they had a defined upward or downward trend which, once established, tended to continue. Within this trend stocks moved in a series of frames, or call it "boxes". What we need to do is to identify those frames and get into the counter when a stock moves from one frame to the next frame.

In the modern day trading world we call these "boxes" brackets or support and resistance. Price moves from one zone to another. Once prices break this zone, they will enter a new zone. When these zones pile on top of each other we have an official established trend. This concept is similar to a higher or lower value placement in market profile. As long as there is a continuation of a higher value, a trend is in place. When studying price action alone, this is an important concept to understand. Price action is king. Learn this method and apply it to your trading methodology and you will never become extinct.

I have studied the Box Theory to apply it to my trading as well as tape reading. For a new trader, the concept of the simply law of supply and demand is hard to grasp. The market is an auction place. There is price acceptance in a new zone or rejection. Acceptance offers opportunities to fade the lower pivot level. Rejection offers opportunities to play the false breakouts.

In tape reading, the box theory can be applied by understanding short term support and resistance points. Just like a stock will use resistance as support once broken, the tape acts in a similar fashion. Understand that the more time price spends at one particular level, the more transfer of hands and a possible reversal. Most traders focus on just price and indicators. Learn to apply time into your trading and this will give you a new perspective.

Regards

Prof Sameer Jain, VSA Expert with 27 years of experience.

E-Mail: Sameer@hbjcapital.com

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Adani Enterprises Ltd - What Next?

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We have received queries from many trading members on the outlook of Adani Enterprises Ltd and we are here with further updates and the next course of action.


- If you observe the above chart of Adani, you will find that stock has gone up on very high volume. Such kind of volume supported up-move are a sign of trend reversal since the stock has fallen much during last 6-12 months and huge volume upside was a reason to go long in this counter.


- As a trader, when you trade on any stock, you trade with discipline because end of the day any stock or market as a whole is neither your friend nor mine so we need to play safe with discipline. This stock was recommended by us under 'technofunda call' for buying around 235-240 with strict stoploss at 220. If you look into the chart, you will observe that spike in the volume has moved stock from 220 to 240 and it was advisable to keep SL at 220.


- Now, stock has gone up on good news and volume was supporting that move. But slowly this stock started falling down on no news and average volume. Since the fall in the stock price was without any bad news hence you can say that "Path of least resistance" is down. Remember that not only in market but also in life we follow least resistance path.


Now, let us try to understand the hidden meaning behind the fall of Adani Enterprises.


- Frequently, you see a move called up-thrust (up for the day or any time frame followed by sudden fall), which is seen after a substantial decline of a stock or Index has already taken place. In case of Adani we have already see descent decline during last 6-12 months. These are traps created by the smart money to catch the stop-loss orders of the short traders (since Adani was falling like anything from long time so most of the traders must have build short position in this counter, any false breakout will trigger the SL of those short traders). On seeing an up-thrust, a short trader will cover his position, or may even buy. People waiting for so-called breakouts to the up-side ill buy on an up-thrust – it is these traders who will be caught out by this moneymaking manoeuvre. Even those traders who are not in the market may buy, before they miss the move.


What next for those who are stuck in this counter or those who has not followed the strict stoploss at Rs220?


- Those who do not have any position should not enter in this counter at this point of time because in short term trend is bearish. Those who got stuck in this counter should look forward for exit above 200 levels. If you are ready to hold this counter for next 3-6 months, you might see levels of 300+ but for short to medium term trend is bearish to neutral.


Regards
Prof Sameer Jain, E-Mail: Sameer@hbjcapital.com

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- Investment capital of minimum INR 1-2 Lacs (or) if your saving is over Rs 10K/month.

- More importantly, If you don't want to gamble your money for short term trading.

“Double Circuit Plan” is suitable for?

- You should not be an active day trader doing intraday trading or a very long term investor with holding period of 2-5 years. You must be a working professional or self employed or business owner looking for safe and secure 15-20% reasonable return per month without tracking market on day to day basis.

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State Bank of India - Outlook Remains Bearish for Short Term

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Nothing ever changes in the market – The only thing that changes are the players and the new players have no financial memory of the previous major cycles or crash!

The big money is made by “being right and sitting tight” not by thinking. Wait until all the factors are in your favor before making a trade. It is the big swing that makes the big money for you. Remember that Stock market is the world’s biggest gold mine. Look at speculation as a business not gamble. Expect a descent return from the market like 50-100% per annum rather than 5 -10 times.

There are two sides of everything, but there is only one side to the stock market; and it is not the bull side or bear side, but the right side. There is no good direction to trade, short or long, there is only the “money making” way to trade.

Normal man doesn’t lose habit of being poor. He will risk half of his fortune in the Stock market with less reflection than he devotes to the selection of a medium priced automobile. The human side of every person is the greatest enemy of the average investor or speculator. The key factor that drives the stock market is not intelligent analysis or reason…..No, it is human emotions. Look behind what you see, everyone received same info, some win & some lose based on how they interpret the info they receive.

Losing money should not trouble you. Losses should never bother you once you take it. You should forget it overnight. But being wrong – not taking the loss – that is what does the damage to your soul.Never “PREDICT” or “ANTICIPATE” the market, try to “REACT” to what the Market is telling by its behavior. The stock market always moves ahead of world events/news/results; not operating in the present or reflecting the present; it is operating on what is yet to be the future.

Qualification of successful traders...

1.   POISE – Stability as well as balanced person with dignity of manner. A person who can handle their hopes & fears in a calm manner.

2.   PATIENCE – Wait for the opportune time.

3.   SILENCE – Keep your victories & failure to yourself, learn from them both, there is nothing to gain through informing people of your activities.

4.   SOLITUDE – Individuality, everything that happened occurred as a result of my judgments. 

Three Trading Mantra...

#1. Market Timing – “The big money is made by “being right and sitting tight” not by thinking. Wait until all the factors are in your favor before making a trade. It is the big swing that makes the big money for you.”

#2. Money Management – Cash was, is and always will be “KING”. Always have cash reserve; cash is your “LIFELINE”. Don’t lose your money, your stake, your lifeline, your best friend, your inventory; without cash you are out of business. The fact that each trade showed a profit is living proof, hard evidence, that your basic judgment is correct in the trade. Wait for the confirmation of your Judgment – “Pay more for each lot you buy”.

#3. Emotional Control - Before you can successfully play the market, you must have a clear concise strategy & stick to it. DO NOT fight the tape! DO NOT argue with the market. Be sure to confirm your judgment before you take your full position.Use small position PROBES, placing small orders & checking the direction of market because “It is the change in the major trend that hurts most speculators.”

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Un-discovered Indian Technology Stock which partners with Facebook, Microsoft and Owns Lycos!!

Ybrant Digital Ltd: An Interesting Stock which has got listed through Reverse Merger in the Fast Growing Digital Advertising Space without much Noise.

As Internet usage increased, it also created a new advertising channel and additional competition for eyeballs. But today, the marketplace has become even more crowded. As information has become delivered and consumed in entirely new ways, everything and everyone are competing for attention. Consumers no longer need to be programmed, or even search for new products. These products are all around them. People see what their friends are listening to, what fashion items they just bought or want to buy and what they are cooking for dinner. When information is everywhere and from sources far more trusted than advertising--their peers-- the game is forever changed. Welcome to the Age of Discovery and welcome to Ybrant Digital Limited.

YBRANT DIGITAL LTD formerly LGS Global Ltd is an end-to-end global digital marketing company having its Head Office in Hyderabad. Ybrant Digital Limited specializes in selling  international traffic for advertisers. Ybrant Digital Limited  having a Market Cap of around Rs.3990 crores is quoted only on BSE bearing Scrip Code 532368. The current Market price of Ybrant is hovering around Rs.83.80 and the 52 week High-Low was Rs.141.40-43.15.

The whole world knows how Facebook’s shares were mercilessly hammered post its IPO. But everybody also knows how great a company Facebook is and does Ybrant have any connection with Facebook? Well, it does.  Ybrant Digital, has been successfully providing Facebook Ads solutions since 2009, Ybrant Digital helps its clients to advertise and  spread  their message across all main types of digital media platforms: Display, Social, Mobile, Search, Email and more. Ybrant’s  proprietary technology is designed to deliver the audience, monitor performance on the go across all the above platforms, and optimize for best results, according to the advertiser's aim.  Ybrant  provides  one centralized reporting point of contact for all of its clients  activities.

Quite some time back Ybrant made a smart move by acquiring LYCOS, a Massachusetts   based company for US$ 36 million. LYCOS based in Waltham, Massachusetts has been evolving from a single search engine into a focused network of community and social sites that include Gamesville.com, Tripod.com, Angelfire.com, and of course, Lycos.com. Lycos is a company which has managed to survive so many market changes  and the key to  their  longevity is diversity;  they  have integrated and fostered different brands, sources of revenue, and meaningful online communities for over 15 years.

Apart from  social applications,  YBrant also actively participates  in government computerization projects in India like ration cards, GPS tracking, Rajiv Yojana Programme, he said they were closely working with HCL for joint bidding.

It is evident that Ybrant has a good future if we see the robust stake of 59.56 per  cent that the Promotor’s have in the company. And you may be more encouraged to bet on this company after realizing that the FII’s holding is an astounding 38.4 pc.

On the financial front, the company is doing pretty well on a q-o-q as well as on a y-o-y basis. Revenues shot up by about 61 per cent from Rs.84 crores in Q4FY11 to Rs.137 crores in Q4FY12. Net Profits too increased by 57.6 from Rs.5.66 to Rs.9.81 crores in same period. In FY08, Ybrant did a turnover of around Rs.128 crores which shot up to Rs.473 crores in FY12 and that’s a 5 year CARG of 29.8 per cent. However bottomline 4 year CARG was on the lower side at 8.73 per cent – NP which was Rs.25.22 crores rose to Rs.38.81 crores in FY12.  The low profitability is primarily due to increasing interest burden. Interest outflow which was Rs.0.68 crs 5 year back shot up to Rs.17.97 crores in FY12.  Besides tax outgo has increased by a 5 year CARG of 25.2 per cent.

Fast Forward – Let us look into the recent activities and Financials of the company going forward :

Ybrant  is going to buy US$283 million (INR 1500 crores) business from Experian which means Ybrant will own the following :

- PriceGrabber,
- LowerMyBills, and
- ClassesUSA.com.

PriceGrabber, its price comparison shopping business which powers Yahoo! and MSN shopping. LowerMyBills.com, the one-stop destination that offers savings through relationships with more than 500 service providers across multiple categories, including home loans, credit cards, auto and health insurance, and long-distance and wireless services. ClassesUSA.com, is the leading online higher-education portal with 2 million visitors and 300 accredited college and university partners. This will add a business of US$283 million and an employee strength of over 300.  Steve Krenzer who is the President of Experian Interactive will continue to lead the new group by joining the Ybrant Digital family. “I am very excited to join the Ybrant team. With Ybrant’s global footprint and our leading sites the combined group will make us the pacesetter globally.” said Krenzer. With this significant move, Ybrant will nearly double its current revenues. “By adding these established brands to Ybrant, we will offer interesting new products, and a world class lead generation platform.” said Suresh Reddy, Chairman and CEO of Ybrant Digital.

Experian Interactive is currently one of the top five internet advertisers in the US. Ybrant is one of the leading digital advertisers in the global markets outside of the US. This is Ybrant’s second successful foray into acquiring premium destination sites. The company successfully acquired Lycos.com in 2010. 

By acquiring these three established Internet brands and combining forces, Ybrant becomes the leader in many key digital marketing areas worldwide.

Facebook chooses Ybrant Digital as an Official Marketing API Partner. Ybrant Digital has official access to the Facebook Ads API, which allows developers to integrate into the Facebook. Ads system and provide marketers with new solutions to manage Facebook Ads.

Microsoft Corporation India Pvt. Ltd. today announced their expansion plans to non-metro cities, specifically Hyderabad, Chennai, Kolkata, Ahmedabad, Pune, and Goa; and appointment of Ybrant Digital Limited as the Sales House for the cities outside Delhi-NCR, Mumbai and Bangalore. The appointment of Ybrant Digital complements Microsoft Advertising’s existing sales partner– AIDEM Ventures Pvt. Ltd. that will continue to drive sales in Delhi-NCR, Mumbai, and Bangalore.

Ybrant enjoys Net Profit margins of around 10 pc, it has a ROCE of around  23 per cent and Return on Equity of about 30 pc. EPS is Rs.15.26 and if we consider current market price of Rs.78 there is a good opportunity to double one’s money in 1-2 years time by betting on this little talked about company. Of course, there are some negatives like a leveraged balance sheet and long outstanding collection period but that may be a thing of the past if we consider the rapid developments happening at Ybrant as explained above.

Hey folks, what are you waiting from – if you want to know the if Ybrant Digital Ltd is a Potential Multibagger and whether you must have this stock in your Portfolio or not? You can call us at +91 9886736791 or e-mail to us at Info@hbjcapital.com to know more about this and about our services.

- Team HBJ Capital

Indiabulls Financials Services (IBFSL) - Use this opportunity to slowly accumulate this stock

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Today there was a Veritas report on Indiabulls Group which questioned their Corporate Governance practices. This news flow which was dramatized by the media has led to some panic among the shareholders. We have been recommending Indiabulls Financials as a good Investment opportunity for a long term Investors for over 12 months now (From share price of Rs 135/-). Nothing has changed about the company's Business and importantly the operations have actually been strengthening well over the past few quarters which can be seen from the higher profitability.

Some Key Highlights on Today's Veritas Report

1) Veritas report was majorly attacking Indiabulls Real-estate and Indiabulls Power. We have no interest in these stocks and hence we are not overtly concerned about this report.

- Indiabulls Financials doesn't have any outstanding loan book to its other Promoter companies like Real Estate and Power. There is also no Cross-Holdings between these companies. Management has also been transparent about the inter-promoter entity dealings 

2) Veritas had only one major attack on Indiabulls Financials which is with respect to its ESOP Policy and the outstanding loans to the Employee Trust.

- Though the Management has clarified on this issue, even if let's say even if Veritas report is correct - "900 Cr of loan outstanding is too small a number in Indiabulls overall Loan book of 29,500 Cr. More over the Profit spiking from this is not more than 1% of its reported Profits which is too meager a number too pull down the overall valuations of the company.

3) Company has a 40% Dividend Payout Policy and with a growing loan book, we feel that there is good cash generation at the corporate level which is fueling a stable dividend policy. So we don't think there can be substantial accounting gimmicks. Management disclosure with Analysts during the Con call and its Annual Reports are good. Hence we are not highly concerned about any Corporate Governance issues.

Management Commentary on the Report

1. Note 37(g) on Page 96 of the Annual Report of FY-2012 states: ‘The repayment of the loans granted by the Company to the Trust is dependent on the exercise of options of the eligible employees, at the exercise price as determined by the Trust based on its Carrying Cost and the market price of the underlying shares of the unexercised option’.

Note 37(g) makes it abundantly clear that the eligible employees who are beneficiaries of the Employee Stock Option Schemes will pay to the Trust the Total Cost of the Trust, ( including interest cost less dividend) at the time of exercising the Options granted to them.

2. EWT is being levied interest @12% per annum and the total interest income is INR 0.99B and not INR 1.2B. More importantly the Net Interest Income (NII) is Rs. 18 crores given that IBFSL has cost of funds of 10.1% for FY-2012. Rs.18 crores is less than 1% of the NII of Rs. 1866 crores earned by the company in FY 12.

3. On Page 58 in Note 3(e) of Annual Report of FY-2012, the constitution of the EWT has been detailed. As stated in the Annual Report of FY-2012: ‘EWT has been founded pursuant to the approval of shareholders in meeting held of September 30,2010, to administer and implement the Company’s current Employee Stock Option Schemes (ESOP) and any future ESOP schemes. The Trust is administered by independent Trustees."

Given the fact that EWT is not a 100% subsidiary and operates at an arms length through independent trustees, IBFSL cannot give any interest free loan to this entity as per RBI guidelines and has to charge a fair rate of interest. All related disclosures pertaining to this have also been made in Annual Report of FY11 in Note 7 on Page 99.

4. IBFSL has maintained a very healthy practice of grant of ESOP’s to its employees even before it went public in 2004. The ESOP scheme of the company is in line with the other leading HFC’s and NBFC’s.

5. The value of stocks in EWT, have accrued a positive return, for the total employee workforce of  4400 people ,  of an amount of Rs. 45 crores based on closing price of Rs.210 of IBFSL yesterday(7th August,2012). 

6. The company will initiate appropriate criminal proceedings on the authors of the research report for publishing false and factually incorrect data, to create sensation and entice people for benefitting through trading, for the sole purpose of selling their research reports for money.

7. In our opinion such intentional error on basic factual data is resulting into loss for thousands of shareholders. The figure of NII arising out of EWT is Rs. 18 crore , which is less than 1% of total NII of Rs. 1866 crores for the company. The same being projected as 33% of profit before tax in headlines, demonstrates the malafide intentions and criminal actions under Indian Penal Code. We firmly believe that this is not an oversight but an intentional act for profiteering.

Conclusion

Indiabulls Financials at the current prices is attractively valued. We expect the company's profits to grow at 20% CAGR for the next 3-5 Years. A Company which is generating over 20% ROE deserves to trade at a higher P/B. Investors can enjoy the twin benefits of earnings growth along with Valuation upsides in the long term. So, you can use this opportunity to slowly accumulate the stock.