Jim Rogers- Let us all learn from him

Jim Rogers does not need any introduction. People like Jim Rogers, Warren Buffet, Rakesh Jhunjhunwala etc. are known for their investment acumen, and for anyone associated with stock markets, or if he does any kind of investment in equities or commodities, the above mentioned people should certainly be heard.

For all those, who don't have an idea about him, here's a brief description. Jim Rogers started in business, at the age of five by selling peanuts and by picking up empty bottles that fans left behind at baseball games. He got his first job on Wall Street, at Dominick & Dominick, after graduating with a bachelor's degree from Yale University in 1964. In 1970, Rogers joined Arnhold & S. Bleichroeder, where he met George Soros. That same year, Rogers and Soros founded the Quantum Fund. During the following 10 years the portfolio gained 4200% while the S&P advanced about 47%. One of his famous quotes is : "If you were smart in 1807 you moved to London, if you were smart in 1907 you moved to New York City, and if you are smart in 2007 you move to Asia."

I recently came across one of his citing from his book: "A Gift to My Children". It's always a learning experience, going through his books. One should always read books written by greats like Jim Rogers, Peter Lynch, Benjamin Graham etc., and try and learn from their decades of experience.

Let's see what Jim Rogers had to say in his book :

" If people around you try to discourage you from taking a certain course of action, or ridicule your ideas, take that as a positive sign. Sure it can be difficult not to run with the herd, but the truth is that most long-term success stories are written by folks who have done exactly that. Let me give you an example.

When I was thirty-two years old or so, a Wall Street colleague of mine invited me to join a smart and successful group of financial guys who regularly got together to swap ideas over dinner. At the time, I and a partner (George Soros) were in the early years of our hedge fund called the Quantum Fund...

We were sitting in the private room of a fancy mid-town Manhattan restaurant when the host asked each guest at the table to recommend an investment. Most of them touted so-called growth stocks. When my turn came, I recommended Lockheed, the aerospace company. Once extremely prosperous, by the 1970s it had fallen on hard times. A fellow sitting opposite me smirked and, making sure that I heard him, stage-whispered, " Who buys stocks like this? Why buy a bankrupt company?"

About six years later, I ran into this schoolyard bully. I resisted the urge to remind him of his condescending remark. It wasn't easy, given that Lockheed Corporation stock had since increased in value a hundredfold, and for all the reasons that I had explained over dinner."
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We at MPS, subscribe to the views of Mr. Rogers, and are here to provide you a life changing opportunity to create wealth. When we say "we discover multibagger" mean we don't reco any stock on which whole world is betting upon or the popular names which are chased by the masses. We always look out or say we are hungry for the emerging sector, the future trend, the opportunities which are overlooked by most of the investors. We arrive at the best stock (always leader or to be a leader) available with huge scale of opportunity.

For your ready reference, access our "Business Insight" recommendation for the month of November Here, that has been made public.

Team MPS

APW President Systems Ltd. - Let's focus on something different in telecom space

The Telecom service providers are engaged in a savage tariff war, with the bigger players hoping for a consolidation. There's another jolt to their hopes with the Government postponing spectrum auction for third-generation mobile-phone services to the next fiscal year. While everyone is focusing on the fate of telecom service provides, I thought why not concentrate on companies that might benefit from the entry of new players. The entry of new players in the telecom industry is going to be marked with the enhancement of the infrastructure, and this shall help both upstream and downstream companies. Taking note of the same, the company that came to my notice is APW President Systems ltd.

APW President Systems Limited, is a designer, manufacturer and supplier of standard and customized enclosure systems in India. The Company caters to three major business segments: enclosure systems, contract manufacturing and trading activities – all with a focus on the IT/Networking and ITES, Telecom, General and Industrial Electronics sectors. Cabinets or enclosures are the main product offering of the company. These enclosures are basically used for server housing for networking purpose. Company has a focused approach towards the design and manufacturing of such products, and has introduced many variants of the same.

APW President Systems has a total of 1,65,500 sq ft of fully-equipped modern manufacturing space in India, and the capacity to manufacture up to 60,000 enclosures, 70,000 card frames and 30,000 instrument cases each year. As per the expansion plans, the company is coming up with another 45,000 sq ft facility at Bangalore.

The business of the company is such, that it did not get affected to the extent the other industries suffered. The slowdown did lead to to postponement of purchase decisions and deferred projects, but it also had a positive effect that it initiated cost control measures. So, cost control measures coupled with surge in demand, seems to be a good story unfolding for APW President Systems. Even the management seems to have taken cognizance of the same, else they would not have embarked on capacity expansion. With all the new entries, especially the larger players like Telenor-Unitech, investment into infrastructure is bound to take place, and players like APW President Systems would directly benefit.

As mentioned earlier, that Cabinet division is the main segment and more than 95% of the revenues come from the same. Cabinets or enclosures recorded Rs 130 crore of sales, out of a total of Rs 136 crore for FY 2008-09. The good thing about the performance of the company is that they have been steadily growing for the last many years. From Rs 54 crores in 2005, their turnover has crossed a mark of Rs 135 crore. A similar jump has been witnessed in net profit from Rs 3.6 crore to Rs 9.2 crore over the same period. While their NPM is not exactly great at 6-7%, and not much improvement as well during the mentioned period, the interest coverage ratio is fairly high at 14-15. This definitely gives some breathing space, especially when the margins are not high (the products are such, that one cannot command very high margins).

The board has approved a rights issue, although the modalities of the same are yet to be defined, but considering the performance and future prospects, the shareholders might get a good chance of consolidating their holding, if the issue price comes at a good discount.

Note: The stocks discussed at MPS thru blog postings are neither a part of “Business Insights” issue nor a “Penny Stocks” which we reco/publish for paid subscribers. These are just stock specific views by MPS team; one MUST do the due diligence before doing any investment based on our reco.

To contact the Lead Associate on this story: Ekansh Mittal in Noida (New Delhi) at Ekansh@hbjcapital.com

Virat Industries Ltd. - Focused operation, steady growth and reasonable valuations

Virat Industries Ltd., the company that is definitely not the size the name signifies, however, is doing rather well in the area of its operations. The company has chosen a very limited area of operation and is well focused on achieving significant heights in the same. Virat Industries Ltd. is basically a socks manufacturing company, with 97-98% of its revenues coming from exports.

Since inception the company has focused on export markets because export clients offer large size orders, which result in better plant efficiency, improvement in quality and better management of raw materials inventory for the company. Although it is difficult to ascertain the quality of overseas clients of the company such as John Lewis, House of Fraser, TK Maxx, Next, Fatface in the UK, Migros in Switzerland and Shoe Mart in the Middle East, but their Indian counterparts definitely have a good name such as Levis, Dockers etc.

During 2008-09, we all know that how the export oriented companies suffered at the hands of recession, with textile companies being evenly more badly hurt. However, in the case of Virat, the inflow of orders remained encouraging throughout the year, and export dispatches in turn of quantity of pairs of socks were 22% higher, compared to FY 2007-08. An argument against it can be that the company could outperform on account of low base factor, but be whatever the reason, any good performance is always welcome, and as we have already mentioned in our previous article that small companies do enjoy the benefits of adaptability.

Speaking on the performance, VIL has been a steady performer. It has grown from a Rs 5.29 crore sales turnover company in the year 2005 to Rs 13.80 crore at the end of Mar'09. That's a consistent performance at CAGR of around 28%. The good thing about the performance of the company has been that they have been enjoying some operational leverage and have continuously scaled up their margins.

While in the year 2005 they could enjoy a NPM of just 6.8%, the latest data reveals the fact that the margins have improved by almost 100% over the 4 years with the company enjoying the NPM at 13%. What this has done is that it has resulted into bottom-line growth at CAGR of 50%, over the last 4 years. The management has even paid off some portion of their debt during FY 2008-09. This is because their debt portion has come down from Rs 2.59 crore at the end of Mar'08 to Rs 1.80 crore.

So, considering the facts that the company has been enjoying good flow of export orders, good dividend payout, reasonable valuations at a multiple of around 3.8, low debt, focused operations make VIL a company definitely worth looking at in the penny stock space for medium term gains. But, one cannot take a long term view as there lies the concern with respect to scalability and how rapidly that can be done, because there are numerous players that operate in the un-organized space.

Note: The stocks discussed at MPS thru blog postings are neither a part of “Business Insights” issue nor a “Penny Stocks” which we reco/publish for paid subscribers. These are just stock specific views by MPS team; one MUST do the due diligence before doing any investment based on our reco.

To contact the Lead Associate on this story: Ekansh Mittal in Noida (New Delhi) at Ekansh@hbjcapital.com

"Business Insight" recommendation due for release on 29th Jan'10. Expect 10-12 times return is next 24 months. Read below !!!

We are coming towards the end of first month of 2010. The market is into correction mode, and it is rather sometimes good to see market correcting, especially when you have ready cash to deploy into equities (the multibaggers, if you chose the right one).Well, that's what our team of technical analysts have been suggesting, to keep 30-40% of your portfolio into cash and they have been bang on correct.

In our earlier post, we made public "Business Insight - Nov 2009" recommendation "Sumeet Industries ltd (Code 514211)" for everyone to create long term wealth, and here we are again coming out with yet another "Business Insight - Jan 2010" recommendation, only for our paid subscribers. The company has experienced a complete makeover off-late. Certain calculations, revenue guidance by the management and our own in-depth analysis makes us believe that the company is poised for multi-fold growth in the next 2-3 years.

The theme for “Business Insight – Jan 2010” is turnaround, coupled with sustainable growth. It is said that turnarounds seldom happen. However it is so true that if you get a hold on to a turnaround situation at an early stage, huge appreciation can be expected of your investments. One can get such companies at huge discounts as many remain oblivion to the fresh developments that may have happened in the due course of time.

We at MPS believe that It is always wise to look for the opportunities while everyone else is ignorant about them. To be able to witness capital appreciation in your investments, you need to tap the opportunities before others get their hand on the same. However, you need to ensure that you chose the right one, because many bad cases with an improvement in performance might appear prospective turnarounds, but they do not turn out that way, with the end result being minority shareholders making losses. This is where you need an in-depth analysis, along with concrete facts supporting your conviction.

Some details on our "Business Insight - Jan 2010" pick.

The company selected has been recording good numbers for the last many quarters. While most other companies recorded a slump in sales and poor numbers during 2008-09, "Business Insight - Jan 2010" witnessed almost 80-90% increase in turnover and more than 60% improvement in bottom-line over previous year. The results for 9 months ending Dec'09 have been in line with our expectations with and a QOQ improvement in numbers. We expect the company to witness a more than 300% increase in bottom-line in the next 2 years, over 2008-09 figures.

At present, the valuations commanded by the company are not in line with the industry standards, and this is primarily because it is out of everyone's sight. However a marked improvement in performance will be noted, and so good numbers coupled with re-rating of valuations shall create a multibagger out of the same. One can very well expect a 10-12 times return in next 24 months (a detailed explanation of the same is provided in the report).


At the end I would like to say that one has to recognize when the right place, right people and the right time fuse and take advantage of that opportunity. There are only few opportunities out there, don't miss them. You can't sit back and wait for ever, time is running out, grab it fast, who knows the opportunity in hand might change your life for ever.

To Know more on the same, Please Call 09886736791 (Sandeep Jain, IIMA, Senior Associate) or E-mail to Info@hbjcapital.com

- Team MPS

Must Read - "Sumeet Industries Ltd (Code 514211)" : Our Business Insights (Wealth creating penny stock) stock reco for Nov 2009

Sumeet Industries Ltd ("Business Insights" stock reco) is yet another unknown, undiscovered "penny stock" reco from MPS (http://www.multibaggerpennystocks.com/) of HBJ Capital.

This stock was reco under one of offerings called Business Insights (12 times in 18 months) - Micro cap multibagger. We would like to share this research report to all our readers so that all can create wealth together!!!

[Click on the image to download the complete research report]

Sumeet Industries Ltd (Code 514211)

- Sumeet Industries Ltd is a diversified conglomerate marching towards establishing its presence in entire Polyester Fabrics Value Chain (Manufacturing Pet Chips and POY / FDY directly from MEG and PTA, Twisting & Texturising, Weaving and Dying) will enable the company to offer premium products at extremely competitive price and boost its profitability margin and market share. There is huge value unlocking seen in near future!!!

Sample 10in3/Street Smart & Business Insights reports disclosed earlier - Link

To Know more about our Paid and Free services, Please Call 09886736791 (Sandeep Jain, IIMA, Senior Associate) or E-mail to Info@hbjcapital.com

- Team MPS

Small Caps at an advantage over large caps

A few months back, I read an article about small cap stocks are doing far better than large caps. . If one is able to pick a good small cap or large cap company at reasonable valuations, then over a longer period of time, his portfolio is bound to give a higher return than the one consisting of only large caps.

In fact, according to Ibbotson Associates, a firm that tracks long term data (of companies listed in USA), small caps have increased in value by an average of more than 12% per year between 1927 and 2007. Meanwhile, large caps have increased just over 10% during that same time period. A difference of 2% per year compounded annually can make a huge difference to the end value of his portfolio.

Well, this performance advantage is no coincidence. In fact, small caps have several advantages that large caps simply can't match. They being :

Temporary Valuation Disconnect

Small caps may outperform larger companies over time, but the operative words here are "over time". That's because smaller companies, primarily because of their lack of visibility within the investment community, often experience a disconnect between their stock prices and their fundamentals. This discrepancy between price and fundamentals presents a tremendous opportunity that small cap investors can take advantage of.

Thin Market

Small caps tend to be thinly traded and, while this is a characteristic that can slice both ways, it often presents a huge opportunity for shrewd investors. As the company grows its revenues and earnings over time and the public becomes more aware of its existence and future growth prospects, demand for the stock inevitably perks up. And when a large number of investors start to clamor over a very limited amount of stock, this gives small cap stocks the potential to rise quite rapidly.

Lack of Analyst Coverage

We all have observed, that how various analysts keep track of earnings of large cap companies. They keep making estimate about future earnings of big companies(although they mostly fail), but no one cares about small cap companies and their earnings potential. The analysts start tracking such companies only when they have already grown by 40-50 times. Thus, if one jumps in early into a small cap company at its nascent stage, a lot of money can be made.

Institutional ownership

You must have often observed in our reports, that most of the stocks recommended by us, do not have any holding of major financial institutions or mutual funds. Well this scenario proves to be quite beneficial, as it can present a huge opportunity particularly for investors who get in early. Later on when major financial institutions start investing, then there happens P/E expansion for such companies, thereby giving good returns.

Adaptability

Eric Schmidt, who headed up Novell (Nadsaq:NOVL) and later moved on to Google (Nasdaq:GOOG), once said in a conference call that big companies were like aircraft carriers or cruise ships, "they take a long time to change direction."

In many ways, this is a perfect analogy. In fact, it can take years for a larger company to bring a new product to market because of the committees that need to review its practicality (before its introduction), the legal vetting it must receive and the work that goes into its marketing and promotion. Also the impact of a new product on overall earnings of the company, may not be that substantial. Small companies, on the other hand, have less bureaucracy and a genuine need to push products to market just to survive.

Thus there are numerous factors, which make small cap companies, a suitable investment option, if researched properly.

To contact the Lead Associate on this story: Ekansh Mittal in Noida (New Delhi) at Ekansh@hbjcapital.com

Interfit Techno Products Ltd. - Are we witnessing a turnaround

From the number of Annual reports that I have been reading these days, it is quite clear that many small and medium sized industries based in Tamil Nadu suffered during 2008-09 , on account of frequent power cuts. Many companies could not achieve the desired sales and margins because of the reason mentioned above. Well, it is not surprising at all, considering the fact that the power situation is grim across the whole of India, and the Govt. is most definitely going to fall short of adding another 78,000 MW power generation capacity by 2012.

Many companies are resorting to different measures to overcome the problem of power cuts. The bigger companies are going for captive power generation (mostly in the metal space), while the smaller ones are changing the product mix and manufacturing products that are less power intensive. One such company in the penny stock space is Interfit Techno Products Ltd.

Interfit Techno Products ltd is subsidiary to Interfit India Limited, a Government of India recognized Export House and an ISO 9001 certified manufacturer, producer of economic piping products. The product profile of the company includes Screwed & Socket-weld Fittings, Couplings & Fittings for grooved piping system, Ball Valves and Butterfly Valves in Carbon Steel, Stainless Steel and Alloy Steel etc.

Earlier the thrust area for the company was overseas market, however off-late it has started catering to the local needs. During the year 2008-09 the company issued 500000 9% Non-Convertible, Non-Cumulative Redeemable Preference Shares of Rs 100/- each to its holding company, Interfit India Limited. Also, they have added 3.75 lacs redeemable preference shares of Rs 100 each to the authorized capital of the company, however the same have not been allotted. So, the management is basically infusing money into the company and has been making conscious efforts to revive the company, and they seem to be paying off.

I said earlier that the company is changing the product mix and is diversifying into new products. This is because the company has started manufacturing the new products, S.G. Iron Cost Fittings and Ball valves in additions to existing stainless steel Fittings and Ball valves. Also, they are outsourcing power intensive components from other manufacturers and concentrating on finishing and assembly operation requiring lesser power.

So, have these new developments transformed into better numbers for the company ? Well, actually they have especially with respect to sales, and if one is to consider the Sep'09 quarter alone, then on net profit front as well. In the last 4-5 years the company could never achieve a turnover in excess of Rs 9 crores and the bottom-line was abysmally low at around 10-20 lakhs. However, in the first two quarters alone of FY2009-10, it has achieved a turnover in excess of Rs 17.1 crore and a bottom-line of Rs 1.3 crore.

Although it would be too early to term the current situation as a turnaround for the company, but the good signs are definitely there. I say this, because one can see an increase in employee cost for the company QOQ (a rather good indicator of the growth in the company). The current market cap of the company stands at just around Rs 14 crore and an annualized earning of Rs 2.6 crore makes it available at a multiple of 5.5. One should definitely keep a tab on the fututre performance of the company, because as I said, it could be one of those rare turnaround case.

Note: The stocks discussed at MPS thru blog postings are neither a part of “Business Insights” issue nor a “Penny Stocks” which we reco/publish for paid subscribers. These are just stock specific views by MPS team; one MUST do the due diligence before doing any investment based on our reco.

To contact the Lead associate on this story: Ekansh Mittal in Noida (New Delhi) at Ekansh@hbjcapital.com

Penny Stocks - Life changing opportunities

There’s a lot of debate as to what is the fastest path to making millions in the stock market. If you’re starting with just a little capital, penny stock investment/trading can certainly pay huge rewards.

A penny stock is basically any stock that trades under 10.00 per share. For many brokers, this is a threshold limit where they will not spend money on research, and will not loan against the value of the stock. Therefore, there is great potential as these large firms are not paying attention to these stocks. Because of that fact, it can be harder to get information on them.

While these smaller stocks are riskier than their larger brothers, they have a tremendous reward potential if you can find the good companies. While some small companies have gone from 50 Paisa to zero, some have also gone from 50 Paisa to Rs.50 or even Rs 100 which is almost 100-200 times returns!!!

More recently, investors are quickly learning that these penny stocks are the future companies of India and the world and have great potential. The greatest potential of a penny stock is its ability to move a large amount in a short amount of time. Think of a large company such as Infosys with a stock price near Rs.1,500 per share. It would take a modern miracle for Infosys's stock price to double to Rs. 3,000 per share - even after several years. However, a small company with a stock price at Rs 2.00 could see its stock double to Rs 4.00 much more easily in a month. In fact, we have seen many stocks with prices like these double in just days or weeks. That is where the great profit potential lies.

Even companies like Praj Industries Ltd, Unitech Ltd, Bliss GVS Pharma Ltd, Gujarat NRE Coke Ltd, Gemini Communications Ltd, Lakshmi Energy and Foods Ltd, Texmaco Ltd, ICSA India Ltd, NMDC Ltd. used to be penny stocks in 2001.

However, researching penny stocks is more vital than anything else

Whether you’re buying a hot tech stock, penny stock or a well-known stock, do your research always. It doesn’t matter if you’re investing Rs 5,000 or Rs 10 lakhs. You need to do your research. Want to know the secret of truly wealthy people? They value each and every rupee they have.

For details on our short term calls, explore our previous posts, wherein we were mostly successful (with a few exceptions). For our most popular "Business Insight" report, follow the link. For our performance update on "Value picks", follow the link

So, if you wish to make huge money, and lead a luxurious life, well-researched Penny/Micro Cap stocks might be an appropriate investment option for you.

Subscribe for "Penny stock package" from MPS and, and see your self as a millionaire in next 2-3 years.

- Team MPS

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Apcotex Industries ltd. - Buy back and bulk deals

These days the industries based on usage of rubber are suffering at the hands of surging rubber prices. One can see MDs of leading Tyre manufacturers regularly appearing on business channels giving their guidance regarding further increase in tyre prices on account of escalating rubber prices. While the end users are grimacing, the latex producers are enjoying as the petrochemical prices have come down since Sep'08 and have thus been enjoying higher margins.

The natural rubber prices have shot up from Rs 65 per kg in March 2009 to Rs 130 per kg in December 2009, an increase of 100 % in a short span of nine months. Domestic rubber production has been continuously falling short of consumption leading to its poor availability even during the ongoing peak rubber season.

Keeping these factors in mind the stock that comes to my notice is Apcotex Industries. The company is one of the leading producers of polymer products namely Synthetic Latices (VP Latex, XSB latex, Nitrile Latex) and Synthetic Rubber (HSR,SBR) in India. It has one of the broadest range of products based on Styrene - Butadiene chemistry available in the market today and cater mainly to the industrial segment. Their range of synthetic latices is used among other applications, for tyre cord dipping, paper and paperboard coating, carpet backing, concrete modification/water proofing and textile finishing. The various grades of Synthetic Rubber find application in products such as footwear, automotive components, v-belts, conveyor belts and hoses.

The business of the company is highly vulnerable to volatility of crude oil and its downstream product prices, but the management of the company has been doing well to stave off any major impact from it (their margins did dip in Dec'08, but they managed well during other quarters). They succeeded in reducing their working capital requirement through better inventory and debtors management during FY2008-09.

On the cursory look there seems to be a decline in bottom-line for FY2008-09 in comparison to FY2007-08, however one needs to take notice of other income and losses to arrive at a true judgment. The operating profits before tax and after depreciation during the year FY2008-09 increased by 89.77% to Rs.6.49 crore from Rs. 3.42 crore during the previous financial year. However, the other income included loss on sale of investment at Rs.65 Lacs as compared to Rs.3.09 crore during 2007-08.

The company is quite investor friendly in the sense that they have been quite good with dividend payments. For FY2008-09 the company recommended dividend of Rs 4 (Rupees Four Only) per equity share of Rs 10/- each (@ 40%). This was at a tie when the stock price was trading at around 70 odd rupees, thus one could have accrued 5-6% from dividends alone, while the management also announced the buy-back at a maximum price of Rs 90. So, Rs 90 in effect should act as a good support level going forward.

By the time I started writing on Apcotex, the stock hit the upper circuit today and reached the level of Rs 115.80. However I still maintain that all those holding the stock should continue holding because as mentioned before the price should find really good support at Rs 90. Also, the performance for half year ending Sep'09 is quite an improvement over half year ending Sep'08, and since the Dec'08 was poor for the company there should be a further good gap up over the nine months December'09 ending results.

Also, I would like to mention here that today a bulk deal took place at Rs 115.80 for around 30k shares.

Note: The stocks discussed at MPS thru blog postings are neither a part of “Business Insights” issue nor a “Penny Stocks” which we reco/publish for paid subscribers. These are just stock specific views by MPS team; one MUST do the due diligence before doing any investment based on our reco.

To contact the Lead associate on this story: Ekansh Mittal in Noida (New Delhi) at Ekansh@hbjcapital.com

Gillanders Arbuthnot ltd. - Riding on good performance from Tea and Engineering division

Gillanders Arbuthnot is a well diversified company with 6 (six) major divisions viz. Tea Division, Engineering (MICCO) Division, Textile Division, Chemical (Waldies) Division, Property Division and Trading Division. However the major contributors to the income of the company are Tea division, Engineering and Textiles division. The other divisions such as trading, property and Chemicals do not lend a major impact on the income statements of the company.

The company has been doing well for the last 4 years, although that could be attributed to certain amalgamations but be whatever the reason, at the end it's the results that matter. Growth may be registered from both organic and inorganic route and Gillanders has been resorting to second method by amalgamating companies like The Tengpani Tea co, GIS cotton mill ltd.

There have been a few developments in the company in the recent past and have rather been good. The company recently got its equity shares listed and admitted to dealings on National Stock Exchange of India Ltd. with effect from December 14, 2009. The listing of the company on National Stock exchange helps in better visibility of the company amongst Institutional investors and is thus always a positive outbreak. Also the company amalgamated The Tengpani Tea co.

Now, talking in terms of performance :

Tea Division

Tea prices in India have firmed-up in the last few months due to tightening of supply and increase in domestic demand. This division of the company is expected to perform better during the current year, as already reflected by the results of first two quarters.

For the half year ending Sep'09 the tea division of the company recorded revenues of Rs 46.50 crore in comparison to Rs 35.7 crore over year ago period. This is after taking into account the effect of consolidation for the previous year, so the results are comparable. The profit before interest and tax stood at Rs 14.81 crore (year ago Rs 8.49 crore).

Engineering Division

This division of the company is engaged in execution and implementation of turn key projects of steel, cement, power and aluminum. It is involved inter-alia in Structural, Mechanical, Electrical and Instrumentation work. It achieved a turnover of Rs.132 crores in FY2008-09 as compared to Rs.75 crores in the FY2007-08, and continuing its good performance, the company has achieved a PBIT of Rs 8.16 crore for the half year ending Sep'09 over Rs 4.91 crore for the year ago period.

I wont go into the details of other divisions as only these two seem promising at this point of time. The company has been commanding reasonable valuations as it has already recorded EPS of Rs 13 for half year. The last two quarters have usually been good for Gillander and assuming that it is able to record the same earnings, the company is available at a multiple of 6-6.5.

Note: The stocks discussed at MPS thru blog postings are neither a part of “Business Insights” issue nor a “Penny Stocks” which we reco/publish for paid subscribers. These are just stock specific views by MPS team; one MUST do the due diligence before doing any investment based on our reco.

To contact the Lead associate on this story: Ekansh Mittal in Noida (New Delhi) at Ekansh@hbjcapital.com

Elgi equipments ltd. - One of the largest manufacturer of air compressors

When one talks of air compressors and automobile service station equipments Elgi equipments is the name that crosses the mind. ELGI is today, the market leader and Asia's largest manufacturer of air compressors and automobile service station equipment. The products are used in a wide range of applications in areas ranging from mining, defence, transport, pharmaceuticals, power, oil, railways, chemicals, textiles, printing to ship building, paper, electronics, telecommunications, medical, food & beverages and plastics.

The product lines today, broadly comprise, Rotary Compressors, Reciprocating Compressors Centrifugal Compressors, Automotive Equipment, Diesel Engines and Manufacturing and engineering services. ELGI has two manufacturing locations in Coimbatore, India, with 22 acres of land and 352,000 sq ft of built up factory area.

The company is now attempting to go global and has rather already started treading the path in the same direction. The company on one hand has announced the acquisition of a company in Europe engaged in the manufacture, sales and service of compressors, while it has already established three subsidiaries one each in Gulf, China and Brazil.

Currently exports account for about 30% of the sales of the company, while its acquisition of small and medium sized companies and with establishment of subsidiaries abroad, the share should increase going forward. However, the domestic demand is also buoyant and should help the company post steady growth for another 2-3 years.

The management was quick to respond to recessionary situation and resorted to cost cutting. Containing cost seems to have paid good dividend to the company, which has seen a jump in profit after tax, though sales grew by about eight per cent, in the second quarter of current fiscal compared to the corresponding quarter last year. While the net sales/income from operations on a standalone basis jumped to Rs 137.98 crore in the second quarter from Rs 127.47 crore, the net profit went up to Rs 16.38 crore from Rs 11.48 crore. The EPS was higher at Rs 2.61 (Rs 1.83). Both compressors and automotive equipment divisions saw good increase in turnover, though compressor manufacture is its core business.

According to the consolidated results, the total income during the quarter was Rs 161.52 crore (Rs 146.66 crore) and the net profit was Rs 17.27 crore (Rs 12.68 crore). The share of compressor business in the turnover was Rs 137.75 crore and automotive equipment Rs 22.32 crore. Going forward, the share of automotive equipments could be larger, especially the way, the automotive segment is growing domestically.

As far as the dividend policy of the company is concerned, the company pays out good dividend, with dividend yield standing close to 3%. Apart from dividend income, one can expect a steady 15-16% growth year on year. So, all those looking for steady stream of income and capital appreciation to the tune of 15%, may have a look at Elgi as a prospective buying opportunity.

Note: The stocks discussed at MPS thru blog postings are neither a part of “Business Insights” issue nor a “Penny Stocks” which we reco/publish for paid subscribers. These are just stock specific views by MPS team; one MUST do the due diligence before doing any investment based on our reco.

To contact the Lead associate on this story: Ekansh Mittal in Noida (New Delhi) at Ekansh@hbjcapital.com

"MPS Money Machine (3M) Package" going live on Jan 11th (Monday) 2010 : Watch out for "3M Power Calls"!!!

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Radha Madhav Corporation Limited - Keep a tab on it

Radha Madhav Corporation Limited, is a company into manufacturing of multi product packaging solutions, and is now transforming itself from being only a manufacturer of packaging materials and is emerging as a packaging consultant capable of providing customized packaging and printing solutions.

RMCL is a good and dedicated company, with very impressive results till 2008. However its results have been poor for 2008-09 and also for the June quarter. Well, it could have maintained the same level of profitability and revenues, provided it had not gone in for the aggressive expansion. But, to be able to command high valuations and to be able to sustain one has to expand in this rapidly changing world.

So far, the company's bet of expansion of Daman unit and foray into Uttrankhand has not gone right. They have expanded rapidly by taking on huge debt, as evident from the increase in interest payment from Rs 5 cr on 2007-08 to Rs 12 Cr in 2008-09, and also the increase in depreciation charge. The use of debt for expansion purpose is good, but there has not been a proportional increase in revenue.

Now the concern for me is, that their operating margins have come down substantially even when crude prices are down. It is to be seen if the product mix of the company has changed, bcz its USP had been its margins (difficult to maintain good margins in such an industry), but recently their cost of raw materials has gone up.

Also, at this moment it seems that there interest cost is going beyond their control, and now more than funding their expansion plans, they may have to raise money to fund their working capital needs, and also repay some portion of debt.

However the company definitely has good earning potential as shown in past, and also it does not depend on just one kind of packaging, it has on offer all kind of packaging solutions.

So, as now I would suggest one to sit on the sidelines, and take position in it only when there is some better performance by the company. We may miss out a few percentage gain due to this, but it is always better to be sure while committing money in a particular company.

Note: The stocks discussed at MPS thru blog postings are neither a part of “Business Insights” issue nor a “Penny Stocks” which we reco/publish for paid subscribers. These are just stock specific views by MPS team; one MUST do the due diligence before doing any investment based on our reco.

To contact the Lead associate on this story: Ekansh Mittal in Noida (New Delhi) at Ekansh@hbjcapital.com

Thanks for Your Overwhelming Response for 3M Package!!!

- Team MPS & SLT

Refer:-
>>>MPS Money Machine (3M Package) launch on Monday, Jan 11th 2010 : Subscription open only for 3 days!!!
>>>MPS Money Machine [Coming Soon.....] : Money making has never been so easy!!!

Gruh Finance - Leading the way in semi-urban & rural housing finance

When one talks of housing finance, the first name that comes to mind is that of HDFC (Housing development finance corporation), but no one really knows about Gruh Finance. One of the reason for that could be less visibility in cities and also it being a small cap. However, Gruh finance has its own set of customers, and with HDFC promoting it, there's enough funding backing it.

Gruh Finance (GFL), was set up by HDFC to replicate its home financing business model in semi-urban and rural areas. GFL provides long-term finance to individuals for construction, purchase, extension, repair and renovation of homes.

GFL also offers loans for purchase of non-residential properties like office premises and shops. HDFC holds a 61.49% stake in the company. GFL has been a major housing finance company operating in the semi-urban and rural areas of Gujarat, Maharashtra, Rajasthan, Madhya Pradesh, Karnataka, Chhattisgarh and Tamil Nadu. Gruh finance has been able to penetrate in this market, while other major pvt. bankers have not been able to do so.

It has 89 branches – a majority of these in areas where HDFC does not have a presence. The main strategy of the company is to penetrate into places that are avoided by large housing finance companies. Therefore the company has been able to carve its own niche in the housing finance sector.

Even in a difficult quarter, like March 2009, it has posted 53% rise in its operating income and 41% rise in its operating profits over the corresponding year-ago period. Well that's the mark of a company, managed by a very good set of people (in this case its very obvious with HDFC being its parent company).

During the year the Company disbursed Rs 655.52 Crores (Previous Year Rs 632.29 Crores). Loan Assets have increased from Rs 1769.61 Crores as on March 31, 2008 to Rs 2085.61 Crores as on March 31, 2009 registering a growth of 18%. Gruh has continued to focus on the individual loan segment and disbursed Rs 557 Cr to 12,538 families and the cumulative disbursements as on Mar 2009, stand at Rs 3865 Cr.

Although a comparison with HDFC can't be done, but I would still like to compare it on the front of valuation. HDFC trades at a P/E of somewhere around 30, while Gruh trades at 13-14. Now, HDFC commands such valuations on account of its credibility and growth, but if one is to consider Gruh finance, then you automatically get both the traits. HDFC being its promoter lends incredible amount of credibility to the company, and growth is ther for everyone to see.

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3M Package will be launched sometime during mid Jan'10. It will have limited number of subscription per month & subscription will be open ONLY for 3 days every month (a separate announcement will be made for this). We have already completed beta testing for this package and the results so far have been encouraging (results will be posted soon).

More details on this package will be posted in next few days. For more info email Info@hbjcapital.com or Call : +91 98867 36791.

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Performance update on Instant profit call given on Dec 24th 2009

As is the case always, our subscribers at MPS are making money and that too in quick time.

IP (Instant Profit) Stock Reco :

1. Suggested Stock R*** J*** (532***) at Rs 54-55 and the position is still open in this stock at more than Rs 65. The name of the stock shall be disclosed, once the position is closed. We expect the stock to scale up to Rs 75-80 in next 2-3 trading days. [Gain of 20% in just 5 trading days till now, another 20% to be made in another 2-3 days!!!]

Note: “MPS Money Machine (3M Package)” is our next innovative, aggressive & highest return package for short term investors/traders (expect 100% return guaranteed per month). It is expected to be launched in early Jan’10. Commencement date for this package with further details on delivery model will be shared before the launch of this package.

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Wishing all of you a Very Happy New Year 2010 - Team HBJ Capital

We will open the book. Its pages are blank. We are going to put words on them ourselves. The book is called Opportunity and its first chapter is New Year's Day - Edith Lovejoy Pierce

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