Santosh's Business Times

Ashok Leyland speeds up on hopes it may exceed annual sales guidance

2010-07-07T08:29:00.000-07:00

Ashok Leyland rose 1.60% to Rs 66.55 at 11:44 IST on reports the company may exceed the annual sales guidance of about 85,000 vehicles.

Meanwhile, the BSE Sensex was up 88.89 points, or 0.51%, to 17,530.33.

On BSE, 5.39 lakh shares were traded in the counter as against an average daily volume of 11.46 lakh shares in the past one quarter.

The stock hit a high of Rs 67 and a low of Rs 65.50 so far during the day. The stock had hit a record high of Rs 70.35 on 13 May 2010 and a 52-week low of Rs 28.60 on 9 July 2009.

The stock had underperformed the market over the past one month till 2 July 2010, gaining 2.38% compared with the Sensex's 4.30% rise. It outperformed the market in past one quarter, rising 9.75% as against 1.31% fall in the Sensex.

The large-cap commercial vehicle maker has an equity capital of Rs 133.03 crore. Face value per share is Rs 1.

Commenting on the sales guidance for fiscal year 2011, Ashok Leyland's chief financial officer K Sridharan said the company may hopefully exceed the guidance it gave at the beginning of the year of about 85,000 vehicles.

However, he added that the company would like to wait and watch because it needs to take into account the effect of the changing emission standards coming in October 2010. So at this juncture the company has maintained guidance of about 85,000 vehicles.

Ashok Leyland's total vehicle sales jumped 111.8% to 8,400 units in June 2010 over June 2009. Domestic sales soared 115.61% to 7,499 units, while exports jumped 84.63% to 901 units in June 2010 over June 2009.

Ashok Leyland's net profit galloped 317.7% to Rs 222.66 crore on 141.3% rise in net sales to Rs 2,939.04 crore in Q4 March 2010 over Q4 March 2009

Hold Reliance Industries

2010-01-17T11:19:00.001-08:00

"Directionally Reliance has clearly stated its intentions about going for inorganic growth. Along with that if you factor in a turnaround in the commodity cycle, somewhere 15-18 months down the line, you have the affect of a lower base coming currently, which will help in percentage terms which will scoop the sentiments of the markets and at the same time in absolute levels.”

He further added, “Reliance might start making 4-5% higher return on equity and the profit growth might exceed 30-35% because that will also be the time when the Krishna-Godavari gas ramp up will happen. Along with that any more positive news on exploration and concrete moves on, inorganic growth should also help the sentiments and valuations are not very demanding at around 14 times 20% discount to the broader market. I think there is reasonably margin of safety for an investor trying to hold it for 1.5-2 years."

Book some profits in Jaiprakash Associates: Agarwal

2010-01-17T11:16:00.001-08:00

"In Jaiprakash Associates one should book profits here because the upside is very limited in most of the stocks though cement is doing quite well and it’s the flavor of the day. But overall you find that upside is very limited and the downside might be about a 20-25% over a medium term; by May 2010.”

He further added, "If you are getting a very good profit you can book profit and wait for the prices to come down because even in the longer term this stock is likely to do very well. But definitely if you are able to make some trading profits and buy at a lower level again, that will enhance your profitability. So definitely I would suggest to book some profits atleast partially at the current instance and wait for the correction."

Investing Strategies for the year ahead

2010-01-14T09:35:00.001-08:00

The upheaval in the global economies and the resultant massive downturn in the stock markets through 2008 and early part of 2009 saw a section of equity investors exiting from the market in a panic. Besides, there are investors who have been waiting on the sidelines to invest at lower levels. Both are at a crossroads today. While the panic sellers are still ruing their rash decision, the fear for the fence sitters is a result of unpleasant experiences of the past. So, what should investors do in such a scenario?

In the present market conditions, the crucial part is to adopt the right approach and select the right investment options rather than following a strategy whereby one takes aggressive decisions in order to make up for the lost time and opportunities. The major issue, therefore, is to manage expectations and not allow one’s asset allocation to drift for short term gains. As we all know, each investment carries some risk and that it is vital to choose wisely. While there are plenty of options available to design the portfolio, the key is to invest in a manner that allows you to potentially lower your investment risk and still maintain the chances of achieving your varied financial goals.

This is what you need to do to achieve investment success:

It’s time to adopt an asset allocation model

2010-01-14T09:34:00.003-08:00

Asset allocation i.e. the process of spreading your savings across different types of investment can help you find and maintain your balancing point and that goes a long way in pursuing your goals at a risk level you are comfortable with. For an asset allocation strategy to be successful, it must be flexible enough to accommodate the changes in one’s financial circumstances as well as the changes in the economic cycle. It is important because economic environment has a direct impact on the behaviour of the financial markets.
Circa 2010 is likely to pose challenges even for experienced investors. That’s why, determining and maintaining the right level of risk tolerance should be an important aspect of your investment strategy. Don’t make a mistake of underestimating risk and/or overestimating reward from an investment. In fact, estimating the risk associated with an investment option is more crucial than estimating the returns. By understanding investment risks and how they relate to potential returns, you can improve your chances of building greater wealth. Remember, mutual funds offer the best possible options to practice asset allocation and also provide you the flexibility required to make it a success.

Strategy for equity portion of the portfolio

2010-01-14T09:34:00.001-08:00

The stock market is likely to do well in 2010, albeit with increased level of volatility. However, considering that equity as an asset class performed exceedingly well from 2009 lows, it would be advisable to exercise a little caution during 2010. The out-performance of mid and small stocks over the last six months or so may be tempting enough to go all out for them but the key would be to resist the temptation and focus more on your own risk profile and the existing portfolio mix. While for those who intend to invest directly in stocks, the success would depend on the right stock selection, for mutual funds investors the correct strategy would be to go for funds that have a well defined strategy and investment universe so as to retain control over the exposure to different market caps in the portfolio.

For those investors who have been investing through Systematic Investment Plan (SIP), the key would be to carry on that process and try to increase the investment amount in keeping with the increased income levels. Those who had discontinued the process during the market downturn need to restart the process all over again. If 2010 turns out to be a volatile year for the stock market as expected, the section of investors that would benefit the most would the one that follows a disciplined approach.

Strategy for investing in debt or debt related instruments

2010-01-14T09:33:00.001-08:00

For this part of the portfolio, you need to have a personal yardstick which you may aim to better with your investment in a debt or debt oriented fund. This may, for example, be the returns that you have been getting from some of the traditional investment options like deposits, bonds and small savings schemes. To achieve this in the year 2010, the key would be to manage credit and duration risk.

Going ahead, inflation as well as the subsequent movement in the interest rates are going to be the most influential factors for this part of the portfolio both in terms of selection of instruments as well as their performances. While, one may debate about how quickly interest rates will start moving up, there is no doubt that interest rates will increase from here.
Hence, you may be better off either focusing on short term bonds funds for another couple of quarters or invest in floating rate funds. Thereafter, debt funds and FMPs will have a role to play in investing long term funds. For those who do not mind some exposure to equity in order to get better returns than pure debt and debt oriented funds, MIPs will continue to be a good option for at least 1-2 years time horizon.

Strategy for investing in Gold

2010-01-14T09:32:00.000-08:00

Notwithstanding the recent volatility in the gold prices, it continues to remain one of the attractive options. Considering that it would take some more time for the global economies to recover fully from the setbacks of 2008, an alternative asset like gold will remain an attractive investment option. However, as the gold prices are likely to be volatile going forward, one would be better off buying periodically rather than investing a lump sum. Remember, ultimate role that gold plays in a portfolio is that of hedging against the inflation. Therefore, restrict your exposure to gold to around 10 to15% of the portfolio.

Though Indians have always fancied owning gold for various cultural and emotional reasons, it has not been actively considered while working out the asset allocation. It’s time to do so. Today mutual funds offer investors a couple of choices that can eliminate many risks that one has to face while holding physical gold.

Firstly, there are Gold Exchange Traded funds (GETFs). An exchange traded fund with gold as its underlying asset is called Gold ETF. There are many advantages of investing in GETFs. For example, gold storage and other costs are shared with other investors. GETFs allow investment in gold in small denominations thereby allowing retail investors to participate. In the secondary market, the minimum lot is one unit.

Another option is to invest through fund of funds launched by domestic mutual funds to invest in gold mining companies through an international fund. Investing in a scheme like this provides investors access to fund manager’s expertise and active fund management, which is not available in GETFs. Also investing in gold mining companies offer investors the upside opportunity through organic/M&A growth as well as leverage the increasing price of gold. In other words, investors benefit as the profitability of gold mining companies increases with a rise in gold prices.
Ideally, a combination of both i.e. GETF and Gold equity fund would be the right way to invest.

NAVs end higher as markets gain

2010-01-13T08:46:00.000-08:00

Equity diversified NAVs ended last day of the year 2009 on a positive note and their advance:decline ratio stood at 209:13. The markets closed the session at a new 19-month high. The Nifty shut shop above the psychological 5,200 mark for the first time since May 02, 2008.

Oil & gas, power, capital goods, and select auto, banking & technology stocks helped the indices to remain on the higher side. However, selling in the last couple of hours in pharma & realty stocks along with Reliance Communications, JSPL, ICICI Bank, PNB, HUL, Idea & Reliance Infrastructure limited the gains to some extent.

The 30-share BSE Sensex closed at 17,464.81, up 120.99 points or 0.7% and the 50-share NSE Nifty rose 0.61% or 31.60 points, to settle at 5,201.05, after seeing an intraday high of 17,530.94 and 5,221.85, respectively.

Ambani gas case: HC rules in RNRL's favour

2009-06-15T05:46:00.000-07:00

In what is seen as a victory for Reliance Natural Resources (RNRL) in the tussle with Reliance Industries over the KG basin D6 gas, the Bombay High Court on Monday upheld the maintainability of RNRL’s plea and asked RIL to supply gas to the latter to the tune of 28 mmscmd for 17 years at a price of USD 2.34 per mmbtu.

The RIL-RNRL case is related to a conflict over the terms of supply of natural gas from RIL’s Krishna Godavari Basin to Anil Ambani’s Dadri Power plant in Uttar Pradesh. Mukesh Ambani-promoted RIL wanted to sell the gas at USD 4.2 per mmbtu.

The court has asked the two parties to enter into an agreement within a month along the stipulated ruling. The HC also said the parties can approach Kokilaben Ambani — the mother of the estranged industrialists Anil and Mukesh Ambani — to reach an arrangement or approach a company court. The interim order would continue till all remedies for the argument are exhausted, the court said.

An elated Mukul Rohatgi, counsel for RNRL, said, “It has resulted in a complete victory for RNRL. The company will get 28 mmscmd of assured gas supply plus 12 mmscmd if NTPC does not avail of the amount given to it — so it may be 40 mmscmd. RIL had entered into a one-sided agreement and pushed it down the throat of RNRL, and it was contrary to the Memorandum of Understanding [signed during the Reliance demerger]. The court came to a conclusion that the MoU was valid and that the agreement as prepared by RIL was invalid.”

DJ Kakadia, another RNRL counsel, said the court had given RNRL the option to also file for damages.

RIL can now approach the Supreme Court challenging the verdict.

Coin Shortage leads to chocolate sales

2009-06-14T16:52:00.000-07:00

The sale of fifty paise chocolates in the city has picked up manifold not because of people's sudden love for it, but to tide over acute shortage of 50 paise coins. The chocolates are given in some government and private buses, canteens, hotels, drug stores and parking places in place of coins and sholesale dealers.Some scrap dealers attribute this shortage to mas purchase of coins by blade manufactures in Mumbai for making high quality razor blades. The dealers said they were paying two rupees for one rupee coin and one rupee for a 50 paise coin. The companies in turn would pay more margin to the scrap dealers.Though the business was at a peak till a month ago, there's a shortage of coins at present, they had a deal with employees who were managing the vehicle parking areas and some bus conductors to supply coins. But they too were facing proglems in procuring the coins now.The branded chocolates are selling bottles of chocolate instead of one bottle. Even in hospital canteens, where a cup of coffee or tea costs Rs. 3.50, chocolates were given for 50 paise balance. Conductor or a parking site employee whould earn about Rs. 15.00 if he is able to use a bottle of chocolates for the purpose of giving the change. In some city buses chocolates are given without authorisation. The corporation officials had approached some co-operative banks and temples to provide 50 paise coins. The scaracity of 50 paise coins are artificial. Chocolates are being thrust on the people. It is a ploy of the chocolate dealers to sell their product.I think that there should be an immediate action on this