How to Create a Successful Stock Watch List

Follow these steps and you can create a powerful stock watch list in the matter of minutes to an hour each night. I work longer than that but it can be done in less time if need be. This watch list will generate opportunities for trend buying, swing trading and even shorter-term trading. I guess the occasional buy and hold investor could even benefit from this very simple procedure if they purchase at the right time.

I encourage all investors in all time frames to evaluate stocks for investment using both fundamental and technical analysis. A day trader and even a swing trader can get away with avoiding fundamental analysis but I highly recommend both methods of analysis for intermediate and longer term trend traders. Both tools are equally important in making serious decisions with your hard earned CASH!

If you wish to invest in stocks, treat it like a business, NOT A HOBBY. You need rules and you need to follow these rules or money WILL be LOST. Once proven rules have been established, they cannot be broke or you will lose money. Everyone loses money in investing but we must learn to cut losses quick and allow gains to develop. Small losses are acceptable because they teach us lessons that allow us to win big. Think of losses as part of doing business and focus on the long term success of the system and not each individual trade. As long as you have a positive expectancy, the winners and losers will equal out over time to make you consistently profitable.

Now to the watch list method:

Determine if overall market is in a specific trend (up, down or sideways).
Use a computerized screener to find stocks with superior fundamentals
Evaluate sister stocks or stocks within the same industry group (strength travels in groups so the probability of success rises when buying into a strong industry).
Study the technical aspects of the charts for each possible opportunity
Simple Fundamental Screener Criteria:
The criteria listed in this section can be used together or arranged in a variety of ways to generate multiple lists containing all possible opportunities. Get a feel for specific screens and determine which are the most successful during certain market conditions.

Increasing Earnings (current, past: quarterly, yearly and future estimates)
Increasing Sales (current, past: quarterly, yearly and future estimates)
Stocks making New Highs
Stocks within 15% of New Highs
Stocks within 10% of the 200-day moving average
Increasing Return on Equity (ROE)
Price/Earnings Growth (PEG) – Less than 1 is preferable
Accumulation/Distribution ratio
Up/Down Volume over past several months
Increasing Institutional Sponsorship
Simple Technical Analysis Scans (with your own eyes):

Study the one year weekly chart (preferably candlesticks)
Study the six month daily chart (preferably candlesticks)
Look for increasing accumulation days (stock up on above average volume)
Evaluate the Point & Figure chart for support and resistance levels
Look for basic chart patterns such as flat bases, cup bases, saucer bases, triangle breakouts, obvious trends along a moving average, etc…
That is all one needs to develop a quality list of opportunities night in and night out. Trading opportunities will appear once you see a particular stock make multiple screens on a consistent basis. This is the basic foundation I use to pinpoint my opportunities in the market and the general guidelines I used while running MSW.

I use the custom screen wizard from Daily Graphs (Investor’s Business Daily sister company) for my fundamental analysis because I love CANSLIM type stocks but many tools exist on the web. Some are free and some cost a pretty penny to use. My screener costs $45 per month which is nothing to me but maybe too much for others.

Please leave a comment on what screener you use and why. Leave a link to the screener that you use to give the site or business credit. I am very curious to hear what other trader use. As great as the wizard is for me, I am always looking to find something better.

-Author: Chris

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DLF - second most valued private firm in India

Real estate giant DLF on Friday pipped Bharti Airtel to become the country's second most valued private sector company after Reliance Industries, following a surge of over five per cent in its share price.

In an overall flat market, shares of DLF rose by 5.31 per cent at the BSE to close at Rs 1,063.70 -- more than double its IPO price in less than six months of listing.

The company's market capitalisation surged to Rs 1,81,343 crore at the end of today's trading, marking a gain of about Rs 9,150 crore over the previous day. This is second highest among private sector companies after country's most valued firm RIL, which has a market cap of over Rs 4,21,000 crore.

This is estimated to have swelled DLF Chairman K P Singh's wealth to more than 40 billion dollars (about 1,60,000 crore). Last month, Singh was named as world's richest realtor with a wealth of 35 billion dollars by Forbes magazine. Forbes had calculated Singh's wealth on the basis of DLF share price on November 2, since when the scrip has gone up by 14.3 per cent.

Today's rally, which followed reports that DLF was mulling over listing its various subsidiaries, made it the country's fourth most valued firm across both private and public sector companies.

RIL is followed by two public sector companies ONGC and NTPC in the market capitalisation league at over Rs 2,62,000 and Rs 1,99,000 crore respectively.

DLF was followed by telecom major Bharti Airtel as the country's fifth most valued company with a market value of Rs 1,78,530 crore.

Earlier in the day, shares of DLF touched a life-time high of Rs 1,072.

The surge in DLF shares came along with a sharp rally in other real estate stocks as well, although the benchmark Sensex closed on a flat note with a fall of 9.77 points.

Among the 14 stocks in the BSE realty index, only Phoenix Mills closed in the red (down 1.02 per cent), while Unitech, Omaxe, Parsvnath, Akruti City, Hdil and Peninsula Land rose between 4-8 per cent each.

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Mental Fitness for Traders

You've got a great trading system. So why are you losing?

You've done your homework. Countless hours of seeking out the right guru (or piecing together your own system). Weeks of monitoring your guru's daily trade picks (or paper-trading and back-testing your homemade system). You've done it by the book. No seat of the pants trading for you!

OK, now you're confident. It's time to put your money where your homework is. You've had your coffee and your first trade signal is before you. Confidence high. Trade made. First loss. Not a problem. You understood before you started that successful traders both win and lose and “losing is part of the overall winning”.


You've also heard more then once that “successful traders don't win on every trade.” Moving on, still confident. Next trade made. Another loss, but this one hurt your pride a little because you got stopped out early in the trade, and then the market rebounded and would have hit your profit target if you weren't topped out.

You double check. Yep, you placed the stop where your trading system told you to place it. You kind of had a feeling that the early weakness in the market was just profit-taking from the previous day's trading, but you're trading a system and you must stick to it. Wounded, but resilient.

After a good night's sleep and a few mouse clicks, your new daily trades are in front of you. Hey, this one looks good! It's a little bit more risk than yesterday's trades had, but look at that profit potential! With a smiling face, the trade is executed.

With a nice start to the trade, you're feeling good and you've moved your stop to breakeven, just like your system said. Surprise piece of news - market reverses - blows through your stop - an “unexpected” loss. Is something wrong with the system? Has the overall market “personality” changed, affecting your system to the Core, rendering all your back-testing irrelevant? Your confidence turns to doubt.

You decide to “watch” the next trade… I mean, isn't it wise to make sure the system gets back on track before you “throw good money after bad?” Isn't that what a conservative trader does? Trade watched. It wins!

In your head, you beat yourself up a little because you know that when you started your “live” trading, you made an agreement with yourself to take the first 10 trades “no matter what”… and here you wimped-out and missed a big winner that would have gotten you even.

What's happening?!

What's happening is that you are out of control. Your emotions are ruling your trading. The above scenario plays out in every trader from time to time.. newbee and veteran alike.

The winning trader senses what is happening and nips it in the bud. The winning trader spend time EVERY DAY, working on “the discipline of trading”. Reads a chapter in his favorite psychological trading book, scans the “ten commandments of trading” that hangs on the wall over his/her desk, listens to his/her mental training software for futures traders… Something… Every Day… before trading begins.



There are many more losing traders than winning traders… and it's seldom about the trading system. In my career, I've come across at least 50 systems that I consider A+, yet I know for a fact that MOST traders that have traded on these systems have lost. Why? They were not in control of their emotions.

Are you?

By Norman Hallett, former CTA/Trader

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Small-cap, mid-cap stocks shine

The market ended the choppy session with miniscule losses. The volatility was high on account of weekend profit booking, but value buying supported frontline stocks at lower level. Metal, consumer goods and realty stocks were star performers of the day. Auto and IT stocks edged lower. DLF surged. Wipro slipped. 17 out of 30 stocks from the Sensex pack were in green.

European markets, which opened after Indian markets, were trading in red. Asian markets, which opened before Indian market, were weak after the assassination of Pakistan’s opposition party leader Benazir Bhutto in nuclear-armed Pakistan increased geopolitical uncertainties. Bhutto was killed on Thursday, 27 December 2007, at a rally in Rawalpindi, raising fears of instability in Pakistan.

India's wholesale price index rose 3.45% in the 12 months to 15 December 2007, lower than the previous week's rise of 3.65%, government data showed on Friday, 28 December 2007. The annual inflation rate was 5.73% during the corresponding week of the previous year. The wholesale price index is more closely watched than the consumer price index, which is published monthly, because it covers a higher number of products and is published weekly.

The 30-share BSE Sensex fell 9.77 points or 0.05% to 20,206.95. The market witnessed a bout of volatility. Sensex hit a low of 20,022.88 in the mid-afternoon trade. At day's low, Sensex lost 193.84. Sensex hit a high of 20,259.45 in early trade. At day's high, Sensex rose 42.73.

The broader CNX S&P Nifty fell 1.80 points or 0.03% to 6079.70.

The BSE Small-Cap index rose 2.16% to 12,901.29 and the BSE Mid-Cap index rose 1.55% to Rs 9,574.57. Both these indices outperformed the Sensex.

Market breadth was strong. On BSE, 2270 shares advanced and 651 shares declined. 32 shares remained unchanged.

BSE clocked a turnover of Rs 8497 crore compared to Thursday (27 December 2007)'s Rs 8286.79 crore.

The NSE's futures & options (F&O) segment turnover was Rs 50436.85 crore, which was lower than Rs 94658.80 crore on Thursday, 27 December 2007.

Nifty January 2007 futures were at 6119.75, a premium of 40.05 points compared to the spot closing of 6079.70.

India’s largest private sector firm by market capitalization & oil refiner Reliance Industries rose 0.14% to Rs 2898.35.

India’s largest private sector bank by assets ICICI bank fell 1.20% to Rs 1227.10.

India's biggest drug maker by sales Ranbaxy Laboratories jumped 1% to Rs 415.60 after it received tentative approval from the US Food and Drug Administration for galantamine hydrobromide oral solution.

Debutante Transformers and Rectifiers (India) settled at Rs 728 on BSE, a 56.55% premium over IPO price of Rs 465 per share. The stock debuted at Rs 701.10, a 50.77% premium over the IPO price. The stock hit a high of Rs 813.75 and low of Rs 685.20.

India's second largest power utility by revenue Reliance Energy gained 0.97% to Rs 2155.30, off day’s high of Rs 2218. The stock moved up on reports Reliance Power in which it holds 50% stake, has edged closer to its mega initial public issue. As per reports, a two-member panel of the Securities and Exchange Board of India (Sebi) office directed that 20% of the equity held the promoter group be locked in for a period of five years, instead of the mandatory three years as per the guidelines on IPOs.

The BSE Metal index rose 2.47% to 19,948.45. It outperformed the Sensex. Tata Steel rose 2.76% to Rs 931.0, Sterlite Industries 1.35% to Rs 1051.95, National Aluminum Company jumped 3.47% to Rs 497.5 and Steel Authority of India rose 2.31% to Rs 279.50.

The BSE Consumer Durables index rose 4.15% to 6,602. It outperformed the Sensex. Videocon Industries soared 10% to Rs 752.10, Titan Industries spurted 3.66% to Rs 1533, and Blue Star jumped 0.37% to Rs 485.

The BSE Realty index rose 3.90% to 12,551.26. It outperformed the Sensex. India’s largest real estate firm by market capitalization DLF moved up 5.31% to Rs 1063.70 on reports the firm plans to raise $5 billion over the next three years by listing five of its business units, including DLF Homes, DLF Retail, DLF Hotels, DLF Utilities and DLF Infrastructure. There are no plans to further dilute equity in group flagship DLF.

India’s second largest real estate firm by market capitalization Unitech spurted 4.18% to Rs 483.80 on reports the company is making an aggressive entry into the booming realty market in the south. It is on the verge of announcing two joint development deals, involving over 1,400 acres of prime land in Hyderabad and Chennai.

Parsvnath Developers surged 7.86% to Rs 457.45, Peninsula Land jumped 4.98% to Rs 143.40, Omaxe gained 4.22% to Rs 573.30 and Indiabulls Real Estate rose 1.71% to Rs 720.

The BSE Auto index fell 0.20% to 5,595. It underperformed the Sensex. Bajaj Auto slipped 2.30% to Rs 2610.95, Maruti Suzuki fell 1.05% to Rs 984.20, Tata Motors declined 0.81% to Rs 730.75, and Amtek Auto fell 0.76% to Rs 425.25. Mahindra & Mahindra rose 0.79% to Rs 834.40.

The BSE IT index fell 0.37% to 4,552.06. It underperformed the Sensex. India’s third largest software exporter by sales Wipro declined 3.52% to Rs 529.95. The stock fell after some reports suggested that Europe-based computer services firm Capgemini has denied takeover talks with Indian rival Wipro. Earlier some reports had suggested that Wipro was preparing a €7 billion bid for taking over Capgemini.

India’s second largest software exporter by sales Infosys Technologies fell 0.47% to Rs 1795.75. The company said during market hours today, 28 December 2007, it would unveil Q3 December 2007 results on 11 January 2008.

TCS declined 1.83% to Rs 1080.05 and Satyam Computers fell 0.40% to Rs 449.60.

Special steel and strips maker Bhushan Steel jumped 3.26% to Rs 1565.50 on reports Japan's Sumitomo Metal Industries has signed a memorandum of understanding (MoU) with Bhushan Steel, whereby the Japanese company will assist the Indian counterpart in its proposed integrated steel plant in Orissa.

Among the mid-caps, Monsanto India surged 20% to Rs 1942, SpiceJet soared 18.74% to Rs 86.50, Gulf Oil Corporation spurted 15.04% to Rs 335, Orchid Chemicals & Pharmaceuticals moved up 14.54% to Rs 294.70 and Bajaj Auto Finance rose 14.04% to Rs 426.5.

Among the small-caps, Suraj Stainless surged 20% to Rs 235.25, Glodyne Technoserve soared 20% to Rs 394.10, Ramco Systems spurted 20% to Rs 214.10, ORG Informatics climbed 20% to Rs 94.90, and L G Balakrishnan & Bros moved up 20% to Rs 43.55.

Reliance Natural Resources clocked the highest turnover of Rs 261.61 crore on BSE. Reliance Energy (Rs 218.30 crore), Transformers and Rectifiers (India) (Rs 193.97 crore), SpiceJet (Rs 179.46 crore) and Essar Oil (171.23 crore shares), were the other turnover toppers on BSE in that order.

SpiceJet registered the highest volume of 2.18 crore shares on BSE. IKF Technologies (1.83 crore shares), Himachal Futuristic Communications (1.70 crore shares), Reliance Natural Resources (1.48 crore shares) and GV Films (1.43 crore shares), were the other volume toppers on BSE in that order.

The December 2007 derivative contracts expired yesterday, 26 December 2007. As per reports, Nifty rollover from December 2007 series to January 2008 series stood at 81% while total marketwide rollover stood at 85%, as on Thursday, 27 December 2007. This compared to Nifty rollover 76% from November 2007 series to December 2007 and marketwide rollover of 83% from November 2007 series to December 2007 series.

In Europe, key indices in France, Germany and UK were down by between 0.14% to 0.39%.

Asian stocks were trading lower today, 28 December 2007. Key indices in Japan, China, Singapore, South Korea and Hong Kong were down between 0.60% to 1.70%. However, Taiwan’s Taiwan Weighted index was up 1%.

US markets declined on Thursday, 27 December 2007, on news of Benazir Bhutto's assassination. The Dow Jones Industrial Average fell 192.08 points, or 1.42%, to 13,359.61. Broader stock indicators also fell. The Standard & Poor's 500 index declined 21.39 points, or 1.43%, to 1,476.27, and the Nasdaq Composite index fell 47.62, or 1.75%, to 2,676.79.

Crude oil was unchanged today, 28 December 2007 around $97 a barrel as an Energy Department report showed that US inventories fell more than expected. Crude oil for February delivery was at $96.91 a barrel, up 29 cents, on the New York Mercantile Exchange. Brent crude for February settlement was at $95.11 a barrel, up 33 cents in London.

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Mkts trade in a narrow band on triple witching day

	Markets trade in a narrow band on the triple witching day. Sensex was up 24 points at 20216 while Nifty was up 11 points at 6082. CNX Midcap Index was up 0.2% while BSE Small-cap Index was up 2.3%.
	Markets trade in a narrow band on the triple witching day. Sensex was up 24 points at 20216 while Nifty was up 11 points at 6082. CNX Midcap Index was up 0.2% while BSE Small-cap Index was up 2.3%. BSE Consumer Durables Index was up 1.8%. BSE FMCG up was 0.9%, in which ITC was up 1.8%. BSE Metals was up 0.9%, in which Nalco was up 9.2%, Tata Steel was up 1.4% and SAIL was up 1.1%. BSE Bank Index was up 0.7%, in which HDFC Bank was up 2.3% and ICICI Bank was up 2.3%. BSE Auto Index was down 0.7%, in which Tata Motors was down 2%. Other Index gainers were Idea Cellular, up 2.9%, Wipro, up 2.6%, Suzlon Energy, up 2.2%. Other Index losers were Satyam, down 2.5%, RPL, down 2%, Ranbaxy, down 1.9%, Sun Pharma, down 1.9%. Non-Index gainers were SCI, up 13%, Kalindee Rail, up 20%, Videocon, up 9%, Suven Life, up 19.4%, Era Construction, up 19.6%, Inox, up 15.4% and Tulip IT, up 15.4%. NSE Advance Decline ratio stood at 5:3. Total market turnover was at Rs 1.27 lakh crore vs Rs 1.19 lakh crore yesterday. FNO Snapshot: Aggressive Rollovers in Momentum stocks. Metals, Oil & Gas, Banking stocks saw strong rollover. Cement, Sugar, Pharma, saw rollovers pick up. Auto Stocks saw low rollovers. Marketwide Rollover was at 81% (prov) vs 83% in Nov and 84% in Oct. Niftywide Rollover was at 73% (prov) vs 75% in Nov and 70% in Oct. Gitanjali Gems Jan futures trades at a 22 point discount. NSE F&O Turnover was at 94658 crore vs 96144 crore yesterday. Nifty Jan Futures ends at a 43 point premium, up ward pressure from long rollers. Star Performers: Shipping Corporation: up 15%; added 16.7 lakh shares in Jan; Rollover 71% Nalco: up 9%; added 4.15 lakh shares in Jan; Rollover at 73% Tulip IT: up 20.6%; added 53000 shares in Jan; Rollover at 71% Aptech: up 6%; added 12.4 lakh shares in Jan; Rollover at 81% Alok Industries: up 6.3%; added 55 lakh shares in Jan; Rollover at 74% High Rollover: Bharat Forge 94.17 Parsvnath Developers 94.16 CMC 94.13 Adlabs 93.78 JSW Steel 93.74 Sesa Goa 92.91 Kotak Mahindra Bank 92.42 Hindalco 92.15 Orchid Chemicals 92.12 Hindustan Construction 91.87 Sun Pharmaceuticals 91.26 Lupin 91.2 Everest Kanto 90.95 S Kumars 90.88 IOB 90.28 Jaiprakash Associates 89.95 Maruti Suzuki 89.07 Andhra Bank 89.02 India Cement 88.42 Reliance Communication 87.86 Reliance Industries 87.67 Low Rollovers: Misc: Nicholas Piramal, Sun TV, Gitanjali Gems, Alstom Projects, Tata Power, VSNL, Dena Bank, Auto: Hero Honda, TVS Motor, Bajaj Auto IT: Satyam Computers, HCL Tech Better than last time: RPL 84% vs 50% (Last time was low, the one before was 85%) Good Rollovers: Parsvnath 94% vs 96% Hindalco 92% vs 91% JSW Steel 93% vs 91% Bank of Baroda 96% vs 93% Weak Rollvers: RNRL 77% vs 85% Ashok Leyland 73% vs 90% TTML 81% vs 87% Hotel Leela 74% vs 83% IFCI 84% vs 91% Dena Bank 59% vs 86% Chambal fert 65% vs 85% Arvind Mills 83% vs 91% Power Grid 80% vs 85% Fresh longs/ Long Rollovers: Metals: Nalco, JSW Steel, Hindalco, Tata Steel, SAIL, Textiles: Alok Ind, Arvind Mills Banks: Bank of Baroda, Yes Bank, ICICI Bank, HDFC Bank Pharma: Orchid Chem, GSK Pharma Misc: IVRCL Infra, Idea Cellular, Adlabs, Punj Lloyd, Misc: ITC, Balrampur Chini, HCC, Power: REL, Power Grid, NTPC Oil & Gas: ONGC, GAIL, Essar Oil, RPL Kalindee Rail: Company expected to benefit from dedicated freight corridor of Railways. Reports say may get contracts worth Rs 10,000 crore over next 5-years. At upper circuit for 2nd day; hits new 52-week high; vol 4x 10-day avg. Noida Toll Bridge: To benefit from strong traffic growth National Capital Region (NCR). India Info sees profit CAGR of 52% over. FY07-10 on 21% CAGR in revenues. India Info has Buy on stocks with price target of Rs 107. Credit Suisse sells 37 lakh shares @ Rs 57.74/sh (1.98%). At upper circuit, hits new 52-week high, vol over 4x 10-day avg. Rico Auto: Mulling building factories in Thailand & China on lower power & infra costs. Close to 52-week high, volumes 6x 10-day average. Suven Life Sciences: Gets US product patent for neuro disorder drug. Expects several other patent applications to be granted shortly. Mercator Lines: At upper circuit for 2nd day; close to 52-week high. Religare puts Buy on Mercator Lines, with target of Rs 177. Era Construction: May have to raise open offer price: NW18. Promoters recently made open offer for 20% stake at Rs 615. Ahluwalia Contracts: Bags order worth Rs 341 cr; still way off 52-week high of Rs 775. Can Fin Homes: Canara Bank hikes open offer price for co to Rs 78/sh: NW18. Shri Lakshmi Cotsyn: Board meet on Dec 31 on raising Rs 160 cr via QIP/FCCB/GDR. Hits new 52-week high but volumes near average. Rice stocks: KRBL: Up on hopes of price hike; wholesale prices up by over 100-150/quintal. At upper circuit, vol over 6x 10-day avg; still off 52-week high of Rs 195. Kohinoor Foods: Up on hopes of price hike; wholesale prices up by over 100-150/quintal. Close to 52-week high, volumes over 12x 10-day average. LT Overseas: Up on hopes of price hike; wholesale prices up by over 100-150/quintal. At upper circuit, hits new 52-week high, vol 3x 10-day avg. Global markets today: Taiwan market stood out in Asian region on back of FIIs flow. Shanghai, Thailand were up over 1% each. Nikkei, Hang Seng end marginally in the red. Japanese economy falls below 10% of world's nominal GDP for the first time since 1982. Goldman Sachs says that Citigroup may cut its dividend by 40% to preserve its capital position. In Taiwan, FIIs net buy equities worth $ 250 million in today’s trade (Prov). FIIs have bought $ 470 million during this week. FIIs have sold $ 4.6 billion in Nov month.

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Nifty January 2008 futures at premium

Turnover in F&O segment declines


The Nifty January 2008 futures were at 6126 at premium of 44.50 points as compared to spot closing of 6081.50. Derivative contracts for December 2007 series expired today, 27 December 2007.

The NSE's futures & options (F&O) segment turnover was Rs 94,658.80 crore, which was lower than Rs 96,144.43 crore on Wednesday, 26 December 2007.

Reliance Energy January 2008 futures were at premium, at 2177, compared to the spot closing of 2134.10.

Reliance Industries January 2008 futures were at premium, at 2945.50, compared to the spot closing of 2893.85.

Essar Oil January 2008 futures were at premium, at 313.50, compared to the spot closing of 307.85.

In the cash market, the S&P CNX Nifty gained 10.75 points or 0.18% at 6081.50.

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Recomendations - ICICI Direct

Recomendations from ICICI Direct

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Sharekhan Stock Ideas

Evergreen

Housing Development Finance Corporation
HDFC Bank
Infosys Technologies
Reliance Industries
Tata Consultancy Services

Emerging Star

3i Infotech
Aban Offshore
Alphageo India
Axis Bank (UTI Bank)
Balaji Telefilms
BL Kashyap & Sons
Cadila Healthcare
Jindal Saw
KSB Pumps
Navneet Publications (India)
Network 18 Fincap
Nucleus Software Exports
Orchid Chemicals & Pharmaceuticals
Patels Airtemp India
Television Eighteen India
Thermax
Zee News
Apple Green
Aditya Birla Nuvo
ACC
Apollo Tyres
Bajaj Auto
Bank of Baroda
Bank of India
Bharat Bijlee
Bharat Electronics
Bharat Heavy Electricals
Bharti Airtel
Canara Bank
Corporation Bank
Crompton Greaves
Elder Pharmaceuticals
Grasim Industries
HCL Technologies
Hindustan Unilever
ICICI Bank
Indian Hotels Company
ITC
Mahindra & Mahindra
Marico
Maruti Suzuki India
Lupin
Nicholas Piramal India
Punj Lloyd
Ranbaxy Laboratories
Satyam Computer Services
SKF India
State Bank of India
Tata Motors
Tata Tea
Unichem Laboratories
Wipro

Ugly Duckling

Ahmednagar Forgings
Ashok Leyland
Aurobindo Pharma
BASF India
Ceat
Deepak Fertilisers & Petrochemicals Corporation
Genus Power Infrastructures
ICI India
India Cements
Indo Tech Transformers
Ipca Laboratories
Jaiprakash Associates
KEI Industries
Mold-Tek Technologies
Orbit Corporation
Punjab National Bank
Ratnamani Metals and Tubes
Sanghvi Movers
Selan Exploration Technology
SEAMEC
Shiv-Vani Oil & Gas Exploration Services
Subros
Sun Pharmaceutical Industries
Surya Pharmaceutical
Torrent Pharmaceuticals
UltraTech Cement
Union Bank of India
Wockhardt
Zensar Technologies

Vultures Pick

Esab India
Orient Paper and Industries
WS Industries India
Cannonball
Allahabad Bank
Andhra Bank
Gateway Distriparks
International Combustion (India)
JK Cement
Madras Cement
Shree Cement
Tourism Finance Corporation of India

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Ahluwalia Contracts (India) Limited

Company Background:
Ahluwalia Contracts is engaged in providing construction related services including; designing, plumbing and project completion. It undertakes construction of projects such as, information technology (IT) parks, retail, multi-storeyed housing complexes, industrial complexes, luxury hotels and hospitals. The company operates primarily in India.

Cliental:

ACIL's clientele includes government and semi-government organisations and corporate houses.
public sectors clients…
P.W.D. - NCT Of Delhi
P.W.D. - Himachal Pradesh
Ministry of External Affairs
Ministry of Health
Ministry of Commerce & Industry
National Thermal Power Corporation(NTPC)
Delhi Development Authority (D.D.A)
Indian Institute of Technology (IIT)
Industrial Finance Corporation of
India (IFCI)
Bharat Petroleum Ltd.
C.P.W.D.
P.W.D. Goa
Delhi Metro Rail Corporation
Ministry of Textile
Ministry For Civil Aviation / Airport
Authority of India
Indira Gandhi National Center For The
Arts (IGNCA)
Housing and Urban Development
Corporation (HUDCO)
India Tourism Development Corporation(ITDC)
All India Institute of Medical Science(AIIMS)
Institute of Labour Development (ILD)
Department of Space & Research
Source: Company

Private Sector
Asian Development Bank
FIAT India Pvt. Ltd.
Tata Consultancy Services
Apollo Tyres India Ltd
Hughes Software Systems
HCL Perot Systems Ltd.
Moser Baer India Ltd
DLF Universal Ltd
Unitech Ltd
Grand Hyatt Hotels
Phoenix International Ltd.
Max India Ltd.
Nikko Metropolitan Hotels
ITC Centre At Gurgaon
Xansa India Ltd
Daewoo Motors (India) Ltd.
Tata Chemicals Ltd.
Tata Projects Ltd.
Mahindra & Mahindra Group
HCL Technologies Ltd.
Samtel Color India Ltd.
Ansals Properties & Industries
A.L.Batra Group
ITC Hotels Ltd.
East India Hotels Ltd.
Apollo Hospitals Enterprise Ltd
Usha India Ltd.
Apollo Tyres Plant At Limda,
Source: Company

Business Outlook:

Having successfully executed projects in the domestic market, ACIL is steadily moving into higher end of infrastructure play, with additional positive comes from the Common Wealth Games in Delhi. Currently, ACIL is doing Rs 7000 mn, Common Wealth Games Village and additional Rs 2500 Common Wealth Games Stadium is in Pipeline. Apart from it ACIL has got a total order book of Rs 30000 mn, which is almost 4.5X FY07 Revenues, executable over next two-half years.

With strong order book position and impressive order pipeline, Management of ACIL is targeting revenues of Rs 10000 mn for FY08E and net profit in the range of Rs 400 mn. At CMP of Rs 328, stock is trading at 66x FY07 EPS of Rs 5. Currently, we do not have any active rating on ACIL.

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Multibaggers - IMP Powers Ltd

IMP Powers is undertaking $ 7 Mn (Rs 30 Cr) expansion plan after which the installed capacity of Transformers would increase from 3600MVA to 6000MVA (67% rise) meters from 164400 units to 314400 units (47% growth). The expanded capacities are expected to be operational by Q1FY09.

IMP Powers Ltd

Investment Rationale

The company is undertaking $ 7 million (Rs 30 crore) expansion plan after which the installed capacity of Transformers would increase from 3600MVA to 6000MVA (67% rise) meters from 164400 units to 314400 units (47% growth). The expanded capacities are expected to be operational by Q1FY09. The expansion is part financed by investment of $ 4.7 million (Rs 19 crore, 11.80 lakh Compulsorily Convertible Preference Shares (CCPS) at Rs 161 per share) by Motilal Oswal Venture Capital Advisors. Brescon Corporate Advisors was the financial advisor to the deal. Further, promoters of the company and Brescon Corporate Advisors Ltd have subscribed to the warrants to finance the balance capital expenditure (7 lakh warrants at Rs 163.90). Post conversion of the warrants, Motilal Oswal Venture will hold 13.75% in the company.

The company is having a strong order book position of Rs 130 crore as on 30th Sept 2007 (1.26x FY07 net sales), executable over next 8-9 months. The company recently bagged order worth Rs 65 crore from a renowned EPC Contractor for supply to Maharashtra State Electricity Board.

The capacity utilization level for the Transformers has witnessed improvement over the past years (FY05: 27.7%, FY06: 38.3%, FY07: 41.9%). Going forward we expect the levels to improve further to 50% for FY07 & 55% for FY09.

The share of exports (FOB) in total sales has increased from 18% in FY06 to 22% in Fy07. The company enjoys 5% higher margin on exports than domestic sales. We expect the share of exports will further increase to 25% in FY08 & 30% in FY09.

The company’s dependence on SEBs has reduced to 50% which is expected to go down further helping the company to reduce its working capital cycle and thus improved margins.

Besides, IMPPL is having land at Kandivli (W) in Mumbai. If it decides to develop it into residential / commercial complex, it will fetch additional money for the company.

Financial Performance

Transformers constitute about 95% of its FY2007 sales. The company has successfully turned around after a bad phase in 2000-2005. Subsequent to the turnaround, it has achieved a CAGR of about 55% in sales over last 2 years. The EBIDTA margins have improved to a current level of 17.9% for FY07 as against a low of 10.1% in FY05 because of growth in sales and operational efficiency.

For the Q1FY08 the company’s Total Income grew by 38.7%, EBIDTA by 46%, PBT by 103% and PAT by 57%. Also the EBIDTA margin improved from 16.9% to 17.9% and PAT margin from 6.9% to 7.9%.

Valuations

At current market price, the stock is quoting around PER 17.9x. On EV/Sales and EV/EBITDA it is available at 2.0x and 11.4x of TTM September 07 earning respectively.

- K.R Choksey

Disclaimer: As per SEBI requirements it is stated that, Kisan Ratilal Choksey Shares & Sec Pvt Ltd., and/or individuals thereof may have positions in securities referred herein and may make purchases or sale thereof while this report is in circulation.

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