Scripscan:Surya Chakra Power Corporation Ltd
Code:532874
cmp:3
Story:The company is a power producer basically a biomass based power generation company.Now,Revenue and earnings potential from biomass-based power generation in our country is not very attractive and the company has no experience in this business.The company knows it too and thus at present it is in the process of establishing solar power plants in several States, including Madhya Pradesh and Orissa, and a coal-based plant in Orissa.The main fuel for the biomass plants is agricultural waste such as rice husk and cotton stalks.The biggest disadvantage is that this is the maiden foray of the company into this business.The company or its subsidary has power trading license,Though there is good scope in the power trading business, it may be difficult for a small player to break into the industry, which has such major players as PTC India and NTPC Vidyut Vyapar Nigam.The only way to make money will be to increase trading volumes.It is doubtful if SPCL will be able to do that.Now as far myself is concerned,a visionary entreprenur backed by a solid pedigree team is everything for me.I would buy a company with huge losses,huge liabilities,bankrupt one bought by an influential man rather than buying a company with modest financials,good background but run by dull minded and lethargic owner.The promoters of SPCL were earlier in the aquaculture business and two of their listed companies — Suryachakra Sea Foods and Kalyan Sea Foods — fell into difficult times when the aquaculture projects were banned by the Supreme Court in 1996. These companies were subsequently delisted by the BSE, and the Securities and Exchange Board of India slapped penalties on them for non-compliance. Some cases are also pending in different courts against the promoters and some of the group companies for not repaying loans, including one filed by the Marine Products Export Development Authority (MPEDA).Maybe the promoters would do something great ths time,maybe all the projects of the company would fructify and reap huge benefits for the stakeholders,maybe surya chakra would be a household name among the small retail investor fraternity.Considering all these,I rate a hold rating on the counter.
Tuesday, December 27, 2011
Vikash Metal & Power Ltd:Buy/sell/hold,growth prospects and recomendation,news and results,target price and analysis
Scripscan:Vikash Metal & Power Ltd
Code:532677
cmp:20
Story:The company manufactures and trades sponge iron and ferro alloys. Over the past few years, VMP's performance has remained subdued. Low capacity utilisation and thin margins appear to have affected the business.A number of other companies in the Impex group (run by the promoters), mainly into trading ferro alloys, have also shut operations after running up losses for several years.The pricing environment does not offer a great degree of comfort. Sponge iron prices, after shooting though the roof last year, have cooled off.Shortage of coal and iron ore (the principal raw materials for producing sponge iron) in the medium term is likely to provide a stable outlook for sponge iron prices.The pricing effect is likely to be more pronounced in the stainless steel market where the demand has been sluggish in the last few months and may take a while before it picks up. Considering this, the company's ferro alloy plant, is expected to contribute to volume growth.Owing to its small size and scale of operations, limited geographical presence and absence in downstream operations, VMP may find it difficult to withstand any cyclical downturn.Consolidation in the domestic steel sector, which is likely to change the industry dynamics in the long term, also remains a threat.Growth in terms of value, is however, likely to be flat because of lower realisations. Given the stiff valuation, a lacklustre performance, tightening pricing environment and a high level of gearing, VMP may not provide an attractive investment oppurtunity.Exit and move on to better bets.
Code:532677
cmp:20
Story:The company manufactures and trades sponge iron and ferro alloys. Over the past few years, VMP's performance has remained subdued. Low capacity utilisation and thin margins appear to have affected the business.A number of other companies in the Impex group (run by the promoters), mainly into trading ferro alloys, have also shut operations after running up losses for several years.The pricing environment does not offer a great degree of comfort. Sponge iron prices, after shooting though the roof last year, have cooled off.Shortage of coal and iron ore (the principal raw materials for producing sponge iron) in the medium term is likely to provide a stable outlook for sponge iron prices.The pricing effect is likely to be more pronounced in the stainless steel market where the demand has been sluggish in the last few months and may take a while before it picks up. Considering this, the company's ferro alloy plant, is expected to contribute to volume growth.Owing to its small size and scale of operations, limited geographical presence and absence in downstream operations, VMP may find it difficult to withstand any cyclical downturn.Consolidation in the domestic steel sector, which is likely to change the industry dynamics in the long term, also remains a threat.Growth in terms of value, is however, likely to be flat because of lower realisations. Given the stiff valuation, a lacklustre performance, tightening pricing environment and a high level of gearing, VMP may not provide an attractive investment oppurtunity.Exit and move on to better bets.
CESC Ltd:Buy/hold/sell.analysis/outlook and recomendation
Scripscan:CESC Ltd
cmp:195
Code:500084
Story:CESC is a fully integrated power utility engaged in the generation and distribution of electricity across 567 square kms of licensed area in Kolkata and Howrah in West Bengal. CESC is also operating a retail chain of 208 stores through its subsidiary Spencer`s Retail (SRL). SRL has been incurring losses for the past five years and has dented CESC`s core profitability by 42% in FY11. However, the retail business has already started earning at store level and I expect it to breakeven at corporate level by FY14E.CESC is one of the cheapest utility stocks available in the Indian equity market. One of the key reasons for the lower valuation is the concern related to loss in its retail business. CESC`s core regulated business is fully secured in the terms of fixed ROE, secured fuel availability and power off taking agreements.I believe future growth would come from capacity expansion through SPVs, expected turnaround in retail business and commissioning of premium mall within a year. The company is expected to deliver CAGR of 14% and 31% in consolidated revenues and profitability over FY11-FY13E.I recommend BUY on CESC with a target price of Rs 346 on a duration of two years, based on SOTP Valuation approach. At CMP the stock is trading at P/E of 5.1x FY13E EPS and P/BV of 0.44x its FY13E book value on consolidated basis.
cmp:195
Code:500084
Story:CESC is a fully integrated power utility engaged in the generation and distribution of electricity across 567 square kms of licensed area in Kolkata and Howrah in West Bengal. CESC is also operating a retail chain of 208 stores through its subsidiary Spencer`s Retail (SRL). SRL has been incurring losses for the past five years and has dented CESC`s core profitability by 42% in FY11. However, the retail business has already started earning at store level and I expect it to breakeven at corporate level by FY14E.CESC is one of the cheapest utility stocks available in the Indian equity market. One of the key reasons for the lower valuation is the concern related to loss in its retail business. CESC`s core regulated business is fully secured in the terms of fixed ROE, secured fuel availability and power off taking agreements.I believe future growth would come from capacity expansion through SPVs, expected turnaround in retail business and commissioning of premium mall within a year. The company is expected to deliver CAGR of 14% and 31% in consolidated revenues and profitability over FY11-FY13E.I recommend BUY on CESC with a target price of Rs 346 on a duration of two years, based on SOTP Valuation approach. At CMP the stock is trading at P/E of 5.1x FY13E EPS and P/BV of 0.44x its FY13E book value on consolidated basis.
Indiabulls Power Ltd:Future growth prospects and outlook,buy/sell/hold,recomendation and analysis
Scripscan:Indiabulls Power Ltd
cmp:8
Code:533122
Story:Indiabulls Power has a very high-risk profile for the average retail investor. The company is to start generating cash flows only after 2012. It is planning to set up 6,615-MW of thermal power generation capacity at a cost of Rs 31,052 crore in the next four years.Also, “the company is yet to arrange fuel linkages for all its projects, except for the Amravati Phase 1 project which is to come up by June-September 2012. Further, the company lacks operating history and experience in power generation which increases the doubt over its ability to execute projects of such mammoth scale.It is better, therefore, to avoid this stock at the moment, and instead watch the company’s performance for some time before taking a call.
cmp:8
Code:533122
Story:Indiabulls Power has a very high-risk profile for the average retail investor. The company is to start generating cash flows only after 2012. It is planning to set up 6,615-MW of thermal power generation capacity at a cost of Rs 31,052 crore in the next four years.Also, “the company is yet to arrange fuel linkages for all its projects, except for the Amravati Phase 1 project which is to come up by June-September 2012. Further, the company lacks operating history and experience in power generation which increases the doubt over its ability to execute projects of such mammoth scale.It is better, therefore, to avoid this stock at the moment, and instead watch the company’s performance for some time before taking a call.
Saturday, December 24, 2011
Orient Green Power Company Ltd:-Buy/sell/,growth prospects and recommendation,news and results,target price and analysis,views and outlook,multibagger
Scripscan:Orient Green Power Company Ltd
Code:533263
Cmp:8
Story:Orient green power is one of India's leading renewable energy producers with 213 mw of installed capacity running. It currently operates four wind farms with aggregate installed capacity of 172.5 mw - 85% of which is in Tamil Nadu and the rest in Andhra Pradesh.It also operates five biomass plants and one biogas plant with aggregate installed capacity of 40.5 mw in Tamil Nadu, Maharashtra and Rajasthan.It has a diverse customer base with a mixture of off-take arrangements.Its customers include SEBs, distribution companies, private commercial and industrial consumers and a power trading company. It benefits from the support and commitment of Shriram EPC Limited ("SEPC"), one of the promoters, through access to SEPC's operational expertise, experienced technical staff and an increased ability toaccess a network of suppliers and customers based on the strength of SEPC's brand. It has also engaged SEPC as the turn-key contractor for most of the biomass projects.The company provides a unique green power exposure in India. Government policy appears supportive, setting the renewable generation target at 15% of the total power generation mix in 2020.While the target may be bullish, it supports positive pricing policy over the medium term.Fundamentals of the sector are very strong given the fast growing energy demands of an economy growing at a rate of 8-9%.OGPL doesn’t have any direct comparable.Its returns are heavily dependent on government policy and regulations, thus, the company is more comparable to regulated power utilities. The cmp is at a discount to its bookvalue which is nearly unheard of in the sector.Its peer regulated power utilities are priced at 1.4-2 times of book value.Aggressive capacity expansion will fuel the topline growth for the company.Orient green power at 400crs marketcap or at 8rs is a buy for me.One should have a horizon of 3-5 years though to reap best benefits
Code:533263
Cmp:8
Story:Orient green power is one of India's leading renewable energy producers with 213 mw of installed capacity running. It currently operates four wind farms with aggregate installed capacity of 172.5 mw - 85% of which is in Tamil Nadu and the rest in Andhra Pradesh.It also operates five biomass plants and one biogas plant with aggregate installed capacity of 40.5 mw in Tamil Nadu, Maharashtra and Rajasthan.It has a diverse customer base with a mixture of off-take arrangements.Its customers include SEBs, distribution companies, private commercial and industrial consumers and a power trading company. It benefits from the support and commitment of Shriram EPC Limited ("SEPC"), one of the promoters, through access to SEPC's operational expertise, experienced technical staff and an increased ability toaccess a network of suppliers and customers based on the strength of SEPC's brand. It has also engaged SEPC as the turn-key contractor for most of the biomass projects.The company provides a unique green power exposure in India. Government policy appears supportive, setting the renewable generation target at 15% of the total power generation mix in 2020.While the target may be bullish, it supports positive pricing policy over the medium term.Fundamentals of the sector are very strong given the fast growing energy demands of an economy growing at a rate of 8-9%.OGPL doesn’t have any direct comparable.Its returns are heavily dependent on government policy and regulations, thus, the company is more comparable to regulated power utilities. The cmp is at a discount to its bookvalue which is nearly unheard of in the sector.Its peer regulated power utilities are priced at 1.4-2 times of book value.Aggressive capacity expansion will fuel the topline growth for the company.Orient green power at 400crs marketcap or at 8rs is a buy for me.One should have a horizon of 3-5 years though to reap best benefits
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