Information Bite by Prahasi Paper Pvt Ltd - [private circulation. Weekly Newsletter] - email: information.bite@gmail.com A successful man is one who can lay a firm foundation with the bricks others have thrown at him. --David Brinkley VOL. 1 ISSUE 43 14571q 619 4348 q 189 21 2008 INFLA TION 8.75 Weeks Change June Mkt fall leaves a slew of undervalued stocks: It will be hard to find other spheres of human interest where the tide turns as fast as the stock markets. The India growth story ruled the roost till January ’08. That seems like distant past. And, the present is marred by concerns of slowing growth and rising inflation. The difference between the immediate past and present is that the stock market has lost almost one-third of its market capitalisation. Surely, these are the toughest of times to say anything about the future course of the market. However, every sharp fall leaves behind a slew of undervalued or discounted stocks. But, what it does not leave behind is the optimism, which was available in abundance when the market was scaling new highs every other day.We must warn investors that nothing can be said about the near term outlook of financial markets, as the general elections are round the corner, which may add to the volatility even further. The real estate stocks are extremely volatile, as they are still in the nascent stages and there is no consensus as to how to value such stocks. The dynamics of sectors like petroleum, capital goods, banking, metals, auto, pharma and FMCG have also changed in the past few months. Petroleum is the most talked about sector these days, as crude oil prices have soared above $135 a barrel and are expected to touch $150 soon. But, the profitability of government-owned petroleum companies is determined by the government’s policy, which is right now tilted towards keeping the prices low for retail consumers. Capital goods is another sector on the firing line. The market expects the sector’s growth to be adversely affected as the investment cycle peaks.This is backed by the fact that capacity addition in the power sector continues to move at a brisk pace Major capital goods companies such as Larsen & Toubro (L&T) and Bharat Heavy Electricals (BHEL) are still overflowing with bulging order backlogs. However, the rising prices of metal and other industrial commodities are a concern for the industry and may dent its profitability in the near-to-medium term. Banking is another industry, which was growing at healthy rates but has now hit a roadblock. Only those banks will do well which can change their asset mix by focusing more on high-yielding assets and have well laid-out plans to reduce their cost of funds. The other victim of rising interest rates is the auto sector. It is passing through a sluggish phase, as rising input costs compress the margins in a stagnant or slow growing market. However, there are a few positives. Average steel consumption in India stands at 40 kg per capita, which is far lower than the global average of 139 kg per capita. International Iron & Steel Institute (IISI) expects global cont... 1 cont... steel demand to grow at around 7% globally and 10.5% in India for the next two years. Hence, it’s no surprise that most Indian steel makers have large expansion plans. Inflation has turned out to be beneficial for the FMCG sector, as rising prices provide ample opportunities for leading players to further beef up their profit margins. A portfolio of strong brands enables these companies to successfully pass on the cost inflation to consumers. Apart from FMCG, pharma is another defensive sector. The not-so-good outlook of India Inc notwithstanding, investors should consider picking up reasonably discounted stocks. Some of the Stocks are: Jindal SAW, Bhushan Steel, Thermax, ABG Shipyard, OBC to name a few. a India’s growth rate can jump to 10 pc: Kamath The Indian economy is on course to achieving a 10 per cent growth rate “over a sustained period”, India’s most powerful private sector banker said today. The remarks by ICICI Bank CEO K V Kamath came after Commerce and Industry Minister Kamal Nath told a gathering on Wednesday night that recent inflationary pressures had caused growth to dip by one per cent to 8.5 per cent. Kamal Nath, who was supposed to have addressed today’s meeting, cut short his visit to London to attend to urgent business back home. Another absentee at the event was Planning Commission Deputy Chairman Montek Singh Ahluwalia, who was awarded an Oxford doctorate on Wednesday and is scheduled to leave for India on Friday. Kamath told a meeting of prominent Indian and British businesspeople and entrepreneurs in London that the biggest driver of the Indian economy was the service sector, which accounted for 60 per cent of India’s gross domestic product (GDP) and was growing at the rate of 10 per cent. Neither the proportion of the service sector in the economy nor its rate of growth had shown any signs of dipping and were expected to remain roughly at the same levels in the future, said Kamath. Kamath said that another reason for basing his 10 per cent projection was that the Indian manufacturing sector was poised to spring back “very strongly” after a period of “deep pain” from 1996 to 2002. “It is now an entity that is lean, financially well-structured and with a global mindset,” he said. However, he said that some inflationary pressures and, what he called, “environmental issues” could slow down growth in the short term. (IANS) a Larsen and Toubro bags orders worth Rs 10 billion Engineering and construction heavyweight Larsen and Toubro (L&T) has bagged orders worth Rs 10 billion for supplying high-tech equipment and systems in the first two months of this quarter, the company said today. Major local contracts include orders to supply power plant equipment to Coastal Gujarat Power Limited, a Tata Power subsidiary, and critical reactors to HPCL Mittal Energy’s Bhatinda refinery project. Export orders include supplying coke drums to Kuwait National Petroleum, high-pressure heat exchangers to Petroleo Brasileiro of Brazil, ammonia converters to UHDE in Germany and reactors to PTT Asahi Chemical Company in Thailand. The orders were bagged against competition from Italian, Japanese and Chinese manufacturers, the company said in a statement. It has in the past supplied critical reactors and high pressure heat exchangers to refinery and petrochemical majors in the US, Canada, Europe and China. The projects would be executed by L&T’s heavy engineering division at its manufacturing units at Powai, Mumbai and Hazira, Gujarat. L&T is upgrading its Hazira unit; it’s also setting up a new unit at Oman, its senior executive vice-president M V Kotwal said in the statement. (IANS) a 2 GMR awards toll project contract to Allied Digital Allied Digital Services Ltd (ADSL), an IT infrastructure management services provider, has bagged a Rs 200 million contract for implementation of toll collection and traffic control solution from leading developer GMR Projects Pvt. Ltd. GMR has contract of developing four national highway awarded by the National Highway Authority of India (NHAI) that includes the Ambala-Chandigarh Expressway, Jadcherala Expressway, Pochampally Expressway and GMR Ulundurpet Expressway. ADSL will implement and manage IT infrastructure, intelligent video surveillance, unified communi- cation, automated access traffic controls, and optical scanners for vehicle classification for all the four location, which will be completed by the end of this year. “Infrastructure companies are showing great interest in IT players to provide infrastructure solutions for their growing business needs,” ADSL chairman and managing director Nitin Shah said. “In India, the toll market plays a significant role in this sector and is expected to grow substantially, especially in the light of road projects.” “The toll market appears very attractive in terms of sheer size and growth potential for the IT industry. It will undoubtedly be a booming business over the next 10 years”, he added. a Biz-QUIZ: . How do we better know the company J.W.Foster and Co.? a.) LOTTO b.) NIKE c.) REEBOK d.) PUMA Analysts question Ranbaxy-Pfizer deal: No one expected the Lipitor settlement with Pfizer to trigger a massive slide on the Ranbaxy stock. It fell 7% on Thursday. Analysts believe Ranbaxy is left with very little to offer its shareholders and so many investors are selling the stock. “Most analysts have taken the upside of Lipitor in 2010 earnings but that is not going to happen as there is a delay of one year. It will now be launched in Dec 2011. Revenues will occur only for one month in 2011 so most analysts will downgrade it,” said Ranjit Kapadia, Pharma Analyst, Prabhudas Lilladher. Earlier Ranbaxy was a hot favorite because Malvinder Singh owned the company. It also had the potential to produce Lipitor exclusively in 2010 but now this has been postponed. Ranbaxy was also considered a solid generic drugs company. But now Ranbaxy’s owner, Malvinder Singh, will only be a manager and analysts are questioning his dedication to the firm. Lipitor has gone off to Pfizer’s advantage and the generics business has been sold to Daiichi. While Singh is a rich man after striking the deal, the shareholders are certainly not happy that their company has very little to offer now. “A subsector within health care is pharma and Pfizer being a part of that is one of the least attractive areas to be invested in right now,” said Vinny Catalano, President & CEO, Blue Marble Research. While most brokerages downgraded the stock on Thursday, many are even asking if Malvinder Singh has any interest left in Ranbaxy. There’s buzz once again that Singh is already looking at turning Religare into a bank and expanding his other small businesses too. a 3 KPO business may touch $10bn mark by 2012: ASSOCHAM • The KPO sector is estimated at $4 billion and it has grown at around 15 percent in the last few years • The Indian Knowledge Process Outsourcing (KPO) industry is expected to be worth $10 billion by 2012 • KPO industry is facing stiff competition from countries like the Philippines, Russia, China, Poland and Hungary • There is a need to create new pool of KPO workers from emerging domestic knowledge-based industries such as biotechnology and nanotechnology Knowledge process outsourcing (KPO) is a form of outsourcing, in which knowledge-related and information-related work is carried out by workers in a different company or by a subsidiary of the same organization, which may be in the same country or in an offshore location to save cost. Unlike the outsourcing of manufacturing, this typically involves high-value work carried out by highly skilled staff. KPO firms, in addition to providing expertise in the processes themselves, often make many low level business decisions—typically those that are easily undone if they conflict with higher-level business plans. As of 2007, most US organizations were hiring foreign professionals under H-1 visas to do jobs in the USA for several years, after which they would return to their home countries as managers to train and supervise others, continuing to report to their former business units. The Indian Knowledge Process Outsourcing (KPO) industry is going to reach $10 billion by 2012, according to the Associated Chambers of Commerce and Industry of India (ASSOCHAM) report released Tuesday on 17 June 2008. The KPO industry is set to grow at the rate of 25-27 percent according to the report on ‘Future Course of KPO Industry’. At present, the KPO industry is estimated at $4 billion and it has grown at around 15 percent in the last few years and this industry is dominated by professionals of management, medical and engineering. ASSOCHAM president Sajjan Jindal said that there is a need to create a new pool of KPO workers from emerging domestic knowledge-based industries such as biotechnology and nanotechnology. “In India, the KPO industry is banking on availability of this talent pool to fill up its seats, but now they are facing a supply crunch”, Jindal added. A large number of talented young people have joined in biotechnology and nanotechnology areas for career excellence. The study says that overseas clients are hesitate to give KPO work since there is no security frameworks in Indian KPO industry, Few companies giving their work with ways to secure information since India’s cost advantage and less competition a combola & quizes the next Combola session starts on 30th june 2008. heres wishing all of you all the very best! continue to participe in our weekly monday quizes and win gift vouchers. Disclaimer: This document is not for public distribution and has been furnished to you solely for your information and must not be reproduced or redistributed to any other person. Persons into whose possession this document may come are required to observe these restrictions. Investing or trading in stock markets is a high risk activity. Those who cannot afford to risk their money should refrain from dealing in stocks. The author has no vested interest in any of the stocks mentioned. He and/or his close associates may or may not be having positions at the time of preparing this document. It is to be understood clearly that the articles have been written purely for informative purposes only and the author cannot take any responsibility whatsoever for transactions, if any, entered into by the reader. The author does not guarantee that the projected targets will be achieved. biz quiz answer C. 4