Thursday, November 4, 2010



Presenting 5 stock ideas for this Diwali.First 3 for all and the rest only for high risk takers.

* based on the closing price of .3/11/2010

1)  YES BANK                                                 CMP 372.50/-

YES BANK, the new generation, fastest Growing Private Bank in India, is an outcome of the professional entrepreneurship of its Founder, Rana Kapoor who has a brand in the Indian banking industry.  The bank providing all banking services such as Corporate and Institutional Banking, Financial Markets, Investment Banking, Corporate Finance, Treasury operations, Branch Banking, Business and Transaction Banking and Wealth Management business to corporate and retail customers. Yes Bank presents a remarkable record in every operational metrics since its inception like Consistent improvements, year on year in top- line as well as bottom-line growth, industry-best figures on RoE and cost-efficiency with the lowest NPAs.
The bank’s 69.8 per cent business contributes corporate and institutional banking, followed by commercial banking at 19.6 and branch banking at 10.6 per cent, respectively.  For the second qtr ended Sep 2010, Yes Bank reported robust net profit growth of 57.8% yoy and 12.7% qoq to Rs. 176cr, well above street estimates. The Bank’s Advances grew by a strong 15.6% qoq and 86.3% yoy compared to a marginal industry qoq growth of 0.6%. Deposits increased 32.3% qoq and 106.6% yoy compared to 1.6% qoq industry growth. NII registered a 95.8% yoy growth. During the quarter, the bank’s gross NPA ratio stood at 0.2% and net NPA ratio at 0.1%. The bank’s capital adequacy ratio improved to 19.4%, with tier-I capital of 11.0% .

Presently, the bank has 171 branch networks across the country and it has received 91 new branch licenses. The bank plans to have a network of 250 branches by June 2011 and 400 by FY 2012.  The bank successfully raised over Rs 1,170 crore through upper (Rs 640 crore) and lower tier II (Rs 306 crore), and tier I perpetual bonds (Rs 225 crore) in Q2. It is expected a CAGR of 51 % in advances and 56 % in deposits for FY 2010 to 2013.

At the CMP around  Rs. 370, the stock is trading at 20.5Xs its TTM EPS of Rs. 18 and 3.9Xs average book value. It is expected to report an EPS of Rs.30/- by FY 2012 .Considering the Bank’s high growth, Stable asset quality, professional management, moreover the India’s growth story; l YESBANK should register new records in its financial  front as well as in market going forward.


2) SELAN EXPLORATION                    CMP 355.55/- 

Selan Exploration is a Gujarat based Oil exploration and Production Company having rights to develop three proven oil fields in Gujarat – Bakrol,Lohar and Indora.As per estimates the  Bakrol oil field having a reserve of 73 million barrels and Indora  having much more . If we take the entire reserves as 100 million barrels on an extremely conservative basis and the average oil price as $ 75 /barrel , the value of reserve will be around  Rs.30000 Cr. Selan is one of the low cost producer and even after  providing the share of government and deducting the production cost, company is sitting on a gold mine. At a time of comparatively lower oil prices ,as a prudent strategy ,company  now concentrating in more Seismic data acquisition , Processing and interpretation activities  rather than drilling new wells .Result of this can be utilized at a time of better oil prices lately .Company also awarded two more fields namely Ognaj and Karjisan. Since the Oil prices are moving in a narrow range ,oil producing companies are not in limelight for the time being. But it is expected to move to higher level in correlation with the world wide recovery . So it is a perfect fit for true investors with patience for reaping big gains in future. CMP is Rs.355/-
3) ARIES  AGRO Ltd                                  CMP Rs 163.05/-                                                                                                                                 

Aries Agro Limited offers the widest range of products in the micro-nutrient  sector . The company also producing  value added secondary nutrients and water soluble NPK complex fertilizers. Aries recently expanded its product line to cover bio degradable chelates, organic chelates, sea weed extracts, seeds, synthetic chemical pesticides, bio fertilizers, bio pesticides and farm equipments.  During FY 10 the company launched 15 new products, taking its total products tally to 76 brands. Over past many years, Aries has built an extensive distribution network across 24 states, through a network of around 5000 distributors in the country. In addition, it also actively began marketing to institutions and also scaled up its sales under State development and drought/flood relief schemes. Currently, Aries products being sold in 1,75,000 villages located in 375 districts of the country. Aries have one of the largest manufacturing bases of specialty plant nutrition solutions in India.  It has also expanded manufacturing base in overseas. As of the end of 2009-10, Aries has a total manufacturing capacity of 84,600 MT per annum spread across 6 factories in India and an additional 70,000 MT per annum at its 2 Units in Fujairah and Sharjah. This is the largest world class manufacturing base of specialty plant nutrition solutions set up by any Indian Company.
In the current fiscal year the company plans to launch an additional 6 products. This will include further specialty plant nutrients, farm equipment and plant protection products, adding on to its already extensive range of 76 brands. The GoI’s favorable policies to improve food production using scientific methods and most modern techniques opens immense growth potential for the fertilizers and the micronutrients business in the country and Aries being one of the largest and the most established player in micronutrients space is expected to benefit from the same. CMP is  Rs.163/

                              HIGH RISK BUYS        

If you are not interested to take very high risk , just ignore the below mentioned two companies

4) KREBS BIOCHEMICALS             CMP Rs.37.95/-
Krebs Biochemicals was a darling of investors in the first half of 2000 and touched a high of Rs.276 /- in 2004. This is the only listed pharma company with equity investment  of two pharma majors , Ranbaxy laboratories and Dr.Reddy’s lab .Interest of both these biggies itself is a testimony for the potential of Krebs. This is one of the very few pure listed Active Pharma Ingredient(API) makers using the fermentation technology. The only another pure listed player is Biocon. This Hyderabad based company is promoted by Mr.RT Ravi  who has over 34 Years of experience in Applied Biochemical Research. Krebs had two units ,one in Nellore and other in Vizag .The unit 1 was dedicated for the production of Ephedrine and  Psuedophedrine and unit 2 for Statins like Lovastatin and Simvastatin. The complexity of fermentation technology is a real entry barrier into this industry .
                                                In 2004, Krebs posted a turnover of Rs.101 Cr ,net profit of Rs.13.5 Cr and an EPS of Rs.23/- Its misfortune started in the form of the  arrest of some people related with a narcotic racket overseas. One of the products of the company ‘Pseudoephedrine’ is used in medicines for cough and cold .On the other hand it can also be used to produce ‘Methamphetamine’ – a narcotic drug. After the above mentioned arrest ,the authorities tracks the source of  Pseudoephedrine which end with Krebs biochemicals. Even the company repeatedly affirm that they are selling the product only to the bulk buyers overseas and not aware  about the end users, the drug authorities cancelled the license for manufacturing  ‘Pseudoephedrine’.This incident badly affect the entire operations of the company and it moves to red. Its diversification to some unrelated fields also adds fuel to the fire.

Current Situation

Company is Shy to share information with any outsider ,so no chances to get direct information from the management about the new developments.. So I am  forced to make conclusions based on the available information’s in the public domain and certain assumption.Currently ,the day to day operations are  managed by Mr Avinash Ravi  son of the main promoter R T Ravi. Avinash is a Bio process Engineer from the university of New Southwales,Australia. He has done his project work in Fermentation and Laboratory Control from Suntroy Brewary, Queens Land, Australia and done his student Exchange Programme from University of Alberta .Canada. He is specially qualified in Production and purification of Biotechnology products Monoclonal Anti Bodies, R-DNA Products..etc. Now,company stopped its all non core activities and concentrating only in pharma business. For the past may years company posted losses and the reason as per the latest annual report  is the non operational status of  its plant 1 located at Nellore. Company also  expressed its optimism to find out some arrangements with big pharma companies to re start the production of Unit 1 . What catch our attention is the performance in the second quarter of current FY .In September qtr company doubled its turnover from Rs.10 Cr to Rs.21 Cr and reduced the loss from Rs.6 Cr to Rs.1.8 Cr . It is a fact that the skills of the promoters and infrastructure of the company is a big asset and it is not easy to replicate in an industry like Fermentation and Biotechnology . As I have mentioned in the beginning ,interest of two pharma majors is not a co-incident in this high entry barrier industry.If the latest financial performance is any indication ,some surprise may happen in this company by next Diwali. Don’t forget, all of these are depends on lot of  IF’s and let us hope  the old good days will come  back in future for Krebs .

Read Below some articles on the company  :

5) CENTUM ELECTRONICS              CMP RS 134.40/-           

Centum electronics is a Bagalore based company
promoted by Mr Apparao V. Mallavaravu and engaged
in the business of designing and manufacturing of
electronic systems,sub-systems and components.
The  Singapore based multi national EMS giant
Flextronics is also holding  about 5% stake in
Centum Electronics. Recently company merged another
company of the same management into itself which was
in the business of  Electronic manufacturing
Services (EMS) and Printed Circuit Board  Assembly.
The new entity’s products are used in industries
like Space,  Defense, Aerospace,Communications and
Automotive.It also have another  subsidiary in
the name of Centum-Rakon which is a joint venture
between Rakon Limited,New Zealand .Centum Rakon
is one of the largest  manufacturer of
frequency control products in India . Centum’s
main  business includes the manufacturing of
Signal Conditioners,  Multiplexers,
Relay Drivers, Power Processing Units,
Control Electronics  Modules,
Sensor Electronics Modules and Crystal Oscillators
including high-end SPXO, VCXO, TCXO and OCXO .
In India ,company is expecting
more  orders for their products and a bright
future due to the increasing  participation of
private sector in Defense arena .
Interest of  Flectronics in this company is
helping it to tap the international  opportunities .
Recently company got some big orders
from Alcatel and  Ericsson ,and it is planning
another factory in Bangalore to meet the improving
order flow from overseas.Flextronics is reportedly
planning  to invest another Rs.25 Cr in Centum
Electronics to increase the  capacity .
For the September quarter ended Centum posted
a turnover of  Rs.43 Cr , net profit
of Rs. 1.61 Cr and an EPS of Rs.1.30.Company
is  expected to perform well due to the revival
in western economies  ,increasing
interest of private sector in Defense and
Space in India, and new commitments of
Flextronics .Long term investors may
consider  at CMP of Rs.134.4/-


  1. After JK AGRIGENETICS now it is turn of HB Portfolio Ltd.

    At current price of around Rs. 42 market cap of HB Portfolio Ltd. is around 50 crores. As per annual report 2010 company has Cash & Bank Balances more that 14 crores(Precisely Rs 140643338) on consolidated balance sheet . You can access annual report from company's website.So effective market cap after reducing cash is 36 cr. Company does not have any debt .Can you imaging how much stocks and mutual fund unit this company hold ? As on 31st march 2010 value of stock portfolio is 185 cr (Rs 185,13,13,967) and mutual fund units of 10 crores (Rs 9,98,89,044) . Company is also having unquoted investment worth 39.29 crores (Rs 392897303) in associates companies at book value. Happy Diwali . can you please give me your input about HB Portfolio Ltd. For more details refer blog .

  2. Hi Valuepick ji,
    Happy Diwali . I am big fan of your value pick . Specially I made good profit in JK AGRIGENETICS .
    can you please give advise on HB Portfolio Ltd .

  3. Happy Diwali Valuepick.......

    Hats of really find real gems and may god bless you for all the selfless service you have been doing.
    Thanks Buddy...You r a gem of a person.

    Vikas Karunakaran

  4. Dear Mahendra

    We have three types of holding cos here.First one is ,companies holding shares of group companies only and no other business.Second one is ,companies holding shares of other companies for an investment purpose.Third one is company's holding shares of group cos or other companies but having another main business.

    In the first case ,most probably ,shares of group cos will not sold by any reason for taking a profit and only dividend from the shares of group cos are the main source of income.Even if the value of investment is very high on paper share holders will not get anything till the end ,but only with dividend ,if any declared.
    In the second case,This type of companies are better to called as Investment companies than holding companies.Such companies holding shares of other companies as part of their regular investment business.They will sell these shares and make profit and re-invest the money in another company.But in our country ,such company's are not interested to share any such big profits with the share holders through higher dividend,bonus...etc.
    In the third case, other business plus investment as in the case of JK Agri,I feels it is the best case.A promising business with huge un realised value in its books.That is why I like JK Agri than many of so called holding cos.Such company's can show growth from their main business itself.

    In most cases , holding cos will came to limelight only at a time of takeover chances,Buyback offers ..etc.Otherwise ,management of such companies should change their attitude and share profits liberally with it share holders,to make them more attractive.Such a trend is not in India till now,that is why many of our holding companies are not catching market fancy as in the case of western world .

  5. Dear Vikas

    Thanks and Happy Diwali

  6. Hapy diwali

    good picks,good to study too

    Apreciate your effort


  7. Dear valueji

    i also do funda investing,a mallu, ah ah ah, the high risk high gain category i am invested in TRANSGENE BIOTEK.please delete this message if this is not apt to put it across,once again happy diwali....

  8. dear value picks,

    i am regular visitor to your blog. please comment on shrenuj diamonds. 90% promotor holding with lot of investments in stocks and book value at 300.

  9. Dear Valupicks,

    Whising u very Happy & Prosperous DEEPAWALI


    DFM is rocking;so is KSCL&so is JK Agri,Cosmo Ferrite,... list seems endless.

  11. Buy Govind rubber, news that it is going to merge with Balkrishna industries. The news will be out soon. ....Happy diwali

  12. Readers are advised to take decisions only after due diligence and not on the basis of any rumors, even if it is published in this blog as posts or comments



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