Rising Inflation, Spiking Crude Oil, Spiralling food prices, Rising Commodity prices are few of the tough tasks faced by Indian Economy in the last few months and the impact is likely to continue for the next 3-6 months.
The worst hit sectors during this period are Realty, Banking, Infrastructure, Aviation, Capital Goods, Consumer Electronics, Automibles, Textiles, Investment & Finance, Cement, Logistics, Retailing.
Least hit sectors include Telecommunications, Power, Media.
No hit sectors include IT, Sugar, Hotels, Pharma, Shipping.
Good for sectors like FMCG, Food, Oil Exploration, Fertilizers, Alternative Energy Companies(Solar, Bio Fuel)
So how to ride the next 6-9 month investment cycle ?
Though we always believe that sentiment is what that drives Indian Markets instead of looking at the fundamentals and sectoral space. But markets tend to recognize the same quickly once the steep fall slows down.
Lets look at the best companies from the above mentioned best Sectors during the troubled times. Remember the accumulation bands might seem a bit higher. Keeping the market situation we have mentioned the same. Please start accumulating slowly.
Food (Edible Oils) : The Indian vegetable oil economy is the world’s fourth largest after the US, China and Brazil.India imports half of its edible oil requirement, making it the world’s third-largest importer of edible oil.
1. KS Oils is an excellent pick from this space. About 14 producers of vegetable oils, including Gujarat Ambuja, KS Oil, Liberty Oil, Pranab Agro and Betul Oil, have formed a consortium to acquire 10,000 hectares of farmland in Uruguay and Paraguay to cultivate soybean, maize and sunflower. India Imports 3.8 million tonnes of palm oil. KS Oils bought 50,000 acres of palm plantation in Indonesia and plans to import 80,000 tonnes of the oil into India. But the fruits from Indonesia plantation will take 2-3 years though. Recently, the Indian government reduced the import duty on crude palm oil to 20 per cent from 45 per cent, while that on refined palm oil was trimmed to 27.5 per cent from 52.5 per cent to help curb inflation. KS Oils Ltd sees revenue rising to 32 billion rupees due to a rise in demand, following import duty cuts in mustard oil. The company had earlier targeted revenue at 30 billion rupees. The company expects net profit of 2 billion rupees in FY09.
Very Strong Accumulate : Rs 35-53
2. Ruchi Soya is the flagship of the Ruchi Group and it is one of the largest agribusiness company in India. It crushes about 25% of total soya crop in India and the company has also learnt to be scouting for palm cultivation in Malaysia and Indonesia and agriculture as a sector looks very promising in the long run. It has a refining capacity of 2.1 million tonnes per annum (mtpa) and crushing capacity of over 2.9 mtpa, the largest in the country. Nutrela and Ruchi Gold are the flagship brands of the company. It also has a portfolio of health oil variants and soya foods. It has recently forayed into health drinks.
Very Strong Accumulate : Rs 70-90
FMCG : Hindustan Unilever is a sound and stable investment during these times. But we do not expect major returns in the stock though downside is limited. Other good stocks in this space include Marico, Colgate. Better to avoid this space though limited downside as the returns are not expected to be worth it.
Oil Exploration/Production Companies : Cairns India and ONGC are two prominent players in this space. We believe Cairns India is likely to get the better among the two in terms of absolute returns. Markets have linked the Cairns India stocks price movement to the Internation Crude Oil prices. But soon the stock will be de-coupled from the Crude oil price movements.
Very Strong Accumulate : Rs 230 - 280
Dark horse in this space Reliance Petroleum.
Accumulate : Rs 150 - 175. Production expected to start around september. Stock price likely to race ahead and downsides are limited from the current pri
ce.
Alternative Energy Companies (Solar & Bio Fuel): Higher crude oil raised the immediate requirement for Alternative Energy sources and the global stock markets acknowledged the fact. Solar stocks across the globe are riding high with huge orders. Europe is the leading importer of solar panels and other solar products.
Spain is one of the most attractive countries for the development of solar energy, as it has more available sunshine than any other European country. The Spanish government is committed to achieving a target of 12 percent of primary energy from renewable energy by 2010 with an installed solar generating capacity of 400 megawatts (MW). Spain is the fourth largest manufacturer in the world of solar power technology and exports 80 percent of this output to Germany.
XL Telecom is the best bet in this space. The company's total outstanding order book for the export of solar panels stood at more than 5 billion rupees. The company through Saptashva Solar Ltd has firmed up a forward integration project to establish grid connected ‘solar farms’ in Spain and Portugal with an investment of Rs 1,000 crore. Of the Rs 1,000 crore, Rs 800 crore is being raised through debt from Spanish banks and the rest would be through XL Telecom equity.
Very Strong Accumulate : Rs 170 - 230
Moser Baer : Moser Baer India is investing about $1.5 billion in increasing its thin-film photovoltaic capacity to 600 mega watt (MW) over the next two years from the existing project capacity of 40 MW.As part of the expansion plans, a Moser Baer wholly-owned subsidiary, PV Technologies India, has signed a memorandum of understanding (MoU) with a leading US-based equipment supplier to secure supply of critical equipment. Moser Baer Photo Voltaic (MBPVL), another arm of the company, is on track to increase the crystalline silicon capacity to 80 MW by the end of the current fiscal. The company is seeking to raise about $150 million by listing on the Nasdaq exchange (A big trigger for the stock as solar is riding high)
Very Strong Accumulate : Rs 100 - Rs 140
Second rung stocks :
Bhagyanagar India
Bhagyanagar India recently formed a joint venture company named `Surana Ventures` for setting up of solar photo voltaic cell and module project in partnership with its promoters and a group company named Surana Telecom. The JV plans to manufacture and sell the equipment required for generating solar energy. It will be an 80% export-oriented unit with substantial tax-benefits.Bhagyanagar India and Surana Telecom will hold 40% each in the Rs 3 bn project with the remaining 20% being held by the core promoters of the company
Very Strong Accumulate : Rs 24 - 28
Goldstone Infratech
Goldstone Infratech Ltd recently announced a joint venture to set up a solar panel manufacturing facility in Hyderabad.The total cost of the project is estimated at 28 billion rupees over 4-5 years. One of the joint venture partners is Jusung Engineering, a Korean equipment supplier. Goldstone will hold 54 percent stake in the venture.
Very Strong Accumulate : Rs 35 - 45
Bio-Diesel Company : Southern Online Bio Technologies recently recieved the much-awaited order from APSRTC for the supply of 3 lakh liters of Biodiesel per month to its 12 depots in Hyderabad & Secunderabad. The transacted to over 25% of the Company's installed capacity, which is slated to go up by some 7 times over the next year or so. The Company has been supplying Biodiesel on regular basis to Tata Indicom, Idea Cellular, Air Tel, Taj & ITC Group of Hotels in Hyderabad, cement Industries such as Priya Cement, UltraTech Cement and Penna Cement apart from traders. The Company has also supplied 12,000 liters of Biodiesel of specified feedstock to Research, Designs and Standard Organisation (RDSO) of Indian Railways, Lucknow and is working closely with this organisation.
The Company has started work on its second bio-diesel unit at Vizag, for which APIIC has allotted 10 Acres of land in its Multi Product Special Economic Zone (APSEZ) at Atchutapuram, Vizag. The Company has performed the Bhoomi Pooja and commend civil works and is targeting to commence the commercial operations in early 2009.
Very Strong Accumulate : Rs 17 - 23
The worst hit sectors during this period are Realty, Banking, Infrastructure, Aviation, Capital Goods, Consumer Electronics, Automibles, Textiles, Investment & Finance, Cement, Logistics, Retailing.
Least hit sectors include Telecommunications, Power, Media.
No hit sectors include IT, Sugar, Hotels, Pharma, Shipping.
Good for sectors like FMCG, Food, Oil Exploration, Fertilizers, Alternative Energy Companies(Solar, Bio Fuel)
So how to ride the next 6-9 month investment cycle ?
Though we always believe that sentiment is what that drives Indian Markets instead of looking at the fundamentals and sectoral space. But markets tend to recognize the same quickly once the steep fall slows down.
Lets look at the best companies from the above mentioned best Sectors during the troubled times. Remember the accumulation bands might seem a bit higher. Keeping the market situation we have mentioned the same. Please start accumulating slowly.
Food (Edible Oils) : The Indian vegetable oil economy is the world’s fourth largest after the US, China and Brazil.India imports half of its edible oil requirement, making it the world’s third-largest importer of edible oil.
1. KS Oils is an excellent pick from this space. About 14 producers of vegetable oils, including Gujarat Ambuja, KS Oil, Liberty Oil, Pranab Agro and Betul Oil, have formed a consortium to acquire 10,000 hectares of farmland in Uruguay and Paraguay to cultivate soybean, maize and sunflower. India Imports 3.8 million tonnes of palm oil. KS Oils bought 50,000 acres of palm plantation in Indonesia and plans to import 80,000 tonnes of the oil into India. But the fruits from Indonesia plantation will take 2-3 years though. Recently, the Indian government reduced the import duty on crude palm oil to 20 per cent from 45 per cent, while that on refined palm oil was trimmed to 27.5 per cent from 52.5 per cent to help curb inflation. KS Oils Ltd sees revenue rising to 32 billion rupees due to a rise in demand, following import duty cuts in mustard oil. The company had earlier targeted revenue at 30 billion rupees. The company expects net profit of 2 billion rupees in FY09.
Very Strong Accumulate : Rs 35-53
2. Ruchi Soya is the flagship of the Ruchi Group and it is one of the largest agribusiness company in India. It crushes about 25% of total soya crop in India and the company has also learnt to be scouting for palm cultivation in Malaysia and Indonesia and agriculture as a sector looks very promising in the long run. It has a refining capacity of 2.1 million tonnes per annum (mtpa) and crushing capacity of over 2.9 mtpa, the largest in the country. Nutrela and Ruchi Gold are the flagship brands of the company. It also has a portfolio of health oil variants and soya foods. It has recently forayed into health drinks.
Very Strong Accumulate : Rs 70-90
FMCG : Hindustan Unilever is a sound and stable investment during these times. But we do not expect major returns in the stock though downside is limited. Other good stocks in this space include Marico, Colgate. Better to avoid this space though limited downside as the returns are not expected to be worth it.
Oil Exploration/Production Companies : Cairns India and ONGC are two prominent players in this space. We believe Cairns India is likely to get the better among the two in terms of absolute returns. Markets have linked the Cairns India stocks price movement to the Internation Crude Oil prices. But soon the stock will be de-coupled from the Crude oil price movements.
Very Strong Accumulate : Rs 230 - 280
Dark horse in this space Reliance Petroleum.
Accumulate : Rs 150 - 175. Production expected to start around september. Stock price likely to race ahead and downsides are limited from the current pri
ce.
Alternative Energy Companies (Solar & Bio Fuel): Higher crude oil raised the immediate requirement for Alternative Energy sources and the global stock markets acknowledged the fact. Solar stocks across the globe are riding high with huge orders. Europe is the leading importer of solar panels and other solar products.
Spain is one of the most attractive countries for the development of solar energy, as it has more available sunshine than any other European country. The Spanish government is committed to achieving a target of 12 percent of primary energy from renewable energy by 2010 with an installed solar generating capacity of 400 megawatts (MW). Spain is the fourth largest manufacturer in the world of solar power technology and exports 80 percent of this output to Germany.
XL Telecom is the best bet in this space. The company's total outstanding order book for the export of solar panels stood at more than 5 billion rupees. The company through Saptashva Solar Ltd has firmed up a forward integration project to establish grid connected ‘solar farms’ in Spain and Portugal with an investment of Rs 1,000 crore. Of the Rs 1,000 crore, Rs 800 crore is being raised through debt from Spanish banks and the rest would be through XL Telecom equity.
Very Strong Accumulate : Rs 170 - 230
Moser Baer : Moser Baer India is investing about $1.5 billion in increasing its thin-film photovoltaic capacity to 600 mega watt (MW) over the next two years from the existing project capacity of 40 MW.As part of the expansion plans, a Moser Baer wholly-owned subsidiary, PV Technologies India, has signed a memorandum of understanding (MoU) with a leading US-based equipment supplier to secure supply of critical equipment. Moser Baer Photo Voltaic (MBPVL), another arm of the company, is on track to increase the crystalline silicon capacity to 80 MW by the end of the current fiscal. The company is seeking to raise about $150 million by listing on the Nasdaq exchange (A big trigger for the stock as solar is riding high)
Very Strong Accumulate : Rs 100 - Rs 140
Second rung stocks :
Bhagyanagar India
Bhagyanagar India recently formed a joint venture company named `Surana Ventures` for setting up of solar photo voltaic cell and module project in partnership with its promoters and a group company named Surana Telecom. The JV plans to manufacture and sell the equipment required for generating solar energy. It will be an 80% export-oriented unit with substantial tax-benefits.Bhagyanagar India and Surana Telecom will hold 40% each in the Rs 3 bn project with the remaining 20% being held by the core promoters of the company
Very Strong Accumulate : Rs 24 - 28
Goldstone Infratech
Goldstone Infratech Ltd recently announced a joint venture to set up a solar panel manufacturing facility in Hyderabad.The total cost of the project is estimated at 28 billion rupees over 4-5 years. One of the joint venture partners is Jusung Engineering, a Korean equipment supplier. Goldstone will hold 54 percent stake in the venture.
Very Strong Accumulate : Rs 35 - 45
Bio-Diesel Company : Southern Online Bio Technologies recently recieved the much-awaited order from APSRTC for the supply of 3 lakh liters of Biodiesel per month to its 12 depots in Hyderabad & Secunderabad. The transacted to over 25% of the Company's installed capacity, which is slated to go up by some 7 times over the next year or so. The Company has been supplying Biodiesel on regular basis to Tata Indicom, Idea Cellular, Air Tel, Taj & ITC Group of Hotels in Hyderabad, cement Industries such as Priya Cement, UltraTech Cement and Penna Cement apart from traders. The Company has also supplied 12,000 liters of Biodiesel of specified feedstock to Research, Designs and Standard Organisation (RDSO) of Indian Railways, Lucknow and is working closely with this organisation.
The Company has started work on its second bio-diesel unit at Vizag, for which APIIC has allotted 10 Acres of land in its Multi Product Special Economic Zone (APSEZ) at Atchutapuram, Vizag. The Company has performed the Bhoomi Pooja and commend civil works and is targeting to commence the commercial operations in early 2009.
Very Strong Accumulate : Rs 17 - 23
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