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The mega merger of Vedanta Group Assets will burden Sterlite Limited with capital intensive and trouble-some aluminum operations thus denting its fundamental strengths.
To access target price of Sterlite Industries and our other multibagger stocks and to get your queries resoled by our analyst, please consider registering for our investment research services.
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In March 2003, a leading business magazine carried a cover story titled “CAN THE SENSEX TOUCH 4000 in 2003?”. Now, that shouldn’t have been a question of so importance so as to reach the front cover, especially when markets had already crossed that mark 10 year back in 1992. Surprisingly, of all the experts surveyed for the masterpiece, no one dared to predict a humble 4K mark for the beloved Sensex. 3,800 was their most bullish projection.
For the record, the article turned out to be good luck charm for the market and Sensex registered a whooping gain of 89% in rather short period of 9 months. With the benefit of hindsight, it can be said that is was not just that year but a beginning of 5 year bull rally that culminated in January 2008 with Sensex breaching 21,000. Moral of the story, none of the market pundits, at least those in public arena, were able to predict the coming bull run in stock market. So, could be the case this time as well. Afterall, the Sensex had first time breached current levels of 17,000, 5 years back. Back to the future Feels good to see 5% upside in broader markets since upward revision in our market outlook from neutral to cautiously bullish. We continue to maintain our bullish stance on the market, but are becoming increasingly cautious with every point rise in broader market. Series of bad news continued to flow in since upward revision in our market outlook of which petrol price hike, depreciating rupee and weak IIP numbers occupied maximum public attention. Market eyes are now glued to RBI’s decisions on interest rate on 18 June 2012. Given continued slowdown in industrial growth 25 bps cut in interest rate is almost certain and even 50 bps cut lies within the realm of reality. Rate cut, rating cut Mr Market’s excitement on probable rate cut by RBI is being subdued by S&P’s cautionary on potential rating cut on Indian debt below investment grade. Rating agencies have been behind the curve for the past decade with subprime crisis in US and sovereign debt related problems of PIIGS group standing epitome to their prowess. S&P’s caution note only reiterated those issues, policy paralysis and rising fiscal deficit, that were already known for quite long. Hence, we don’t foresee much impact of proposed rating cut signals on long term fundamentals. Because of positive impact of RBI credit policy on interest rate sensitive sectors, falling crude oil prices and more because of the low prices that the stock are trading in current markets, we maintain our cautious but bullish stance on the Indian stock markets. Grab these stocks before someone else Please find below some of the stock that we like with investment horizon of more than 12 months:
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Sanghvi Movers (CMP-Rs104)
Sanghvi Movers is a crane hiring company servicing infrastructure and mining companies. The company owns over 400 hydraulic truck mounted cranes with lifting capacity of 200 to 800 tons. The company has expanded its fleet which has largely been funded by debt which has increased from Rs275Cr in 2007 to Rs640Cr in 2011.
Sanghvi’s sales increased during the same period from Rs179Cr to Rs361Cr in and is poised to cross Rs400Cr in just concluded fiscal year (FY12). Net income increased from Rs47Cr in 2007 to Rs86Cr in 2011. We estimate the company to register net profit of Rs100Cr in 2012.
Based on FY12 earnings, the company is trading at PE of 4.5x. Given strong business fundamentals and high growth potential, we expect he company’s valuation multiple to be re-rated upwards over the coming years. This coupled with growth in earnings will boost company’s valuation over the coming years.
At CMP of Rs104, we expect growth in company’s stock price to exceed hurdle return rate of 18%. Dividend yield of 3% further sweetens the deal. Hence we rate the company a BUY for long term investors. (Investment Horizon:2-3 years)
However, the company high debt and capital requirements to fund its expansion coupled with week market sentiments will keep the stock price pressurized over the near-to-medium term. Hence fresh position in the company should be taken only with long term investment horizon.
To access target price of Sanghvi Motors and our other multibagger stocks and to get your queries resoled by our analyst, please consider registering for our investment research services.
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Fall in stock markets over the past few weeks has created some attractive investment opportunities. Taking advantage of this, we have identified several multibagger stocks that could double over the coming 2-3 years. And as subscriber to our newsletter, we want you to be among the select few to have access to these multi-bagger stocks at 20% discount on our Safal plan. The annual subscription is available at Rs1,560/- instead of usual price of Rs1,920/-
So @ Rs4.5 per day, one gets:
Good things don’t wait forever. Offer ends of 11 June 2012. To register for services click here. Have any queries? Write in to us at support@anavaran.com or you can also contact us at 022 322 56579.
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