Telecom companies market share

Telecom Companies market share in India as of August 2011



Sl. No.	Name of Company	Total Sub Figures	Additions in Aug	% Market Share
1	Bharti Airtel	171,846,824	1,150,298	28.09%
2	Vodafone Essar	144,144,031	1,133,024	23.56%
3	IDEA	98,441,714	2,330,239	16.09%
4	BSNL	90,622,219	388,057	14.81%
5	Aircel	59,191,661	602,312	9.68%
6	Uninor	27,738,154	349,488	4.53%
7	Videocon	6,382,493	-652,383	1.04%
8	MTNL	5,298,081	32,932	0.87%
9	Loop Mobile	3,181,967	19,035	0.52%
10	Stel	3,433,988	-67,259	0.56%
11	Etisalat	1,477,495	52,941	0.24%
12	All India	611,758,627	5,338,684	100.00%

# Telecom Companies market share in India as of march 2011
 



Rakesh Jhunjhunwala portfolio

Rakesh Jhunjhunwala Potfolio as of March 2011. 

Stocks to avoid in 2011

Its a well known lesson in investing that Capital protection should have the higher priority over return on capital. We all talk about which stocks to bet on that can giver superior returns on investment, but it is equally important to know which stocks to avoid to prevent the risk of capital loss. Here is a selective list along with reason:

Buy Bharti Airtel with an immediate target of 400

Bharti airtel seems to have broken out of a tough resistance of 360 and has managed to stay above this level in last few trading sessions. On 14th April the counter witnessed high volume of close to 8 million shares with unusually high delivery percentage of 74% which suggests that strong hands were buying stock in the cash segment. Based on options data for Bharti Airtel, it was seen that 380 call has seen a cut of 12% in open interest while the call of 400 has registered an addition of 40% in open interest, which suggest that the bias has shifted towards

Firstsource Solutions - Valuation rerating possible

The recent rumors of EXL Services, the NASDAQ listed BPO firm from India, getting sold have raised the prospect for the largest BPO company of India, Firstsource Solutions Ltd (FSL).

Stake sale in FSL by ICICI has also been rumored several times in the past but could not materialize because of some pricing issue. But the recent talk of IT biggies trying to buy EXL services have raised the hope for FSL shareholders to gain from the possible rerating in the valuations of FSL.

FSL at INR 16 bucks is currently trading at a PE multiple of just

Japan Crisis - What should investors do now?

Japan crisis seems to be bigger than what people anticipated a week back. Before the Middle east unrest could even stabilize, Japan event occured and had shaken the investors confidence twice in the last 2 months. One after the other global events have spooked the Investors confidence in equity assets across the world. At this point of time there are lot of uncertanities which might unfold over couple of weeks. Investors are confused on what they should do now. What should be the correct strategy to follow in this market situation.


There are few things that one should do at this point of time to avoid big losses and generate long term wealth. The focus undoubtedly should be more inclined towards protecting the capital instead of making huge punting gains.


1. Cut your levergaed position if you are long. Series of events and uncertanities will keep the bigger investors away from putting fresh money into equities in the next 1-2 months.


2. Hold on to quality blue chips even if there is quotational loss. Once the market recovers they will be the first to absorb inflows and hence rise.


3. Selectively buy quality midcaps available at cheap valuation. Use every dip to incremently put money into these themes and keep a horizon of 1 to 2 years.


4. Allocate some money to fixed income assets & utilize the advantage of high interest rates on Fixed deposits by banks and companies. Some companies are even offering an interest rate of more than 12% per annum for a 3 year deposit. Please ensure that the fixed income scheme of the company you invest in has a stable credit rating.


5. And last but not the least, don't panic and take decisions in haste. The world is not going to end. Every time the crisis hits the riskier asset classes are sold first but it rises euqally fast when things stabilizes.

Polaris software - Insiders accumulating

Polaris softwares has been witnessing unusually high volumes with upward price movement since last few days. On 4th Feb it went up 10% when the overall market was up only 1%. Then on 5th Feb it went up more than 2% when the overall market was down more than 2% and that too on a volume thrice as large as it witnessed the previous day with total number of shares traded close to 5 Million shares (around 5% of the company's equity).

Polaris usually declares an interim dividend in the first fortnight of February. This time it is expected to declare an interim dividend of Rs. 2.00 to 2.25 per share. But there seems to something else beside dividend which insiders knows but we are yet to know. If the cash and cash eqivalent of Rs. 508 crores is some kind of indication then following events might occur:

1. BUYBACK - The company is trading at a very low valuation of less than 8 times forward year earnings. Considering the attractively low valuation that company trades at and huge cash surplus that the company has, there is a reasonable probaility of a buyback announcement to part utilize the idle cash reserve and boost the investor's sentiment in the company.

2. Special Dividend - In terms of cash per share the company has approximately Rs 50/- Per share, more than 25% of the current market price of Rs 190/-. To reward the existing shareholder and boost investors confidence in the comapany a special dividend cannot be ruled out.

3. Bonus - In such a depressed market condition and lower valuation that company is trading at, a bonus issue is also a possibility to lift the investors confidence in the company.

It is to be noted that above events are just a possibility and might not occur. The above scenarious are built based on the high trading interest witnessed in the stock in last few trading seesions.

Indian Bank stocks - Injured by the tripple edged sword

During upside banking sector in general outperformed SENSEX and NIFTY by wide margin and at the peak their weightage in the indexex went to as high as 30% which was clearly non sustainable because of two major reasons, one was obviously the overvaluation and other was the overownership.

98 out of 100 people were bullish and invested in one or the other bank stocks and analysts were busy defending the relative valuation of the bank stocks they were invested in inspite of the fact that on absolute terms all of them were trading at the upper end of their lifetime valuation. When we chase something blindly we tend forget the basic principles of investing again and again. Interest rate has been continously rising since last 1 year and by the sheer nature of the banking business rising interest rates are fatal for them. The credit growth slows down, NPAs start cropping in and the bond prices come down which reduces their treasury profits. So a rising interest rates acts like a tripple edged sword for banks. Every cyclical business should be avoided when the cycle is about to turn. With rising interest rate the interest rate sensitive sectors such as Banks & Auto were clearly sell but inspite of that fact analysts kept on recommending both to the investors and they have burnt their fingers badly.

Investors should avoid bottom fishing the bank stocks at this point as the march quarter is going to be the first quarter of painful result. The price correction might stall after 10 to 15% fall from current levels for large banks but the time correction is due. The interest rate cycle will take at least one year to top out and thus the ideal time to look at quality bank stocks would be at least 6 months from now. The investors then should have the investment horizon of at least 2 years to get some meaningfull return.

Fidelity Research bullish on Zensar Technologies

Fidelity Management And Research Company seems to be very bullish on Zensar Technologies, a pune based midcap IT company, and has quietly increased its stake in the company from 0% on 31st March 2010 to 4.62% (~2 million Shares) as on 31st DEC 2010 based on the shareholding pattern declared by the company on the National Stock Exchange official website. The latest share holding pattern of the Zensar Technologies as on 31DEC 2010 is summarized below:

Sr No	Shareholder	Number of shares	% of total shareholding
1	Promoter group	20620404	47.64%
2	Mutual Funds	1005310	2.32%
3	FIIs including Fidelity	2785281	6.43%
4	Electra Partners Mauritius Ltd	10301294	23.80%
5	Ganesh Natrajan	557058	1.29%
TOTAL			81.48%

Around 82% of the shares of the Company is locked among the promoters and institutional investors. Free float in the stock is very low and ownership among public is shallow. Any good news in terms of company performance might create significant demand for its shares and because of low liquidity the stock price might appreciate very fast in very short span of time.

On valuation metrics as well the company is tremendously undervalued. At the current Market price of 180 the stock is available at a PE multiple of just 6 times based on the current year EPS of Rs. 30/- and around 5 times based on the expected EPS of around Rs 35/- in FY-12. The expected financial performace of the company is summarized below:

Parameter	FY-11	FY-12	FY-13
Sales	1150	1600	1800
PAT	130	150	180
EPS	30	35	42
PE	6	5.14	4.28

Stick with the bottom up approach in 2011

Indian stock markets have corrected more than 5% in 2011 and individual stock have seen correction in the range of 10-15%. This market correction has made some of the stocks very attractive.

The rise of indian market in 2009 and 2010 is certainly a reason for SENSEX and NIFTY to take a breather in 2011 and hence a broad based call on stocks based on markets might not be a good idea. Instead one can look at the sectors or stocks which have not performed inline with the markets in 2009 and 2010. For example MIDCAP IT basket, Shipping were lagards of 2009 and 2010. If the globe is expected to do well in 2011 then good quality companies in both of the above sectors should do well.

Good quality stock in the MIDCAP IT segment are still trading at a PE range of 6-12 which is tremendously cheap given the cash generating and high ROC nature of the business. Some of the name like POLARIS Softwares, MPHASIS, ZENSAR Technologies, NIIT TECH are trading at rediculously low valuations in absoulte terms and should give decent returns from current levels in 6-12 Months. Names like GE Shipping under the shipping sector looks atttractive at the current valuation.

In a nutshell if one doesen't get panicked by the volatility in the market and focus on individual story one can still make decent return in this market. But the mantra is to keep the temparament cool and look at this market correction as opportunity.

Happy Investing!!.

Buy Polaris Softwares

We are strongly positive on Polaris Softwares Lab and recommed buying at CMP of 171.

POLARIS software which is a niche plauyer in BFSI domain trades at a PE multiple of just 8.75 based on expected FY-11 EPS of Rs. 20. Vis - a Vis bigger player it is trading at a very significant discount and should give decent returns in next 3 to 6 months time frame.

One can look for an immediate target of Rs 200 in 1 month time (15% Appreciation) and a target of Rs 240 in 3 months time (38 % Appreciation). Slightly longer term investors can invest for the price target of Rs 320 within 1 year. The 1 year target is based on a PE multiple of 14 times on FY -12 estimated EPS of 23.

MIDCAP IT companies are expected to do well in FY-11 and POLARIS being a undervalued nice MIDCAP IT Company should benefit from the overall sector rerating.

Technicall also the stock has bottomed out at 145 and has been on uptrend since last 1 month. We believe todays correction is because of unwinding of F&O position across all the companies and hence is a good opportunity to accumulate the stock at the current level of 170 - 171.

Buy Zensar Technologies

Zensar Technologies acquired Akibia Inc last month. The results of Akibia group will be reflected in the march quarter of Zensar.

On consolidated basis the company is expected do a Profit After Tax of around 130 crores on the topline of around 1150 crores, resulting into an EPS of around Rs 30.

The midcap IT story has started to catch up recently and there has been an overall PE rerating happening across the midcap IT basket. We expect that even on conservative basis Zensar should get a PE multiple of at least 8 times in 3 months from here. Considering that our price target for the stock is Rs 240/- in 3 to 4 months time frame.

Investors with that kind of time frame in mind can invest in the company at around Rs 170/- for an appreciation of close to 40%.

SESA GOA – Bottomed out

SESA GOA bounced back sharply yesterday from 289 – 290 odd level with pretty decent volumes. Technically the stock seems to have bottomed out 290 level as it has seen a very sharp runup on the rumors of cairn Vedanta deal getting called off.  If rumor of cairn – Vedanta deal  getting called off materializes then it should give big sentiment boost to Sesa Goa script as the company won’t have to shell out its cash which is estimated nearly $2 Billion.  

Short term investors can buy the stock at 304 levels with a 4-5 day target of 320-325. Long term investors can enter with a price target of 340 in 1 month time.

Warren Buffett Investment Criteria

Warren Buffet owned Berkshire Hathaway relies on extensive research-and-analysis team that goes through reams of data to guide their investment decisions. While all the details of the specific techniques used are not made public, the following 10 requirements are all common among Berkshire Hathaway investments:

1. The candidate company has to be in a good and growing economy or industry.

2. It must enjoy a consumer monopoly or have a loyalty-commanding brand.

3. It cannot be vulnerable to competition from anyone with abundant resources.

4. Its earnings have to be on an upward trend with good and consistent profit margins.

5. The company must enjoy a low debt/equity ratio or a high earnings/debt ratio.

6. It must have high and consistent returns on invested capital.

7. The company must have a history of retaining earnings for growth.

Summit securities listing update

Last year, the RPG Group decided to merge four companies—Summit Securities Ltd, Brabourne Enterprises Ltd, Octav Investments Ltd and CHI Investments Ltd—with RPG Itochu Finance Ltd (RIFL), a 100% subsidiary of RPG Enterprises. Shares of these companies have been suspended from trading since 3rd February due to the proposed merger. In august the company decided to change the name of the merged entity from RIFL to Summit Securities Ltd.

The shareholders of those four companies have received their proportion of summit securities in their demat a/c in august but the merged entity (Summit securities) is still not listed and hence shareholders are not able to sell their holdings. Shareholders are stuck and frustrated and have been looking for several exit options. Many brokers are trying to take advantage of this situatuion asking investors to tender their share of summit securities lying in their demat a/c at Rs. 10/- through off market transaction, misleading them that their investments are of no worth now and they should exit at whatever value they are getting.

The shareholders should stay away from such brokers or people and stay calm for some more time. This is about to get solved very soon. As per the recent conversation with an RPG management representative we came to know that all the approvals have been obtained except SEBI. The approval from SEBI should also come soon as the pressure is equally high on the RPG group as well. RPG group being a 17,000 crore enterprise is not expected to cheat shareholders of such small companies.

As per the latest annual report of summit securities the top 5 quoted investments held by the company are as follows

Company Name	No of shares after Merger	CMP as on 09DEC 2010	Value in crores
CESC Ltd	2,056,948	360	74.05
KEC International	4,857,790	442	214.71
Phillips Carbon	1,903,114	170	32.35
Zensar Technology	4,444,276	160	71.10
Harrison Malayalam	728,150	69	5.02
TOTAL                                                            397.23

So the top 5 holding iteself are worth approximately 400 crores. On an equity capital of 10.90 crores, the per share value of the above investments comes out to Rs 365/-.
Other quoted and unquoted investments including cash held by the company are worth at least 100 crores.

Considering the above facts it is advisable not to sell any holdings in Summit securities until it is listed and has been traded for 6 months, because it might happen that because of delay in listing some shareholders sell on the listing day itself.
The book value of the company at cost as on 31st March 2010 is Rs. 362/-. Even if we discount the BV by 20%, the shares of summit securities should stabilize above Rs. 300/- within 6 months of listing.

Firstcall Research: Buy Federal Bank - Target 523

Firstcall research has comeout with a buy rating on Federal bank. The research report can be downloaded from this link.

http://www.moneycontrol.com/news_html_files/news_attachment/2010/FederalBk_FirstCall_071210.pdf

Is the recent correction an Opportunity?

Yes this correction is certainly an opportunity to nibble some of the quality mid and large cap stocks which have fallen with the rest of the markets without any reason. After Satyam saga, the corporate governance has again come into limelight. Any company having any kind of governance issue whether big or small is being punished brutally by the market. Welspun Corp, Akruti city are some of the example which fell like 9 pins on Friday because of news of stock price manipulation in cordination with stock brokers. So one should stay far away from those names and should avoid any kind of bottom fishing. Any company having any kind of news regarding the governance should be completely discarded at this stage. They might rise a bit tomorow but its safer to not invest in tainted companies, as one never knows how greedy is the management and what else has happened in the company which is yet to come out in public. Satyam was a big lesson for every one.

But because of panic some really genuine companies have also corrected in the recent fall. One can look at some of the bluest of the blue chips like NTPC, Bharti, Axis bank etc and start acummulating slowly at each fall. They have got very professional & honest management and are available at reasonable valuation and are expected to perform well over medium to long term. One can also look at some of the quality mid cap companies having good professional management, governance & reasonable valuation like Federal Bank, Firstsource, Zensar Technologies, Godrej Properties etc. But one should avoid exhausting his entire budget for investing in one shot and only invest at correction in small lots.

Investment Quotes by Warren Buffet & other Legends

These are not just the quotes, but the experiences shared by some of the most successful investors in the history of stock markets. We can benefit from them if we understand them and remember them while taking investment decisions.

If past history was all there was to the game, the richest people would be librarians.
Warren Buffett

Risk in investment is not knowing what you are doing.

Warren Buffet

The dumbest reason in the world to buy a stock is because it is going up.

Warren Buff

One of the biggest mistakes is to focus on a stock price instead of its value.

Warren Buffet

Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.
Warren Buffett

The key to making money in stocks is not to get scared out of them.
Peter Lynch

Profit in stocks goes to those who buy stocks on sale. There’s no such thing as risk free investment.
Peter lynch

The four most dangerous words in investing are 'This time it's different'.
John Templeton

The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell.
John Templeton

Every day I get up and look through the Forbes list of the richest people in America. If I'm not there, I go to work.
Robert Orben

I hate weekends because there is no stock market.
Rene Rivkin

Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.
George Soros

It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong.
George Soros


   
 

Warren Buffet, Peter Lynch, George Soros & Sir John Templeton

Goldman Sachs puts BUY rating on Bharti Airtel

Goldman Sachs has upgraded Bharti Airtel to buy from neutral and raised its target price on the stock of India's top mobile phone operator to Rs. 430

We expect the price target is conservative. The recent 2G scams are more likely to hit newer and unlisted player in the telecom space like UNINOR, Videocon, LOOP etc. This will rationalize the competition and would be favourable for the listed telecom player like Bharti Airtel. The tariff war seems to have bottomed out and the uncertainity in terms of its african operation is alomost over. Bharti is confident of it African operation turnaround in next 1 year. Most of the indian mutual funds have increase their stake in Bharti in last 6 months.

If Bharti reaches its target of 100 Million users in Africa by FY-12 then we exepect Bharti to report a Consolidated revenue of approximately Rs. 75,000 crores and PAT of around Rs. 12,000 crores in FY-13. Considering a PE multiple of 18, which is the forward multiple at which SENSEX broadly is trading at, then the market capitalization of  Bharti is expected to be approx.  Rs. 2,16,000 crores and hence the target price for Bharti is expected to be at Rs 560 in next 1.5 year. A near 70% appreciation from current levels of 335.

Zensar Technologies - The potential multibagger

Zensar Technologies, a mid sized IT company, has announced the acquisition of Akibia Inc yeterday for cash of around $66 Million. Akibia Inc is a very niche player in Infrastructure managment space. With its acquisition, Zensar would be among top 5 Infrastructure Management Company in India. Akibia has centres in, Boston, in the US and in Europe and counts IBM, HP, AT&T, Goldman Sachs, and Verizon among its customers. Akibia did around $100 Million in revenues and around $9 Million in Profit last year.

Considering the niche space and the kind of revenue and profitability that Akibia has, Zensar has got an extremely good deal. Zensar has around $35 Million of cash which it will utilize in doing the acquisition.

With full year results of akibia getting integrated into Zensar from FY12, Zensar is expected to report a consolidated revenue of 1600 crores and a PAT of around 145 crores. The expected EPS is around 33.5. At a PE multiple of 10, the stock is expected to reach Rs. 335 in next 1 year time frame. So from the current levels of 160 there is more than 100% appreciation expected in the stock.

Update as on 16th August 2015: Zensar Technologies has become a huge multibagger and is up 6 times since the recommended prices of Rs. 160.

Indian Stock market showing initial signs of weakness

Indian stock markets have started showing some weaknesses on the back drop of FII outflow. Both SENSEX and NIFTY are down close to 2% in early trades today. The reason seems to be obvious. The rupee has depriciated by 2% in last 3 days and the SENSEX and NIFTY are down almost 4 % from the recent peak. So all in all there is a loss of 6% for FIIs in dollar terms. Since in short to medium term the direction of rupee seems to be downward, they might be worrying about further losses on currency side and that is why taking some money of the table before the majority of the gains get wiped out.

But this correction is healty as Mutual funds and Retail Investors have been out from the market and were waiting for corrections to get in. One should not panic by the volatile movement of the SENSEX and NIFTY and stay calm. A 5% correction from the current levels of 20000 SENSEX should provide good entry point for investors. However one should still follow bottom up approach of stock selection and buy where the business outlook is good and valuation is reasonable.

Lloyd Electric & Engineering - Promoters buying from open market

In the article titled "Cooling will make it hot soon" dated 24th Oct 2010 (http://investorzclub.blogspot.com/2010/10/cooling-will-make-it-hot-soon.html) I explained how undervalued is Lloyd electric and Engineering. Don't know about other investors but promoters seems to have read the article and started buying shares from the open market. On 10th and 11th Nov the promoters Mrs Renu Punj and M/S Lloyd electric and Engineering Pvt. Ltd have acquired 1.41% (around 4,38,000 shares at the rate of Rs.90/-). The stock has already moved 12% since I recommended it at Rs.78/-. Promoters have been steadily increasing their stake since last 6 months. If that is any indication the stock seems to be moving much higher from current levels in next 6 to 12 months.

FEDERAL BANK - Strong Buy @ 435, Target 700 in 1 to 1.5 year

Rakesh Jhunjhunwala has picked stake in Federal bank recently. He disclosed this in an interview. The reason seems to be very obvious, its undervaluation relative to the other private sector lenders like ICICI bank, HDFC, AXIS Bank, ING Vysya Bank etc.

On FY-12 basis it is quoting at around 1.2 times book value. Even public sector lenders are available at somewhere in the range of 1.5 to 2.5 times book. Private sector lender are anyway available in the range of 2.5 to 4 times book.

The reason for its undervaluation in past 2 years has been its low retun on Net worth because of its right issue in 2007. But with loan book growing at 25% annually it is expected to report better RONW in coming years and hence should start commanding better valuation.

At expected PBV of 2.0 for the Financial year FY-12, the stock is expected to generate around 60 to 70% return from current levels in 12 to 18 months time frame.

Investorz club exclusive tip on Short term Capital gain tax for salaried professionals

In India long term capital gains on equity investments are completely tax free which means if you have been holding a stock for more than a year then you are not required to pay even a single rupee as tax on whatever gains you make on your investments. On the other side, the short term capital gains are taxed at 15%, that is if you sell your equity investment within a year of purchase you need to pay short term capital gain tax at the rate of 15%.

COAL India IPO lists with a bang and sets the stage for the retail comeback

Today investors especially the retail investors who got subscription at 5% discount to the issue price of 245 must be very happy today as COAL India lists at 300 and touched an intraday high of 340. At 340 retail investors are earning close to Rs. 21,500 /- on each application. This is going to be an eventful day in the history of Indian stock market. The retail investors who had the leftout feeling in the recent rally of SENSEX from 8000 to 20000 have finally been able to make some money. This is crucial, for our markets because it is the retail investors who will bail out people who have been betting on midcap and small cap stocks, based on valuations, since very long but have hardly reaped any benefit. Because of FII money, the large cap stocks have been independently rising without the participation of mid and small cap and hence a huge valuation gap has been created between them.

After this episode of COAL India IPO, retail investors would now have some confidence of investing in the market again.