Top 10 Widely Held Stocks

Top 10 Widely Held Stocks

March 08, 2013
Research Team
Ajay Kumar Srivastava Tanmay G Purohit Swati Saxena Gaurav Sharma ajaykumar.s@religare.com tanmay.purohit@religare.com swati.saxena@religare.com gaurav.sh@religare.com
Disclaimer: http://www.religareonline.com/research/Disclaimer/Disclaimer_rsl.html
RELIANCE POWER
CMP(`): 75.15 EPS (`): 0.52 52 Week High: 139.40
Fundamental View:
Mcap (` Cr.): 20786 Book Value(`): 57.40 52 Week Low : 70.55
HOLD
Reliance Power's third quarter consolidated net profit jumped 30 per cent to Rs265.6 crore from Rs204 crore in the corresponding period last year. The total income, too, doubled to Rs1,586 crore compared with Rs674 crore on the back of increased power generation from its Rosa power plant. During 9M FY13, its consolidated net profit increased 17.3 per cent to Rs 745.40 cr and net sales increased by 147.5 per cent to Rs 3678.80 crore. A 765 KV switchyard has been commissioned in Reliance Powers 4000 MW project at Sasan in Madhya Pradesh. The power generated at the plant will be supplied through six transmission lines to Delhi, Punjab, Haryana, Madhya Pradesh, Rajasthan and Uttarakhand. Promoters of Reliance Power Reliance Infrastructure, Reliance Innoventures Pvt Ltd and AAA Project Ventures Private Ltd successfully diluted their 5.42% stake on in the company.
Outlook: The company has the largest portfolio of power projects in the private sector based on coal, gas, hydro and renewable energy, with an operating portfolio of 1,540 MW. The company also has the largest captive coal reserves in the private sector, estimated at more than two billion tonnes. Besides, the company has purchased three coal mines in Indonesia and is also having plans to develop coal bed methane based generation capacity.
Technical View:
The stock has witnessed a pause after steep fall from above 98 to 70 levels. At the current levels, it is important that the stock trades and consolidates above 76 levels for some time else selling may continue in the near term as well. If the stock manages to hold above 76, there are higher chances that 85-87 levels may be witnessed in the coming trading sessions.
RELIANCE INDUSTRIES
CMP(`): 851.30 EPS: 60.67 52 Week High: 955
Fundamental View:
HOLD
Reliance Industries and two partners, BP and Niko Resources, plan to invest Rs27,127 crore ($5 billion) over the next three to five years in the KG-D6 block to develop four trillion cubic feet (tcf) of discovered natural gas reserves. RIL's net profit rose 23.9% to Rs 5502 crore and net sales grew by 10.3% to Rs 93886 crore in Q3 December 2012 over Q3 December 2011. During 9M FY13 its net profit decreased by 2.5% to Rs 15414 cr and net sales increased by 12.8% to Rs 276098 crore. Reliance Industries has shut its seventh well on KG-D6 gas block due to high water and sand ingress as it awaits regulatory nod to carry out urgent work over to plug the problem responsible for drastic fall in output. Reliance Industries and Venezuelan state oil company Petroleos de Venezuela, SA has signed a 15 -year heavy crude oil supply deal.
Outlook: Gas output from Reliance's D6 block has fallen sharply but the company says production will rise once new discoveries in the block will be developed. However, the company wants market -linked prices to justify multi-billion dollar expenditure to develop new deep-sea fields.
Technical View:
The stock bounced back sharply and closed nearly 5% higher week-on-week basis. There are higher chances of continuation of the up-move till 800 levels are held on the down side. If the stock manages to close above 850 levels, 900 will be the next target.
SUZLON ENERGY
CMP(`): 16.90 EPS: 0.00 52 Week High: 30.80
Fundamental View:

Mcap (` Cr.): 3030 Book Value(`):31.64 52 Week Low : 13.35
HOLD
Suzlon Energys promoters had sold about 10 crore shares (6.19%) of the paid-up capital, for a total consideration of Rs 240.40 crore. Suzlon Energy reported a consolidated net loss of Rs 1154.53 crore in Q3 December 2012, higher than net loss of Rs 286.46 crore in Q3 December 2011. Suzlon may sell stake in its three subsidiaries SE Electricals, SE Forge and Suzlon Energy Tianjin to pay off debt. Suzlon Energys Kutch wind park has crossed 1,000 MW of installed capacity. This achievement makes the wind park one of the largest of its kind in India.
Outlook: Although the demand from the Indian and other emerging markets is growing, the subdued outlook for large markets like the US and Europe will remain an overhang on the company's consolidated performance for next few quarters.
Technical View:
The stock registered a fall of more than 10% last week. The stock is looking weak on the short and medium term charts. Going forward, 15 is an important support levels.
NHPC
CMP(`): 21.10 EPS: 2.09 52 Week High: 29.40
Fundamental View:

HOLD
NHPC plans to take up three thermal power projects; 1,320-MW Rewa Thermal Project in Madhya Pradesh and two projects of 1,320-MW each at Lakhi Sarai and Pirpainthi in Bihar. NHPC's net profit rose 46.9% to Rs 311.77 crore and net sales grew by 5.7% to Rs 911.57 crore in Q3 December 2012 over Q3 December 2011. During 9M FY13 its net profit decreased by 7.9% to Rs 17650 cr and net sales also decreased by 2.7% to Rs 4011.42 crore. The Bihar State Electricity Board is planning to strike joint venture agreements with NHPC Ltd for setting up two super critical thermal power stations of 2X 660 MW each at Kajra and Pirpainti, respectively. The West Bengal Government has sought the termination of NHPC as an implementing agency for the rural electrification project at the Purilia district of the State.
Outlook: The company has the largest portfolio of power projects in the private sector based on coal, gas, hydro and renewable energy, with an operating portfolio of 1,540 MW. The company also has the largest captive coal reserves in the private sector, estimated at more than two billion tonne. Besides, the company has purchased three coal mines in Indonesia and also has plans to develop coal bed methane based generation capacity. Technical View:
The stock fell more than 18% last week, as a result of this fall it is now trading below all its important moving averages. The stock may consolidate around 23-25 levels.
UNITECH
CMP(`): 27.55 EPS: 0.50 52 Week High: 40.90
Fundamental View:

HOLD
Unitech posted a 52.43% rise in its consolidated net profit at Rs 84.17 crore for the third quarter ended December, compared with Rs 55.22 crore in the same period a year ago. The core real estate revenue was higher by 18%. But the revenue of Transmission Tower business jumped up by 139% to Rs 66.37 crore. Similarly the sales of property management, hospitality and others were higher by 21%, 25% and 27% respectively. Segment margin of Real Estate business contracted by sharp 580 bps and hurt thus the segment profit of it was lower by 10% to Rs 93.09 crore.
Outlook: The company is witnessing sharp contraction in margins largely on account of change in revenue mix. The financing cost for the company has increased as the company is facing challenges in terms of availability as well as cost of funding for real estate projects.
Technical View:
After testing 4-month low levels the stock has seen an impressive pull-back last week but trades below important moving averages. It has to move above 29 levels on closing basis to show an extended rally in near term.
RELIANCE COMMUNICATIONS
CMP(`): 65.05 EPS: 3.25 52 Week High: 101.80
Fundamental View:

HOLD
Reliance Communication signed 8-year $1 billion managed services contract with Ericsson for wireline and wireless networks for Northern and Western states of India. Reliance Communications has posted a 43.5 % drop in consolidated net profit of Rs 105 crore in the December quarter, due to a rise in finance costs. Its consolidated revenues rose 1.3 % to Rs 4797 crore. During 9M FY13 its net profit decreased by 37.9% to Rs 370 cr and net sales increased by 1.2% to Rs 14309 crore on YoY basis. Reliance Communications has tied up with WhatsApp in India and has launched the first -of-its-kind pre-paid plan WhatsApp lan for Reliance GSM subscribers and My College Plan for students. Reliance Communications has partnered with Chinese computing major Lenovo to launch a new smartphone that automatically switches between technologies depending on signal strength.
Outlook: RCOM announced its plans to exclusively market Android devices in India over its superior network for the next 2 years. Through this strategic collaboration with Google, RCOM will market the Android mobile operating system and Google Mobile Services in order to promote the usage of Android devices in the country. It will provide the required competitive edge to the company. Technical View:
After falling for five consecutive weeks, the stock bounced back sharply after testing support around 59 levels and rallied for more than 5% this week. If 66 levels are crossed , the stock may rally towards 72 levels shortly.
IFCI
CMP(`): 29.25 EPS: 3.13 52 Week High: 46.85
Fundamental View:
HOLD
IFCI reported a 33% decline in net profit for the quarter ended December 2012, at Rs 76 crore. Total income from operations for the quarter under review declined 5.2% to Rs 638 crore. During 9M FY13, its profit declined by 32.3% to Rs 300.93 crore and total income also declined 6% to Rs 2023.92 crore. IFCI's shareholders have given their nod for the company to issue optionally convertible debentures (OCDs) worth Rs 523 crore to the Government and subsequently convert them into equity shares at par.
Outlook: The company has shown moderated growth from past few quarters. The increase in interest rates has not allowed its growth in top line to be translated into bottom line. The company is looking at increasing its competency through its subsidiaries which have their own ability to raise funds.
Technical View:
The stock bounced back sharply after testing supports around 26.50 levels. If the recent low of 26.50 is held on the down side, the stock may run-up towards 31-32 levels shortly.
JAIPRAKASH ASSOCIATES
CMP(`): 77.80 EPS: 2.97 52 Week High: 106.70
Fundamental View:
HOLD
Jaiprakash Associates (JP Associates) registered 64% fall in standalone net profit to Rs 110.93 crore for the quarter ended Dec 2012 even while it's operating sales was higher by 16% to Rs 3430.87 crore. Sharp fall in net profit inspite of higher sales is triggered first by 600 bps contraction in operating margin which resulted in 8% fall in operating profit to Rs 795.02 crore. JP Associates won two contracts worth an aggregate Rs 913 crore from Mangdechhu Hydroelectric Project Authority in Bhutan.
Outlook: The cement prices may firm up after pick up in construction activity, especially as upcoming elections in some states will boost execution of public infrastructure projects. Its rising debt is a major concern and current consolidated net debt has risen 34%to Rs 50,300 crore last fiscal from Rs 37,500 crore in 2010-11. For better performance in coming quarters; the company needs to maintain such reductions in interests and expenses. Technical View:
The stock rallied more than 7% last week. It is looking good and 81 levels may be tested in the near future. Important moving averages are placed around 82-84 levels, which will act as resistance for the stock.
TATA STEEL
CMP(`): 359.15 EPS: 54.65 52 Week High: 482.25
Fundamental View:
HOLD
Tata Steel's consolidated net loss for the third quarter went up 27% to Rs763 crore from Rs602 crore in the corresponding period last year. The loss was the biggest quarterly one in more than three years. Decreased demand in Europe and closure of a blast furnace affected the revenues, down 4% to Rs32,163 crore from Rs33,357 crore in the year-ago period. During 9M FY13, its consolidated net loss Rs 529.11 crore vs profit of Rs 4956.31 crore YoY. Its net sales was almost flat at Rs 99236.55 cr vs Rs 98397.28 crore YoY.
Outlook: The reforms announced by the government will provide a fillip to growth in the economy. It hopes that demand will revive with the recent reform measures taken by the Government and reduction in the key banking rates, which will lead to lower lending rates and boost infrastructure activities.
Technical View:
The stock rallied more than 5% after testing important supports around 332 levels. till this level is held on a closing basis their are higher chances that the stock may register meaningful recovery and test 400 levels in the near future.
10
JSW ISPAT STEEL LTD.

CMP(`): 9.60 EPS: 2.10 52 Week High: 14.35
Fundamental View:
Mcap (` Cr.): 2375 Book Value(`): -0.41 52 Week Low : 8.95
REDUCE
JSW ISPAT Steel reported net loss of Rs 130.74 crore in the quarter ended December 2012 as against net loss of Rs 308.57 crore during the previous quarter ended December 2011. Ten promoter group companies of JSW Ispat Steel have sold their 6.38 per cent stake in the company amounting over 16 crore shares for Rs. 174.47 crore.
Outlook: The company needs to revamp its operations to increase the profitability.
Technical View:
The stock has remained an underperformer and has stiff resistance around 11 -12 levels. Sustaining above this resistance is important so as to show any meaningful rally. Nearest support is placed around 8.95 levels.
POSSIBLE REPLACEMENT HINDZINC
11

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