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Sunday, October 26, 2014

PE investors bullish on organised jewellery chains
[Editor: Gitanjali Gems Ltd was already recommended around Rs.63, but those who are not holding the scrip can buy it at the CMP of Rs.58.15, for a target of Rs.71-72, in the short term. Recently, there were some media reports that, Imports of cut and polished diamonds trebled in August, 2014 on concerns on export markets. Traders are importing more for local sales if export demand doesn't match up. Meanwhile, the Diamond ornaments has become costlier by at least five per cent this festive season, on Indian diamantaires’ decision to pass on the rise in prices of rough diamonds (‘roughs’ in trade parlance) to consumers. Gold sales in India during the festivals of Diwali and Dhanteras celebrated this week rose by about a fifth, a senior official at the country's biggest gold trade group said on Friday]
On October 20, US private equity (PE) major Warburg Pincus announced its Rs 1,200-crore investment in Kerala-based Kalyan Jewellers for an undisclosed stake. This transaction lifted eyebrows, because the PE firm had reported a considerable loss in the same space in its previous investment.

Warburg competed with its peers Temasek, Apax Partners, Blackstone, Bain Capital and TPG Capital to pick up a stake in Kalyan Jewellers. Experts say these investors' interest point to the potential of branded retail jewellery chains in the country.

The domestic gems and jewellery sector had a market size of Rs 2.51 lakh crore in 2013, with the potential to touch Rs 5-5.3 lakh crore by 2018, according to a Ficci-AT Kearney report. Gold jewellery accounts for 30 per cent of this market.

About 80 per cent of the jewellery market consists of local and regional players. Such players, too, have been growing at 8-10 per cent over the past five years, according to industry experts. The domestic retail jewellery segment has seen a consistent year-on-year growth of 15-20 per cent and the sector will continue to expand at 20 per cent in the next few years, experts point out. It is this growth that has attracted PE firms.

Another factor attracting PE majors to the sector has been the gradual shift in jewellery retailing from the traditional way of retailing to the modern, organised way of marketing - both online and offline.

Before the Warburg Pincus-Kalyan deal, SAIF Partners had invested $13.1 million in Kolkata-based jewellery firm Senco Gold, early this month. In September, Ratan Tata, chairman emeritus of Tata Sons, invested an undisclosed amount in BlueStone.com, which in March had received about $10 million from Kalaari Capital, Accel India and Saama Capital.

In 2013, Progruss Investments invested $24.82 million in Shree Ganesh Jewellery and in 2012, Brand Capital invested in Gitanjali Brands. Since 2012, Caratlane.com has raised about $20 million from Tiger Global. Earlier, Credit Suisse PE Asia had made a 74 per cent return on its investment in Shree Ganesh Jewellery by making a part-exit during its IPO in 2010. Gitanjali Gems also raised some PE funding.

A media report quoted Vani Kola, managing director of Kalaari Capital, one of the PE investors in BlueStone.com, an online jeweller, saying the branded jewellery has tremendous growth potential. Consumers will continue to look for great designs and trust in quality. PE players will be interested in online and offline jewellers. "I think there is tremendous opportunity for both," she said.

"This investment by Warburg Pincus reinforces the trust in the Kalyan brand name and will act as a fillip to the entire industry," says S Subramanian, managing director at Axis Capital, which acted as a financial adviser to Kalyan.

"Warburg Pincus' investment in Kalyan Jewellers is the largest private equity investment into the jewellery segment in India, and is an acknowledgment of the company's highly-talented team, its pioneering role within the industry, and its commitment to the highest levels of customer service. We are excited to partner with the team at Kalyan Jewellers as they continue to grow the business going forward," Warburg Pincus said in a statement.

Currently, organised jewellery retailers in India (national and regional) command about 20 per cent share of the Rs 2.5-lakh crore domestic gems and jewellery market, according to global consulting firm AT Kearney. Further, rating firm ICRA expects the domestic gold jewellery industry to record a robust growth of about 15 per cent over the medium- to long-term, aided by the growing penetration of the organised sector.

India's organised jewellery market accounts for a mere eight per cent of the total market worth $45 billion. Leading organised gold retailers include Titan, Kalyan Jewellers, Tribhovandas Bhimji Zaveri, PC Jeweller and Gitanjali Gems.

JAYPEE SPORTS INTERNATIONAL LIMITED (JSIL)
PhotoLand of Krishna
Jaypee Sports International Limited (JSIL) was incorporated on 20th October, 2007. It was allotted around 1100 Ha. of land for development of Special Development Zone (SDZ) with sports as a core activity by Yamuna Expressway Industrial Development Authority (YEA). This area is inclusive of 100 Ha of land to be used for Abadi Development. Its core activities are Motor Race Track, suitable for Holding Formula One race and setting up a Cricket stadium of International Standard to accommodate above 1,00,000 spectators and others.

The Motor Race Track known as Buddh International Circuit (BIC) was completed well in time and JSIL successfully hosted the three Indian Grand Prix held in October, 2011, October, 2012 & October, 2013. The success of the event was acknowledged by winning of many awards and accolades.

JSIL is trying its best to generate revenue by placing Buddh International Circuit (BIC) as one stop destination for various games, launching promotional activities like motor cars, bikes and other products. JSIL has also made significant progress in development of non core area planned for group housing, plots, multi storey flats, commercial area, institutional area, roads, open space and other social activities.
Jaiprakash Associates Merger 
[Editor: Recently, there were media reports, that Aditya Birla group firm Ultratech Cement is believed to be looking at possible acquisition of Jaypee Group's three cement plants in Madhya Pradesh in a deal that couldbe worth about Rs.5,500-6,000 crore. Meanwile, the Economic Times reported on 21st October, 2014, that Eighty-eight infrastructure and industrial projects, involving investment of nearly Rs 3 lakh crore - which is more than the Centre's budgeted income tax collections for the current financial year - have become operational over the past few months. Therefore, the share of Jaiprakash Associates Ltd, which is now trading at around Rs.30.10, is one of the best scrips to be bought, as of  now]
New Delhi, October 24, 2014: Jaiprakash Associates' proposed merger of subsidiary Jaypee Sports International Ltd with itself has got approved from National Stock Exchange (NSE).

Jaypee Sports International Ltd (JPSIL) set up the motor race track Buddh International Circuit at Greater Noida in Uttar Pradesh. Formula One Grand Prix in 2011, 2012 and 2013 were held there.

At present, JPSIL is a wholly-owned subsidiary of the diversified Jaiprakash Associates group.

The amalgamation is aimed at having "greater synergies" between the two companies by consolidating the businesses.

The exchange conveyed in a communication to Jaiprakash Associates on October 8 that it has "no objection" to the deal. This would be valid for six months.

"The validity of this 'Observation Letter' shall be six months from October 8, 2014, within which the scheme shall be submitted to the High Court," the bourse said.

As per the draft scheme, the merger would result in focused management attention, improvement in operational efficiency and business prospects as well as on Jaiprakash Associates' profitability, among others.

All these factors are likely to improve the valuation of Jaiprakash Associates' shares and benefit the shareholders, it added.

According to the draft scheme, the interest of the secured and unsecured creditors would remain unaffected. Among others, JPSIL is setting up a cricket stadium in Uttar Pradesh. It became a public company in 2010.

Courtesy: NDTV Profit

Friday, October 24, 2014

Winning Strokes: Think Different
Photo: The Economic Times
Yesterday, J P Power Ventures Ltd recommended around Rs.12.05--12.28, touched Rs.12.77 intra-day. The Indian government on 20th October, 2014, announced that it will auction 74 coal-mining licenses to private companies in the next three to four months after the Supreme Court last month canceled 214 coal licenses issued to private and public companies since 1993. The move came after the government freed diesel from price controls and increased natural-gas tariffs over the weekend to curb subsidies and cut the fiscal deficit. Moreover, the coal block auctions will reduce uncertainty regarding power generation companies that depend on the dry fuel--this augurs well for the shares of J P Power Ltd. 
Tata Steel Ltd which was recommended around Rs.450, some days back, yesterday touched Rs.461.90 intra-day. The company is scheduled to come up with Q2FY15 results on November 1, 2014.
My recommended Country Club (I) Ltd, at around Rs.7, yesterday made a new 52-week high as the scrip touched Rs.16.90. Congratulations to those who bought the scrip on my recommendation made money yesterday. 
A couple of days back J P Associates Ltd was recommended around Rs.29.70, for a short term target of Rs.35-37. The scrip yesterday touched Rs.30.45, before closing at Rs.30.10. A sharp cut in diesel price on Saturday, 18 October 2014, is expected to bring down freight rates which in turn could reduce consumer price inflation. Lower consumer price inflation (CPI) could  provide room for Reserve Bank of India (RBI) to cut interest rates. This might  in turn, bring cheers in the Realty, Construction, Banking and Auto shares. In between, there were media reports on September, 26, 2014 that, Jaiprakash Power Ventures (JPVL) had stroked a new deal to sell, three of its power assets to JSW Energy. JPVL signed a binding memorandum of understanding (MoU) with Sajjan Jindal controlled JSW Energy to sell three of its operating power plants with an aggregate capacity of 1,891 MW. The three power plants are Baspa II plant having 300 MW capacity, Karcham Wangtoo plant with 1,091 MW capacity and Bina thermal plant with 500 MW capacity. Jaiprakash Group has been trying to sell its assets to pay off its huge debt. Jaipraksh Group has a total debt of around Rs.60,000 crore on its books, which represents a debt to equity ratio of 6.8 times. It means against every one rupee of equity it has Rs.6.8 of debt. Its annual interest cost is 1.1 times its EBIDTA. However, the book value of the shares of J P Associates Ltd is Rs.56.69 and the company has a market cap of only Rs.7,321.70 Cr, which is almost half its FY14 earnings of Rs.13,327.02 crores. This gives much room for the appreciation of the share price, from the CMP of Rs.30.10.
Resurgere Mines and Minerals Ltd, yesterday hit another buyer freeze in the opening trade, at Rs.1.64. The scrip has a good future ahead--the investors need to have patience, to generate superb returns from the share.. 
The Reserve Bank of India (RBI) is scheduled to undertake its fifth bi-monthly monetary policy review on 2nd December 2014. The annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India eased to 6.46% in September 2014, from 7.73% in August 2014. Meanwhile, the Nifty_Spot, closed at 8,014.55 yesterday, which gives fresh ammunition to the bulls. The rally is  now expected to get more fierce in the coming days, till 8000 holds on the downside on a closing basis 

Wednesday, October 22, 2014

MARKET MANTRA
Today's call: Buy J P Associates Ltd at the CMP of Rs.29.70, for a target of Rs.35. The company is looking at the possibilities to reduce its huge debts. It seems the scrip has formed a bottom of sorts around Rs.29. 
A couple of days ago, a call was given on Tata Steel Ltd at Rs.450, today the scrip touched Rs.462.60, intra-day. The target for the scrip given to the Paid Members is Rs.480.
Resurgere Mines and Minerals Ltd, hit another upper circuits on the opening trade. The Resurgere Mines & Minerals Ltd (Rs.1.57), in 2011 decided to acquire an iron ore mine, at Satarda in Sindhudurg district of Maharashtra, having area of 96 acre. The Fe content in the ore body ranged from 54% to 60%. The estimated total reserve is 47.59 million tonne.But even after almost 3-yeas of UPA RULE under Dr.M M Singh and around 5 months of NDA Rule under Narendra Modi, the company is yet to get approval, for the same. In the process, not only the promoters and its employees, but lakhs of shareholders have suffered, as the price of scrip plummeted from above Rs.250 to the CMP of Rs.1.57 (...and much below this earlier). Is it the fault of the company or of the government in power...? Even the present Narendra Modi government's performance till date is unsatisfactory. 
Yesterday, the PAID GROUP members, were asked to hold on to their Nifty LONG POSITIONS. Today, the BULLISH view will even get stronger if the Nifty closes either above 8000 mark or near it. The breakdown of Nifty below 7800 proved to be short lived and the close above 7900, again brought the BULLS into action. It appears that the corrective phase is near to an end.

Tuesday, October 21, 2014

MARKET MANTRA
Nifty's bounce back to 7900 again, after a brief correction is a sign of strength. The breakdown below 7800 proved to be short lived. The Nifty has currently broken its immediate resistance at 3925 and is now trading at 7934, which tells volumes of the commencement of a pre-Diwali rally. What should the traders do at this time? Join the PAID SERVICE to get regular updates on the markets. 
My call on Jindal Saw Ltd yesterday touched its first target of Rs.82, as the scrip cross Rs.83, intra-day. The Paid Members were suggested to book profits yesterday. 
Yesterday's strongly recommended call J P Power Ltd is doing well, as the scrip is up more than 2 percent intra-day and is  now trading at Rs.12.25. The scrip is expected to touch Rs.17-18, very soon and hence this is a must buy scrip for every investor.