Call Succes For MSIL - Revised Target of 2000.

We had given a call for Maruti Suzuki on 21st January 2013 with a target price of 1592 for 5 days., Maruti closed @ 1600 on 25th Jan 2013.

Here we give a buy recommendation on the stock because of its robust Q3 results and the future earning prospects.

The rationale for the call is : a)MSIL was able to report a sales of about 300000 units in the 3^rd quarter of 2012 an upside of 30% QoQ and 26% YoY. We expect the sales to grow with the same trend in the next quarter driven by robust domestic demands and exports. b) Exports not affected in spite of Europe being the main importer, it grew at an astounding 59% QoQ and 17.2% YoY. The countries of export are Netherlands, Germany, France and the UK. With the exception of France all countries have a growth of GDP and have lowered their debt as a percentage of the GDP. Hence the export figures are bound to grow even more impressive. c) 25% of the FY12 sales was driven by Rural India and has a lot of potential for growth given that Maruti’s distribution channel in the rural market is good. d) New diesel models Ertiga (Maruti’s MUV offering) and Swift Dzire drove the sales figures. New and good quality cars offered by MSIL in a market where its competitors are just sitting on old or unchanged models is a big competitive edge.  While the Society of Indian Automobile Manufacturers renewed its growth figure for the industry to 3-5% we expect sales of MSIL to grow at 9.5%.

As we can see the stock is trading @15 P/E multiple according to future earnings potential. Buy maruti and hold for 6-7 Months to get an impressive yield of 25-30% on your investment.

Buy Maruti for a target of 1592.

The sales figures of Maruti are looking good and they will grow 7-8% driven by sales of Ertigo & Dzire.While the automobile industry is expected to grow at a meager 3-5% during that period. Maruti will soon prove to be market leader in terms of sale if they continue to bring high quality and new cars into the market.  Buy Maruti for a period of 5 days and expect it to go to 1592. Q4 results on 25th Jan.

Buy Havells India for short term.

With the Q3 results awaited on 23rd Jan 2013, expect this stock to reach 690 again. Currently trading at 24 times P/E, is still undervalued by industry standards. CMP 658.9INR at the time of writing. Target of 689 till January end and a stop loss of 650.

Will the Market Reach 23000 in 2013?

The Sensex is nowhere near the valuations of around 22 times the earnings  it was trading during the year 2010. Since then a lot of uncertainties in the Indian policy scenario and the corruption charges against the government had put a downward pressure on the market. That coupled with the debt crises in Europe had made it worse. But now, global fund managers are looking at India as a viable investment market due to rise in earnings growth. The so called "Policy Paralysis" is disappearing, it was apparent when the government finally gave the go ahead to FDI in retail and deferred the General Anti Avoidance Rules to 2016. The stage for investors both foreign and local is set!

Deutsche Equities sees Sensex at 22,500 by December led by Financial, energy, information technology and industrial stocks. Global biggies like Morgan Stanley, Goldman Sachs, JP Morgan, Nomura, Citigroup and Macquarie have already raised the Sensex target for 2013 to a high of 23,069 by December. They have said that the fresh wave of economic reforms set off by the government last September will revive investment and boost economic growth, which is set for a decadal low of 5.5 per cent in FY'13.

 

In morning trade on January 15, the Sensex climbed to over 20,000 for the first time since January 2011, but settled a tad low for the day. Today the benchmark index rallied 146 points to close at 19,964 points after the government virtually deregulated the diesel prices. Market heavy weight ONGC hit a 52 week high and RIL closed 2.8% higher.

Overseas funds bought USD 24.5 billion worth of shares in 2012, the most among 10 Asian markets. The highest foreign inflow was USD 29 billion in 2010. Deutsche Equities said it is bullish on cyclical stocks, a departure from its last two years of focus on defensives. Consumer staple, health-care and utility stocks would remain 'underweight', the brokerage said.

"Value" Investing explained

And finally there should be a margin of safety in your approach. As Benjamin Graham would have said i would drive a truck weighing 9800 pounds over a bridge meant to hold 10000 pounds if it was 6 inches above ground. Not if the bridge was over the Grand Canyon, then the bridge has to hold 30000 pounds thats the Margin of Safety. Happy investing!

Titan Industries : Dont Buy even for short term.

I would suggest from desisting in buying this stock that is greatly over valued when compared with industry standards. Reasons for this :Watches are not viewed as an important piece of everyday product. I mean how manyof us actually wear watches?Titan has achieved an Operating profit margin increase of just 0.05 %, and thats pathetic.While other players like HMT ,TIMEX are struggling with HMT in loss and Timex just scrapping at .16 rupee per share how is Titan achieving 6.7 per share? Aggressive advertising which is further reducing its operating margins.Sales are growing but are not sustainable in a market where Chinese players provide the same quality at half the price.Then the question, why are big research houses advising otherwise? Because they think a increase in stake to 8% by Rakesh Jhunjhunwala is a good sign. No it isnt. They are big players, following them could land small investors in trouble.

Obama Avoids The Fiscal Cliff, But wait theres a catch! 

The budget deal passed by Congress Jan. 1 and signed into law by President Barack Obama the following day raises taxes on the income and investments of fewer high earners than Democrats proposed.

              Still, families earning $250,000 to $450,000 a year, who are now breathing a sigh of relief, might have more of a tax pinch in 2013 than they anticipate. And those earning more than $450,000 a year may be better off than they expect.
The deal struck by Congress Jan. 1 averts most of the $600 billion in tax increases and spending cuts that were set to take effect this month. It includes a new top income tax bracket with a 39.6 percent rate, which applies to annual taxable income above $400,000 for individuals and $450,000 for married couples. Obama had campaigned since 2007 to set the levels at $200,000 and $250,000, instead. So in essence what has happened is Mr. Obama as given in to the demands of the rich to tax them more.

Lets look at a few examples of what the bill has done :

• Democrats had proposed the lower thresholds as a marker for higher rates on capital gains and dividends. Instead, the law raises the rate to 20 percent from 15 percent, also for taxable income above $400,000 for individuals and $450,000 for couples. That means four tax brackets effectively exist for long-term capital gains and dividends this year: the existing zero and 15 percent, 18.8 percent and a top 23.8 percent. Fair enough, in a democracy it is somewhat the burden of the rich to provide for the poor.  But there are always ways to circumvent such provisions.

• The budget deal also didn’t extend a two-percentage point cut in the payroll tax for workers of all income levels that expired Dec. 31,great aint it? Millionaires also saw relief with taxes paid on gifts and on estates at death compared with Obama’s past proposals. The law makes permanent a $5.12 million exemption, or $10.24 million for married couples, on lifetime gifts and estates. It also indexes those levels for inflation so they will increase over time,wow its like the rich would wait for the time when a $2Mn "GIFT" would give them most returns and then hit the button. For those confused as to how this will benefit them, it would be through the fake trusts they make.