i Develop Stocks Advisory

No gain without pain... When 2 Japanese and Chinese steel cos agreed for a 72% hike in iron ore prices the writing on the wall was clear. No slowdown in steel globally hence the sector will outperform. India consumption could match close to China if not to exceed which means domestic steel sector will have another Bull Run especially all small cos which are trading at market cap of 20 to 50 crs are ideally good cos for hostile or otherwise takeovers. The reason is simple. Greenfield project could take longer time for project and cost will be at least 4 times higher than the existing co’s market cap and hence M and A route most favoured. Bihar Steel Tubes is talking to at least 5 smaller companies for acquisitions including Stelco. Therefore keep watch on all small steel cos which will outperform in course of time. At the same time this is BONANZA for iron ore cos. Now you will understand why should SANDUR touch Rs 2500….? Last quarter it reported net of Rs 45 crs on an equity of Rs 9 crs and with whopping jump of 72% in iron ore prices and increased in Sandur’s capacity it has potential to report Rs 250 crs net in 09 which means at 20 PE it should be valued at Rs 5400 per share. How much valuation you want to give it is your problem? You may give even 1 PE nobody can stop you and then you may suddenly chase in 5 digits too like NMDC which is again your own problem…? When we selected R Power at 360 we knew the stock was underperforming by at least 45% due to sheer bear attack and we were not surprised when ADAG announced bonus which saw stock climbing to Rs 420. I think very soon it will cross Rs 450 the IPO price because now the IPO allottee’s generally loyal shareholders of ADAG will stop selling R Power whereas the bears are caught on wrong foot. Short covering is imminent once it crosses IPO price. It is also expected to freeze few takeovers of power plants to reach the 28K MW size sooner than anticipated. ADAG gr is known for this and hence the stock price which was looking very vulnerable at 350 will look smart and rosy at 750 also. Please cut and paste this. R Com was recommended in this column below Rs 200 in June 2006 which then went on Rs 800 plus with lot of value unlocking stories. As regards market, we are still cautious as the run up was very sharp and chances of traders getting trapped may not be ruled out. Our approach still remains to just come out of existing positions which could take still 6to 8 week and traders should take their own call with regard all new calls given by our S C team. We will be becoming absolute bullish once market closes above Nifty 5550 from where Nifty will race to 5880 in just hours. And 5900 I think we will be close to previous top of 6300 which will wipe off the entire pain. As regards cash shares, lot of investors might be feeling that they are stuck at higher prices in numerous stocks and they have doubt about the prices re surfacing. One that all calls are for long term and prices will surface in these periods or even later due to changed circumstances. Two that this is an equity market where share prices reacts to sentiments too. e g R Power was looking at 450 and got oversubscribed by historic high of 75 times which could have allowed listing of Rs 750 to 800 band which got hammered at 333. If this can happen with ADAG gr co it can happen with all other cos too even if they are GOLD or equivalent to GOLD. Investors those have lost faith in particular co may book losses and switch to stock of A gr which are still available at same discount. Instead of complaining about you’re riding wrong stock use this correction to correct your position where you feel your prices will come. E g somebody bought AVON Organic at like 56 (we too form that class of idiots) and lost faith in it may switch to IFCI thinking that he had bought IFCI at 120 provided he has faith in IFCI. You have stocks like Punj, REL, Larsen, ABAN, LMW, Petronet, Sterlite Optical, HMT, Videocon etc. Depending upon your loss in B gr shares discount in A gr share you can manage your arithmetic on your own. If you are still can’t digest that idea too then you are living in FOOL’s paradise and only fit for debt trading because equity by nature is risk oriented where you entire capital can get wiped off. If that is not the case DSQ could have been traded still at Rs 2000 per share. Nobody, as long as he moves about among the chaotic currents of life, is without trouble.