Mumbai Investor Meet - Nishit Vadhavkar

We had an interesting discussion on stock ideas this Sunday.

The consensus amongst the members was that stock picking has indeed become difficult in current times. The market has now become very stock specific which underscores the need for more interactions amongst members.

Vipul our analyst with Edelwiss met the management of Crisil and was convinced of its long term potential. He also is strongly bullish on Pantaloon Retail.

Sunder Rajan sir was bullish on two off beat scrips Tripex and Sukhjit Starch.

I made a presentation on GE Offshore reccomended by Vijay Sir. We tried to understand the working of the company and the high entry barriers made it a compelling buy at lower levels.

Siddarth continues to remain very bullish on KLG Systel having closely studied the company.

FMPs were considered to be an attractive option offering in excess of 10 pc returns for a short period.

Vipul also provided a list of conference calls numbers where individuals could pose questions to managements.

Nishit Vadhavkar's Analysis on GE Offshore

A new posting is available under Nishit Vadhavkar's Stock Analysis on GE Offshore.

This company belongs to the erstwhile GE Shipping Group handling Offshore business for Shipping Industry. It got listed separately last year and has been underperforming for sometime now.

Charter Rates having been on an uptrend, it also provides an impetus to the charter rate for the offshore rigs and vessels.

Do visit the presentation for more information.

Infosys a Safe bet for next 1 year - Nishit Vadhavkar

The Infosys results have been declared and the annual ritual of the next year guidance also has been given.

The guidance for the next year has been pegged at rs 82-83.

Infosys always beats its own guidance by a long margin. Taking a minimum 1 year view of the stock, at this time next year, a price target of Rs 3000 looks very realistic. That is assuming Infosys gives Fy09 guidance at 20 pc.

20 pc guidance for next year should not be too difficult for a company like Infosys which has moved into Consulting, its china operations have broken even.

Infosys may not be hot stock it once was, but as long as it continues delivering steady numbers, it should occupy a a sizeable chunk of one's portfolio.

I flex yesterday touched Rs 2360, a far cry from the open ofer price of Rs 2100. As I mentioned earlier, I flex is like opening a fixed deposit, there is virtually no down side.

In last week of December when recommended to to convert major part of portfolio into I-Flex it was trading at Rs 1880. A gain of 25 pc risk free.

The easy days of the bull market are over now. It is a stock pickers market. Over the next 1 year, its time to be very cautious.

I am still bearish on the markets and would wait at sidelines with i flex and cash and wait for the UP election results to come through. 1 more CRR hike seems to be on the anvil.

Jet-Sahara Deal a Lose-Lose Deal by Nishit Vadhavkar

We have heard of a win-win deal but this should surely go down in Indian Aviation history as a lose-lose deal.

Lets look at it from Sahara point of view. Last yr they were pocketing around 2300 crores and were gonna live happily ever after. Now they get around 1400 crores, lot of heart ache, and had to run an airline which made losses for a year.

Jet claims 40 pc discount to the price offered last year. But they will have to bear some of Sahara's losses, interest lost on 1500 cr in escrow account, lawyers fees so actually they have to shelve out Rs 1950 crores.

For 1950 cr what are they getting?

Rights to fly to international routes which they already. 24 aircrafts which are on lease anyway and aircraft type is different from jet, one is boeing other is airbus. they get pilots who can easily fly away to their competitors as they did last year.

They do they get important parking slots in delhi and mumbai but thats not worth the price paid. From naresh goyal point of view, if the arbitration panel had voted against him, he would have to shelve out around 1000 crores and got nothing. by paying double at least he is getting something.

The people to gain are Kingfisher and Air Deccan, for them one rival less in the skies. Air Sahara was undercutting everyone in the business. Jet is unlikely to do the same. The gleeful reactions say it all.

Gopinath of Air Deccan says Jet buying Sahara is like marrying a girl because you have lived with her for a while. Vijay Mallya wishes all the best to jet with a loud guffaw. Air Deccan remains my top stock to buy and the current merger is just one bonus for it.

Wait for Deccan to come to rs 75 and pick up huge quantities. 3 years from now i expect it to quote at rs 500 nothing less.

Nishit Vadhavkar's View on Healthcare Sector

One of the niche and overlooked sectors is that of Healthcare. India is now going through a consumption and IT driven boom.India has become the back office of the world. Thousands of Indian are leading an affluent lifestyle which only a few years ago, they could only dream of.

Life styles have become more sedentary and stress levels ahve increased dramatcially. The stress levels have are directly proportional to the salray increases.People now have the money to spend but along with that also the lifestyle diseases to boot. Diabetes and heart attacks are now hitting peole in their 30s a phenomenon which was unheard of until even a few years back.

The demographics suggest that the Indian population which has a large work force in the 25-35 years age group will peak around 2015 and then become greying.As has happened in the 1960s in the USA, the baby boomer generation has the money in hand and are willing to pay the premium for better healthcare services.I strongly feel healthcare is the sector to watch in the future.

There are very few listed companies in this space.1 of them is Apollo Hospitals. Now Apollo has a chain of hospitals in major cities and they have started Apollo pharmacies. Better supply chain efficiencies and bargaining power can make them a force to reckon with. They have also started the Apollo clinics where diagnostics services are provided. I have not studied this stock in detail but with a 10 year holding horizon a good stock to buy and forget.

Fortis healthcare has filed the red herring draft prospectus with SEBI. At the right price this could be a good buy, given that the promoters are the Ranbaxy group.

Nishit Vadhavkar's Stock Analysis

I have been associated with Nishit for long time now. It atleast feels like that since we regularly discuss about stock picks and investment environment in India as well as US.

Nishit has been contributing to this blog for few weeks now and has been providing his independent views on the market situation in India. He is a young guy with lots of knowledge and insights in the market.

Nishit has also been conducting investor's meet in Mumbai for a long time now where they discuss specific stocks and the fundamentals behind the same which makes it cheaper in terms of value with enough margin of safety, a classic Warren Buffet principle.

He has agreed to share few of the stock analysis he had completed during last few weeks for the benefits of the readers of this blog. I am sure it would be very useful, especially readers investing in the Indian Stock Market. Not to discourage US Investors who can decide on investing in the most exciting emerging market in the world alongwith China.

Would also like to invite comments from readers marked to me or Nishit (@ nishv77@gmail.com) for any questions they might have on the fundamentals of the stock picks.

I would like to offer readers investment portfolio suggestions if they send me specific query to my personal email id - gurudatta22@gmail.com

Markets: Continue at the sidelines by Nishit Vadhavkar

That was March 1st and today is April 1st. The scenario has played out more or less as predicted.

Things are gonna get loot worst than better.

i would suggest please do not touch Vakrangee or any small stock right now.

Even Air Deccan wait till it hits Rs 75.

The tightening by the RBI will hit banks, autos and real estates.

Cement, sugar and steel are already hit by the government.

IT strengthening rupee is lining up for a hit.

So what remains to provide support to the market? The telecoms and Reliance.

Oil has slipped back upto mid 60s level. The oil marketing companies will continue to bleed.

The only bright spot in the markets remain the telecom companies.

Its time to go on a vacation, forget about the markets and lets see after the UP elections.

Since february, all that I have in my portfolio is cash and I flex. I didnt make much money but did not lose anything.

Come may-June and its time to buy. Capital preservation is the fundamental rule of stock markets.

For past 4 months, I have not been holding a single real estate stock since I dont believe in crazy land bank valuations.

Nishit's View on I Flex

I-Flex today touched Rs 2085. The last open offer was made at rs 2100.I have been tracking this stock closely and since Mar 19th, Gudi Padwa both volumes and price has picked up.

Volumes have gone on somedays ten fold and price has gone up from Rs 1850 to Rs 2085 a gain of 12.70 pct.

Those who have been sitting on a combination of cash and I flex since early february instead of losses would be in profit right now.Increase in volumes and price usually points out to some insider info.

I strongly another open offer, preferential allotment to fund some acquisition might just take place especially if other tech stocks tumble on poor guidance.

Such an offer at Rs 2500 or thereabouts would make it very tempting for existing shareholders to cash out.I would suggest watch the stock carefully and enjoy the ride up.

Indian IT Watch for the results - Nishit Vadhavkar

The rupee has appreciated 2.7 pc against the dollar in the period jan 07 to mar 07. This means that companies who earn in dollars, their profit margins will be hit. The Indian IT companies will be the first off the blocks with their results in first week of April. Even a hint of negativeness, could lead to a trigger for correction in IT stocks which would be a good time to buy.

The Indian IT sector is a sector well insulated from domestic slowdown and with US recession still a question of debate, the IT stocks at cheaper valuations would be be a good pick in one's portfolios.

Infosys if available at around Rs 1900 levels would be a good solid pick in the portfolios.

Any correction would be an opportunity to add stocks like Vakrangee, compulink silverline, mindtree.

Mindtree the delivery percentages are 3-4 pc every day on the NSE. Pure satta is taking place in Mind tree, if the IT stocks correct temporarily, mind tree will surely be available at Rs 600 - Rs 650 levels.

To buy small caps and mid-caps its better to wait till the UP elections are over. The recovery in the nifty though almost vertical is misleading. The mid caps are languishing at levels 10-20 pc lower than what they were when nifty was 3850 last. The nifty has been taken up reliance, bharti reliance communication.

I feel distribution of stocks to retail investors is taking place. One would do well to sit on the sidelines and wait. if one has to buy it has to be the big boys like reliance, infosys, bhel, and larsen and toubro where in case of any correction the downside risk is limited.

Sometimes sitting on cash also leads to portfolio appreciation in the long run.

The bonuses of the fund managers are fixed on NAVs at the end of the financial year. that can also pratly explain why the index is running up.

Home Loan Growth Slowing Down - Nishit Vadhavkar

The retail home loan market growth has slowed down to around 25 pc from 40 pc as per ICICI Bank.

Lenders are unwilling to lend to borrowers. This is a far cry from the heady days of 2002-2006 when the lenders would line up in front of the borrowers.

Banks normally lend upto 85 pc of a property's value. The fear of Bank's now is delinquency by the borrowers. If the asset value falls below 85 pc, the borrower may decide to give up his home rather than pay up the loan. This is true especially in the case of a second home.

The disposable incomes earned by today's generation of IT and BPO employees has been funneled into the real estate market. This is purely as an investment option. At some point, putting in fresh money may seem unviable leading to delinquencies.

The scenario seen in 2001 is repeating where a bank FD is giving more than 10 pc safe assured return.2007 is going to be a stockpickers market. The US is facing problem over subprime lending.Subprime lending is lending to borrowers with a risky credit record. Banks do this in boom times to earn higher interest margins.

Defaults here will lead to a rise in NPAs. The early warnings signs of maybe a recession in the US are there. Once global liquidity tightens, India is not an isolated market which will go up whereas the other markets do the collapso.

Best is to sit on cash and watch the world cup.Amongst large caps, reliance looks to be a safe bet at around rs 1200 levels.BHEL, CONCOR and L and T will add solidity to one's portfolio but if bought at much lower levels. Just my 2 bits.