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Sunday, February 24, 2013

Stock Analysis of Delta Corp, Jain Irrigation, Shree Renuka Sugars and Transgene Biotek!

Question: Can you please tell me why Delta Corp is underperforming as I am holding 3263 shares @ 140 since October 2010. Will I get my investment price within 2 years?

Answer:

Delta Corp is a concept stock and is the only listed Indian company in casino business. Delta Corp operates two offshore casinos in Goa and another onshore casino is coming up in Daman region. The current casino gaming capacity is about 700+ gaming consoles. Delta Corp is launching its onshore gaming operations in the Union Territory of Daman as well. Third offshore casino is also set to be operational in Goa shortly.

From its Goa based offering, Casino Royale is currently India’s largest live offshore gaming casino with 480 gaming positions. Casino Caravela is another live casino offering 190 gaming positions.

In hospitality space, Delta Corp owns Daman Hospitality Pvt. Ltd (DHPL), which owns the largest resort and convention complex in Daman. The hotel is in the five-star deluxe category with 189 rooms, 29,000 sq ft of indoor events and meeting space and 70,000 sq ft of outdoor pools and events space.

Latest revenues for Delta Corp were sales of Rs 103.40 crore and a net profit of Rs 14.86 crore for the quarter ended Dec '12. This is lower in comparison to YoY revenues for Delta Corp. For the Dec, 2011 quarter the revenues were Rs 146.37 crore and net profit was Rs 23.67 crore. This slowdown in revenues and profits has impacted the stock price.

Looking at charts, 142 was the highest price ever for Delta and you seem to have entered at its peak. Technically Support for Delta Corp is at 51, and it would be a tough bet to get 140 in near future. Resistance levels are at Rs 84 and at Rs 110. You should aim for Rs 110 in next 12-18 months.

Question: Please provide your views on TransGene Biotek. I am holding this stock from a very long time.

Answer:

Transgene Biotek is a very interesting microcap stock. It has two decades of biotech expertise and unfortunately markets don't value stocks like this properly, because of lack of visibility and business model.

Transgene began as a firm manufacturing and selling diagnostic kits and moved on to biotech research, including the research and development of vaccines. One of its first major successes was development of genetically engineered Hepatitis B vaccine technology which was sold to Serum Institute, Pune in 1999, which continues to sell vaccines based on this technology.

It has a sizable portfolio of under development drugs and any more blockbuster success from this portfolio will move the scrip in positive direction.

Looking at charts, the firm has seen crazy heydays when stock was worth Rs 300 apiece, and currently it is trading at 99% discount to that price. So what has gone so wrong for Transgene?

One, promoter shareholding is less than 10%. That sends the signal that effectively no-one really owns the company now.

Secondly, there was an attempt at delisting, which failed. At Rs 2.63 a share, and market cap of Rs 17 crores, effectively one is getting all the IP and technology for a very small price.

Thirdly, large scale selling by GDR holders, the foreign ownership has come down from 73.44% to 27.44% and this has crashed the price to these penny stock levels.

Overall, support may come at Rs 2.1, and now it is as good as a lottery ticket to hold. Any more blockbuster drugs to unlock may cause the series of upper circuits once again. Existing shareholders should hold, however new investments is only for investors with high risk appetite.

Question: I have 1208 shares of Jain Irrigation Systems at 112 Rs/share. Please suggest what to do, I can wait for 2-3 years for good returns.

Answer:

Jain Irrigation is a marquee firm in Drip Irrigation technology and has proven products and technology in this space. The firm has many firsts to its name. Jain irrigation is Pioneer of Micro Irrigation Systems in India and is the largest irrigation Company in India.

Other than its irrigation division, in its Pipe Division, firm is the largest manufacturer of Plastic Pipes in India. In its Plastic Sheet Division, firm is largest manufacturer of PVC & PC sheets in India and is the only manufacturer producing widest range of Plastic Sheets (PC & PVC) under one roof. Firm has a successful food processing business as well and is initiating new business in solar panels as well.

The challenge that Jain irrigation faces is overly dependence on making sales through government subsidies and hence the firm is making a transition away from this business model. For the latest quarter profits have in red. Revenue is flattish from past five quarters and new business model is yet to make serious inroads. Promoter holding has also come down in last quarter from 31% to 27.46%. The firm is a regular dividend paying company.

Technically speaking, it has a support at 60 and can be expected to reach 90 levels from here on. One can average a bit here and new investors can take a entry here with a SIP kind of investing in mind.


Question: I am holding 100 shares of SHREE RENUKA SUGAR at Rs 55 per share. Could you please suggest whether to average at current price for good profits in next 1 year.

Answer:

Shree Renuka Sugars is one of leading manufacturer of sugar in India, and one of the largest sugar refiners in the world. The Company operates eleven integrated sugar mills globally (four in Brazil & seven in India) & two port based refineries in India.

The Company operates eleven mills globally with a total crushing capacity of 20.7 million tonnes per annum (MTPA). The Company operates seven sugar mills in India with a total crushing capacity of 7.1 MTPA and two port based sugar refineries with capacity of 1.7 MTPA.

In its Ethanol business, firm manufactures fuel grade ethanol that can be blended with petrol. Global distillery capacity for Ethanol is 6,240 KL per day (KLPD).

In its Power generation business, firm produces power from sugar cane by-products for its own consumption and also for sale to the state grids in India and Brazil. Total Power Cogeneration capacity is 555MW with exportable surplus of 356 MW.

Quarterly revenues of Renuka are in uptrend and have grown from Rs 697 crores in Dec, 11 quarter to Rs 1846 crores in last quarter Dec, 12. Firm is trading close to its book value of Rs 26.4 and promoter holding stands at 38.06% which is slightly higher than 37.36% two quarters ago.

Technically speaking, Sugar stocks are consolidating for long and Renuka is currently at 75% discount to its peak price of Rs 120. Technical Support is nearby at Rs 26 and one can average this stock at the current price or even take a fresh entry. The Rangarajan committee report for total decontrol of sugar sector will benefit the sugar stocks tremendously.

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