RIL - Sirf naam hi kaafi hai

Assume you have a huge cash pile with you.

You can invest it
OR
You have the choice of investing or putting it in FD/NCDs till you decide what to do with it.

Person who opts for option 2 will be appreciated as being prudent.

RIL is doing just that.

Have a look @
http://economictimes.indiatimes.com/special-report/mukesh-ambanis-ril-not-buying-despite-its-huge-pile-of-cash/articleshow/11087027.cms

25 Bn USD of cash ----- uh

News:
RIL buys stake in Nuclear Design Company -
http://www.hindustantimes.com/business-news/CorporateNews/RIL-buys-stake-in-Terra-Power-US/Article1-785831.aspx

RIL buys stake in US Shale gas company
http://energybusiness.in/ril-acquires-stake-another-shale-gas-company/

It has many ventures

- RIL Pet Chem
- Oil, Gas and Refinery
- Retail (Includes Gold, Grocery, Shoes etc)
- Retail Outlets to sell Petrol
- Internet Telephony (4G)

RIL has the following unique problem:
What to do with so much cash?????

While other companies struggle with the following question:
Where to get cash from????

Isn't that an issue we all dream we should be in?

Will you buy RIL for the sheer cash size it has?

GAIL

GAIL -
This is the stock which we believe could be a huge one going forward. Why?
- As gas market grows in India, GAIL will be a big beneficiary.
- As output from KG Basin + ONGC basin etc increases, it will help GAIL
- GAIL will be working on TAPI pipeline and that will also benefit GAIL [http://www.financialexpress.com/news/gail-to-lay-tapi-pipeline/302677/1]
- Investments in Shale Gas [http://www.business-standard.com/india/news/gail-to-invest-1-bn-in-shale-gas-/454382/]
- CBM fields to generate more hydro carbon [http://www.business-standard.com/india/news/gail-arrow-consortium-spuds-first-core-well-in-cbm-block/322823/]
- Cash rich company
- Eyeing stake in Petronet LNG [http://www.firstpost.com/investing/gail-keen-on-buying-adb-stake-in-petronet-lng-for-about-rs-614-cr-97954.html]
- Eyeing stake in Gujarat Gas [http://articles.economictimes.indiatimes.com/2011-11-15/news/30401623_1_bg-stake-mahanagar-gas-city-gas-distribution-business]

What do you think?

DTC and effects on ELSS MF

DTC draft seemed to propose removal of Sec 80 C benefits for ELSS MF.
Since DTC will kick in from the next financial year, you can still buy them this year and get tax benefit under 80C this year.

However, if folks buy in Dividend re-investment option, not only will they be in a 3 year lock in (for every investment) but also not get any benefit [your new units are locked for a further 3 years].
With that in mind, change your dividend reinvestment option to a simple dividend or growth option.

My thoughts:
Most new investors used ELSS option to tap the market and get tax benefits.
Won't investors whose ELSS mature this year redeem and not invest next year?
Wouldn't this reduce the popularity of ELSS + reduce the assets?
Won't this have any effect on the performance of these funds?

For existing ELSS schemes, I would definitely want to try and change my option from Divident Re-investment to either Growth or Dividend payout.
Once 3 years lock-in period completes, exit.

Instead of investing in a new ELSS scheme this year, shouldn't we look at other options?
Await the DTC to become an act, see the impact and take a calculative decision?

These are my thoughts? I could be wrong....what do you think?

Pipavav Defence.....

Pipavav Defence.....

http://www.livemint.com/2011/09/12134610/Mazagon-Dock-Pipavav-to-joint.html

. Picked by state-run Mazagon Dock Ltd as its joint venture partner to build warships for the Indian Navy.

. Plans to list company overseas

. Will float an independent company to be named Mazagon Dock Pipavav Ltd (I don't like this until existing shareholders get a stake)

. Company will be executing the current order book of Mazagon Dock worth Rs1 lakh crore (Rs1 trillion) and look for new orders jointly

. Pipavav Defence owns India’s biggest dry dock used for building and repairing ships and has a licence from the government to build warships

. The company proposes to convert an existing wet dock into a second dry dock to enhance its capability to build warships for the Indian Navy and the export market

. Pipavav is currently executing orders worth a combined $1.5 billion, with defence work accounting for some 42% of the total value

Rakesh JhunJhunwala has a stake in this company.
In Pipavav, Rakesh Jhunjhunwala and his family holds 10 mn convertible warrants issued at Rs 78 a share

What more does one want? Will you invest?

UPDATE (13th Oct) -
As per
http://www.moneycontrol.com/news/business/i-t-searches-at-pipavav-group-firmmumbai-delhi_598355.html#toptag

It seems the fate of the JV is unclear.

Health Care -- A good investment?

I was at a famous hospital (in Blore) for a lot of time last 2 weeks.
Have been frequenting there and visiting doctors for some health issues.

Couldn't believe the rush......costs of blood tests, xrays have grown...no complaints
Consultations fees of doctors in OPD go close to 300 Rs for a couple of minutes...
Credit cards get swiped one after the other...people are in queue waiting to pay.....drawers full of cash...500 Rs notes seem so little .....wads and wads of them....

Made me wonder....shouldn't health care stocks be on everyone's radar?

Just like when I got hit by a bolt of lightening when I realized the kind of money made by titan (tanishq).
Its the same bolt now.....I think I made a good decision by buying Titan... unless gold goes to such high levels that people stop buying...
Will it happen in India? Could be ....one never knows.

Going forward...people will still make families...and with growing income people will go to hospitals
And the way the hospitals are charging..they will break even and make profits...

Health care stocks now are appealing to me....something like Fortis HealthCare.

I will hope some schools (not everonn/educomp) come in IPOs ...they are minting money and will be a good investment.....

Till then..I will look @ Fortis Health Care a bit more closely.
What do you think?

Debt Instruments or FD - Use as Retirement plan?

Debt Instruments or FD - Use as Retirement plan?

Have heard many times the statement that -- "if you are a ling term investor with a horizon of 10+ years, you will reap benefits."
OR
"In the long term invest in equity MF"

But all of us would like to have a debt (read fixed guarantee) income scheme as well isn't it?

Here is what I was thinking and need your opinion on the same. (I haven't taken the taxation part into account.)

Fixed Deposit as a tool for retirement plan:

SBI current term deposit rate is 9.25%
20,000 INR invested now will give you close to 50,000 INR in 10 years.

Picture this:

Make a FD of 20,000 INR every month (till interest rates are high).
10 years later, you will get 50,000 INR per month (guaranteed) + your additional income at that time.


Recurring Deposit:

An RD of 2K per month for 10 years @ SBI (@ 9.25%) will generate income of 4L odd after 10 years.

Make a RD of 2K (or 1K) per month for 10 years @ SBI (assume 12 RDs)
Yearly - 24K (or 12 K). -- 2k * 12 or 1K * 12
At the end of 10 years, monthly one will get 4L (or 2L) per month for the next 12 months + your additional income at that time.

Debt MF:

Pick a MF with more or less guaranteed income
e.g. HDFC Monthly Income Plan - LTP - Dividend Re-investment (Monthly)
This scheme gives 0.06 INR per month as dividend.
Buy 17000 units (each @ 12.5 means 2.12L).
Monthly dividend on 1000 INR which can be re-invested.
This is 5% return

But after this, without doing anything, due to consistent dividend (note: if it continues that way)...
After 10 years one would have 28690 units.
Even if the NAV is same, it comes to 28690 * 12.5 = 3.58L
That comes to 6.8% yearly + any gains due to rise in NAV

What do you think? Makes sense?

Mayhem

Mayhem -

BHEL does a stock split.....great...will you buy?
ONGC - no FPO as yet .....great...will you buy?
TATA Steel - < 400 .....great...will you buy? (remember it has huge debt @ high interest rates)
RIL/Larsen/SBI ....just one way .....great...will you buy?

Some stocks just seem to hang on
I have seen HDFC and HDFC bank just holding on to 600+ and 450+
They just dont seem to go down ..obviously due to large institution holdings. What if they decide to offload?

They say the best time to buy is when everyone panics.....is this the time.

Personally I want to wait and see a reversal (would be a big one when it comes).
But it gives a comfort factor to buy @ that time

However, rest assured no analyst will say dont buy SBI/Larsen/ONGC etc

Alternate options:
- Index Funds [eventually will give index based returns when market rises]
+
- FD @ 9.25% [SBI/Corporation bank]

All of us who have invested in stock and have tasted blood (profits) always seem to think 9.25% of FD is crappy.
Think again....

New mining bill

New mining bill

I am scratching my head here.
Whats the new mining bill for?

Share 26% of your profits with locals.
Great - atleast the locals and tribals will benefit.

But, here is where I scratch my head, what about the tax that they pay?
Why can't government use it to the benefit of the locals?

Must be something I have to dig up into.

So thanks to the new mining bill, stocks go one way --- DOWN
Coal India, Tata Steel, Sterlite.....you name it.
Would it have been a super idea to short these stocks (Derivatives) because most of us knew about this bill?

Would you now look at Coal India, Tata Steel and say "Slurp, this looks super inviting"?

Addendum - Sterling Hotels

Addendum - Sterling Hotels

In addition to my earlier post on Sterling Hotels, Rakesh Jhunjhunwala and Radhakrishna Damani have invested 800 mn INR.

http://www.indiainfoline.com/Markets/News/Sterling-Holiday-Resorts-up-after-Jhunjhunwala-invests-in-stake-reports/5254397841

Stock jumped close to 10% and was in upper circuit.

However, today it didn't hit a circuit.

Need to decide: Trust RJ and RD's judgement and make a splash?
I know I didn't for VIP and regretted ever since.

Rakesh Jhunjhunwala...Radhakishan Damani...uh..how about both?

Radhakishan Damani - Dream investment was VST Industries.
Bought 26% (approx) @ price of 63 crores (source: moneycontrol)
Current Investment value: 520 crores in 10 years.
Dividend: 71 crores

Rakesh Jhunjhunwala - Dream Investment was Titan Industries.


Do these both have any stock in common?
Yes.

CRISIL, Delta Corp, Sterling Holday Resorts.
I had mentioned a post on Sterling Holiday resorts (http://mymoneyrules.blogspot.com/2011/08/holiday-season-resorts-beckoning.html)

What do they look for in a stock?
All stocks which have a competitive advantage.

VST Industries: Cigarette Industry with no new competition coming in
Delta: Gambling (highly lucrative + goa advantage)
Sterling Holiday: 14 resorts which a new competitor will have a tough time (courtesy high real estate prices)

We have to spot companies with strong fundamentals + competitive edge and hold them close to heart with patience.

Some just follow either Radhakishan Damani or Rakesh Jhunjhunwala

Some others, may follow both by buying the common stock from their portfolio.....are you one of them?

MRPL - Out of sight ... out of mind?

Can't write a lot on MRPL.

Go through following link....easy to understand why MRPL should be in the investment list.

http://www.thehindubusinessline.com/companies/article2296232.ece

The company is planning to expand the refinery to 300,000 bpd.
Current capacity is 194000 bpd.

MRPL‘s expansion will witness the refinery complexity rising from 5.5 to 9.
This will help in maximizing GRMs.

Whats your call?

CIL is # 1

CIL is # 1 in market cap.
It has dethroned RIL who had dethroned ONGC in 2007.

As of today, Reliance Industries' market cap stands at Rs 248,662.36 crore and that of Coal India stands at Rs 250,728.08 crore.

The world's largest coal miner had a production target of 460.5 MT for 2010-11, which was revised to 440.2 MT

What does this news mean?
It implies that with CIL being # 1 in the sensex, its weightage will increase and all index MF and ETF will have to purchase it as per norms.
Please correct me if I am wrong here.

See MF holdings:
http://www.moneycontrol.com/mf/user_scheme/mfholddetail_sec.php?sc_did=CI11

Many index funds are missing. They need to buy which implies stock will be in demand.

Whats the future?

According to NC Jha, CIL's products are sold @ 50% cheaper prices than imported coal.
If the coal is washed, the company can get better rates for their coal.
For this the company has planned for 20 washeries which will gradually come onstream in a couple of years.

Waheries news: http://www.constructionupdate.com/CMS/Newsletter/NewsFiles/39739.html

As per moneycontrol:

Coal India in Q1'12:
Maharatna firm Coal India reported a 64% jump in the consolidated net profit at Rs 4,143 crore for the first quarter ended June 30.
The company had posted a consolidated net profit of Rs 2,525 crore in the April-June period of 2010

This at 50% cheaper price. Imagine the extent when they sell washed coal!!!

Prediction?
From the look of it, this company has huge potential.
Its in my outlook for long term investment.

What do you think?

Holiday season - resorts beckoning - Sterling Resorts beckoning?

Holiday season - resorts beckoning - Sterling Resorts beckoning?

Sterling Holiday Resorts has 10 resorts.
Sterling Holiday Resorts has plans to open 11 new resorts in the next 10 years.

Mahindra holidays -
http://money.rediff.com/companies/mahindra-holidays-and-resorts-india-ltd./16560125
Mcap - 3000 Crore
CMP: 364 Rs

Sterling Resorts -
http://money.rediff.com/companies/sterling-holiday-resorts-%28i%29-ltd./16560010
Mcap - 488 Crore
CMP: 99 Rs

What does Sterling Resorts have?
- Ramesh Ramanathan has joined as managing director (he was part of Mahindra holiday's success)
- Rakesh Jhunjhunwala to get preferential allotment of shares

Will it zoom away like VIP (after Jhunjhunwala bought it)?

Time for a treat.....time for pizza....time to buy Jubilant Foodworks?

Time for a treat.....time for pizza....time to buy Jubilant Foodworks?

Jubilant Foodworks who runs Dominoes and soon may open Dunken Donuts has reported 40% growth.
Results: http://economictimes.indiatimes.com/jubilant-foodworks-ltd/profitandlose/companyid-16224.cms

Food inflation has led to price rise in costs of the pizza.
However, the growth seems to be increasing with price.

Do we see a time that folks stop pizza? Would you?
If yes, what will you replace it with?
Pizza, burgers best idea for treats?

Today they announced that soon they will come up with a new Pizza in the next 2 months.

If folks accept dunkin donuts with the same enthu as McDonalds etc.....
we are looking at zooming profits for lots of quarters to come.

Time to buy Jubilant Foodworks?

This stock could zoom provided they keep up with their competitors.... + food inflation.