Septemeber 2006- India cements & Escorts

These are my personal musings. These are not in any way meant to be trading advise.

Didnt Post for long; We had a great crash in May and started to rise from June 14th. Hope u had survived the crash and learnt some more lessons on the way

India Cement
For the week ended 1-09-2006 India cements closed strongly. 198 seems to be the support. MACD is flat
Cement seems to be in strong demand; Analysts projections are that this will continue well into 2007 also beyond which capacity additions will start kicking in

India Cements (ICL) is the largest producer of cement in South India. Capacity expansions in the south are likely to be the lowest in FY 2008 leaving scope for sustained rise in cement prices in FY 2008 over and above strong rise in FY 2007.

Little Impact on F2007E Pricing Blowout since estimated greenfield or brownfield capacity announced by the industry players in future would take around 21-24 months (Jan–Apr 2008) to become operational. Hence, possibility of a potential blowout in pricing in F2007E does not change due to capacity addition announcements.
Hence Cement Industry looks attractive

Escorts

Turnaround story; with a lot of debt restructuring and focus on core business;
From the chart for week ended 1-09-2006 it seems that 84 is a strong support for Escorts. It should cross the 90-92 range to strengthen further. Moving in a upward sloping channel since June 14th. Formed a Bullish Harami Candlestick Pattern on Friday

NEWS on Escorts
Escorts just sold out its 49% stake in its joint venture with Carraro for 20 million euro. On the back on that, Rajan Nanda, CMD of Escorts says that they plan to continue their partnership with Carraro, despite the divestment, and continue to be the largest customer of Carraro.
20 million to Escorts would lower its interest cost, and give capital for growth because they are ramping up volume

View from ASK RAYMOND JAMES:
Escorts could be a turnaround story. But again, it is too early to jump the guns on that company because in the past they have missed many opportunities what they could have easily converted. So it would be interesting to see how in the next few months they are able to translate this good opportunity into good numbers.

15th September 2006
See the Big Move of Escorts today to 108 levels. Consider partial profit booking to re-enter at lower levels

I think Escorts is a mixture of Tractors and Auto Business. Everyone knows Escorts for more of a tractor division, but they have realized this money and they are planning expansion in auto components and the auto industries, one sector where people do like.

It is one industry and one sector where you can sell a story, so if they expand that and develop that using the good brand that they have got, they could definitely turn something positive there in the balancesheet of the next six months to one year and onwards.

But seeing the Price action in the past few months --- lets be optimistic

Result for June Quarter indicate a turnaround as tabulated below

Quarter Ended	30-JUN-2006	31-MAR-2006	31-DEC-2005	30-JUN-2005	31-MAR-2005
Particulars	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited

Net Sales	47850.00	44158.00	32929.00	24875.00	23199.00
Other Income	0.00	0.00	0.00	6.00	5.00
Gross Income	47850.00	44158.00	32929.00	24881.00	23204.00
Increase/Decrease in Stock	-1669.00	-794.00	-1420.00	-180.00	-194.00
Consumption of Raw Materials	35183.00	33610.00	24333.00	17688.00	16994.00
Staff Cost	4172.00	3993.00	3887.00	3724.00	3953.00
Total Expenditure (Excluding Other Expenditure)	37686.00	36809.00	26800.00	21232.00	20753.00
Other Expenditure	6135.00	4658.00	5154.00	7263.00	5178.00
Total Expenditure	43821.00	41467.00	31954.00	28495.00	25931.00
Interest	2401.00	1629.00	1818.00	3519.00	2548.00
Profit(+)/Loss(-) Before Depreciation & Taxes	1628.00	1062.00	-843.00	-7133.00	-5275.00

Will continue to post with minor interruptions