Speciality Restaurants is coming out with its IPO plans to raise about Rs 171-181 crore and this issue is open for subscription from May 16 to May 18. Speciality Restaurants is the owner of restaurant brands such as Mainland China, Sigree, Machaan and Oh!Calcutta among others.

The company plans to use the proceeds of IPO for developing new restaurants and partial repayment of debt. About 80 per cent of the proceeds (Rs 131 crore) would be used for the development of 45 new restaurants.
 
Issue Details:

Issue Open: May 16, 2012 - May 18, 2012.
Issue Size: 11,739,415 Equity Shares of Rs. 10.
Issue Price: Rs. 146 - Rs. 155 Per Equity Share.
Market Lot: 40 Shares.
Listing At: BSE, NSE.

Fundamentals:

For the fiscal Years 2010 and 2011 the company  reported an EPS of  3.92 and 5.48 respectively .  For the full year 2012, the EPS could be around Rs.4.25 and at the upper band, the IPO is done at 36 times the 2012 earnings. The book value of the company stands at Rs.32 for the reported year 2011 and the issue is being done at 5 times the book value. The company is growing at 30% and considering the appetite for such companies in food industries segment, the issue is worth  looking at. The only deterrent is the weak market condition and over pricing of the issue, in such market conditions. The company might do well post-listing, if not immediately.

Could be another Jubilant Foods ? Let's wait and watch.

What is Dividend Yield?

Dividends are payments made by a company to their shareholders and these payments are paid out of the profits made during the year. Dividend yields are returns from dividends, which can be calculated by dividing the dividend per share by the current market price of the stock. For e.g., a company quoting at 200, declares a dividend of 10, the dividend yield works out to 5%. High dividend yield stocks are for those investors who are looking for regular income as well as capital appreciation over a longer period of time.

These stocks can be picked up during market down trend or when market trend is not clear. In a downtrend, dividend yields of such companies goes up as the stock prices fall. Before investing in companies that provide high dividend yields, care to be taken that these companies have sound fundamentals, regular dividend paying and  enjoy healthy cash flows. We have picked few stocks which have high dividend yields in the range of 6-9% and with a low P/E ratio. Though the earnings growth of these companies may not be among the highest in the industry, they manage to deliver good results across business and economic cycles. During this time of the year, the companies declare their annual results and dividends. Hence, before investing in these companies, watch out for their annual results and performances as well.




The stocks that are picked have been limited to CNX 500 Index and of course, there are few other stocks outside this index with better yields also. While investing in the above stocks, an investor should limit their exposure to about 15-20% of their portfolio, since dividend-investing alone should not be anyone's investing strategy. If you find any other such high dividend yielding stock which might have missed our attention, please inform us or post them in the comment section.

With Indian economy moving on an up cycle during FY10, FIIs infused $20bn in Indian capital markets, and retail participation has also improved through direct investments through stock brokers,  insurance and mutual fund route. There is a significant jump in number of online trading by retail traders and this trend is likely to continue its upward journey. So let us throw some light on this brokerage sector, albeit cyclical in nature.

Corporate fund raising activity (through QIPs, IPO, and debt syndication) has gained momentum during FY10, along with the secondary capital market volumes which has clocked a growth of 60% yoy.  This has aided capital market intermediaries’ fee-income substantially. Operating cost of capital market intermediaries is largely variable in nature but still cost effective distribution model - franchisee and online trading through portals helps in keeping a check on operating cost. And, thus operating and net profit margins are likely to remain stable.

India Infoline, Edelweiss Capital and Motilal Oswal  are the prominent listed stocks in this sector. Post correction, these stocks are trading at discount to the benchmark index valuations. The valuations are reasonable, which make them stocks to watch on any declines.

Rajesh Exports (REL), in a potential game-changing move for the industry, announced plans to sell products at per-gram rate, the buyer paying no wastage, making and other hidden charges. REL said the initiative, promoted as Gold Revolution, would be launched at its Shubh retail outlet showrooms.

Contrary to the general practice of all jewellery stores, Subh outlets will not charge any additional charges like wastage, making charge, value addition charge, etc. REL will sell 22 carat gold jewellery and coins with Hallmark of 100 per cent guaranteed purity.

For example, if a customer buys 10 gms of gold at a price of Rs 1,600 per gm, he actually pays 15 per cent 20 per cent more than the Rs 16,000 jewellery due to various hidden charges. But Subh will charge only 3 per cent or Rs 48 more per gram towards its various costs.

In next 3 years REL plans to open 250 Subh showrooms in various cities in the country, a ten fold jump from 25 at present. This will help the company increase its presence in jewellery retail space which now accounts only for 2 per cent of its revenue. Going by these developments REL is a definitely a stock to watch, in the coming days.

Cadila Healthcare is targeting revenues of US$1 bn in FY2011E versus revenues of US$620 mn reported in FY2009. CDH is ranked fifth in India by revenue. International generic sales accounted for a third of the company’s FY2009 revenues. The company has a presence in niche consumer segments in India. CDH has invested in NCE research in three segments but benefits from these investments are not yet visible.

Some updates on the Company:

Cadila Healthcare has created multiple platforms to ensure stable growth over the medium term. France,US and Japan are expected to drive revenues in the near term. Despite the Rupee appreciation and higher R&D costs in FY2010-11E, the margins are expected to be stable.

The Indian finished dosage remains the most important segment in valuating the company. This is followed by the US market and consumer/animal healthcare business.Early success in the transdermal and oncology segments can drive the price even higher.

Key risks :

Regulatory risks in the form of price controls by the government are the most important. Other industry risks relate to (1) pricing reforms in Europe, (2) increasing consolidation of the global generics industry, (3) global generics players using India’s manufacturing cost advantage, and (4) continuing volatility of the Indian Rupee against the US Dollar.

The EPS for FY09 is Rs.22 and is expected EPS for FY10 is Rs.33. At current market price of Rs.650, the stock is trading at forward p/e of 19. The stock is worth looking at during sharp declines.

Godrej Consumer Products is developing into a good story in the FMCG space. Inorganic growth, like it's intended buy-out of Sara Lee’s 51% stake in the JV, is the trigger to watch out for this stock. This buy-out and its geographical expansion can potentially add 20% to the company's sales over FY2009.

Godrej group intents to buy out Sara Lee’s 51% in Godrej Sara Lee Ltd. Going further, the group may even consider buying out the HI operations of Sara Lee in markets like Indonesia, Malaysia etc.

In the event of Sara Lee selling the global Household business to a third party, Godrej group has the opportunity to buy the entire 51% from Sara Lee at a predetermined price and in turn sell the Sara Lee brands (Ambipure, Brylcream and Kiwi) business to the new buyer at the market price.


The focus on low unit packs and increase in distribution reach, is expected to drive growth—the company has a reach of about 4,000 towns (of a total of 8,000 towns) and 15,000 villages (of a total of 6, 37,000 villages). GCPL is targeting to expand its presence to 8,000 towns and 50,000 villages in the next three years.

The EPS forecasts are Rs9.6 for FY2010E and Rs11 for FY2011E and at current price of Rs235, Godrej Consumer Products trades about 21 times based on FY2011E EPS. The recent acquisition of 49% stake in Godrej Sara Lee and higher distribution-led growth will be boost the company's growth prospects. Hence, long term investors can use any sharp correction to buy into this stock.

BPCL,HPCL and IOCL are going to be the big beneficiaries of the government’s decision to (1) bear the entire subsidy burden on cooking fuels (LPG and kerosene) and (2) bear subsidy on auto fuels along with the upstream oil companies. The petroleum secretary has guided to an overall subsidy burden of Rs300 bn on cooking fuels for FY2010E and has stated that the government will bear this entire burden through issue of oil bonds to the downstream companies.

The downstream companies are expected to report strong earnings in FY2010E and beyond in light of the above mentioned development. The stocks have been historically cheap on P/B and replacement cost. But there were concerns about lack of a transparent pricing system and stable subsidy-sharing mechanism and inability to forecast earnings confidently. However, the government’s decision to bear the entire subsidy on cooking fuels and some portion of subsidy on auto fuels addresses the street’s previous concerns.

The FY2010E, FY2011E and FY2012E EPS estimates for BPCL work out to Rs80(+109%), Rs65(+56%) and Rs74(+29%) and for HPCL Rs73(+77%), Rs58(+52%) and Rs70(+8%). The large upward revision over the current year estimates reflects (1) the new subsidy-sharing mechanism and (2) information contained in FY2009 annual report. Key downside risks to earnings and fair valuations stem from (1) unfavorable changes to subsidy-sharing system and (2) lower-than-expected refining margins.

Going by these estimates the fair value of BPCL and HPCL works out to Rs675 and Rs525, respectively. Long term investors can watch out these stocks on declines.

Bank of Baroda - Q4 Results Update.

The bank's net interest income (NII) grew 43.0% on back of strong growth in advances (34.9%), improvement in C/D ratio from 70.2% in Q4FY08 to 74.8% in Q4FY09 and improvement in liability mix.

Its net profit grew whopping 172.3% on back of robust NII growth (43.0%), strong traction in non-interest income (53.9%), lower growth in operating expenses (17.4%) and 35.5% decline in provisions & contingencies. Asset quality of the bank witnessed improvement both YoY as well as QoQ. Both gross and net NPA declined in absolute as well as in percentage terms.

The stock is a re-rating candidate due to improvement in its return profile; consequently, BoB remains one of preferred pick in the banking sector space.

Bharat Electronics BEL - Q4 Results Update.
During the quarter, BEL has been able to maintain its margins at elevated levels of 30%. On a sequential basis (not strictly comparable due to skewed revenue booking), margins have expanded by 500 bps. Employee cost is higher on account of wage revision.

While the order backlog is strong, bureaucracy in defence matters poses the risk of execution taking longer period.The order book as on April 01, 2009 is estimated to be around Rs 100 bn, which is up 5.8%. Order backlog provides a revenue visibility of 26 months. However, for the year we estimate order inflows to have grown by 10% in FY09.


Strategic tie-ups with global defence majors.

BEL is looking for new growth opportunities through organic or inorganic growth. In this direction, BEL is discussing with reputed foreign and Indian players for forming joint venture companies in India, in the areas of defence electronics, namely electro optics, airborne electronic warfare, missile electronics and guidance systems, microwave super components, etc. The company has also appointed KPMG to identify future growth opportunities for the company.

India is one of the largest defence equipment importers in the world. This is attracting several global defence majors to India. The U.S. defence manufacturer Northrop Grumman has recently entered into an agreement with Bharat Electronics Limited to manufacture components of the F-16 fire control radar.

Pact with Boeing to establish a facility in India to test military products:
Boeing co of US has recently announced that it has signed an pact with BEL to set up a facility for analysis and experimentation of military products and equipments. Boeing has similar centers in Australia and the U.K., the statement said.

Valuations.

At the current price, BEL is trading at 8.1x FY10E earnings. The stock tends to outperform during times of economic uncertainties. The stock has gone up more than 100% since last mentioned in StockWatch section and it is quoting at Rs.1000. So investors could wait for better entry points.

HDFC Bank - Q4 Results Update.

Recently HDFC Bank has reported its Q4FY09 numbers. HDFC bank has reported its merged numbers with Centurion Bank of Punjab Ltd (CBoP) for Q4FY09. The merger of CBoP with HDFC Bank became effective on May 23, 2008. Therefore, these results are not comparable. Net interest income (NII) and net profits have risen 12.8% and 33.9%, respectively, for Q4FY09.

NIM stood at 4.2% during Q4FY09; Strong CASA growth (44.4% at the end of FY09) was very heartening to watch. Moderation was visible in the asset growth, which grew 29% on the average during Q4FY09 vis-à-vis the corresponding quarter last year. During the period, net NPA also increased both in absolute as well as in percentage terms.

HDFC bank would continue to enjoy the valuation premium vis-à-vis its peers on back of one of the highest CASA, high and stable margins, high RoE, cleaner asset quality and a large share of fee-income to its total income.

HDFC Bank has consistently delivered a growth of around 30% (YoY) in net profit for the past 28 quarters. However, it has rallied 40% in last one month from its recent lows. At CMP of Rs.1170, the stock is fairly valued and therefore, investors can wait for better entry points.

Larsen & Toubro Limited (L&T) is India's largest engineering and construction conglomerate with additional presence in electronics and IT. A strong customer-focus approach has enabled L&T to attain and sustain leadership position over last 50 years. L&T enjoys a premiere brand image in India and its international presence is on the upswing, with a global spread of over 30 offices worldwide.

Recently L&T has increased its stake in IT company Satyam Computers from 4% to 15%. Will it have any major impact on its balance sheet? We have to wait and watch, till there is some clarity on the operations of Satyam Computers.

Now let us take a look at the fundamentals of the L&T's stock.

Positives
..Order backlog up 48% to Rs.609 bn, equivalent to 30 months of FY08 sales.
..Best placed in emerging opportunities like Defence, Railways and Shipping.
..Downside risk to margins has diminished in view of softening in metal prices.
..Ability to tap opportunities in Middle East if domestic market slows down.

Key Risks
..Credit crunch and firming interest rates likely to decelerate infrastructure investment.
..Bad debts may increase as firming of interest rates and credit crunch impact project developers.
..Impact of its stake in Satyam.

At CMP of Rs.630, the stock trades at 13 times FY09 earnings estimate of Rs.49.Medium to Long term investors can Buy/Accumulate on declines, to get good returns.

Punj Lloyd has commenced adjudication proceedings ( through its wholly-owned United Kingdom based subsidiary - Simon Carves) against SABIC Petrochemicals UK after SABIC terminated the contract and called the performance and advance bank guarantees amounting to approximately Rs2.14bn.

Punj Lloyd was expecting these claims to be settled from SABIC by end of Dec,2008. However, with commencement of legal proceedings against SABIC for terminating the contract, one can't expect early recovery of these costs from the client till a settlement is reached.

The company would have to make provisioning to the tune of Rs 2.14 bn in the current fiscal to factor in the present status of the project.This move is one-time negative for the company in terms of adverse impact on the profitability in FY09.

At current price, the stock is currently factoring in most of the negatives related to order inflow slowdown, SABIC order provisioning as well as negative headwinds prevailing in the economy. Moreover,this provisioning is only one time in nature.

At current price of Rs 110, stock is trading at reasonable valuations of 10.8x and 5.4x its P/E multiples on FY09 and FY10 estimates respectively. These valuations currently factor in most of the negatives related to provisions for SABIC order as well as order inflow slowdown.

Investors with long term view can accumulate on declines, for good returns.

Housing Development Finance Corporation, founded in 1977, is the leading institution focusing on home mortgages.HDFC has a wide range of distribution network of over 250 outlets and 50 offices.HDFC's marketing efforts continue to be concentrated on developing a stronger distribution network.

Positives
Demand from re-sale and new properties to remain strong barring urban areas.

Pre-eminent return ratios and healthy asset quality fetch premium valuation.
Valued on SoTP methodology, core business trading at 2.3x P/ABV of FY09E.
Loan growth outlook remains positive, FY09 loan book growth at over 20% yoy.
Liquidity conditions improving now, fund raising picks up.
The quality of builder’s loan book, comprising of 12% of the total outstanding loan book, remains healthy.

Concerns
Moderation in housing demand may impact business growth
Liquidity crunch and constrains in raising funds may pressurize margins.

At current price of around Rs.1500, the stock trades at 16 times forward earnings of Rs.90.Long term investors can buy/accumulate on declines, with a 12 month view for a good return.

Stock markets worldwide have fared terribly during the year 2008. While the US declined 36%, Europe was also severely affected. While UK tumbled 35%, France lost 45%. It was no different for stock markets in Asia.The emerging giants, China and India, witnessed a serious fall, ending all discussions on the much talked about ‘decoupling theory’. The Chinese market tanked by 65%, while India lost 54%.

A look back at the sectors and top gainers and losers of Nifty and CNX 500 shows all the sectors except FMCG(-14%) and Pharma(-34%) have fallen more than 50%.BSE Realty index has lost more than 80%.Top losers of Nifty and CNX 500 stocks show they have lost anywhere between 40 to 90%.

Nifty Losers:

CNX 500 Losers:


Stocks which have fallen less are those in FMCG and Pharma sectors. These are considered defensive stocks during such down trends.



Going forward,stocks in sectors like FMCG,Pharma and with Brand names are likely to outperform.Looking at the current interest rate scenario PSU Banking stocks and selective private banks, would also outperform.

Punj Lloyd Limited is a transnational company specializing in the infrastructure and energy sectors. Their operations spread across the Middle East, Africa, the Caspian, Asia Pacific and South Asia.

Positives
..Strong and diversified order book to lead to robust growth in revenues and profits between FY08-FY10.
..Completion of legacy orders to improve margins going forward
..Joint ventures in different segments to open up new opportunities

Key risks and concerns
..Slowdown in order inflow may impact future revenue growth
..Steep increase in commodity prices may dampen the margins
..Increase in interest rates from current levels may impact profitability negatively

At current price of Rs.150, the stock trades at 9 times FY09 earnings. Long term investors can accumulate on declines for good returns.

Oracle Financial Services Software formerly I-flex solutions, is number one in financial services customer relationship management.They focus exclusively on the financial services industry.They have serviced the technology needs of more than 825 financial institutions, in over 130 countries, including Banco de Chile, Citibank, the International Monetary Fund (IMF), Shinsei bank and UBS.

Positives
..Leader in the core banking software arena; strong parentage to lead to marqee accounts
..Available at 8x FY09 earnings;
..Potential for open offer from Oracle; last offer at Rs.2100 per share
Risks
..Presence only in BFSI sector;
..Inconsistent performance, evening services business
..Deeper recession in developed economies will impact earnings estimates

The stock trades at a P/E of less than 8x FY09 earnings.At CMP of Rs.430, long term investors can accumulate on declines.

Punjab National Bank is one of the leading PSU bank , which has the distinction of first Indian bank to have been started solely with Indian capital.

Positives
..Dominant player in the Indo-Gangeticplain, which is economically well-off.
..Strong liability franchise with around 39% of CASA (low cost deposits)
..Among few banks in PSU space having strong growth in fee income.
..Asset quality has improved significantly in last 2-3 quarters.
..More than 4000 branches on CBS platform, covering around 99% of its total business.

Risks
..Ripple effect of financial crisis in US & Europe
..Downside risk arises from hard-landing of our economy
..Deterioration in the asset quality, if any, would require higher provisioning.

At current price of around Rs.400,the stock trades price to book of less than one and 6 times FY09 earnings. Long term investors can accumulate on declines,for good returns.

Bharat Electronics Limited (BEL) was established at Bangalore, India, by the Government of India under the Ministry of Defense in 1954 to meet the specialized electronic needs of the Indian defense services.

Positives
..Prime play on defencebusiness which is not vulnerable to economic down-cycles
..High profitability due to improved level of product sophistication
..Strong balance sheet and robust cash generation
..Cheap valuations and huge cash surplus (Rs.307 / share in FY08)

Key Risks
..Defense business involves significant government bureaucracy hence project delays are common.
..Opening of defense business to private sector competition may challenge BEL’s market share in defense electronics.



At current market price of 560,the stock trades at 6 times FY09 earnings. Long term investors can accumulate on declines, for very good returns.

Axis Bank, previously UTI Bank, was the first of the new private banks to have begun operations in 1994, after the Government of India allowed new private banks to be established.
Axis Bank stands apart from its private sector competitors HDFC Bank and ICICI Bank — in one crucial respect. While the other two banks have envisaged retail banking as a key area of strategic emphasis — with the share of the retail business growing strongly year after year— the share of retail business, particularly retail assets, has actually come down quite sharply in the case of Axis Bank.

Positives
..Consistency in its earning growth (grown over 30% YoYin 33 out of
the last 35 quarters)
..Robust asset quality despite strong growth in assets during last
couple of years
..One of the highest CASA (40%), next only to HDFC Bank & SBI.
..Diversified loan book –well spread across all segments.
..Has strong technology, expanding distribution franchise & large
array of products
Risks
..Ripple effect of financial crisis in US & Europe
..Downside risk arises from hard-landing of our economy
..Deterioration in the asset quality, if any, would require higher provisioning.
At current price of around 400 it trades around 11 times FY09 and 9 times FY10.Medium to Long term investors can accumulate this stock which can give very decent returns.

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HDFC Bank is the leader in private banking space.Delivering consistent and superior returns as compared to most of its peers in the industry has been the mainstay of HDFC Bank’s performance in the last couple of fiscals. Sustenance of one of the best margins, return ratios and asset quality across interest rate cycles sets the bank apart from its peers. It has grown consistently around 30% YOY for the past 25 quarters.

Positives
..One of the highest CASA (low cost deposits) and NIM in the industry.
..Robust asset quality despite strong growth in assets during last
couple of years.
..Has strong technology, expanding distribution franchise & largearray of products.


Risks
..Ripple effect of financial crisis in US & Europe
..Expensive acquisition of CBoPand prevailing integration risks.
..Downside risk arises from hard-landing of our economy
..Higher unsecured loan exposure could lead to faster deterioration
in asset quality

At current price of around 850 it trades around 16 times FY09 and 13 times FY10.Medium to Long term investors can buy the stock which can give very good returns.