Diwali 2011

Its that part of the year when we look at how our investments are doing. Anyone who has been following the stock market will know that its pretty bad. Well lets look at the numbers for the recommended stocks

There are 28 stocks and the return from the day of investment is 4.9% ie an investment of Rs 10,000 in each of the 28 share would be worth 2,92,223.74. Profit is 12,223.74. Dividends have not been considered. If it wasn't for Venky's we would be in negative territory.  

Looking back at the stock prices my understanding is:

- Interest rate spike is one of the key reasons for the market downturn.

- Global liquidity squeeze is "on" which is restricting investment flows.

- Fear is directing investment rather than rational decisions.

There are multiple ways to look at the current market scenario. My belief still is that "Peak oil" is the prime underlying theme. Further extrapolation of "Peak oil" is high inflation (due to rising energy costs for transportation, energy, fertiliser) I also see "Growth falling" at worldwide basis. 

Growth would specifically impact discretionary items. Also if you see the trend of "Carbon footprint" "Eco-Conscience" the trend is moving toward minimalism.

Though there are 27 recommended stocks in the blog .. my personal investment is heavily geared towards my "Best Buy's" Jayant Agro Organics, Gujarat Ambuja Exports, Tata Communication and NHPC. These 4 cover 90% of my investment funds and all are somewhat linked to the "Peak Oil" theory.

Jayant Agro Organics:  Jayant as we have discussed time and again is one of the largest listed Castor oil and castor oil derivatives manufacturer in India. Castor is a replacement for crude in the chemical industry and is "The Green Chemical"

Gujarat Ambuja Exports: It is a play on the consumption story of India. GAEL is also a very fundamentally sound agro processing major. The management is committed and GAEL with time we should see the market acknowledge its sound fundamentals.

Tata Communications: Not much discussed in the blog but Tata Communications has quietly setup the largest network of submarine cables and connection endpoints in the world. This basically ensures that customers get a better deal signing up with Tata communications for their network needs than any other company. With Peak oil "Travel" is going to be more and more virtual. Whether you use "Tata Telepresence" or just plain simple "Video conferencing" you will be touched by "Tata communications"

NHPC: National Hydro Power Corporation is the largest "Hydro power" corporation in India and all set to maintain the status for time to come. Electrical energy with "Natural Water Cycle" as the source of energy is definitely very very attractive.

My suggestion to investors is.. This is as good a time as any to take a good look at which stocks to sell and which stocks to buy. Markets will rise considering the huge pile of cash lying around.. not all stocks will do well stock picking is highly recommended. Avoid Auto, Airlines and discretionary stuff. I would also recommend that the "Best Buy" stocks must be considered for investment.

Jayant Agro: Fuel Line Made of Renewably Sourced DuPont™ Zytel® Nylon Provides Long-Term Resistance to Biodiesel

Castor oil derivatives specifically sebacic acid is used to produce "Fuel lines" used by diesel engines and bio-diesel engines. The renewably sourced long-chain nylon was chosen in preference to competitive grades of PA12 on the basis of its superior temperature resistance and long-term aging performance in biodiesel.

Geneva (PRWEB) October 18, 2011

The fluid transfer system supplier Hutchinson SRL, of Rivoli, Italy, has specified a DuPont™ Zytel® RS grade based on PA1010 for the production of fuel lines used with both diesel and biodiesel. The renewably sourced long-chain nylon was chosen in preference to competitive grades of PA12 on the basis of its superior temperature resistance and long-term aging performance in biodiesel.

The extruded, monolayer fuel line from Hutchinson is already in use on commercial new turbo and multijet diesel engines used on several Fiat vehicles, including the Fiat 500, Panda, Punto, Lancia Delta, Alfa Romeo MiTo and Giulietta. As well as seeking to increase the use of renewably sourced polymers to reduce dependence on fossil fuels, automotive component manufacturers, OEMs and materials suppliers are modifying engine and fuel systems to run efficiently on the latest generation of biofuels, including biodiesel.

Components for such systems must resist the chemically aggressive biofuels, temperature extremes and mechanical stresses for the lifetime of the vehicle. This specific Zytel® RS grade based on PA1010, which contains more than 60 percent renewably sourced ingredient by weight, offers properties typical of flexible polyamides with additional benefits such as superior high-temperature resistance when compared to materials such as PA 12, high chemical resistance and low permeability to fuel and gases. It is suitable for a range of extrusion applications including fuel lines, hydraulic hoses, corrugated tubes, transmission oil cooler hoses and pneumatic tubes.

“We were seeking a polymer for our fuel line application that was preferably renewably sourced, for a more sustainable solution, and was able to provide the best aging stability in biodiesel,” explains Katia Rossi, development manager at Hutchinson. “We considered a number of flexible polyamides, including PA12 as they had previously been specified for similar fuel line systems, but material testing showed Zytel® RS PA1010 to meet our requirements. It combines, for example, superior temperature resistance to PA12 with the best resistance to biodiesel at high temperatures.”

Data on aging performance in biodiesel was obtained by immersing the materials in the most common biodiesel – rapeseed methyl ester (RME) – at 125 °C (257 °F) for 1,000 hours and measuring retained mechanical properties. The B30 biodiesel used for testing is made up of 30 percent biofuel from rapeseed and recycled vegetable oil and 70 percent standard diesel and is suitable for many diesel cars.

By specifying the DuPont material for its fuel line for diesel engines, Hutchinson gains a longer-lasting solution that also is market leading in terms of its renewably sourced content. “With more than 60 percent by weight, this Zytel® RS grade based on PA1010 has one of the highest levels of renewably sourced content currently available for a high-performance nylon,” confirms Mario Delbosco, development programs manager at DuPont Performance Polymers. The renewable carbon in PA1010 comes from sebacic acid, which in turn is derived from castor oil.

The successful adoption of renewably sourced Zytel® nylon for the fuel line has encouraged Hutchinson to extend the application to other automotive manufacturers in Europe and beyond as well as other fuel system applications. Hutchinson is a subsidiary of the Total Group with representations in Europe, America and Asia, and is one of the world’s leading suppliers to the automotive industry. The product portfolio includes components for vibration technologies, drive train systems, sealants and adhesives, fluid transfer systems (low and high pressure), body parts and sealing systems as well as precision seals and molded parts.

DuPont offers more than 100 materials and product families for the global automotive industry. Through its global application development network, DuPont Automotive is committed to collaborating with customers throughout the value chain to develop new products, materials, components and systems that help reduce dependence on fossil fuels and protect people and the environment. For more information, visit automotive.dupont.com.

DuPont (NYSE: DD) has been bringing world-class science and engineering to the global marketplace in the form of innovative products, materials, and services since 1802. The company believes that by collaborating with customers, governments, NGOs, and thought leaders we can help find solutions to such global challenges as providing enough healthy food for people everywhere, decreasing dependence on fossil fuels, and protecting life and the environment. For additional information about DuPont and its commitment to inclusive innovation, please visit http://www.dupont.com.

The DuPont Oval Logo, DuPont™, The miracles of science™ and Zytel® are registered trademarks or trademarks of DuPont or its affiliates.

Source: http://www.prweb.com/releases/2011/10/prweb8879628.htm

Conclusion: The race is "ON" just like the demand for "GOLD" as an investment was in every investors mind.  Renew-ably sourced, decreasing dependence on fossil fuels, and protecting life and the environment are the buzzwords and castor is the underlying source. The good part is castor derivatives have always been superior to crude oil derivatives so we are going to get better product/performance characteristics and demand is going to increase.. I hope India and Jayant can increase production with competitive pricing to increase their market share of the emerging "Green Chemicals" business.

Jayant Agro Archives
Zytel Info

Bharat Gears: Value Buy at these prices.

Bharat Gears:

CMP: 46.75

Market Cap: 35.69Cr

Debt: 58.14Cr

Sales TTM: 361.45Cr
PBDIT TTM: 34.31Cr
Net Profit TTM: 10.24Cr
6 yrs Avg Cash Flows from Operations:  +ve 24.28Cr

Bharat Gears Limited (BGL) is india's largest gear manufacturer  (I think its the largest gear manufacturer for Commercial vehicles, Farm machines and Construction equipment) . Bharat Gears manufacturers a wide range of Ring Gears and Pinions, Transmission Gears and Shafts, Differential Gears, Gear Boxes.

Bharat Gears has 3 divisions: Gears, Furnace and Automotive components.

Clients for Gears and Automotive components include: Ashok Leyland, Godrej, Mahindra & Mahindra, Tata Motors, Axles India, Hero Motors, Mahindra Sona, GE Aviation, Carraro-India, Italy, China, Hindustan Hardy Spicer, New Holland Fiat India Ltd, Toyota Kirloskar Auto Parts, CLAAS-India, France,  Hyva India, Paharpur Cooling Towers, Transaxle Manufacturing of America, Dana Corporation USA, JCB India, SAME Deutz - Fahr, Voltas, Eaton USA, JDCW USA, Spicer India, ZF China, Elgi Equipments, JDEPL India, Swaraj Mazda, Agriking Tractors and Equipments, Escorts, John Deer Iberica, Spain, TAFE.

BGL Furnaces engineers and constructs batch and continuous heat-treating furnace systems in technical association with AFC-Holcroft, Michigan, USA.

More than 110 BGL-AFC-HOLCROFT heat treating furnace systems are in service at several customers' plants in India, including Ashok Leyland, Automotive Axles, Bajaj Auto, Ceekay Daikin, Endurance, Fairfield, Greaves, Hindustan Motors, Mahindra & Mahindra, Mukand, National Engineering Industries, Precision Fasteners, Premier Automobiles, Raunaq Auto, Sona Koyo Steering, Sundaram Fasteners, TATA-Timken, TELCO, Tractor Engineers and Varroc.

Company has redeemed 1Cr worth of preferential equity which had 10% interest rate. Bharat Gears also has "leased" some of its manufacturing equipment with estimated lease obligation of 9.65 cr (last year 5.08Cr) and one year lease payment due of 2.49Cr (last year 1.56Cr) This is interesting cause this is the model being used by "Telecom players" and I must say it should be beneficial for Bharat Gears.

There are expansion plans with a new plant at Satara but I think it will take a year or more for it to really start building (right now land has been purchased)

Conclusions: Bharat Gear seems to be cheap.. its market cap of 35.69Cr is equal to 34.31Cr  PBDIT for year ending March 2011. It has also been reporting consistent +ve cash flows. Leasing of equipment seems to be working for Bharat Gears and looks like it is going to drive the growth as Bharat Gears can get latest equipment at a  fraction of cost and service the demands of the customers.. Its target automotive segment is: commercial vehicles, farm machines and construction equipment which are all growth areas for a growing economy like India. I would expect Bharat Gears to close the year with 400Cr or more of sales. Dec and March are the most profitable quarters.

Company Website
Bhart Gears Annual Report 2011:
Bhart Gears Annual Report 2010:
Bhart Gears Annual Report 2009:
Bhart Gears Annual Report 2008:

Where to get research info for Free.

I was just thinking its very important to learn fishing (investing) so that we can all start fishing.

Here is a list of places to go for ideas.

1. NSE and BSE sponsor research for companies using their "Investor Protection Fund".

NSE Link :  http://www.nseindia.com/education/content/reports/eq_research_reports.htm
(dont know why the link is not working)
This is a better link for NSE (link)

BSE Link: BSE Sponsored Research Reports

2. Economic Times Top 500 companies in India based on revenues

ET-500 Home Page (link)
ET-500 Complete List (link)

3. Edelweisse Score for Stocks

Edelweisse Score for GAEL

The good part of Edelweisse site is that they did catch the consolidated data for Jayant which is generally missed by others.

4. MoneySights website.

Moneywebsite for GAEL

What I like in moneysights website is that along with fundamental analysis the "Upside Potential"  which could indicate that the stock is fundamentally good but under-priced or over-priced. 

5. Hindustan Bulls : Candle sticks, Technical Analysis.

Sometimes its good to see and get some idea how the candle stick data looks.

GAEL Data link

6. Money Control: MoneyControl is where I generally start as almost all data is available directly from BSE/NSE

Moneycontrol Link

7. GeojitBNP Paribas: What I like is the Market cap data for 5yrs on month-month basis ..which is very important to see to what level the stock can fall (support) and at what price are we getting in.

Geojit-GAEL Link

8. Technical Data: EMA 500, 200, 50 is good for technical related info.

Moneycontrol website

9. Screens to filter stocks based on parameters..
http://www.screener.in/screens/all/

10. Quantitative data for stocks..
http://www.quantspartner.com/B.aspx

Jayant Agro: Ford Focus 2012: Features First Castor Oil based Automotive Foam

Ford mixed things up a bit when it introduced a special soy-based automotive foam to make up the seat cushions of many of its vehicles in 2008, but now the automaker has teamed up with BASF to produce a special new foam to make a soft-touch dashboard.

Ford and BASF have developed a seamless soft-touch dashboard that comes from plant-based castor oil and offers greater flexibility, durability and faster production than a traditional petroleum-based product.

“Working with BASF, we now can offer our North American customers the new Ford Focus with the industry’s first seamless soft-touch instrument panel that’s stronger, better-looking and better on the environment,” said Bari Brown, Ford advanced product development engineer. “Castor oil from plants helps deliver sustainable interior foam that reduces petroleum use while improving vehicle craftsmanship. It’s beneficial both for the customer and Mother Nature.”

Ford says the new material is “significantly more durable” than the material it used previously, offering 36 percent more tensile strength. Tear strength improved by five percent, while unwanted elongation from temperature or impact stress reduced by 12 percent.

The automaker says it will also reduce production time by 43 percent, an added benefit, but the real benefit and goal of the product was to create a more sustainable car that has a smaller impact on the environment.

Dan Pierce of Ford Motor Company told Leftlane that the automaker already has soy foam in 75 percent of its seats and most of its headliners, something it intends to eventually move to 100 percent. With the new castor oil-based foam for the dashboards, Ford intends to take a similar path towards eventually completely phasing out traditional petroleum-based foam in all of its products.

Pierce says the new dashboard has been slowly integrated into the 2012 Focus product lineup, and is now at 100 percent utilization in all models being built.

Link to original Article (Link)

Ford Focus sales in America 2010: 172,421 units

Conclusion: Castor oil is the best replacement product for crude oil. In-fact castor oil properties are better than petroleum based products (as mentioned above). The only reason crude oil replaced castor oil was because "Crude oil" was cheaper and abundant. Now with crude oil prices at $ 80-100 USD and Peak oil a reality.. Castor oil will fast replace Crude..  

Maybe the real underlying reason could be the virtual ban by European Union of crude oil based plasticiser (- Bio-Plasticiser Surge in Demand )

Jayant Agro Organics is the largest processor of Castor oil in India 

Market Cap:  Rs 1,249 million 

Year end March 2011

- Sales:  Rs11,719.9 million

- PBDIT: Rs 634.5 million

- Net Profit: Rs 245.7 million 

Deep Deep Value and a must have (only for long term investment) 

Old Blog articles of interest:

- Bio-Plasticiser Surge in Demand

- Castor Oil used in synthesis of Silver nano particles

- Castor Oil derivatives used in Solar Panel manufacturing

- Castor Oil: its Derivatives and their application

- Jayant Agro Organics: Castor Oil Derivative manufacturer (blog archives)