Indian Budget 2011-12

The Indian Union Budget is in our face. The official Govt website where you can get original info along with the economic survey 2010-11 data is here (link)

Indian economy is on a roll and will continue to do so. The youngest working age population in the world ensures India of a strong internal demand for goods and services. Global activities could be the only source for derailment of the Indian story. Here Oil price as well as capital inflows/outflows is what is of prime concern.

My area of investment is targeted on Agro processing (GAEL and Jayant) and energy efficiency (NHPC and Tata Communications)

NHPC which is a largest hydro electric power company in India and since its public sector enterprise has vast experience and access to restricted area's of the nation to setup hydro power plants. With fuel linkages a priority NHPC has the natural Water cycle as its source of fuel which is a big advantage. The govt is no longer shy to charge market rates for power and this is going to benefit large scale producers who have their input costs capped. As fuel prices rise .. hydro power electricity and coal powered electricity will be charged the same rates and we will see NHPC benefit from these actions in the future.

Tata Communications: Its sitting at the junction of the world wide web with the largest submarine cable network in the world. So everytime you google in India or any other country in the world you are paying Tata Communications. Now with 3G rollout in India and other countries bandwidth utilization is going to rise and so will the profits of tata communications.

Jayant Agro and GAEL: We have been concentrating on Agro based industries and with govt emphasizing on agri-infrastructure we could see GAEL and Jayant take advantage of the same (storage godowns). GAEL has a Debt/Equity Ratio of 0.42 and Long term debt equity ratio of 0.03 so is well placed for future expansions. Jayant has a Debt/Equity ratio of 2.1 and long term debt equity ratio of 0.42. So Jayant already has carried out expansion in terms of the new JV which is keeping its debt levels busy. 

Conclusions: GAEL, Jayant, NHPC and Tata Communications are the core holdings one must own Recommended (Best Buy). All are available at fair/discount valuations and are future ready. Current downturn is a great opportunity to add more on all these counters.