Different Types of Investments

Investments are anything in which people put money in the hope of gaining financial reward. There is an element of risk in all investments and the amount of financial reward which can be hoped for is usually inversely proportionate to the risk; that is, higher risk investments have the potential for yielding greater returns, yet also involve a greater risk of losing the investment completely. The classic example of a low yielding, low risk investment is government bonds. For the investor to lose out on the sum invested in government bonds, the government would have to go bankrupt and default on its debts. In the developed Western world, this is almost unheard of. Naturally, in poorer, less developed countries, this is not so, and the greater interest rate offered on their bonds reflects the greater risk involved.

Stocks and shared in limited companies are the quintessential form of investment in modern economies. Even other forms of investment, such as pensions or unit trusts, are often only indirect ways of investing in shares. For example, when a person makes contributions to a company providing a private pension, the company will, more often than not, invest that money in corporate shares. Property is the other major investment vehicle.

FD (Fixed Deposit) or CD (Certificate of Deposit) are one of the safest investment instruments compared to stocks because these investements are backed with insurance. The CD rates mostly depends upon the duration of your deposit. You can make deposit in bank for various fixed time frames eg. 6 month CD, 12 month CD, 24 month CD and the reward is payed accordingly.

Reliance Communication - A Jewel in the Mud

Reliance communication announced today its GSM subscriber stats, and they got a whooping 5 million addition in their first month. The company is heading towards great highs. In addition to this they have also mentioned that their CDMA subscriber addition very encouraging. Although they have does not disclosed the figures and promised to disclose it soon.

The company had formed a 5 million subscriber in the first month which is itself the biggest record after chinese company in the world. With the startup of GSM service it is believed that the revenues of the company will grow by 75% within a year and hence the bottom line will rose handsomly.

Sandur Manganese Next Sesa Goa In Making

Scrip Code : 504918 Company Name : Sandur Manganese & Iron Ores Ltd

Cash EPS for the march quarter has been Rs 66/- per share . One time liability of 20 crores due to some past mining royalty charges thats why the profit is 38 crores is in iron ore mining in bellery district in karnatka year eps is projected to 280+ per share or 250 crore profit. Thus if we give a conservative PE of 6 than price could be 1700-1800 per in 1 year Next year.

J K Laxmi cement

JK Lakshmi Cement has been on a capacity expansion spree and has expanded its capacity from 2.4 million MT to 3.4 million MT in FY 06-07. The company has undertaken another expansion project which would see its capacity go up from 3.4 million MT to 5.0 million MT by the end of third quarter of FY 08-09.

At its current price of Rs 136, JK Lakshmi Cement trades at a PE ratio of less than 3, both on expected FY 07-08 earnings and cheap valuations when compared with the peer group and looks attractive for investment.

Gold Investment - A must in your Portfolio

"Compared to the digitized virtuality of financial instruments like shares, bonds and MFs, which are considered boring, investments like owning property or investing in art or gold have a certain panache," says Shyam Sunder, MD, PeakAlpha Investment Services. In the last three years, and especially in recent months, there has been a spurt in gold prices and gold has caught the fancy of investors.

In India, gold is mostly bought for social occasions like weddings and festivals and though it provides financial security, it isn't considered an investment tool. "In every portfolio, gold is a must as it brings an element of diversification. The price of gold is driven by factors that are quite different from the drivers of other assets such as stocks," says Anand KS of Nile Financial Planners.

Wealth managers feel that one should invest in gold based on the individual's risk/return profile. "Gold prices can fall in the short term, so you cannot rule out risk element. But since gold prices don't rise and fall at the same time as the stock market, it's worth including it in your portfolio," says Sunder.

However, it is important to identify the right reasons to buy gold. On the positive side, gold is regarded as a good hedge against inflation. It can be quickly converted into hard currency if required, it improves the consistency of your portfolio's performance during stable and unstable times and its pricing is not linked to the performance of the economy, industry or companies.

On the other hand, it doesn't provide regular current income like debentures, which pay interest, and doesn't offer any tax advantages. There's also a possibility of being cheated on the purity of the metal.

So, how much should you invest in gold and in what form? Wealth managers recommend gold investment in the range of 10%-15% of the total portfolio. Physical gold should be in the form of coins or bars. Gold Exchange Traded Funds, a relatively new concept in Indian MF industry, is another way to buy gold. Investors can trade like any other stock on the exchange, on a real-time basis. Gold ETFs mimic the price of gold. Liquidity is high as the units can be traded on the stock exchange.

Gold ETFs are the ideal way to save for the future as one can even buy gold in units of one gram (one unit of an ETF), and accumulate based on their capacity to save. These units can be sold when required and equivalent quantity of gold bought with the proceeds. Just as one does systematic investment in MFs, it can be done with gold too.

"Jewellery is not the best way to invest in gold, as one ends up losing on account of sales tax, making charges and wastages. Buying gold biscuits is a good option if you insist on having the metal in your custody," says T Srikanth Bhagavat, of Hexagon Capital Advisors.

Source : TOI

Punj Lloyd - The Gem

Currently market favourite sectors are Infrastructure and Banking. Punj LLoyd.

The company has very large visible projects and they have been doing very well.

70% of its order book is from shining oil and gas sector.

Though disappointing previous quarter Punj Lloyd is successfull in improving operating margins significanly and it remains the The Gem of Indian Stock Market. With about 12bn$ to get invested in indian infrastructure sector by 2010 and looking at Strong order book of the company it is advisable to invest in this company with a view of 6 to 9 months for handsome gains.

Jindal Poly Films

Jindal Poly Films, of B. C. Jindal Group, is India’s largest producer of Polyester Film, commonly known as PET Film and Polypropylene Film, also known as BOPP Film, used for food packaging

The present capacity of the company is 86,000 TPA of PET Films, 90,000 TPA of BOPP Film, 26,000 TPA of Metalliser, 1,00.000 TPA of Polymer Chips and 9,000 TPA of Coating Plant.

Two Metallisers of 2,850 mm width, with an annual capacity of 20,000 TPA, is under commissioning and would stablilise by March 08, thus increasing capacity of Metalisers to 46,000 TPA.

Two lines of 8.7 meter width, with an annual capacity of 90,000 TPA is under implementation which shall be operational by September 08, thus raising capacity of BOPP Films to 1,80,000 TPA. All the production line of the company has been sourced from Dornier of Germany, the leading supplier of Polymer Film plants.

The company has been posting robust financial performance. For FY 07, the total income of the company was at Rs.1,032 crores with EBITDA of Rs.168.41 crores, resulting into a margin of 16.30%. PBT for the year was Rs.90.30 crores, while PAT was at Rs.64.96 crores, resulting in an EPS of Rs.23.12, for the year. Cash profit for the year was at Rs.138.09 crores, resulting in a cash EPS of Rs.49.15.

For quarter ending December 07, total income was at Rs.317 crores with PAT of Rs.26.69 crores, resulting in an EPS of Rs.9.50. Cash profit for the quarter was at Rs.43.32 crores giving a cash EPS of Rs.15.42. For 9 months ending December 07, total income was at Rs.932 crores with PAT of Rs.94.77 crores, giving an EPS of Rs.33.73 for the period. Cash profit was at Rs.144.50 crores, resulting in a cash EPS of Rs.51.40 for the period.

FY 08 is likely to have a topline of Rs.1,250 crores, PAT of Rs.120 crores, giving an EPS of Rs.42.70 and cash profit would be Rs.180 crores, resulting into a cash EPS of Rs.64.

Since the expansion in capacity of BOPP Films by 90,000 TPA, would be completed by September 08 and Metalliser Plant by 20,000 TPA, by March 08, EPS of the company for FY 09 is likely to be close to Rs.60, with cash EPS of Rs.70.

The book value, per share of the company, as at 31-03-07 was at Rs.280, which would rise to Rs.320 by March 08.

The share is presently ruling at Rs.205, which is available at a price to book of 0.65 : 1 or at 65% of its book value. PE multiple on historic earning is below 5 times, while on future earnings of FY 09 at 3.50 times. This kind of valuation, leaves no downward risk. Also, other small size packaging films companies are discounted at a PE of about 10 times.

A safe and excellent bet at Rs.205 for a reasonable gain of 30% per annum, over the next 2 – 3 years. The company and sector would get re-rated sooner or later.

CROMPTON GREAVES

An Indian multinational

By SP Tulsian

A Thapar group company, Crompton Greaves (CG) is one of the largest private sector enterprises in India, engaged in the manufacture of products related to power generation, transmission, and distribution.

Power is one of the fastest growing sectors of India and is expected to only grow further. And when the industry is destined to have such superlative growth, it is but natural that one of the leading power equipment manufacturing companies in this sector would also record growth exponentially. So on a macro level, the future of CG, in the backdrop of the power sector, looks immensely bright.

CG's business operations consist of 22 manufacturing divisions spread across in Gujarat, Maharashtra, Goa, Madhya Pradesh and Karnataka, supported by well knitted marketing and service network through 14 branches in various states.

The company has posted very good results for the third quarter ended 31st December 2007. On a standalone basis, the total income, on a y-on-y rose 13% at Rs.1014.36 crore. Despite the 10% rise in total expenditure and tax expenses more than doubling, infact it went up by a whopping 70%, the company showed a very healthy 49% rise in net profit at Rs.67.90 crore.

On a nine months basis, the standalone rise has been more spectacular. Y-on-Y, total income rose 15% at Rs.3017.27 crore and the net profit surged by a whopping 72% at Rs.210.85 crore, which is more than the full year net profit of Rs.192.37 crore in FY07.

On a consolidated basis, the total income of the company for Q3 ended 31st December 2007 stood at Rs.1,806.94 crore. Net profit was at Rs.82.71crore. For the nine months period, total income surged to Rs.5,127.76 crore and net profit was at Rs.263.55 crore, which is very good, when one looks at the net profit of Rs.281.74 crore posted for full year ended 31st March 2007, leaving no doubt that the CG will end the current fiscal on a much higher note.

The biggest contributor to the revenue, as always, has been the power systems unit, with almost equitable revenues coming in from the consumer products and industrial systems units. Its customer list, apart from the state electricity boards, reads like a virtual list of “who’s who”, including names like Power Grid Corporation of India, Infosys, Kirloskar Brothers, Reliance Energy, Larsen & Toubro, Whirlpool (India), ABB Ltd, Mather & Platt India, BPCL and Indian Space Research Organisition, to name a few.

The company’s equity capital currently stands at Rs.73.31 crore and on a face value of Rs.2 per share; the annualized EPS stands at Rs.9.60, on a consolidated basis. The company is actually comparable to giants in the electrical equipments segment, like ABB, and Bharat Bijlee. So in that context, based on the earnings, it would be no exaggeration to say that CG is an Indian multinational.

The promoter’s stake in the company is at 39% while mutual funds and banks are holding 46%, with 15% being held by the public.

The company is expected to end FY08 on a highly optimistic note, with net profit expected to be around Rs.400 crore, on a consolidated basis, resulting in an EPS of close to Rs.11.

In November, when the indices were heated up, the stock was quoted at Rs.450 and currently, after all the sell off; the stock has come down to more accessible levels of Rs.3150. Others like Havells, Areva T&D, Emco, which are in the same sector but with much lower earnings and profitabilities, are quoted much above CG, thus presenting a great opportunity once again for those looking for great long term bargains.

At the current rate of Rs.315, Crompton Greaves is undoubtedly a safe bet. Buy it for a comfortable 45-50% return over the next 12 months.

Source : sptulsian.com