Summary:
| Company | BSE Group | BSE Scrip Code | NSE Price 19-Oct |
| Mahindra & Mahindra (Automobiles) | A | 500520 | 731.95 |
| Patni Computer (Software) | B1 | 532517 | 442.30 |
| RPG(oeknka) Cables (Cables) | B1 | 517056 | 44.00 |
| Sri Adhikari Brothers Television Network (Entertainment) | B1 | 530943 | 19.25 |
| Tata Tea (Plantations) | A | 500800 | 800.05 |
Mahindra & Mahindra Limited:
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Mahindra & Mohammed was founded by J.C. Mahindra, K.C. Mahindra and Ghulam Mohammed in 1945 as a franchisee for assembling jeeps from Willys, USA. After India’s independence Ghulam Mohammed migrated to Pakistan to become Finance Minister and the company was renamed Mahindra & Mahindra.
M & M has the distinction of making the first indigenous jeep of the country in 1949. Today, it is the largest manufacturer of multi utility vehicles and tractors in India. It is also the fourth largest tractor manufacturer in the world.
M & M has diversified into several sectors, viz.
· Automobiles: multi utility vehicles, sports utility vehicles, light commercial vehicles, three wheelers etc. Some of the well known brands are Scorpio, Bolero, Renault Logan etc. It recently rolled out its 2 millionth vehicle.
· Farm equipments: it has presence in India, China, US and Australia with a capacity of 150,000 tractors per year.
· Trade and Financial Services: Mahindra Finance and Mahindra Insurance offer financial and insurance services.
· Infrastructure: Mahindra Gesco is a leading real estate developer in India.
· Information Technology: Tech Mahindra offers IT solutions to telecommunication and service industry.
· M & M also specializes in defence systems, logistics solutions etc.
M & M is a constituent of Sensex (Free float market capitalization: Rs.14,302 crores, weightage: 1.23%) and Nifty (FFMC: Rs.18,464 crores, weightage: 0.67%). It is also traded at F & O segment of NSE. M & M declared a net profit of Rs.1497 crores for 2006 – 07 at an EPS of 57.75.
In the daily chart shown above, it can be seen that the stock failed to close above the resistance at 838.70. A bearish engulfing pattern followed by a red candle (with a downward gap) and lower close have been formed. This indicates that the short term trend has reversed. It can also be confirmed by the stock breaking and closing below the support trendline. Short term investors should stay away from taking long positions.
In the weekly chart shown above, the stock is making lower highs and lower lows, clearly indicating bearishness. At resistance level, a bearish engulfing pattern with medium reliability has been formed. A confirmation in the form of a red candle with lower close next week will mean further downtrend. The monthly chart indicates that the stock has completed the five waves; It has also closed below the support at 723.85 on two occasions. Long term investors may exit the stock at higher levels, if attained.
Since January 1, 2007 M & M, Tata Motors and Bajaj Auto have lost 19% ,13% and 4% respectively while Maruti has gained 16%.
Patni Computer Systems Limited:
We already discussed this stock in my previous article, “Takeover targets and plans of Indian companies”.
The company is a leading provider of information technology services and business solutions with 23 offices located in Asia Pacific, America and Europe. It employs around 14,000 people at 8 locations in India. Patni serves insurance, financial services, manufacturing, telecom, media and entertainment, energy, utilities, logistics and transporation sectors.
It has acquired many US companies viz. The Reference Inc. (2003), Cymbal Corporation (2004), ZaiQ Technologies (2006) and Taratec Development Corp. (2007). In 2004, Patni came out with an initial public offering (IPO) at the price of Rs.230 per share with a face value of Rs.2. The company’s ADR is traded at New York Stock Exchange (NYSE) under the ticker PTI.
The Patni family holds nearly 44% stake in the company and is managed by Narendra K Patni (Chairman & CEO), Gajendra K Patni (Executive Director) and Ashok K Patni (Executive Director). The company declared a net profit of Rs.282 crores for the first six months ended June 2007 at an EPS of 20.35.
The short term trend is bearish for the stock, as can be seen from the daily chart shown above. The stock has failed to break the resistances on two occasions; It has closed below the support trendline since October 16. The short term investors may avoid the stock for the time being.
The weekly chart suggests that the stock had closed below its support level at 364 during August 2007. A bearish engulfing pattern has been formed this week; further negative close and a red candle next week will confirm the pattern (the reliability of course, is low). In the monthly chart, the stock has closed below the support at 511.80 for twice so far. Long term investors may consider profit booking at higher levels.
Major IT giants Satyam Computer, Wipro and Infosys Technologies have lost 5%, 17% and 15% respectively this year while Patni has gained 6%.
RPG Cables Limited:
RPG group was founded by Rama Prasad Goenka in 1979. His ancestors, Keshav Prasad Goenka, Sir Badridas Goenka and Ramdutt Goenka were all businessmen with interests in tea, automobile, tyre, jute, cotton textile, electrical cables etc.
RPG is one among India's top industrial houses, with an annual turnover of Rs. 7400 crores. Some of the listed companies in the group are:
- CESC
- KEC International
- CEAT Tyres
- Phillips Carbon Black
- RPG Cables
- Harrisons Malayalam
- Saregama
- Zensar Tech
RPG Cables manufactures power and telecom cables. The company is a major supplier of power cables in voltage grades from 1 KV to 132 KV to several industries and establishments. It declared a net profit of Rs.1.76 crores for 2006 – 07 at an EPS of 0.65. In the previous 3 years, it suffered losses to the tune of Rs.213 crores.
In my previous articles, “Chart Patterns and market’s reaction” as well as Top Ten Signs a Stock is Going to Move up or down we saw about bullish and bearish chart patterns. A bearish “double top” pattern has been formed in the weekly chart of the stock. The stock is already forming lower highs and lower lows and a weekly close below 37.45 will confirm the double top pattern. Medium term investors need to wait for a confirmation.
The stock is bearish in daily chart too. In the monthly chart, the stock appears to have completed the fifth wave and the first downtrend has started. The long term investors need to exit the stock at every rise.
RPG cables has gained 13% since January 1 this year while Universal Cables has lost 14%.
Sri Adhikhari Brothers Television Network Limited:
The company was founded by Gautam Adhikari and Markand Adhikari in 1985 and it got listed in 1995 at BSE. Initially the company was engaged in the content production for television channels; Later, a Hindi entertainment channel, “SAB TV” was launched in 2000. Now the company concentrates on production of television software; SAB TV brand and related assets were transferred to Sony Entertainment Television (SET, Singapore) for USD 13 million.
A scene from Mohalla Mohabbatwala (LOV on LOC) on SAB TV
The company reported a net profit of Rs.5.06 crores at an EPS of 1.09 for the financial year 2006 – 07.
On December 30, 2005, the face value of the stock was split from Rs.10 into Rs.2. On October 16, 2007 NSE announced that the stock’s face value will be consolidated back to Rs.10 and trading would be suspended with effect from the close of October 24, 2007.
During the dot.com boom, this stock touched a high of 2290 in February 2000. But in May 2000 the stock closed at 424.40. When the stock split is taken into account, it has fallen from its high at 458 in 2000 to 19.25. In the monthly chart, the stock has made higher highs and higher lows on two occasions; but did not break resistances. Instead, it made lower lows next time. This is a violation of Elliott wave theory. Since the stock will be relisted after consolidation, it is better to avoid it for both short and medium term as well.
Sri Adhikari Brothers has gained 33% since January 1, 2007. Balaji Telefilms, Mukta Arts and Radaan Mediaworks have gained 109%, 84% and 50% respectively this year.
Tata Tea Limited:
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Tata Tea is the world’s second largest global branded tea with presence in 40 countries. The company owns 27 tea estates in the states of Assam and West Bengal in eastern India and Kerala in the south. It has five major brands in the Indian market - Tata Tea, Tetley, Kanan Devan, Chakra Gold and Gemini.
Tata Tea has subsidiaries in US and UK (Tetley group). The company produces bulk and instant tea, packet tea and coffee. Another Tata group company Tata Coffee (previously known as Consolidated Coffee Limited) produces tea, coffee, pepper, cardomom etc. and it is a listed company. Tata Tea declared a net profit of Rs.443 crores for 2006 – 07 at an EPS of 77.5.
In the daily chart shown above, it can be observed that the stock had broken its trendline support while failing to close above the resistance. So, the short term trend for the stock is bearish. In the weekly chart, the stock had formed an “inverted hammer” last week indicating profit booking at higher levels; This week, a bearish engulfing pattern with a low reliability has been formed. In the monthly chart, this stock had gone up from 117.55 in September 2001 to a high of 1078 in February 2006 without clear wave patterns. It has started forming lower highs and lower lows in long term charts as well. The long term investors may consider profit booking at higher levels while short and medium term investors may stay away.
Among tea stocks, Harrisons Malayalam and Jay Shree Tea have lost 26% and 29% respectively this year since January 1. Tata Coffee has lost 19% while Tata Tea has gained 11%.
In Part – 3 of this series, we shall compare the technical scenario as well as financial ratios.
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