Bharti Airtel - Buy

Bharti Airtel recently announced its Q2 results with good numbers, but not upto the expectation.

Revenues increased by 9% to Rs.98.45 billion Y-o-Y and net profit up by 15% to Rs.23.7 billion Y-o-Y. Net margin was at 24%, relatively higher than a year before.

Here are some positive notes:

1. Customer based increased to more than 110 million as on Sep'09. This is up by 42% from last year same period.
2. Net debt came down to Rs.42 billion, lowest in last five consecutive quarters
3. Return on equity (RoE) is consistently above 30% for the past five quarters (though it was down from 36% in Sep'08)
4. Net debt-to-EBITDA was at 0.26, lowest in last five consecutive quarters. This is due to the decrease in net debt.
5. Interest coverage at 56, highest in last five quarters

Here are some concerns:

1. Average revenue per user (ARPU) came down to Rs.252, from Rs.331 in Sep'08.
2. Market share in mobile services fell to 23.5% from 24.6% a year earlier.
3. Operating expenses increase over last five quarters (though slightly less than previous quarter)
4. Return on capital employed (RoCE) was at 26%, compared to 36% in Sep'08.
5. Capital productivity (annualized revenue/capex) was down at 64% from 73% during last Sep'08.


Share price is at Rs.292, approaching its 52 weeks low, Rs.290. The stock touched Rs.495 (its 52 weeks high) and hence the stock is currently trading at deep discount. Moreover the trading volume is at around 6.5 million.

Considering its positive fundamentals and free-falling stock price, Bharti Airtel is a 'GOOD' pick now. Investors considering long term investments with 1-2 years investment horizon, can make a call now.

US Stocks stumble

US stock market witnessed another day of bolt as the markets crashed due to the disappointing numbers on consumer spending. US Commerce department released the consumer spending data for Sep'09, showing a decline of 0.5%, first time in five months.

Dow fell by more than 1.5% to 9800 (down by 160 points). S&P 500 also came down by 2% to 1044.

However this fall in US markets may not have greater impact on Indian market on Monday. Sensex is moving based on the selling pressure by the investors who have invested in emerging markets. Moreover the market fell by more than 1% on Oct 30, a day after US markets bounced back (official data showed that US is recovering from recession). However Sensex is expected to be highly volatile in coming week as global markets are tumbling.

Sensex continues to fall...!

Sensex fell for consecutive fourth day to end below 16,000. The market closed lower by more than 1% to end at 15896 on Oct 30. This is led by telecom and oil sector companies.

Bharti Airel announced its Q2 results on Oct 30 in a positive note. But did not match the market expectation. The stock down by more than 6% to end at Rs.292. Airtel's lowest in a year was Rs.290. This shows that the stock is moving towards to break its lowest support next week.

Long term investors who can hold their investments for 1-2 years, can now consider investing in Bharti Airtel.

Sensex is expected to be in the range of 16000-17000 in coming weeks.

Bharti Airtel profit up, but lower than expected

Bharti Airtel, India's largest telecom service provider, has announced that its net profit was up by 13.4% Y-o-Y, during the quarter ended Sep 30, 2009. Net profit was at Rs. 23.21 billion ($497 m).

Revenues increased by more than 9% to Rs.98.45 billion.

However these numbers are lower than many expected.

The Indian telecom market is now entering into a new phase, 3G and 2G. Many new foreign operators are entering into the market and announcing various pricing schemes to customers, making Indian companies to react as well. This pricing pressure may have an impact on operating results of telecom companies in next quarter, or even next year also.

Consolidation is the better way to handle the current situation in Indian telecom market. Many 2G licensed telecom companies are selling stakes in their companies to foreign entities, making the competition even bigger. Indian companies may consider in acquiring these smaller telecom companies who have granted licenses.

Sensex in November'09

As the US and Europe markets are stumbling, Asian markets are also expected to be more volatile. However China and India may have a less volatile market movements in November'09.

This is supported by expected strong economic growth (around 6.7%) in 2009-10 and better turnaround results from India Inc.

Moreover, Sensex is expected to be in the range of 16500-17500 in Nov'09.

We can expect the market to be more volatile and touch record lows in recent days on 29 Oct'09. Again this is backed by the fall in Dow on previous day.

Anyway this will be a season for rational investors to get their picks!

Welspun Gujarat - Where the stock heads?

Welspun Guajarat is one of the hottest stocks now in the mid-cap sector. The company is the seconda largest line pipe company in the world. The thing that keeps the stock rocking is its order book. The company recently announced that it had reached the landmark of Rs.10,000 cr in its order book. This ensures the better cash flow for Welspun in coming years, atleast throughout 2010.

The company's stock was at around Rs.50 in March/April this year, now trading at Rs.280.

Strong fundamentals such as impressing order book, strong financial results, good management, global presence,etc.

Welspun reported that its net profit has increased by more than 90% Year-on-Year to Rs.138 Cr for the quarter ended June 30, 2009.

EPS went up by more than 200% Y-o-Y to Rs.7.38 for the same quarter.

The company is expected to announce its results for the quarter ended Sep 30 with the same level of growth.

This is one of the best picks in the market. It has already reached its peak in the market, trading at Rs.380.

Anyone who wants to invest for atleast 1-2 years, this is the best pick!

Sensex - Short Term Outlook

Global markets are back on track, thanks to the promising results by corporates. India Inc is showing a healthy start towards Q3. Sensex has been recovering well from its 16,000 levels towards 18,000. Hope this may be reached in this month!

I have some stock picks expected to deliver a really 'good' returns in next 6-12 months. Here is the list:

1. Welspun Gujarat
2. Tanla Solutions
3. Gayatri Projects
4. Crompton Greaves
5. SAIL
6. Essar Shipping
7. Sujana Towers
8. GVK Power

Sensex is expected to be in the range of 16,000-18,000 in next 3 months.