BHARAT SEATS LTD.

BHARAT SEATS : BSE CODE 523229

M/S Bharat Seats Ltd. was floated to manufacture of automobile seats. The promoters include Relan Family, Maruti Suzuki India Ltd., Suzuki Motor Corporation and the total promoters holding is over 74 percent. The floating public stock is less than 20 percent.

The company has a share capital of about 6.28 crores made up of 3.14 crore shares of Rs.2.00 each. The company issued bonus shares of 1:1 and split the shares into face value of Rs.2.00 each during 2007-08. Even after the bonus and split, the share commands a good book value.
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The company is showing decent sales numbers and can be regarded as a small auto ancillary company and with good parentage.

The share price (ex-split etc.) saw a high of around 30 during November – December 2007 but due to market melt down after January 2008, the share reached a bottom of around Rs.12.00 or so. Now interest has again surfaced in this share.

Considering the strong parentage and decent sales/profits, we expect the share to show some positive movement and show an increase of about 40% in one year. Conservative investors can consider investing in this share.

Disclaimer: This report has been prepared solely for information purposes and the investment is the sole decision of the investor. Such information is impersonal and is not an inducement to invest. The information contained herein has been obtained from sources believed to be reliable and author accepts no responsibility for the accuracy of its contents. Investors are advised to satisfy themselves fully before making any investments or committing themselves and should consult their own financial consultants whether and how to use such information in making any investment decision. The author accepts no liability arising out of use of the above information/ article.

Kindly note :

a) We advise only regarding fundamentally strong and performing companies. The companies may be mostly profit making and in a few cases, they may be turn around companies.
b) Please go through our fundamental analysis carefully, verify the facts and figures (if you need to) and only then invest.
c) We expect investors to have a time horizon of at least one year and more.
d) We do not advise for short term investing, which is risky.
e) Despite all these, we do not take any responsibility for your financial matters. Investment is solely your decision.

(AJAY SINGH RATHORE)

KASHIWALA

VALUES OF LONG TERM INVESTING

I have been getting innumerable queries from anxious investors stating that they have entered such and such stock at so and so price and the prices have now declined. What to do now? Most of their queries pertain to strong companies like Noida Toll, SPEL, JP Associates, Adlab Films, West Coast Paper Mills, Parsvnath, Omaxe Ltd. etc. etc. The list is endless.
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I may state as under :

i) Most of the investors have apparently joined the bandwagon when the market started rising from Sept. 2003 onwards. It has been practically a bull market.

ii) They have not seen an extended bear market. The present fall in the market has eroded the value of most investments by over 60% (Omaxe from Rs.600 to Rs.200, JP from 500 to 200, Noida from 80 to 30 etc.). I personally do not categorise the present position as an extended Bear Market, per-se. There are various international cues operating over which the investors are getting panicky.

iii) I have seen astronomical bull markets followed by extended bear markets in 1991-1992-93-94, 1996-97, Oct. 2001 to Sept. 2003 (Post 9/11 attack on U.S.). I would quote a few examples.

iv) During Harshad Mehta boom almost every share was rising astronomically without any valuation or reasoning. During 1999-2000 I.T. shares commanded very huge valuations, again without any reasoning. During this period, I know people who had purchased Pentamedia Graphics (then called Pentafour Software) at 2500.00 levels and they held on for whatever reasons known to them. In the bear market that followed, the stock went into hibernation, never to get up.

However, fundamentally strong companies may show extremely low valuations but over a longer time frame they tend to pick up. I am quoting below a few examples :

In the extended bear market post Oct. 2001 to say Aug. 2003 at some point of time the following stocks were quoting almost at their lows :

Tata Steel : Around 70.00, Bharti Airtel : around 33, SBI around 150, Reliance around 240-250 to name a few. But die hard fans of long term investing who believe in fundamental prospects held on. Look at the results.

v) In my fundamental analysis, lesson No. 4, I had stated that one should learn to accept bear markets or accept to book losses. I know many good portfolio managers who do this and even fund houses churn portfolios, at times booking losses. However, if you holding on to a fundamentally strong stock which has fallen down like anything, we can consider averaging out at the bottom. Noida Toll is a good case under consideration. Many persons known to me have started picking up Noida Toll at 35-38 levels for holding of at least one year.

Therefore, Friends, have patience. The temporary blip may pass on and we can look for better times ahead.

Always have a positive view on the market.

Kashiwala

p.s. : I shall be shortly posting Lesson No. 5 of Fundamental Analysis, how and why the stock prices move and what are the symptoms to watch out for.

STATE BANK OF INDIA

STATE BANK OF INDIA

State Bank of India, as a company, does not need any introduction to all of you but I may say a few words. Initially 3 presidency Banks were set up by Britishers, Bank of Bengal, Bank of Bombay and Bank of Madras. At certain point of time, these were merged to be known as Imperial Bank of India.

After independence, it was felt that there should be a strong Government sponsored and Government partnered Bank to take care of various Banking needs of Government as well as public. Accordingly State Bank of India was set up under SBI Act in 1955 and Imperial Bank got transformed into State Bank of India. Subsequently, 7 Associate Banks which were earlier set up by Princely states were taken over as Subsidiaries of SBI, viz. State Bank of Hyderabad, State Bank of Indore etc.

The Bank has a share capital of 526 crores made up of 52.6 crore equity shares of Rs.10.00 each. Of the above, Central Government holds 59.73% shares, Institutions like LIC, FIIs etc. hold 24.22 % shares and Custodians of depository receipts hold 7.42 % shares. Public share holding is only 8.63%. The Bank has offered shares on rights basis @ 1 share for every 5 shares held at 1590.00. The rights issue is expected to be subscribed fully.
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INTRINSIC WORTH OF SBI SHARES

i) The Bank has got substantial real estate properties all over India and in the balance sheet of SBI, several buildings are shown to be having a value of Rs.1.00 or Rs.100.00 (For eg. Bombay Main branch). These buildings command considerable value and the Bank is in the process of revaluing the assets to shore up tier-II capital.

ii) The Bank has got equity capital of 526 crores and free reserves of Rs.41691 Crores (Sourse BSE Site), thus commanding a huge book value.

iii) The Bank has got several associates and subsidiaries which are doing quite well.

iv) All the Associate Banks are not listed. Of the listed Associate Banks, as and when their share value rises, the intrinsic value of SBI’s share also rises.

v) There may be a possibility that SBI may list the shares of its Asset Management Company and SBI Life (both subsidiaries). It this happens, this will unlock share value of SBI. Some regulatory processes are involved in this direction.


FUTURE PROGRAMME OF THE BANK

i) The Bank was in news recently when it opened its 10000th branch in Puduvayal under the constituency of the Hon’ble Finance Minister.

ii) Most of the branches of the Bank have been brought under Core Banking solution and this has resulted in excellent customer service. Besides, the Bank has changed the premises of its various branches and created excellent working atmosphere/ambience, with ultimate customer satisfaction in mind.

iii) Shri O.P. Bhatt, Chairman of SBI was chosen as the best entrepreneur recently amidst several other contestants. Shri Bhatt is a strong visionary and the industry circles believe that he will take SBI to new highs.

iv) The Bank is offering EZ trade (online trading) with Motilal Oswal and this business is picking up fast. In due course, it will give its competitors a tough time.

The share price saw a high of 2500 very recently and has come down since then. Now it is around Rs.1700.00.

Conservative and safe investors can safely purchase the shares of SBI at the current rates and hold it for a long long time. They will certainly see their capital appreciation in due course of time.

Disclaimer: This report has been prepared solely for information purposes and the investment is the sole decision of the investor. Such information is impersonal and is not an inducement to invest. The information contained herein has been obtained from sources believed to be reliable and author , accepts no responsibility for the accuracy of its contents. Investors are advised to satisfy themselves fully before making any investments or committing themselves and should consult their own financial consultants whether and how to use such information in making any investment decision. The author accepts no liability arising out of use of the above information/ article.

Kindly note :

a) We advise only regarding fundamentally strong and performing companies. The companies may be mostly profit making and in a few cases, they may be turn around companies.
b) Please go through our fundamental analysis carefully, verify the facts and figures (if you need to) and only then invest.
c) We expect investors to have a time horizon of at least one year and more.
d) We do not advise for short term investing, which is risky.
e) Despite all these, we do not take any responsibility for your financial matters. Investment is solely your decision.


(AJAY SINGH RATHORE)
KASHIWALA

FINANCIAL PLANNING : FINANCIAL SECURITY

Dear friends,

I have been getting innumerable number of queries from young investors in the age group of 30-35 requesting an overall advice in financial planning. Most of them have an income level of 35000 to 40000 per month, some of them have even lesser income at 25000 per month.

There are many different financial planners who may advice on different issues but I have designed an overall plan meant for a typical young person in the young age of less than 35 with monthly income level of Rs.25000 to Rs.30000. Other persons may work out their strategy accordingly. In my assumption, the typical person is married with two kids.

1. Financial Security :

Assuming there is a mis-hap (God Forbid), your family should have at least Rs.30 Lakhs coverage/ compensation. For this purpose, I suggest the following :

a. Go for Term Assurance plan, eg. SBI LIFE Shied Policy wherein the premium covers only life risk and the premium amount is not repaid. At a young age with a longer term, the premium will work out to less than Rs.6000.00 per annum for a cover of Rs.10,00,000.00. There may be other such pure risk term assurances which you can enquire. The premium outgo works out to Rs.500.00 per month (but paid annually.)

b. The General Insurance companies offer one Janata Personal Accident Policy with coverage of Rs.1,00,000/- and the premium is Rs.264.00 or so and this one time lasts for 5 years.

c. The above General Insurance Companies also offer Personal Accident policies wherein a coverage of Rs.10 Lakhs may cost something less than 3000.00 per annum (please check exact amount). The coverage is only for accidental death. It can be safely assumed, with the medical advancement, death in young age is mostly due to accidents. The monthly outgo may be around 300.00 approx.

d. Go in for a ULIP (LIC Market plus, UTI Ulip, SBI Life Unit Plus/Horizon etc.) with a coverage of Rs.3,00,000.00. Try to get the best possible alternatives and go in for the Equity or Growth or Maximiser options. Different companies have different names.

e. Invest about Rs.5,000.00 per month in a well diversified equity fund under Systematic Investment Plan, Dividend Reinvestment option.

f. Purchase some shares which have a long life (multibaggers). There may be several of such stocks, but stocks with adequate and sustained cash flows like Noida Toll are the best.

g. If you are not covered under PF scheme, invest 10 percent of your monthly income in any mutual fund scheme – Tax Saving scheme in SIP.

h. If you are not covered by any medical benefits in your employment, take a Health Insurance (Mediclaim) from any of the Government Insurance Companies viz. General Insurance etc. with TPA (cashless claims)

If you follow the principles, your coverage is initially Rs.23 Lakhs as above and with the increasing savings over a period of time, your financial security will cross the targeted amount of Rs.30 Lakhs shortly.

Friends, your family is of utmost importance to you. ALWAYS INVEST FOR A LONG TERM.

KASHIWALA