Geodesic A Screaming BUY

The company at CMP of 91 is looking an extremely lucrative BUY.

For the full year FY10 the company has posted an EPS of 26.88 Rs, which means it is trading at less than 3.5 PE. The company is trading below its book value of more than 100 Rs and has superior EBITDA Margins of around 53% and PAT margins close to 38%. ROCE is also fantastic at 20%.
To add to it, it enjoys zero tax rate for the next 3 yrs.
Moreover the Management is confident of delivering 22% in topline with margins maintained at the same level for the next yr.
Also compared to its peer set like sasken and bartronics it looks very cheap

The company has some solid products in its kitty like the

• Mundu Instant Messenger ( An integrated instant messenger that combines Yahoo, MSN and others)
• Mundu Radio ( It has been launched with Idea)
• Spokn ( VOIP application)
• Anti Piracy Software ( To stop online piracy of movies, the product has been tested for movie Houseful)
• Geoamida ( Worlds 1st integrated mobile handheld device)
• The company has also developed websites like the smartinvestor.in, edelweisiss.in and charts for moneycontrol.com

The best part is as an investor u can use and experience these products for yourself to check both the genuineness and ingenuious of them unlike many others.

The company has posted 644 crs of revenues and 248 crs of PAT for FY10, a tad below prev years earnings which were at 653 crs and 264.3 crs respectively due to pricing pressure.

However I feel its Anti Piracy Software and Geoamida are going to be revolutionary products and growth is imminent.

Some Other Points to keep in mind.

• The company has FCCBs to the tune of $111 M, which is the only debt.
• 95-98% of its sales is from export.
• The company is buying back shares to the tune of 5% for not more than Rs 150 per share.

Shareholding Pattern

Promoters =22.70
FIIs= 52.58%
Others=24.72.

A point of caution

The only niggling thing about this stock is that it has been battered continuously from levels of 150. This could be because of two reasons:- 1) Its 95 % sales are from exports and as we all know the situation in Europe and US looks grim. 2) The sentiment for all IT stocks is a bit negative.

However I feel that the stock has almost bottomed out and from here on, we can see a smart recovery.

There was squawk on the Dalal Street. The Nifty ended at 4919, below its 200 DMA.

There was squawk on the Dalal Street. The Nifty ended at 4919, below its 200 DMA.
We saw a global selloff today, with Asian indices tanking abt 1%. More pain was witnessed in the European Markets which plummeted about 2% after Greece banned naked short selling in Euro bonds and some 10 European banks.

However I see this as just a sentimental reaction and Indian markets should rise again from the current levels.
I think markets are overdoing the Greece crisis because India is least affected by it. Infact countries like Poland, Chez and Hungary are most affected as they carry a lot of trade with the EU nations.

Infact in this era of shrinking economies, overgrown debt burdens, fiscal imprudence and increasing unemployment of the biggies like the US, UK and Europe, India stands to gain the most. With near term concerns over China monetary tightening and Japans decade long deflation what seems to be shining brightest is India.

With consumption driven economy growing at 8%, inflation coming under control, coupled with stable government, strong & sound banking sector and credit growth picking up India is at the center stage of the world.

I think it is only in the short term that the FIIs are pulling their out their money as they are nervous and want to book their profits and emerging markets are the ones where they have made most of the profits. I think any further dips should be used to buy in the Indian markets as fundamentals are strong and valuations now getting cheap.

I place my bets on IRB (an infra play) and Reliance.

I also feel one should buy in Sesa Goa and Gujrat NRE Coke at every dip. Commodities have been overly bashed and you will see a overturn. With Chinese economy growing at 10% and inflation at 3% is not much a worry. China has already taken a few steps to tighten its monetary policy and so I dont see much concerns over Chinese economy as well.

Another lucrative long term buy is Cairn. Crude has temporary fallen to levels of 68 and it will bounce back any time.

Lets just hope that this time Monsoon does not play a spoil sport and we have adequate rainfall so that our economy can sustain growth of 8% and above.

Great Offshore surges to 475

I had suggested in my earlier post dated 13th April to buy Great Offshore at levels of 418-422.

The share had been languishing constantly in range of 400-420 levels since quite some time and break out at higher levels looked very likely.

The stock past two days is seeing a good rally of more than 5% and today it touched an intraday high of 475.80.

Interest rates not to rise immediately

The RBI has increased all its key policy rates by 25 bps.

Current Prev
Repo rate 5.25 5
Reverse Repo 3.75 3.5
CRR 6 5.75


The CRR hike coupled will Government borrowing plans will suck away some money from the system. However since there is enough liquidity in the markets, it doesnot look like bankers will immediately resort to raising interest rates.

At the same time with the credit growth picking up ( around 20%) and deposits rising (17%), and the gap between supply and demand narrowing, we can see rise in interest rates inching up in next 5-6 months.