Buy Chemfab Alkalies: Ashish Chugh

Buy Chemfab Alkalies at current levels, says Ashish Chugh, Investment Analyst & Author of Hidden Gems.

Chugh told CNBC-TV18, "Chemfab Alkalies manufactures caustic soda. Incidentally this was the first company in the country to have introduced the membrane cell technology which they did way back in 1985. Now there was a small incidence of gas leak in this company in the month of January. Though this was a small incidence but it was probably blown out of proportion and the plant remained closed for more than 3 months. Only after they filed litigation in the high court the plant got reopened in the month of May."

He further added, "Now the effect of closure of plant was reflected in both the March quarter and June quarter numbers wherein it reported a loss of about Rs 1.3 crore in the March quarter and about Rs 2 crore in the June quarter. Now looking at a full year number this company in spite of a loss of Rs 1.3 crore in the March quarter, ended the year with a profit after tax of close to Rs 9.7 crore as against Rs 7.2 crore in FY10."

"In Q2 also this company has reported sales of about Rs 24.25 crore which was up by about 4% and the profit before tax was up by 40% but profit after tax was down by 30% on account of an additional tax provision of Rs 2.5 crore pertaining to the previous years. Now if that provision had not been made, the quarter profit would have been more than Rs 4 crore."

"This company had a debt of about Rs 25 crore 5 years back. The company has been purling its debt and today it's a debt free company. Now looking at the valuations of the company currently the stock trades at about Rs 40 and the market cap is about Rs 37 crore. This is a totally debt free company and as on 31st March 2011 this company had cash and cash equivalents of close to Rs 23 crore which means that you have this business which is available at a business valuation of about Rs 14 crore."

"If you see the numbers of FY11 closely, the cash profit alone was about Rs 17 crore. In a normal year this company is able to make a profit after tax of about Rs 12-13 crore and a cash profit of close to Rs 20 crore. Gross block is about Rs 150 crore. So given all these things of course the numbers for first 3 quarters – the 3 quarters have not been very good but these are because of certain reasons which are not recurring in nature."

"Going forward we can see this company report good profit for the coming quarters and I think at a business valuation of Rs 14 crore, debt free, this company paid a dividend of about 50% for the last two years. Before that some years it had also paid about 100% dividend. It is a Rs 5 paid up stock and dividend yield at the current price comes to about 6.5%. So given all these factors I think this stock looks to be a value buy at the current price and I think it has got minimum downside from these levels."

Idea Cellular can test Rs 104: Anu Jain

Idea Cellular can test Rs 104, says Anu Jain, Sr. Vice President - IIFL Private Wealth Management.

Jain told CNBC-TV18, "I like the way Idea has moved up. It could hold on and pull back to Rs 96 which has been close to its 20 day and 50 day moving average. I think if it were a bad day I would keep a stop loss close to Rs 94."

She further added, "On a good day like this I think closer to Rs 95 should be where my stop loss would be placed. I think for a trading perspective it’s moving close to Rs 100. If it can manage to hold on there then we look at higher targets of Rs 104. But for trading perspective, for right now, I think a 4% kind of a move on the target is looking good."

The company touched its 52-week high Rs 103.65 and 52-week low Rs 55.65 on 06 Sep, 2011 and 28 Feb, 2011, respectively. Currently, it is trading -4.68% below its 52-week high and 77.54% above its 52-week low. Market capitalisation stands at Rs 32,666.36 crore.

The company's trailing 12-month (TTM) EPS was at Rs 2.12 per share. (Sep, 2011). The stock's price-to-earnings (P/E) ratio was 46.60. The latest book value of the company is Rs 37.16 per share. At current value, the price-to-book value of the company was 2.66

How technology can bring cost of services down

Why does your medical bill cost more than your monthly groceries? Or why does your child's education cost more than a plasma TV? According to a famous claim in economics, the cost of services tends to increase as compared to the cost of goods. This definitely rings true as one can barely afford the costs of rising healthcare and education anymore. They seem to be rising faster than overall inflation. Will we be doomed to continue paying exorbitant rates for these necessities? Columbia University professor Jeffrey D. Sachs, seems to have an answer. He believes that a sharp decline in these costs may soon be possible due to the tech revolution. The disruptive forces of technology have changed our lives in many ways. And further development of this field can actually help reduce the costs of highly expensive services. Various educational videos are now being put online for free so that anyone in the world can learn subjects like math and physics. Similar breakthroughs can happen in healthcare space as well to help empower individuals. Investment in technology is without doubt the only way forward.