Stock Shastra

The MCX IPO goes live today on the 22, February, 2012 with much excitement around it! The bleeding IPO market has seen no issue since October last year.

MCX is the largest commodity futures exchange in India, enjoying a leadership position in metals, bullion and energy futures. Financial Technologies is its biggest promoter. With, MCX being the first commodity exchange to be listed on the bourses, there are many news reports and expectations doing the rounds

So, does this IPO have what it takes? Let’s find out…

ACC Ltd. has been a pioneer and trendsetter in cement and concrete technology in India. Its pan india presence, alongwith a marketshare of 10.83% provides it with economies of scale. Increasing margins and an efficient working capital management present a rosy picture. Also, ACC has a unique track record of innovative research and product development making it one of the most preferred brands of cement in India.

However, the oversupply situation in the cement sector may result into falling demands for the company. This alongwith rising input costs will negatively affect the company’s margins.

Considering this, should you invest in the company?

The volatility in steel prices is well known. And this volatility leads to highly volatile margins of steel companies. However, Tata Steel has a distinctive edge in this respect. The captive sourcing of its raw material protects it from this volatility and this coupled with its high efficiency has helped it enjoy higher margins.

However, the high debt due to the Corus acquisition, high dependence on European operations and fluctuating macro-economic factors are reasons of high concerns for the company. Considering this, should you invest in this company?

Many of you may be aware that we are initiating a new series of Company Shastra, which will cover safe stocks having favorable future growth opportunities. Our first pick for this series is Biocon- the leader in the biotech sector.

Biocon is an integrated healthcare company manufacturing biopharmaceuticals and providing research services. A highly innovative company, it has strong R&D capabilities which have resulted in creating potential blockbuster products in its research pipeline. While its contract research services are picking up pace, it is also well placed to benefit from the Biosimilar opportunity in key regulated markets with products going off-patent in 2014-2018E. However, higher R&D costs (as the product pipeline advances) are expected to act as a margin dampener for the next few years. Considering this, should you invest in Biocon Ltd.?

However, higher R&D costs (as the product pipeline advances) are expected to act as a margin dampener for the next few years. Considering this, should you invest in Biocon Ltd.?

ONGC Ltd. is the only fully integrated Petroleum Company in India, operating along the entire hydrocarbon value chain. It holds largest share of hydrocarbon reserves in India, and contributes over 79% of India’s oil and gas production.

The government has been planning to sell 5% of its stake in the company in order to achieve its divestment target. However, this plan has not fructified for quite some time now. With the long due FPO nowhere in sight and the subsidy burden eating into its coffers, should you invest in this company??