J&K Bank

J&K Bank is available near book value at Rs. 780 abouts.

It is a very safe bet that should deliver 20%+ returns. Definitely a good buy.

I will get its stats and upload them soon.

MOIL IPO - Subscribe *****

The issue of Manganese Ore India Ltd. is very attractively priced. Since, the issue is an offer for sale, there is no fresh issue of equity by the company. The money raised from the IPO will go directly into the coffers of the promoters, ie. the Central Govt., State Govt. of M.P. and Maharashtra. The issue is priced @ Rs. 340-375 and will be open for subscription from November 26,2010 - December 1, 2010. The retail cutoff should be Rs. 356.25.

From, a plain trailing 12 months PE, it is priced at a PE of 12.29. This PE is inflated because of lower profits in the previous year due to a 60% fall in manganese prices like all metal ore prices. When we take a 2-year average, it works out to 10.6 with an average EPS of 10.59.

Some facts which are disguised are:

* Cash Balance of Rs. 1482 crores working out to Rs. 88/share

* Debt-free status

* Net Cash adjusted PE is 10.85 after deducting cash from BV and interest income from profit.

* High EBITDA margins (65% + to be maintained as indicated by management)

* ROE above 25% consistently.

* 25% Dividend Pay Out Ratio

The company currently produces just in excess of 1.17 MT. It has proven and probable reserves of near 69 MT. There is plan of steady increase in output and reserves are definitely there. The average realisation last year was Rs. 11,600/MT. The mines are in M.P. and Maharashtra and there is not any mention of Maoist disturbance.

The company is also investing steadily in wind energy. It also has a JV with SAIL for a ferro-manganese plant but the contribution of these projects is not that significant yet.

For all the positive reasons, I cannot think of why one should not subscribe to this IPO. It is very attractively priced, and one can apply with full amount of Rs. 2,00,000 and lap up one of the few things that the government actually gives to the public.

Due Date - 3.5/5

   Due Date released in India on November 5th. It is lasts for around 1.5 hours.

   It is one of the most comic movies I have seen lately. It has been directed by Todd Phillips (of the Hangover fame) and, stars Robert Downey Jr. and Zach Galifianakis as the main actors. Just like the hangover was a comedy about four guys doing all sorts of stupid things in Las Vegas, so too this movie is a comedy about these two doing all kinds of crazy stuff on a road trip halfway across the USA.

   The dialogues are spot on funny and I could find many people in the theater rolling on their seats.

Robert Downey Jr. (Peter) is an architect who is flying for the delivery of his pregnant wife. He meets Zach Galifianakis (Ethan) in the airport and Peter has really bad experiences with Ethan right from their hand baggage getting exchanged to Ethan's tummy rubbing Peter while Ethan is trying to fit his baggage inside the aeroplane. Due to an incident, both of them are grounded and to get to LA (for his wife's delivery), Peter is forced to drive with Ethan due to lack of options.

The drive is really funny with Ethan doing all sort of stupid things that would irritate any sane person and Peter trying to control his urges of stealing the car and running away. They finish their cash, get stoned, reach Mexico, go to the Grand Canyon and somehow reach LA. There are lot of funny moments inside which I am not going to disclose much about. They concern things like Ethan's Dad (ashes in a coffee can) and Jamie Foxx.

Although the movie falls a notch short of the Hangover (in Todd Phillip's case) or Iron Man (in RD Jr.'s case), this is nonetheless a decent watch.

This movie is a good comedy after a long long time and one must definitely watch it with friends to laugh endlessly and get some relief.

Powergrid FPO - Subscribe *****

The government seems to be crazy but it is pretty good for the investors. The Powergrid FPO is priced @ Rs. 85.5 for retail investors. The 52 week low is Rs. 95. This is a defensive (low-beta) stock. At this level in this bull market, it is a very good investment with a good risk-reward ratio.

Some details about Powergrid and the valuations:

Incorporated in 1989. World's leading power transmission utility carrying 51% of nation's power. Also holds large amount of fiber optic network.

The issue is 50% offer for sale by government and 50% fresh issue (to be deployed for enhancing transmission network).

Networth as on 30th Sep: Rs. 17296 crore

Issue is to increase capital by 42,08,84,123 shares. Post issue, at a price of Rs. 100, Powergrid will trade at a Trailing 12 Month P/E of 19.3 which is below its average historic P/E and not high for a utility. The big debt is not an issue as it is common with power transmission utilities who are not exactly high ROE candidates.

With large amount of power projects coming up, the scenario is supposed to get rosier for the company.

One should subscribe with full amount without hesitation.

Annapurna Trek - Detailed

I am going to share my experiences of the trek with you, readers. Well, it can help you plan an awesome trek (it is one of the world's best) and give me some writing practice for my GMAT :)

We (Dhiraj, my friend who planned the trip and me) left for Pokhara from Kathmandu early in the morning by bus. The Green line bus service is pretty good. We reached Pokhara in the evening and bought stuff for the trek such as Trekking poles, food, etc. We also made contact with our guide Mr. Pawan who is a full time entertainment package.

The next day we took an early morning cab to Phedi where we started our trek. The first bit was steep as we are climbing something like that after ages. But the view keeps getting better as you move upward. We reached Dhampus in about 3.5 hours and put up at Dhaulagiri View Guest

House. It is a really amazing place and blew all our expectations.

We then left for Landruk the next day. We stopped for lunch at a place called Tolka which lies midway. We reached Landruk in like 5 hours. There we put up at View Top Lodge which was also decent. The food is also pretty good throughout expect for the prices which is due to high

cost of transporting goods on back of labourers who you encounter throughout the way. The view of Annapurna South next morning was amazing.

From Landruk, we trekked to Chomrong, which is one of the main places in that area. We stopped for lunch at a place called Jhinu (from here you can take a detour to some hot springs) and then climbed a mighty amount of steps (have a light lunch) to Chomrong. Chomrong has a really amazing view of both Macchapuchre (Fishtail) and An

napurna South. Sunrise and set are the best time to view the mountains. The name of our guest house was Excellent View and indeed it was.

From Chomrong we went to Bamboo. You could reach Bamboo in time for lunch. We stayed at Bamboo guest house. The place was more of a stopover with nothing that great to offer. All GSM services stopped after Bamboo so yo can make your important phone calls.

From Bamboo we left for Deurali. On the way we stopped at a place called Himalaya which offers decent food. We reached Deurali in the evening and relaxed for the next day which was Annapurna Base Camp.

We left for ABC early morning. We reached in 3 hours or so after some quick trekking. We were lucky to get amazing pictures which blew your mind away. The view is hypnotic to say the least (you can see how hypnotised I look in the pic). Not finding rooms, we had to do with a tent. The coldest day of the trip but nothing could extinguish the excitement.

We left the next day trekking downwards and made stay at Bamboo again. Wanting to finish the trek early, the next day we trekked for 6 hours and reached New Bridge. The hotel in New Bridge was not as good as we got used too. But we had a good time with a Scottish family whose daughter was hell bent on scaring our guide.

We then trekked all the way to Nayapul and it was a good experience to sit in a car after so long. We took a flight to Kathmandu the next day and finished the trip with a good dinner at Rox (the best place in Kathmandu at the Hyatt).

Dhiraj, my friend did an amazing job of planning the whole thing and our amazing guide kept our spirits high throughout the trip. The view is truly amazing and it remains one of my best experiences.

Few things to keep in mind are to carry a lot of Cash. Money is your best friend. Also, try and keep everything dry. Try and have a bath daily with hot water which is available for Rs. 150. Carry first aid and lot of chocolates. Don't forget to carry an amazing camera.

You can see some of the pictures in my previous post. I would recommend this to anyone needing some good peace of mind.

Trek to Annapurna Base Camp

Some of the better pictures.

Financial Technologies (India) Ltd.

FTIL is currently going down like a pack of cards.

In the last 5-6 days, it is continously sliding 2-3% daily. I have started accumulating @ 1150 and think its a good buy at current levels of 1040.

The company is engaged primarily in providing technology solutions in financial markets in the form of ODIN trading cum RMS software. Besides this, it is actively creating and operating exchanges in developing markets for facilitating trade in commodities, energy and currency derivatives. From time to time, the company sells stake in these exchanges to monetise value.

The company's primary software division makes on a average, a profit to the tune of 75-80 crores. The good points about the software are its stickiness and strong market share. The bad part is the stickiness again if a broker switches to another software. Valuing that division at 15x profits, gives us a value of 1200cr. for the ODIN business or around Rs. 260/share.

Besides this, the value of core investments (MCX, DGCX, IEX and NSE) is 3800cr on a very conservative scale using past share sale values. Since all the four above mentioned exchanges are doing well, I don't see a point of value diminution. I have excluded MCX-SX shares due to controversy going on which I will highlight. Similarly, I have also excluded investments in many other small subsidiaries which are not mature enough (National Spot Exchange, GBOT (Mauritius), SMX (Singapore) which are up and running besides other ventures). This practice also provides me with a wee bit of Margin of Safety. This gives us a per share value of Rs. 824.

The company also holds substantial amount of cash and liquid investments. We can also adjust the ZCCB it has issued and is buying back. This is to the tune of Rs. 130/share.

The SOTP gives us a valuation of Rs. 1,214. Already basing earnings on a conservative basis, I take a 10% Margin of Safety on my valuation and find Rs. 1,090 to be a good buy price.

The good part about the business is that the primary technology business is a high margin business where the company has a fair amount of muscle. With greater financial inclusivity coming in India, there is still immense scope in this aspect. The exchange incubation cum operation business could be a great cash flow generator if 3 or 4 other exchanges pay off. Here also I am hopeful that greater financial inclusiveness in developing countries allows room for multiple exchanges. On this front, if many exchanges do come up FTIL will be selling software to some of them definitely. I personally admire the promoters and am willing to put my faith on them. The most important aspect is the amount of Free Cash Flow that can be possibly generated in the future from both these areas.

The main negative are the overt motives of SEBI-NSE combine to not let MCX-SX function. With Mr. Bhave packed off if Feb, I hope for better days ahead. Also, if all the new ventures become duds or competition results in bad economics, then there is gloom, boom and doom. Also, institutional stake is high in the stock at around 32%. But it has always been the case so I don't expect that to come down quickly.

Conclusion

One could buy this stock in a portfolio in small quantity on dips at the current levels. There could be exciting times ahead.