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Thursday, December 27, 2007

Time Technoplast buys Bahrain firm for $10 mn

Technology-based polymer products company, Time Technoplast (TTL) has acquired Bahrain-based battery manufacturer Gulf Powerbeat WLL for $10 million. The acquisition was made by the Mumbai-based compnay through its Hyderabad subsidiary NED Energy (NED).

According to a release issued by TTL to the BSE today, GPW has a state of the art production facility for the manufacture of long life batteries. The total investment in the Bahrain project is estimated at $10 million to be made over the next 3 years and to be financed through a mix of equity contribution from NED and raising debt overseas.

The company was owned by a reputed business family of UAE who offered to disinvest in battery business to remain focused on their large size projects in areas like finance and real estate.

The new acquisition of GPW will provide NED 'ready to use' capacity which could be integrated fully with NED's operation in the next 3 months.

TTL entered into the battery business in October through its acquisition of 71% holding in NED for Rs 50.30 crore, which manufactures valve regulated lead acid (VRLA) batteries mainly for the telecom sector.

GPW has installed capacity for telecom and automotive batteries of up to 150 million AM with surplus capacity to produce vital battery components (grids and lead plates) of additional 250 million AH.

NED plans to triple its current capacity to 300 million AH from 100 million AH currently to meet the huge demand of its products and to further bring new products for the fast growing automotive sector.

In the first phase, NED plans to tap the Gulf Co-operation Council (GCC) market for automotive batteries and bring additional components into India to augment the capacity of its Hyderabad plant to 200 million AH.

NED's project expansion in Jammu by the second quarter of the next financial year would also aid further increase in capacity.

TTL had entered into an agreement with NED, a closely-held company engaged in the manufacture of valve regulated lead acid (VRLA) batteries, to purchase 4.289 million shares (71.48%) of the existing share capital from the latter's promoters at a price of Rs 103.33 per share aggregating Rs 44.31 crore, besides subscribing to 0.58 million additional shares at Rs 103.33 per share at an aggregate value of Rs 6 crore.

The existing promoters will continue to hold 26% of the equity capital of NED. The company, enterprise value of which is estimated at Rs 65 crore, registered a turnover of Rs 4.5 crore with a net profit of Rs 3.3 crore for 2006-07. It expects to garner Rs 60 crore revenues with a net profit of Rs 5.5 crore during 2007-08.

The domestic automotive battery market is pegged at Rs 1,600 crore while the telecom battery market is estimated to be Rs 985 crore, in which NED has a five per cent market share. The telecom sector is growing at a rate of 40% and the demand for telecom towers is expected to touch 3.3 lakh by 2010, from the present 1 lakh.

TTL, which posted a net profit of Rs 41.4 crore on a turnover of Rs 456.9 crore in 2006-07, expects its net profit to touch Rs 75 crore and its revenues to exceed Rs 700 crore for the year-ended March 2008.

Posted by Srivatsan at 8:51 AM

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Understanding Short Term Trading

Before I begin, this blog is not for intraday traders. My definition of short term implies duration of around 2 to 3 months.

Short Term stock picking is no rocket science, but rather a visual interpretation of technical charts. A basic moving average on a time frame chart will show the direction of the securities movement.

Moving averages is a mathematical results calculated by averaging a number of past data points. Moving averages (MA) in it's basic form is calculated by taking the arithmetic mean of a given set of values on a rolling window of timeframe. Once the value of MA has been calculated, they are plotted onto a chart and then connected to create a moving average line. Typical moving averages used for short term trading are 50 MA and 100 MA.

Types of Moving Averages

1) Simple Moving Average (SMA)

SMA is calculated by taking the arithmetic mean of a given set of values on a rolling window of timeframe. The usefulness of the SMA is limited because each point in the data series is weighted the same, regardless of where it occurs in the sequence. Critics argue that the most recent data is more significant than the older data and should have a greater influence on the final result.

2) Exponential Moving Average (EMA)

EMA overcomes the limits of SMA, where more weight is given to the recent prices in an attempt to make it more responsive to new information. When calculating the first point of the EMA, we may notice that there is no value available to use as the previous EMA. This small problem can be solved by starting the calculation with a simple moving average and continuing on with calculating the EMA.

The primary functions of a moving average is to identify trends and reversals, measure the strength of an asset's momentum and determine potential areas where an asset will find support or resistance. Moving averages are lagging indicator, which means they do not predict new trend, but confirm trends once they have been established.

A stock is deemed to be in an uptrend when the price is above a moving average and the average is sloping upward. Conversely, a trader will use a price below a downward sloping average to confirm a downtrend. Many traders will only consider holding a long position in an asset when the price is trading above a moving average.

In general, short-term momentum can be gauged by looking at moving averages that focus on time periods of 50 days or less. Looking at moving averages that are created with a period of 50 to 100 days is generally regarded as a good measure of medium-term momentum. Finally, any moving average that uses 100 days or more in the calculation can be used as a measure of long-term momentum.

Support, resistence and stoploss can be infered by referring the closet MA below or above the market price. The other factor that is used in short term momentum is the trading volume. The moving averages along with the trading volume can provide a better insight to short term movement.

Markets are moved by their largest participants - I believe this is the single most important principle in short-term trading. Accordingly, I track the presence of large traders by determining how much volume is in the market and how that compares to average. Because volume correlates very highly with volatility, the market's relative volume helps you determine the amount of movement likely at any given time frame--and it helps you handicap the odds of trending vs. remaining slow and range bound.