ASHOP - Next Generation E-Commerce Solution

As mandkind evolved, we started bartering stuff that we had for the stuff we wanted. Later came the currency and we started trading. Then came banking and money. Then computers evolved and gave birth to a revolutionary concept in trading called "electronic commerce" (popularly known as E-Commerce). In 2000-2002, it was a big hit with everyone jumping into the e-commerce bandwagon to enjoy some bit of its craze.

But the baloon soon burst and all those players having shallow fundamentals gone bankrupt and vanished soon. Only those having strong fundamentals, strong technology background and robust willpower survived. ASHOP is one of these survivors and it's a clear front-runner in the e-commerce industry. If you have a business and want to tap into uncharted territories including international markets, then you must have a web-site with e-commerce facility.

If you have a web-site, then you must have ASHOP E-Commerce software that makes online shopping very easy, simple & convinient. Its award winning shopping cart software tools are so simple to use just like 1..2..3! This ecommerce software is highly sophisticated and is search engine friendly. If you do not have a web-site but still are considering e-commerce, then ASHOP also helps you with hosting! It's truely one-stop-shop for all your e-commerce / online shopping related needs.

Here are few reasons why you should choose ASHOP E-Commerce software:

• It is affordable
• It is easy to use
• Superb technical support and customer service
• Search engine friendly
• You can customize and personalize it to suit your needs
• It's a total solution (one-stop shop)
• Recommended by me :)

Stock Idea - Orchid Chemicals & Pharmaceuticals

Recommendation: Buy
CMP = Rs 244 (as of Monday)
Price target: Rs 375

Key points

• Orchid's revenues are likely to get a big boost in FY2008, with at least three major new products—Tazobactum + Piperacillin (market size of $480 million), Cefdinir (market size of over $600 million) and Cefepime (market size of $190 million)—slated for launch.
• I expect these products to collectively generate $35.8 million and $47.5 million in revenues in FY2008 and FY2009 respectively.
• From manufacture of sterile Cephalosporins, Orchid is now venturing into the non-antibiotic space. It has already filed ten abbreviated new drug applications (ANDAs) with the US Food and Drug Administration (US FDA) and received one product approval for Terbinafine tablets.
• Orchid's much awaited entry into Europe seems at an arm's length now. With all the prerequisites in place, Orchid seems all set to launch Tazo-Pip formulation in Europe. Tazo-Pip will be a big opportunity for Orchid in Europe as the company will be one amongst the three manufacturers of the product in the market. We expect the European business to generate $14.0 million in FY2008 and $26.2 million in FY2009.
• Over the years, Orchid has transformed itself from a company manufacturing bulk drugs for the unregulated markets to one that exports formulations to the regulated markets of the USA and Europe. Led by an improved product and geographical mix, we expect Orchid's operating profit margin (OPM) to expand by 300 basis points from 31.7% in FY2007 to 34.7% over FY2009E.
• Being a 100% export oriented unit (EOU), Orchid was so far exempt from paying any taxes. However, with the newly introduced provision in the Union Budget for FY2007 whereby companies operating as 100% EOUs are liable to pay the minimum alternative tax (MAT) of 11.32%, Orchid too has come under the tax net.
• Incorporating the impact of the delay in the launches of Ceftiofur, Tazo-Pip and Cefdinir in the USA as well as that of Orchid coming under the purview of MAT, of reduced interest burden on account of repayment of debt and of the equity dilution, we are revising our FY2008 estimates.
• At the current market price of Rs 244, Orchid is quoting at 10.4x its estimated FY2009 earnings.
• In view of the bright prospects for the company, I retain the positive stance on the stock and maintain Buy call with a revised price target of Rs 375, at which Orchid will discount its FY2009 fully diluted earnings by 16x.

Stock Idea - HDFC Bank

Recommendation: Buy
CMP = Rs 1,148 (as of Tuesday)
Price target: Rs 1,355

Result highlights

• HDFC Bank's results have been in line with expectations with the profit after tax (PAT) reporting a growth of 34.2% to Rs321.2 crore compared with our estimate of Rs313.5 crore. Even though the numbers are in line with estimates, the core income growth is below expectations. The non-interest income has, however, compensated for the lower than expected core income growth.
• The net interest income (NII) grew by 27.5% year on year (yoy) but declined by 4% quarter on quarter (qoq) to Rs1,042.2 crore, below our expectations of Rs1,153 crore. The growth in the NII was primarily driven by the asset growth, as our calculations suggest that the net interest margin (NIM) declined by three basis points yoy and by 56 basis points qoq to 4.2%.
• The bank had witnessed a significant improvement of 35 basis points in its NIM during Q4FY2007 mainly due to a higher current and savings account (CASA) balance at 57.7% compared with an average of 50% during FY2007 and of 51.5% during Q1FY2008. Some decline in the NIM on a sequential basis was expected as such high CASA is unsustainable and was only an aberration.
• The bank had almost stopped expanding its business during Q4FY2007; very high deposit rates had prompted HDFC Bank to go slow on mobilisation of deposits, especially term deposits, which had resulted in the significant increase in the CASA balance in Q4FY2007. However, we feel that with the deposit rates moderating, the bank has again grown its deposit book.
• Since, the deposit growth is higher in the current quarter and the credit offtake is generally lower during the first quarter, we feel the bank may have parked the excess in short-term investments (only to utilise the same when the credit growth picks up in the second and the third quarter) and this could have lowered the overall investments yield. However, going forward we expect the core income to improve as the credit growth improves leading to better yields.
• The non-interest income growth was much higher at 77.3% yoy and 56% qoq mainly due to lower treasury losses during the current quarter and a higher fee income from the foreign exchange (forex) and derivatives segment.
• The operating profit grew by 41% yoy and 7% qoq to Rs783.7 crore while the core operating profit (operating profit excluding treasury) was up only 27.5% yoy and down by 8% qoq to Rs787.8 crore.
• Provisions & contingencies were up 50.5% yoy and 15% qoq to Rs307 crore mainly due to higher provisioning requirements on certain categories of standard assets as personal loans grew by 46% yoy and 23% qoq.
• The sequential decline in the NIM was expected but the lower growth in the NII is mainly due to higher deposit costs and lower investment income. We expect the NIM to stabilise at the current 4.2% levels and the core income growth to pick up going forward. At the current market price of Rs 1,148 the stock is quoting at 21.1x FY2009E earnings per share (EPS), 8.1x FY2009E pre-provision profits (PPP) and 3.1x FY2009E book value (BV).
• I maintain Buy recommendation on the stock with a price target of Rs 1,355.

Stock Idea - Balaji Telefilms

Recommendation: Buy
CMP = Rs 231 (as of Monday)
Price target: Rs 303

Key points

• Content in demand: The Indian general entertainment space is witnessing a lot of action. Supported by the rise in ad spending and the changing landscape for subscription revenues, broadcasting has become an attractive business and resulted in a flurry of announcements of new channel launches.
• While this creates tremendous growth opportunities for content providers, the rising competition for quality content also augurs well for their realisation growth.
• Excellent track record: Balaji Telefilms Ltd (BTL) has revolutionised the Indian small screen with its family dramas. Over several years its "Saas Bahu" soaps have been the mainstay of Star Plus and have consistently hit the top slots on the rating charts.
• About eight of the most watched Top 10 shows in the C&S households are produced by BTL. BTL produced an unmatched volume of 1,820 hours of content (in FY2007) in Hindi and all major south Indian languages, and the quality of the content is no doubt the most admirable factor.
• But what differentiates BTL from competition are its creative force and infrastructure which make scaleability appear a lesser issue when compared to the others.
• Broadcasting JV—a key value creator: BTL has entered into a JV with Star to launch regional GECs. While Star brings to the JV its already running Tamil channel Star Vijay, the JV within a couple of years plans to launch similar channels in Telugu, Kannada, Malayalam, Bengali, Marathi and Gujarati.
• I believe the JV has the potential to drive the volume growth of BTL's core content business. The stake in the JV promises to be big value creator going forward.
• Attractive valuation: At the current market price of Rs 231 the stock quotes at 12.6x its FY2009E EPS of Rs 18.3. I believe the valuations are attractive considering the overtly bullish scenario for BTL and the new steps it has taken into broadcasting.
• I recommend a Buy on the stock with a price target of Rs 303.

Stock Idea - State Bank of India

Recommendation: Buy
CMP = Rs 1,525 (as of Friday)
Price target: Rs 1,780

Key points

• The Reserve Bank of India (RBI) has announced that it is going to transfer its 59.7% holding in State Bank of India (SBI) to the government for Rs 35,530 crore on June 29, 2007.
• The transaction is revenue neutral for the government, as the RBI would declare a special dividend of a similar amount to replace the amount paid by the government for the stake sale.
• The SBI management has said that the bank will require to raise Rs 15,000 crore of capital in FY2008; of this Rs 6,000 crore is likely to be in the form of equity and the balance as debt.
• The current guidelines restrict SBI from diluting the promoter's stake below 55% and this would hinder the bank's capital raising plans. Hence the management is of the view that the follow-on offer would take place after the amendment to the SBI Act, most probably in December 2007.
• SBI has plans to consolidate its insurance and asset management businesses into a separate non-banking financial company (NBFC). It also plans to sell a 10% stake in the NBFC to three to four investors and intends to list the arm in FY2009. All these would be significant value drivers going forward.
• The chairman of the bank has stated that he expects the valuation of the life insurance business to be around Rs 28,700 crore ($7 billion) while we have valued the same business at Rs 23,800 crore ($5.8 billion).
• Its valuation is lower considering the roadblocks that the bank is likely to face while unlocking the value in these investments, just as ICICI Bank is facing now.
• After providing for the AS-15 impact (Rs 900 crore of extra provision per year from FY2008-12) our earnings estimates for FY2008 and FY2009 have reduced by 4% each. We have also introduced our FY2009 estimates.
• Based on the current market price of Rs 1,525 the stock is currently trading at 13.9x FY2009E earnings per share (EPS), 1.9x FY2009E stand-alone book value of Rs 813 and 1.4x FY2009E consolidated book value of Rs 1,061. The stock has run up 54% in a span of the past three months.
• Hence in the near term there could be some profit booking and consolidation. However, I believe the bank has entered a sweet spot as a host of policy changes in the banking sector and for SBI could unlock significant value in the stock in the medium term.
• I maintain Buy recommendation on the stock with a revised twelve-month price target of Rs 1,780.