My First Million: Rajiv Vij

Radio taxis are ubiquitous in India now. And the man who first brought them in is Rajiv Vij, whose eight-year-old firm Carzonrent,runs a fleet of

1,400 Easycabs across the country today. “This industry had unexploited potential and the ground transportation business was largely unorganised at that time,” says Vij, 50.

When he started, Vij says a senior executive at one of India’s leading banks turned down his proposal on the grounds that taxis are best run and dominated by ‘sardars’ and that he couldn’t possibly make a success of it. It took him six months to convince the gentleman to finally agree to fund his venture.

Coming from a fairly modest background—his father was a school principal while his mother was a housewife—Vij graduated from Hindu College and did his MBA from FMS, Delhi. He then worked his way up the corporate ladder, going on to serve as marketing head at Hindustan Motors and then joining ITC’s International Travel House as head of its car rental business.

This was where the seeds of his venture were sown. It was during this stint that Vij got to know car rental companies like Dollar, Europcar and Avis and radio taxi companies like Smart Cabs and Comfort Cabs, and studied their operating systems and challenges.

Finally, after nearly 20 years of employment, he realised the time was right since India’s car rental industry was poised to boom. In September 2001 he launched Carzonrent (India) Pvt Ltd with an initial investment of Rs 2 crore (of which Rs 30 lakh were his own while the rest were borrowings from ICICI Bank and HDFC Bank) and a fleet of 38 cars. In the first month Vij claims he did business worth Rs 30 lakh. Soon after, his company was appointed as a master licensee for Hertz in India. In six months it turned profitable.

Radio taxis were next in line and in June 2006, Carzonrent entered the business with a trial run of 25 taxis in Chandigarh. “The reason for choosing Chandigarh as a launch pad was that it never had a meter taxi service and it’s a much smaller city as compared to the metros, which in a way was appropriate for testing our business model,” says Vij.

Encouraged by the results, Easycabs were launched in Delhi NCR in January 2007 with an initial investment of Rs 15 crore and a fleet size of 250 cars. Last year, it expanded its fleet by adding 750 Mahindra Renault Logans.

Executives at automotive companies were stumped as no other radio taxi firm had ever placed a single order of this size before, recalls Vij. “It was a challenge negotiating the Rs 40 crore contract but after many rounds of meetings the deal was finalised,” he says. Now with a fleet of 1,400 cars Easycabs operates in Delhi, Hyderabad, Bangalore and Chandigarh, and has corporate clients such as Infosys, Microsoft, Nokia, and ISB, among others.

In nearly two years of operation the company has received investments to the tune of Rs 85 crore and it does Rs 4 crore worth business every month, informs Vij. He adds that in addition to buying new vehicles, much of this money is spent on maintenance, recruitment and training of manpower and upgradation of technology that are crucial to maintaining this service-driven business. By March 2009 he plans to grow the Easycabs fleet to 3,000 and start in Mumbai and Chennai as well. From driving an ambassador—his first car—to a BMW now, Vij sure has covered a lot of ground.

Source: Moneycontrol

Buy Mercator Lines, target of Rs 147-160: Networth

Networth Stock Broking has maintained its buy rating on Mercator Lines with a target price range of Rs 147-160 in its October 31, 2008 research report. "Net sales for Q2FY09 have increased by 75.9% to Rs 6493 million against Rs 3690.9 million in Q2FY08. Coal mining Operation contributed 5.7% to this growth. Mercator lines has sold 129000 MT of coal in Q2FY09."

"Going forward we believe MLL to post an EPS of Rs 15 in FY09 and Rs 24.6 in FY10. Apart from this the coal mining operations in Indonesia have began which started contributing to the earnings. At a CMP of Rs 33.55, the stock is trading at P/E of 2.4x and P/BV of 0.89x its FY08 earnings. We have valued the stock at 6x- 6.5x its FY10E consolidated earnings and so our target price range is Rs 147-160. We maintain our ‘BUY’ recommendation on the stock," says Networth's research report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Phillips Carbon; target of Rs 134: Angel

Angel Broking has recommended a buy rating on the Phillips Carbon Black with a target price of Rs 134 in its October 29, 2008 report. “India’s economic growth is expected to slow down in FY2009 to 8% as the RBI keeps a tight Monetary Policy and the government initiates a slew of measures to rein in inflation ahead of Parliamentary elections next year. Interest rates have also spiked substantially, which would impact the Interest rate-sensitive sectors including the Auto sector. Invariably, the Tyre industry would also get affected. But, around 60% of the Tyre demand is from the Replacement segment, which cushions companies like PCBL which are directly dependent on the Tyre industry growth rate.”

“There would continue to be huge demand from the Tyre Replacement segment due to the huge vehicle population getting added over the years, and because of PCBL’s market leadership position it would stand to benefit. We expect PCBL to record CAGR of 21.2% in Top-line over FY2008-10, while Bottom-line would grow at a CAGR of 3.1% in the mentioned period. At the CMP, the stock is trading at 2.2x FY2009E and 1.7x FY2010E Earnings and 3.4x FY2010E EV/EBITDA. We maintain a Buy on the stock, with a revised Target Price of Rs134 (Rs219). We revise the Target P/E multiple downwards to 4x FY2010E in line with the valuation contraction in broader indices,” says Angel's research report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Bharati Shipyard; target of Rs 179: Angel

Angel Broking has recommended buy rating on the Bharati Shipyard with a target price of Rs 179 in its October 29, 2008 report.“Bharati is one of the leading companies in the Shipbuilding space in India. It has a healthy Order-book position and expects to augment it on getting more clarity on the possible delivery schedules that it can provide clients. The company is also ramping up its production capacity. The company envisages no problem in augmenting its Order book as it caters to the niche segment of off-shore vessels where demand continues to be strong on account of the attractive crude oil prices. Also, the company does not expect any order cancellations to happen as its charges all its customers 20% advance at the time of booking the order, and shipbuilding being a long drawn process involving 2-3 years, buyers have to make bookings with a long-term prospective.”

“We are downgrading our diluted EPS estimate for FY2010E to Rs44.7 (Rs49.4) on the back of expected increase in labour and other operating costs. We are downgrading our FY2010E Target PE multiple to 4x (7x previously) revised 18-month Target Price of Rs 179 (previously 12-month Target Price of Rs 346). However, at current levels, Bharati is trading at an attractive PE of 1.5x FY2010E Earnings and 0.2x FY2010E P/BV. We maintain a Buy in the stock,” says Angel's research report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy HEG, target of Rs 319: SKP Securities

SKP Securities has maintained its buy rating on HEG with a target price of Rs 319 in its October 31, 2008 research report. "Net sales were up 14.61% for Q2FY09 at Rs 295.39 crores. At the current level of Rs 135.25 and excluding the investment value ,HEGL is trading at 2.74 x FY09E earnings and 1.74 x FY10E earnings of Rs. 35.90 and Rs 56.58 respectively. We have valued the core business of the company at 5 x FY10E earnings, taking value of the stock to Rs 282.91 per share. The value of the company is further increased by Rs 37 per share by discounting HEGL's investment value in Bhilwara Energy Ltd. by 50%. We maintain our BUY recommendation on the stock with a target price of Rs 319 per share, upside potential of 137%," says SKP Securities' research report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Jindal Saw, target of Rs 530: Asit C. Mehta

Asit C. Mehta has maintained its buy rating on Jindal Saw with a revised target price of Rs 530 in its October 29, 2008 research report. "In Q3CY08, JSL’s sales increased to Rs 14,855.3 million. from Rs 14,286.1 million in Q3CY07. Sales growth was low at 4%, as JSL sold its US operations in 2007, which contributed 30% to sales in Q3 CY2007. We believe that the company will benefit in the near term on account of the capex incurred in the pipes segment. We therefore maintain positive outlook on the stock and reiterate a “BUY” recommendation with a revised target price of Rs 530, which is equivalent to a P/E multiple of 7 times to its FY10E EPS," says Asit C. Mehta's research report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

See mkts rally on Monday post RBI move: Experts

The Reserve Bank has cut the repo, CRR, and SLR. It cut the repo rate by 50 basis points to 7.5% with effect November 3. It has also cut CRR by 100 bps in two stages to 5.5%, and cut SLR to 24% by 100 bps from November 8 onwards.

So, how will this move impact capital markets?

Portfolio Manager PN Vijay expects markets to rally on Monday. "Central banks globally have been cutting rates and inflation has been on the downward trend in India. Everyone was looking up to the RBI to shift its focus from inflation control to getting the growth engine going. Now, the markets will be looking towards the Sebi to force the FIIs to square their short positions. Then we will really have a real rally."

Dipan Mehta, Member, BSE and NSE, feels this RBI move will improve market sentiment. "We had the RBI policy [on October 24] in which it had maintained status quo and any kind of a policy statement from the RBI had been ruled out by the market completely. Now that we have this fantastic dose of liquidity along with interest rates [expected to] decline, then we also have the inflation figures in place, so what it will do is: it will create a feel-good factor and go a long way in improving sentiment in the market."

"A lot of institutional and retail investors, who were sitting on the sidelines, waiting for a bottom and for an opportunity to get into the market, will see the signals. They will react positively. Like Vijay said, the short positions which are there — even if Sebi doesn’t force the P-note issuers to reverse those short positions — the fact that the numbers have been disclosed and the fact that they may not be allowed to renew the stocks lent will also add prowess to this market."

Will the expected rally be spearheaded by the banking sector?

Meha feels the rally will be spearheaded by the banking sector. "On Friday itself, we saw private-sector banks and some PSU banks do exceedingly well and this particular move will give a further fillip to the banking sector. Government security prices will go down to that extent. Profitability of these banks will be helped by lesser provisions. I think that beleaguered realty and the auto sector will also benefit. There is hope that lending rates for the housing sector may come down and there could be some benefits on auto loans too. So the interest-sensitive sectors will be in focus first thing Monday morning."

Source: Moneycontrol