Stocks In Action, October 30, 2012

A deepwater well in a block at the Krishna Godavari basin block operated by Oil and Natural Gas Corporation has been leaking for 2 months, now posing risks of environmental damage. This uncontrolled gas leak in the G-1-9 is estimated to be spilling at least 1 lakh cubic meters per day according to officials. Though the company is in talks with other oil companies and government agencies in order to control the leakage, the company’s stock price is likely to see volatility with a downward trend due to the risk of non estimated prospective losses and damage and costs associated with it.

Fortis Healthcare announced aggressive expansion plans which bring out the intention of Fortis to add 950 beds by March through capacity expansion at existing facilities and the introduction of 3 new hospitals. The company has an announced capacity of over 12000 beds across 76 hospitals in 11 countries. On account of the announcement of this capacity addition, the share price of Fortis Healthcare is likely to see an upward move today.

Force Motors yesterday said they plan to incur capital expenditure of Rs.1000 crore in 3 years towards the launch of new models and a production ramp up. The company announced these plans after the launch of its 26-seater bus, which is 15 per cent more fuel efficient than comparable models. The company also intends to scale revenues up to Rs.10,000 crore in 5 years from its FY12 level of Rs.2085 crore. These factors are likely to send the stock prices of Force Motors upwards.

Atul Auto said yesterday that they plan to invest in Sri Lanka. The three-wheeler company plans to introduce models running on gasoline, CNG and LPG in Sri Lanka and intends to set up an assembly plant that would require an estimated investment of less than Rs.100 crore, according to media reports. This would be supportive of an upward movement in the stock prices of Atul Auto today.

Gujarat Heavy Chemicals Limited (GHCL) announced their Q2FY13 results yesterday which reported a YoY increase of 17.67 per cent in the topline. Revenues from the home textiles division increased by 28 per cent YoY, thus boosting growth further. The net profit of GHCL too saw improvement with a 33 per cent rise in net profit. Moreover, the company plans to supply textile made-ups to retailers like Bharti Walmart and IKEA and has also announced expansion plans at its Vapi facility. A robust quarterly result and announcement of plans will send this stock on an upswing today.

Among major companies that would be announcing their Q2FY13 results today are Biocon, Dr Reddys Lab, Glenmark Pharma, GTL, IDBI Bank, IRB Infra, JK Tyre, Maruti Suzuki, Pidilite Industries, Shriram Transport and Tata Teleservices. These stocks are likely to see volatility with a directional bias depending on the results announced.