Sun TV | Low Risk High Gain Stock to Power Your Portfolio


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 SUN TV logoSun TV Networks Ltd. is one stock idea which is available at extremely attractive valuations along with added benefits of it being low risk. In my opinion the business has significantly stable annuity income stream with long term visibility. Whats more is that  the market has not comprehended the gains that the media broadcasters are going to reap especially with the implementation of the digitization policy.

Sun TV is going to experience the full impact of the 1st phase of digitization during the first half of calendar 2013, when Chennai with 2 mn households become paying subscribers. Additionally the 2nd phase of digitization which is to be implemented in the 5 cities of Bangalore, Hyderabad, Mysore, Coimbatore and Vishakhapatnam cumulatively will see 11 mn households become paying subscribers in the calendar year 2013.

(For more information on the digitization policy and its impact please refer our blog article DEN networks – a multi bagger stock idea for India)

In addition the recent TRAI recommendation that state bodies be disallowed from entering the media broadcasting and distribution phase should augur well for Sun TV. Arasu the Tamil Nadu state distribution MSO should no longer be a threat to Sun TV and the company should be able to regain its lost market share and also rebuild its lost advertising revenues.

Keeping in mind the above, we expect Sun TV’s revenues to grow at a CAGR of 14.6% to 2778 crore  while PAT is expected to grow at a slightly faster clip of 15.6% CAGR to Rs 1070 crore over the period FY12-FY15.

Sun TV revenue and profit growth

Strong revenue & profit growth on the cards for Sun TV

I recommend a BUY on the stock with a price target range of between 23x and 29x PE multiples on FY15 earnings giving a target range of Rs 625 – 788 (depending on the  sentiment prevailing in the market).  Historically Sun TVs average PE has been around 23x giving a price target of 625. However, if one were to look at the valuation bands, the stock has often exceeded this PE and traded at much higher multiples.

SunTV-Valuation_chart

Sun TV is quoting significantly below historic 1 yr forward valuations

Sun TV Networks Ltd meteoric rise is expected due its

  1. Unique business model,
  2. Strong pull of its SUN TV brand and
  3. Consequent advertising premiums that its gets,
  4. Support from the digitization of the media business which will stop non paying subscribers.
  5. Strong DTH presence
  6. Compelling valuations

Lets explore & understand how each of the above is adding value to its business.

Sun TV’s business model is vastly different from the rest of the industry players.

Unlike other GEC (General Entertainment Channels) players it leases out its prime time slots on 30 minutes basis to third party content producers for a fixed “Broadcast fee.” For this leased prime time, Sun TV maintains two minutes of advertising time with itself while 4 minutes is provided to the lessee for every 30 minutes. Since the time is leased, the content is not “owned” by the company and hence the cost of the content and risks associated are also not borne by it.

In order to ensure that the prime time program is of high quality and TRPs do not erode, Sun TV incorporates certain clauses in its agreements with its prime time lessees which states that

  • If certain level of ratings for the content aired are not maintained  Sun TV has right to change their slot timings or can also stop           telecasting the content.
  • The producer will work exclusively for Sun TV during the period of agreement.
  • After the agreement  expires, the producer cannot telecast that serial on any other network for the next two years.

Moreover ~75% of the non prime time content is sourced in-house out out of which 40-45% is movie based, 8-10% is news and the rest is accounted by game, talk and variety shows which further lowers its production costs.

Sun TV along with its network of 32 channels is a dominant player in the the four key South Indian states of Tamil Nadu, Andhra Pradesh, Karnataka and Kerala (leader in 3 out of 4 markets). The pull of its brand is so strong that even when it was dropped by Arasu Cable (Tamil Nadu state owned cable operator), it continued to maintain its leadership position with marginal impact on it viewership ratings on the back of its continued visibility in Chennai, its availability on DTH platform across Tamil Nadu and presence of piracy, to a certain extent, in the state.

This strong brand pull has enabled Sun TV to charge premium advertising rates as is visible from the self explanatory table shown below

Sun_strong_brand_pull_enables_premium_advertising_rates

Sun TVs dominant position in southern ad-market

Going ahead, the regional TV ad market growth is likely to outpace the national TV ad market as the potential of growth in consumption of various products is greater in regional markets.  We expect Sun TV’s ad revenue to grow at a CAGR of 11.3% to Rs 1,304.5 crore from  Rs 945.4 crore over the period of FY12-FY15 on the back of improved ad spends and increased visibility in Tamil Nadu

Digitzation to spurt cable subscription revenues and this should boost profitability significantly besides providing long term revenue visibility thus improving valuations.

Prior to passing of the digitization bill the industry was plagued by massive under reporting. It is estimated that this reporting was to the tune of 85%.  Now with digitization, the last mine cable operator (LCO) has effectively lost control and all numbers would be accounted for. Further, if subscribers do not pay their monthly dues their signals will inadvertently be cut off.  Phase I of digitzation is a huge success and as the process is rolled out pan India over the next three to four years, revenues of the media industry and broadcasters will only improve.

SunTV_roadmap_to_digitization

Roadmap to digitization for the Indian cable industry

SunTV_broadcaster_share_of_revenue_to_grow_significantly

Broadcaster share of revenue to grow significantly

With ~2 mn households in Chennai (~1.3-1.5 mn cable subscribers and ~0.5 mn DTH subscribers) and ~11 mn subscribers in five cities of Phase II (Bangalore, Hyderabad, Mysore, Coimbatore and Vishakhapatnam), Sun TV is expected to be one of the biggest beneficiaries.  We expect cable subscription revenues growing at a CAGR of 30.2% to Rs 360 crore. Along with cable subscription revenues, DTH revenues are also expected to undergo strong traction and  reach Rs 600 crore by FY15 (CAGR of 21.6%).

Overall domestic subscription revenues (DTH + Cable) are expected to grow at a CAGR of  24.6% to `958.3 crore by FY15 from the current FY12 revenues of Rs 495.6 crore with share of subscription revenue expected to increase by a whopping 760 bps to 36%. Our forecast is based on conservative estimates as we believe that in order to ensure smooth implementation of DAS, broadcasters will not rock the boat and will go in for negotiated basis pricing with MSOs in place of a complete revenue per subscriber model.

SunTV_subscription_revenues

Sun TV subscription revenues to grow at a CAGR of 25% till FY15

Other businesses like international subscription and movei business to maintain an overall steady state of growth. However the overall subscription mix is expecte to change going forward as shown below

SunTV_revenue_composition

SunTV Revenue Composition to change going forward

Valuations of Sun TV Network Ltd. are compelling with low risk. Recommend a BUY with a target range of Rs 625 – 788 depending upon the market sentiment.

So what do you think of Sun TV? Let us know. Incase you would like to be updated on the future developments in Sun TV please send us an email at bolinjkar.vinit@gmail.com or Whatsapp on 9730836363. We would be more than happy to oblige our community of Sun TV investors / traders.

Before investing please make your own thorough analysis or speak to a qualified Certified Financial Planner / Advisor. Also read the disclaimer below.

Disclaimer: This blog is the personal blog of Vinit Bolinjkar. The views expressed in this article are entirely my own and do not reflect the views of my employer. This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither http://winningtrades1.com or myself accepts any liability arising out of the above information/articles.

logo Vinit Bolinjkar Head of Research, Ventura Securities Ltd
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Find Out Where Silver Prices are Headed in 2013


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Which way is silver headed in 2013?  Silver prices since  mid 2011 have been tightly clasped in a broad band between $37 on the upside and $26 on the downside. While the initial oscillations had been large, off late the movement without giving clues to direction is oscillating in a narrow range of $35- $29. While the price movement has been directionless, we thought that before undertaking an analysis of the fundamentals we should undertake a quick  technical analysis of the spot silver prices to spot for clues of the likely future movement.

Silver Technicals not giving clues to market direction

Silver Update January 3, 2012

Silver saddled between $29 and $33

The downward sloping trend line from the recent $50 high was challenged at $35. At $35 silver made a 5th lower top and then retraced back below the $30 level. While the markets have reversed form there and moved up marginally, only a closing above $33 will be bullish for the stock. Once $33 is taken out then we would be watching the level of $35, which if Silver can surpass, then we would be in for a very explosive rally. However the move could take time and Jupiter in Taurus sign (sidereal) can be quite painful and the pain could last until May.

What is encouraging about the previous down move is that on a lower time scale silver has done a flat pattern formation (similar to gold) and taken support at the 61.8% retracement of the previous rally from $26 to $35. One eminent Technical Analyst, Alf Fields expects that the recent take down of the precious metals clearly indicates that the correction is almost over and prices should now start storming on their way up. [Link]

Caveat: If silver breaks $29 then the upside is under threat and then $26 would be our next support level. Until then we maintain our bullish bias.

Meanwhile Fundamental factor predict the tug war to continue

The global economic price drivers  are virtually intact -.

  • Silver Coin sales and ETF investment remains at an extremely high level
  • Central Banks  continue to be buyers of  gold at all price points
  • Asians continue to be big buyers of precious metals, gold and silver,.In particular China is rumoured to be a very aggressive buyer of Gold to augment its reserves. Once this is made “official” the prices of gold would only go through the roof and silver is expected to follow it in sentiment
  • On the supply side, the underground reserves are good for only about 8 -10 years.
  • New resource finds are trailing requirements
  • Above ground reserves have virtually dried up. Its only time before the demand supply equation breaks up and the shortages loom to raise the prices of silver.
  • The mindless printing of money by global Central Banks to counter the economic turmoil is almost certainly going to cause rapidly rising inflation; which is a big positive for precious metals.
  • The recent fiscal cliff resolve is not expected to lead to any budget cuts and the Feds dollar for debt program is expected to lead to enhancing debt by nearly $ 4 tr.

Despite the relative bullish background for the long term price of silver certain events which have taken place in recent time could keep the lid on the price of silver.

  • India, which is a major buyer of gold along with China, is expected to reign in gold imports through increasing duties and imposing restrictions on import quantities. These restrictions are being applied to shore up precious foreign exchange and curb the countries widening fiscal deficit. This could lower demand for gold and ease demand supply pressures and lower gold prices. This in turn would affect the price of silver as both are closely related. 
  • Demand for silver from the solar photovoltaic industry was much lower than anticipated in 2012. With increasing prices of silver, the solar cells industry cut back on the usage of solar paste leading to a fall in silver consumption to 40 mn oz from the previous year’s record breaking 60 mn oz. Although the solar cells industry is expected to grow at 10%, it remains to be seen how much the industry scales back on silver consumption. With no substitute for silver, it is not expected to decline much. However growth would be slower than anticipated previously.

Considering all the above we believe that prices would continue to remain directionless and hence Silver technicals should be  the first indication for future price direction. We would be mildly bullish on the event prices break $33 on the upside and go short should $29 be violated on the downside decisively.

So where do you think the price of silver is headed ? Let us know what you think.

Before investing please make your own thorough analysis or speak to a qualified Certified Financial Planner / Advisor. Also read the disclaimer below.

Disclaimer: This blog is the personal blog of Vinit Bolinjkar. The views expressed in this article are entirely my own and do not reflect the views of my employer. This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither http://winningtrades1.com or myself accepts any liability arising out of the above information/articles.

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Vinit Bolinjkar Head of Research, Ventura Securities Ltd
Vinit Bolinjkar
Winning Trades
Tel: | Mobile: +91- 9730836363

http://winningtrades1.com

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Technical Outlook of the Indian Pharmaceutical Sector December 2012


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The Indian Pharmaceutical sector has been on a roll ever since the global economy picked itself up post the 2007 mayhem.  Given the    strong fundamentals of the Indian Pharmaceutical industry and the global opportunity due to the patent cliff in the western world, listed pharmaceutical stocks have responded well and rallied substantially. While the international opportunities have been good for the bottom line, pharmaceutical stocks with a larger or significant share of the domestic  pharma market have come in for a rude shock as the implementation of the new pricing policy outline of the NPPA can sharply erode profitability. As the policy elements are still not clear, it would be premature to judge how individual companies would be affected.

With a view to having a mid journey  outlook on expected price performance of  pharmaceutical stocks,  we decided to conduct a study of the major pharmaceutical stocks using technical analysis and analyse which stocks offer the best opportunity both from a long and short point of view. The exhaustive analysis was done on 29 of the major stocks, the details of which one can obtained from the slideshow embedded below.

 

The analysis was done using weekly chart data to get a more longer term picture and some of the results we found were quite contrary to general market expectation; yet others were quite revealing of exciting investment opportunities. We could have easily summed up our analysis and provided an instant listing of our analysis and recommendations for the benefit of our blog readers, but we thought it more appropriate that the reader “visualize” our analysis as “one picture is worth more than a thousand words.”

Technical analysis is a great science for stock price forecasting, but the overall investment decision can be more solid  if backed by  hard core fundamental study.  In part 2 of the Indian Pharmaceutical Outlook, we would be providing extremely high quality fundamental evaluation on the fortunes of these very 29 stocks so that our faithful blog readers can make investment decisions based on comprehensive analysis.

As with all the content on this blog, the report will be provided FREE. However in order to make a point of the exclusivity of the content, we request blog readers to send us an email so that we could deliver it directly in your email inbox. This we request so that we could obtain your feedback on the same report so that we can improve on the content.  We would also like to solicit your opinion on the type of content that readers find interesting so that future blog posts could be based more on reader interest rather than just what we think you should read.

request for indian pharma sector fundamental outlook

Dont worry we wont sell your email id. If we wanted to monetize our site we would have kept the blog content paid !

So please drop us an email at bolinjkar.vinit@gmail.com in case you would like to receive the report.

Hope you enjoy reading the Technical Outlook of the Indian Pharmaceutical Sector December 2012 as much as I enjoyed creating it.  So tell us which is your favourite pharma stock.

Disclaimer: The views expressed in this article are entirely my own and do not reflect the views of my employer. This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither http://winningtrades1.com or myself accepts any liability arising out of the above information/articles.

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Vinit Bolinjkar Head of Research, Ventura Securities Ltd
Vinit Bolinjkar
Winning Trades
Tel: | Mobile: +91- 9730836363

http://winningtrades1.com

http://in.linkedin.com/in/vinitbolinjkar

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Low risk high return stock idea | Zenith Fibres Ltd


Yet another low risk high return investment idea from our beloved Kukkuji is Zenith Fibres Ltd.  Zenith Fibres is not only doing well, but its ultra-low cost expansion along with its compelling valuations and 12 year dividend track paying record make it a compelling buy.

In this video interview Kukkuji explains his rationale for being bullish on the stock. For the benefit of our viewers the rationale is enumerated below the video.



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What makes Zenith Fibres Ltd a screaming BUY?

  • Zenith Fibres Ltd (ZFL) has undertaken a very opportunistic expansion in its propylene business by buying out a manufacturing plant from the crisis ridden Europe at a throw away price of Rs 2 crore. On this paltry investment of Rs 2 crore ZFL is expected to achieve a turnover of Rs 50 crore on an annual basis. The capacity is expected to kick start anytime soon.
  • Even without the expansion ZFL had achieved a ~100% yoy growth in net profit for the Q1FY13. The EPS for Q1FY13 works out to Rs 3 and with the added capacity it expects to achieve an EPS of 13-14 per share for the full year FY13. At the CMP of 36 this works out to a  PE of a little less than 3 – clearly indicating that the stock is going extremely cheap.
  • The Book value of the stock is around Rs 46 and hence the stock is available at a significant discount to book signifying low downside risk.
  • ZFL has a dividend paying track record of more than 12 years. Last year ie in FY12 the dividend was upped from 15% to 20%. Considering the rosy prospects and cash balance of RS 14-15 crores and the stock having a market cap of merely Rs 18 crores, there is every chance of the ZFL management increasing dividend payout in the future.
  • Further the stock has a very high ROCE >25% coupled with a very high replacement cost.

This heady concoction of strong fundamentals, attractive performance parameters, compelling valuations and strong dividend policy  clearly makes this stock an undervalued low risk high gain investment pick.

More information on Zenith Fibre can be obtained from its website.

Disclosure: Kukkuji  holds all the stocks mentioned in the video interview.

A brief video introduction of Kukkuji.

Thumbnail

 

Kukkuji has done several video interviews with Winning Trades | Low risk trading strategies for the Indian markets in the recent past.

  1. Four Principles of Stock Selection: Video interview of Kukkuji
  2. Video interview: Kukkuji of ISG offers 3 low risk high return investment ideas

More interesting reading from Winning Trades

Disclaimer: The views expressed in this article are entirely my own and do not reflect the views of my employer. This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither http://winningtrades1.com or myself accepts any liability arising out of the above information/articles.

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Vinit Bolinjkar Head of Research, Ventura Securities Ltd
Tel: | Mobile: 0 9730836363

http://winningtrades1.com

http://in.linkedin.com/in/vinitbolinjkar

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Four Principles of Stock Selection: Video interview of Kukkuji


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Kukkuji in his previous interview had spoken about some low risk high yielding investment ideas on small capitalization stocks). In today’s interview he provides updates on the same recommendations ( viz: Balaji Amines, Hind Rectifiers and NESCO).

In addition he outlines his Four Principles of Stock Selection which are a must see for investors as there is a lot of learning to be derived from this video.  A brief write up on the contents of the interview is included for the benefit of those who have difficulty with viewing videos.

In the interview he recommend’s booking partial profit in Balaji Amines and converting those profits into Hind Rectifiers and NESCO. Hind Rectifiers is expected to be a big beneficiary of the Railway modernization plans. Nesco which has been consolidating for a long time is his favourite pick and recommends to hold onto the stock.

His Four Principles of Stock picking are as follows

  1. Strong fundamentals are the most important
  2. Stock should have a good dividend paying track record and if the dividend yield is attractive it is an added bonus.
  3. The ROCE of the stock should be greater than 20-25% and he finds that when markets turn these stocks have a high propensity of providing unusually high returns.
  4. Replacement cost is another important criteria. If the replacement cost is high then this along with good dividend yield and book value which is at a discount to market price is a lethal combinations.

As per his opinion the stock that meets the Four Principle of Stock Selection  criteria is PTC (India) Financial Services Ltd.  At CMP of Rs 16 the stock is an attractive low risk high return investment opportunity. The attractive criteria for the stock are as follows

  • No NPAs
  • FY12 EPS of Rs 2.75 per share
  • Q1FY13 disbursals are around Rs 458 crores which is exceptional considering that during the entire FY12 the disbursals were ~ Rs 658 crore. Full year FY13 , PTC Financials expects to do about RS 1600 crore of disbursals.
  • It has current commitment for Rs 7,700 crore of disbursals
  • The NIM is also very strong at ~9%.
  • Maiden dividend possibility is an added attraction.

Disclosure: Kukkuji  holds all the stocks mentioned in the video interview.

Brief Profile of Kukkuji

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Kukkuji is a veteran investor who has built up an enviable portfolio investing in low capitalization stocks. He runs a internet group by the name of Investment Super growth which has close to 10,000 subscribers. Currently he is retired and spends most of his time travelling and researching on Indian stocks.

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Disclaimer: The views expressed in this article are entirely my own and do not reflect the views of my employer. This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither http://winningtrades1.com or myself accepts any liability arising out of the above information/articles.

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Vinit Bolinjkar Head of Research, Ventura Securities Ltd
Tel: | Mobile: 0 9730836363

http://winningtrades1.com

http://in.linkedin.com/in/vinitbolinjkar

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Video interview: Kukkuji of ISG offers 3 low risk high return investment ideas


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Video By Low risk trading strategies for the indian markets

Kukkuji (aka Mr Batra) talks about the three small cap stocks which have the potential to not only yield high returns to investors but have significant value built in with very low risk. The stocks mentioned here are

  • NESCO Ltd,
  • Hind Rectifiers Ltd, and
  • Balaji Amines.

In his opinion, all these stocks have the potential to reward investors handsomely over a period of 2-3 years.

ThumbnailKukkuji is a veteran investor who has built up an enviable portfolio investing in low capitalization stocks. He runs a internet group by the name of Investment Super growth which has close to 10,000 subscribers. Currently he is retired and spends most of his time travelling and researching on Indian stocks.

To listen to the podcast of this interview click on this link.

 

More interesting reading from Winning Trades

Disclaimer: The views expressed in this article are entirely my own and do not reflect the views of my employer. This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither http://winningtrades1.com or myself accepts any liability arising out of the above information/articles.

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Vinit Bolinjkar Head of Research, Ventura Securities Ltd
Tel: | Mobile: 0 9730836363

http://winningtrades1.com

http://in.linkedin.com/in/vinitbolinjkar

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MT Educare AGM key takeaways -Downside risk capped high gains on the cards


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Today evening i happened to attend the company MT Educare’s AGM. Initial feelers are that the company is on a very strong wicket and if managed right it can really launch itself into a totally new orbit over the next three years. Education and in particular primary education is an industry which has always been around. Only now its getting more organized.

At Rs 105 the stock is decently valued given a projected EPS of 5 for FY13 and 8 for FY14. Typically education stocks quote around 25x and hence a target of Rs 200 over the next 15-18 months is not too difficult. So although I am extremely bearish overall in the market education being a recession proof business is a good defensive play apart from being one of the growth drivers over the next 10-15 years.

Most encouraging takeaway from the AGM was that the management is guiding for a 50% pay out ratio. 50% pay out ratio is an awesome proposition and MT Educare is definitely on my radar.

Click on this link to listen to the audio MT Educare low risk high yielding investment idea

Disclaimer: The views expressed in this article are entirely my own and do not reflect the views of my employer. This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither http://winningtrades1.com or myself accepts any liability arising out of the above information/articles.

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Vinit Bolinjkar Head of Research, Ventura Securities Ltd
Tel: | Mobile: 0 9730836363

http://winningtrades1.com

http://in.linkedin.com/in/vinitbolinjkar

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