Think Independently

A friend of mine made a comment about an analyst who was saying exit renuka at the bottom. Even I said to him sugar is weak man. Now my friend had not looked up renuka fundamentals or anything he was just making fun of the analyst and yet how right he was :)
Now Lets take a look at the current state of technicals.
Renuka as pointed out near 420 area : it has unfilled gap up near 414-400
When the market was doing a sideways a correction , another friend of mine chided me. In a market like this nothing will hold its levels.
RENUKA, Analysis Date:5/4/2007
Close/cmp:483.25
Swing : Up=Buy ( 11.000% sensitivity)
T1:598.219 T2:709.688
T3:891.557 1xR:603.65
ImpulseTargetZone:1003.02-1184.89
SwingHigh:510.0 CMP:483.3
SwingLow:299.2 SLPivot:416.4
2xAtr14Stop:47.3944
Narrowsl:416.35
WideSl:358.29
Lower Chan:432.373 Upper Chan:620.519
ResLine:726.364
How to trade:
Buy above swing high or above 0.5 retracement level for early entry
Sl : use narrow or wide sl or the support line

Retracements :510-416.35
0.236:438.451 0.382:452.124
0.5 :463.175 0.618:474.226
0.764:487.899


There are weak sugar stocks and strong ones
"Renuka is emerging as one of the largest Ethanol producers in India today & that will relatively sheild it's
bottomline from sugar commodity price swings. Also, it one of the major sugar exporters in country today & the
export incentives announced by the government will add to it's earnings, which we haven't incorporated.
Without incentives, however, stock is trading at 8.3x it's FY08 earnings. We will revise upwards our forecasts
shortly."

"Shree Renuka Sugars (SHRS IN, INR 454, maintain Accumulate)



Shree Renuka Sugars Limited's (SHRS) Q2FY07 results were below our estimates. The company's consolidated revenue grew 30% Y-o-Y to INR 3 bn driven by capacity ramp-up and higher capacity utilisation due to the peak crushing March quarter. As domestic sugar prices continue to remain soft, consolidated EBITDA fell 37% Y-o-Y to INR 366 mn for Q2FY07. The striking feature still remains a double digit operational margin on the sugar segment for the past few quarters, where most sugar mills are reporting single digit margin. SHRS reported consolidated earnings of INR 229 mn translating into EPS of INR 9.6 for the current quarter. Recent government support measures making export remunerative and improving coproducts profitability scenario reinstates our belief in SHRS as the best bet on the ailing sugar sector.



* Valuations available at discount to peers; best play on sector downturn

At CMP, the stock trades at P/E of 11x and 4.3x FY07E and FY08E consolidated earnings, respectively. On an EV to replacement cost, the stock is available at a relative discount to peers at 0.8x SS07E-end capacities. In addition to inherent advantage of operating in freer market (SMP applicable for cane procurement), as exports become remunerative with government support and higher contribution to profitability from coproducts, the outlook for SHRS remains positive over the next few quarters. Despite compelling valuations and decent growth outlook, in the absence of any significant medium-term catalyst to lead to buoyant valuations, we maintain our 'ACCUMULATE' recommendation on the stock."