to r ’s Focus

Inves -Madhukar Das

Issue 8, Vol 1

Subex Ltd.
-Feb 11, 2011
Its was a bloodshed month for the Indian stock market as FIIs and domestic players continued to sell
throughout the month after an euphoric ending to 2010. The Sensex touched a high of 20665 on Jan 2,
2011 and since then it has lost about 15% and closed at 17463 on Feb 10, 2011. Similar fate was ex- Other Picks
perienced by Nifty. The losing streak was broken today (Feb 11) as Sensex gained 265 points to end at
17729. The previous support level of 18K was broken and we may see a further slide if it fails to form a BUY :
support at current levels.
Ester Industries
Fundamentally speaking
CMP—`46.5
Subex Ltd. was founded in 1992 and offers business optimization solutions to communication services
Target—`51
providers. It provides telecom software products that detect fraud and unusual behavior patterns.
Subex Ltd pioneered the concept of a Revenue Operations Center (ROC). ROC Cloud SaaS model was Stop Loss—`44
launched in 2010. ROC is a centralized approach that sustains profitable growth and financial health
through coordinated operational control. Its customers include 16 of top 20 wireless operators world-
Bank of India
wide and 26 of the world's top 50 telecom service providers. Subex has over 300 installations and has
presence over 70 countries. The company has recently won several multi-million dollar contracts. The CMP—`400
latest quarter result showed net profit growth of 112% over the same quarter last year. Product reve- Target—`442
nue for Q3FY11 was `111.18 crore amounting to 87.7 % of the overall revenue for the period.
Stop Loss—`386
The gross margin is 76.5% much higher than the industry average of 32.8%. Net profit margin is 42.8%
as against 20% industry average. Return on assets and capital employed are at par with the industry
weighted average. Adjusted P/E for trailing twelve months is 5.04 much attractive than the industry
Sell :
average of 31.9 and P/B ratio is at 0.95 which is strikingly low for this industry. However investors can Unitech
have assurance about this issue with the recent news of preferential issuance of 5 Lac equity shares to
CMP—`35.5
KBC Aldini Capital Ltd. For `81 per share.
Target—`32
Stop Loss—`37
Technically Speaking

Special points of interest:

The candle stick pattern suggest a
down trend but we are taking a
contrarian position as it might
make a morning star pattern.
Stochastic for very short term
trend has indicated a cross over
suggesting a reversal from down-
trend.
Commodity channel index reaf-
firms the contrarian approach for
this scrip and any support from
volume in the next couple of ses-
sions will help scrip make a rever-
sal and breakout of its 3 week
downtrend.
Since we are looking at a
trading horizon of 15-30
days, we shall give more
weightage to technical
analysis and price trend of
the stock.
We shall also study the
fundamental aspects of a
company to avoid getting
into loss making trade
positions in case of move-
ment of market in direc-
tion opposite to that of my
prediction.

Recommendation : BUY
More at:
CMP : `54.5 http://investorsfocus.blogspot.com
The Williams %R chart suggests
the scrip has been in the oversold The money flow index (9) is Target Price : `62
region for some time and has showing convergence towards
shown some reversal activity. (30). Stop loss : `50