Jan 21, 2007

Stock Talk's .... 21/01/07

Aditya Birla Nuvo : ( Target -- 1500 + 6 Months Hold )

The company is well-positioned to deploy the surplus cash flows from its existing mature value businesses into high growth portfolio in attractive emerging areas.

High growth segments :

As a conglomeration of businesses, Aditya Birla Nuvo's valuation hinges on the growth prospects of three key segments from its high growth portfolio.

Idea Cellular -- Aditya Birla Nuvo holds a 35.7 per cent direct equity stake in Idea Cellular.

Birla Sun Life Insurance -- Aditya Birla Nuvo has a 74 per cent equity stake in Birla Sun Life.

Transworks/Minacs (BPO) -- Aditya Birla Nuvo has an 88 per cent equity stake in Transworks BPO and 85 per cent in Minacs.

Mature segments :

Among the mature business segments of Aditya Birla Nuvo, we remain confident about the growth prospects of fertilisers, rayon, textiles and carbon black.

However, all these are commodity businesses (except fertilisers) ruled by inherent risks of demand-supply imbalance and pricing of end-products and raw materials.

Despite being a steady cash flow generator, fertilisers will be subject to the vagaries of government regulation.


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