Date: 29.01.2008: ROCKET STOCK IN THIS CURRENT MARKET BHGAYNAGAR INDIA LTD at 49/- Double your Money within 2 Months Time.ITS very safe bet. Lot of Accumulation By Foreign Investors, Corporate Bodies.See the delivery Positions for the last 3 Days.BHGAYANAGAR INDIA Vey good Financials & Good fundamentals.BHGAYNAGAR INDIA Ltd placement of 55 Lac Warrants to Non-promoters at 90/- Issue warrants, convertible to one share.EGM on 31 s January 2008.Valuation of this share was 150/-.MULTIBAGGER COMPANY in FUTURE. Don't Miss this Oppertinity.Promoters Holding 55%. Foreigm Institutions & Central Govt.15%, Indian Corporate Bodies 5%, Overseas Corporate Bodies 7% Public only 18%. Check the recent Share holding Pattern in bseindia site.There is No worry about this share market UP'S and DOWN.Company having 550 Crores Land Bank. (This 550 Crores value number announced in CNBC Conference call with company MD).Total shares 7.45 Crores (2/- Face Value) Each share Land value is 560/7.4 = 75 Rupees (his Value is only Land)And Company Running with good profit CABLE Industry per share value 75/- as Industry value (based on the EPS). SO Share value is 75/- + 75/- = 150/- Minimum.So Safe investment Oppertinity at current Price 49/-Valuation of this share was 150/-, But Now trading at 49/-Company Planning to Demerging of Infrastructure Bussiness.Bhagyanagar India Ltd. is a Hyderabad based company which has forayed into real estate and infrastructure development to unlock the value of its existing land bank of 3 million square feet. The new development projects include integrated residential townships, IT parks, and hardware parks. The present value of the undeveloped land bank and tenanted property of the company is Rs 6,160 mn. The one million square feet technology park in Uppal is the likely to complete in 15 to 18 months. Early next year we would have launched our housing project in Vizag in 52 acres, with 1.2 million sq ft.The revenues are likely to increase to Rs 3,591 mn in FY08 and Rs 5,021 mn in FY09 and the net profits likely to grow at a CAGR of 53.34% to Rs 936 mn by FY09. The company is valued at Rs 65 a share with an upside of 57% from the current stock price of around Rs 40. For the next 4-5 years we see the company grow at 40 to 50 percent and expect 150 crores in infrastructure sales next year, said Narendra Surana, MD, Bhagyanagar India. Outright sale of small parcels and development of residential townships, IT parks and hardware parks on the larger land parcels is the route that works best in Hyderabad, for the company. It plans to sell the residential constructions and retain portions of commercial properties for the reason of higher rental yield on the latter. Over 6 Mn Sqft of net saleable area is likely to be developed over the next five years. A tourism project representing miniature monuments in India, a multiproduct SEZ and a resort complex are at different stages of finalization. Bhagyanagar India has shown good Q4 Fy 07 results due to extensive real estate and infrastructure sales. The topline showed a YoY growth of 66.7 per cent and a QoQ growth of 90.02 per cent. The company showed operating margins of 62.97 per cent as against 20 â€" 25 per cent in the previous quarters. Consequently the net profit jumped to Rs 487.86 mn, showing a YoY growth of 442.19 per cent and a QoQ growth of 609.31per cent in Q4 FY07. On a consolidated basis, BIL showed a YoY growth of 35.96 per cent in the net sales in FY2007. The bottom line showed a YoY growth of nearly 170 percent. The real estate and infrastructure division showed an impressive YoY growth of 452.68 per cent in its topline in FY2007. As the real estate and infrastructure division accounting for over 58 per cent of the company’s top line in Q4 FY07, it will remain the key area of focus. On a consolidated level, the division contributed 28 percent to the topline and nearly 76 per cent to the PBIT of the company in FY2007. The company is also keen on selling some of its unused land bank for which it is getting handsome price and subsequently investing the amount in development projects. Estimated EPS for this year was 8/- (Annualised) .Company Proposed EPS for 2008-09 is 15/- Karvy & other brokerages also acquiring this stock.Lot of Accumulating is going on last 3 days. Sell All Penny stocks Buy Bhagyanagar India.Enter current price at 49/- Target 95/- 155/- within 6 months time.Just invest and get 100 to 200% profit within 6 months time.THERE is NO RISK at 49/- IF Market crash also It will get Immediately go to 60/-Just Buy and Hold, SAFE BET at 49/- and you will get appreciation 100% within 2 Months Time..
Aurobindo Pharma Ltd - 325.00 Rs
Date: 28.01.2008 Established in 1986, Aurobindo Pharma Ltd (APL) has come a long way to become India’s top five pharmaceutical companies and undisputed world leader in certain product categories. It has successfully transformed itself from a single-product API manufacturer to a fully integrated multi-product player, encompassing intermediates, APIs and formulations. After ensuring a firm foundation of cost effective production capabilities, APL eventually entered the high margin speciality generic formulations segment, with a global marketing network. Today it operates in over 100 countries and markets over 180 APIs and 250 formulations. It is one of the largest players in Semi Synthetic Penicillin and Cephalosporin space and is backward integrated into manufacturing key raw material P-Gen. The company mainly operates in six primary therapeutic categories of antibiotics, anti-retrovirals, cardiovascular/diabetology, central nervous system, gastroenterology and anti-infectives/allergies apart from having small presence in anti-inflammatory, anti-histamines, anti-asthmatics, erectile dysfunction etc. Presently, APL derives nearly 70% of the revenue from the sale of APIs and intermediates while about 30% comes from formulations. And in couple of year company intends to take this ratio to almost 50:50. As company is focusing to expand its presence in regulated markets like USA, UK and European countries, exports constitute to around 55% of total revenue.
Over the years APL has made mammoth investments in building a mega infrastructure for APIs and formulations to eventually emerge as a vertically integrated company. Hence it is able to offer products at a competitive price as the cost of production is very low. Today it boasts of having 11 state-of-the-art manufacuturing facilities across the globe, around 6000 employees, 20 overseas subsidiaries and half a billion dollar revenue. Remarkably, almost all the company’s facilities are approved by regulatory authorities such as the US FDA, UK MHRA, MCC (South Africa), ANVISA (Brazil), Health Canada and the WHO. However its overall capacity utilisation at API plants is less than 60%. Its R&D unit is spread across 1 lakh sq ft and has 700 scientists busy in developing intellectual property in the area of non-infringing processes and resolving complex chemistry challenges. Interestingly, APL is one of the largest DMF filer with the US FDA from India with 114 DMFs filed to date. Besides it has filed 100 ANDAs in US and 40 ANDAs in Europe, out of which 62 approvals (both final and tentative) have been received from US and only 7 approvals from Europe. Importantly, company has the infrastructure to market the new products at the shortest lead time and convert the approvals into invoicing. So the additional product pipeline is expected to improve the income stream in coming years coupled with improved capacity utilization. In order to increase its foot hold in Europe, company acquired Pharmacin in Netherlands with a portfolio of 203 market authorizations; and Milpharm in UK having 100 market authorizations.
For future, company is planning to invest around Rs 200 cr in SEZ at Jedcherla near Hyderabad, and Rs 160 cr in Pharma city near Visakhapatnam. It is also setting up one more state-of-the-art R&D facility exclusively to meet the needs of increasing business of contract research. Further, APL is constantly looking to grow inorganically and scouting to make few acquisitions in Europe especially in Italy, Spain & Portugal. Meanwhile company has sold off its loss making Chinese subsidiary catering to the local Chinese markets. In short, company is on track to make a strong presence in select premium markets such as US, Canada, Europe and Australia leveraging on the large product portfolio, well balanced therapeutic presence, world class manufacturing infrastructure and experienced marketing resources. To fund its growth plan APL has raised nearly Rs 900 cr thru FCCB route to be converted into equity shares @ Rs 1014 and Rs 879 in tranches.Financially, on a standalone basis, APL is estimated to clock a turnover of Rs 2400 cr and profit of Rs 280 cr for FY08. To be on a conservative side, even if total FCCB gets converted at an average of Rs 550 the diluted equity works to Rs 35 cr having Rs 5 as face value. So the diluted EPS on a standalone basis for FY08 works out to Rs 40. Whereas, for FY09 it can post an EPS of Rs 50. Surprisingly, scrip hit a new low of Rs 233 in the recent carnage and has now bounced backed to Rs 320~330 levels. However on a consolidated basis it may report a topline and bottomline of Rs 2600 cr and PAT of Rs 240 cr for FY08 primarily driven by negative contributions from overseas subsidiaries. Still the consolidated EPS comes to Rs 34 considering Rs 35 cr as diluted equity having Rs 5 as face value. Investors are recommended to buy at current levels with a price target of Rs 550 in a year.
Small & Beautiful (Guj)
Date: 26.01.2008 BSEL Infrastructure (60.00) is currently developing a whopping 5.30 million sq ft of land across real estate verticals including residential, hotel & hospitality, retail, commercial, & shopping malls, IT Parks etc and has acquired another 6.50 million sq ft of developable area for future projects. It has entered into strategic alliances with Unity Infraprojects for development of six shopping malls at various locations in Nagpur. In Pune, it has been awarded a project for constructing, operating and maintaining a 400 room hotel and a commercial project on 60 years renewable concessional agreement. Under its BSEL Narmada Nihar project – Gujarat, company is developing 260 hotel rooms of four star category with a club house and a restaurant. Again in a joint venture with Unity Infra, it has been allotted land for developing 1 million sq ft IT Park at Dona Paula, Goa in which company’s share will 0.50 million sq ft. And most importantly, it’s wholly owned subsidiary BSEL Infrastructure Realty (FZE) has acquired seven plots approximating 7.9 million sq. ft. in Ajman, Main Emirates City, UAE and is constructing BSEL Pearl tower – a 50 storied state-of-the-art architecture tower. Recently, company raised Rs 140 cr thru GDR @ approx Rs 65 per share which will take the fully diluted equity to Rs 87 cr. On a consolidated basis for FY08, it may register total revenue of 450 cr and PAT of 120 cr i.e. EPS of 20 Rs on current equity whereas diluted EPS works out to Rs 14. A screaming buy.
Indag Rubber (84.00) came out with excellent set of nos for Dec qtr. Sales improved by 25% to 20.50 cr but net profit jumped up 125% to 2.60 cr on back of increased capacity, higher realization and better operating efficiency. Company is one of the reputed players in tyre retreading business. It operates thru franchisee business by offering the technology, specialized equipment, retreading material, technical back up etc to the franchisee. It has a state of the art manufacturing unit to produce precured tread rubber along with allied items like cushion gum, repair gum, envelopes, other accessories and specialized equipment for retreading. Notably, the operations at its new plant at Nalagarh, Himachal Pradesh have stabilised at a high level of efficiency. To maintain its growth, company is looking to increase its market share in Tamil Nadu, Karnataka and Kerela, which constitute 30 percent of-the Indian retreading market. Besides, due to termination of joint venture agreement with Bandag Inc. USA earlier, company is now exploring the export markets like Middle East, Africa etc. Accordingly it is expected to clock a turnover of Rs 75 cr and PAT of Rs 8 cr i.e. EPS of 15 Rs on equity of 5.25 cr for FY08. buy at declines.
Uttam Galva (46.00) is the second largest manufacture of cold rolled and galvanized products like coils, plain sheets, corrugated sheets, CRCA and colour coated steel. It is undergoing massive expansion estimated to complete soon this year which will take its cold rolling capacity to 10,00,000 MTPA and galvanizing to 7,00,000 MTPA. Besdies, it already has a colour coating line with a capacity of 80,000 MTPA. In April’07 it raised 85 cr thru GDR @ 40 Rs per equity share. Earlier it had raised approx 200 cr thru FCCB which is yet to be converted into equity shares. With zinc prices remaining stable and steel price on an uptrend, company is expected to end FY08 with topline of Rs 3500 cr and bottomline of Rs 120 cr which means an EPS of Rs 11.50 on current equity and EPS of Rs 9 on diluted equity of 136 Cr (post FCCB conversion). However company is looking to raise further Rs 600 cr thru GDR/FCCB in near future which will dilute the equity substantially. Despite this and high debt, it’s a good bet at current levels.
STOCK WATCH 25.01.2008
Date: 25.01.2008: KLG Systel (780.00) specializes in offering technological solution for entire business life cycle i.e. right from concept and creation, through plant design, project execution and management operations & optimisation to expansion/ revamp. It also provides on-line IT solutions to distribution utilities, using its self-developed software Vidushi, SG61 Technology and solution for determining the transmission & distribution losses, fixing the areas of power theft, on-the spot billing & cheque collection, increasing revenue collection efficiency of the utilities and addressing consumer grievances. It already serves 16 of the 44 power distribution companies across the country and this business is estimated to constitue more than 75% of total sales in couple of years from 50% currently. On the other hand, to capitalize the Engineering Services Outsourcing (ESO) potential company has gained engineering design domain-expertise in various industry verticals and has ventured into planning, design and erection of large scale infrastructure projects in India. Hence it is aggressively bidding for EPC (Engineering procurement and commissioning) contracts and has recently acquired 51% stake in Atlantis Lab Pvt Ltd, a dedicated engineering solutions company. Further it is looking for other companies in the aerospace for acquisition. For FY08 it may report a topline and bottomline of more than Rs 300 cr and Rs 55 cr respectively. This works out to an EPS of Rs 42 on diluted equity (post FCCB conversion) of Rs 13.20 cr. However, for FY09 it has the potential to register an EPS of Rs 55 on fully diluted (post warrants conversion & ESOP) of Rs 14.50 cr. Accumulate only at sharp declines.
Selan Exploration (170.00) is involved in onshore drilling for exploration of oil and gas and presently boasts of owning four oil fields Bakrol, Indrora, Lohar, Ognaj and one gas field Karjisan; all in and around Ahmedabad, Gujarat. Incidentally, company has been producing crude from three oilfields as the mining lease for Ognaj oilfield is still awaited from the government of Gujarat. But its Bakrol field alone is stated to have oil/gas reserves of around 45 million barrel which is huge by any standard. However, due to limitiation of funds and not so aggressive management company produced only 1 lakh barrels of crude in FY07 and is expected to do 140,000 in current fiscal which may move up to 2,00,000 barrels in FY09. With assured offtake of the entire oil and gas production from these blocks by the government, as per the terms of the production sharing contract there is zero marketing risk Secondly, with international crude oil prices expected to remain high the future earning of the company looks very encouraging. Although company may report an EPS of Rs 11 for FY08, but considering its oil reserve company is available at fairly cheap valuation.
KEI Industries (88.00), the second largest power cable company in India is enaged in manufacturing of high and low tension cables (HT and LT), control and instrumentation cables, house wires and stainless steel wires. In near future it plans to manufacture Extra High Tension cables which will serve the modern power transmission segment. It is also contemplating to move up thevlaue chain from manufacturing and supplying cables to executing EPC contracts and manufacturing and supplying transformers. Last week company started commercial production at its new 100% EOU unit in Alwar-Rajasthan for manufacturing of HT and LT power cables. Hence it has increased its capacity by 10,000 Kms thereby taking the total cable manufacturing capacity to 50,000 kms per annum. Company has already registered excellent performance for H1FY08 and may clock a turnover of Rs 900 cr and PAT of Rs 58 cr for FY08. This translates into EPS of Rs 7 on fully diluted equity (post conversion of all FCCB) of around Rs 15.75 cr. But considering companys recent expansion and future growth plans it is estimated to report an EPS of more than Rs 10 for FY09. Depsite company having huge debt of Rs 310 cr, investors are advised to accumulate at sharp declines.
Though currently small but Ram Informatics (16.00) is a budding company in e-governance space. It has completed various IT projects especially for different divisions of govt of Andhra Pradesh like computerized administration of sales tax, tourism, state road transport corporation, AP housing board etc. Besides company has desgined, developed and maintains several govt portal like BangaloreOne(Karnataka), eSuvidha (UP), iSetu (Maharastra), Eseva, Sales Tax and Fire Service(AP) etc. Recently, it got an order from Karnataka govt for executing 'Karnataka One' project which is on Boot model for a period of 7 years and the revenue model is based on per transaction. Offlate, it has also won a contract to implement and manage `Bus Pass' automation system in the city of Visakhapatnam, A.P. on Build, Operate and Transfer (BOT) model for a period of 5 years. Few months back company has launched an insurance portal thru which it intends to tap 2%-5% of the agents of LIC for subscription to its portal for a nominal price per year apart from generating income via hosting Ads. On the other hand, it has developed smart software products for automation in banking, insurance &retail. It is also into education & training and offers courses for call centre training, corporate training etc. On the flip side it has invested whopping Rs 32 cr in its US subsidiary called Aravali Technologies Inc which has not yielded much returns.
Lok Housing & Construction Ltd.
Date: 25.01.2008 Incorporated in 1986, Lok Housing and Constructions Limited (LHCL) is the flagship company of the Mumbai based Lok group which specializes in mass - housing and primarily caters to the needs of middle-income group. It has contributed significantly to the development of Mumbai and its adjoining suburbs with over 40 mini and mega residential complexes, commercial centres, from single storey bungalows to multi storey towers, simple flats to pent houses and plush condominiums comprised of 17000 units spread across 9 million sq feet area. Lok Nagari(Ambernath), Lok Terraces(Vashi), Lok Upvan(Thane), Lok Vatika(Kalyan), Lok Nisarg & Lok Kailsah (Mulund), Lok Vihar(Powai), Lok Darshan(Andheri) etc are few of the popular and big projects executed by the company. It is among the first few real estate players to develop an estimated 1.2 million sq ft of land in a single year way back in 1994. It boasts of being the first to start an SRA (Slum Rehabilitation Authority) project in 1994. Notably, it is also among the very few construction companies in India to have instituted six sigma quality system for operational excellence, timely delivery and seamless execution of large scale projects. Presently, it has several residential projects under construction including Lok Everest(Mulund), Lok Amber(Ambernath), Lok Nirman(Khar), Lok Prabhat(Virar) and few others at Thane, Kalyan, Marol etc.Ironically, LHCL is having a land bank of whopping 1222 acres across Mumbai, Pune and Bangalore with development potential of 62.5 million sq ft. Out of these, 356 acres came into company’s belt due to merger with group companies. Most of the land has been acquired long back at very low cost and are located at Ambernath(80 acres), Kalyan(92 acres), Vasai(136 acre), Turbhe(180 acre), Pune(425 acres), Bangalore(240 acres) and balance 69 acre spread across Andheri, Malad, Khar, Thane & Virar in Mumbai. In order to consolidate and emerge as a bigger player, group recently merged Lok Shelter-involved in urban rehabilitation and reconstruction projects, Lok Global- involved in diverse infrastructure projects and Lok Holding-key vehicle to acquire land with LHCL. Thus, company has now got into two new promising business segment – infrastructure development and rehabilitation project. Although both has huge potential but company is betting high on the latter and is looking to participate in National Urban Renewal Projects comprising slum eradication projects & demolition and reconstruction of old and dilapidated buildings. Hence, it has already submitted a proposal to the state government to rehabilitate tenants of about 300 unsafe cessed buildings in Mumbai and simultaneously develop 6 million sq ft in the heart of the city in association with MHADA. Importantly, against this government may cross subsidize the cost of redevelopment thru sanction of Floor Space Index (FSIs). Hence it’s a win-win situation for either of them.On the other hand, although Maharashtra govt has approved a proposal to repeal the Urban Land Ceiling Act but still no decision has been taken regarding development of saltpan land and the issue is under consideration. Incidentally, LHCL is holding nearly 180 acre as a salt pan land in Turbhe which it intends to develop into a top quality township on getting clearance. In future company plans to come up with a grand project to be constructed on any of its 125-150 acres of land and to be called as “The Lok International City” which will be a landmark mega township, resembling a small independent civilization and possibly a first of its kind in the country. Apart from robust demand for housing, real estate industry is expected to grow substantially in future due to various factors such as 100% FDI investment, reduction of threshold for integrated townships, real estate investment trust, availability of housing loan at lower interest rate coupled with Income-Tax benefits etc.Fundamentally, company’s equity has got enhanced to Rs 42.88 cr against Rs 11.70 cr due to merger of group companies / warrant conversion and at the same time promoter holding got increased to 51% against 23% last year. To fund its upcoming projects, company is looking to raise more than Rs 800 cr thru QIB/FCCB/GDR/private placement etc in future. Accordingly it made a pref allotment of 762,200 shares to Bennett & Coleman @ Rs 197 and is planning to allot 50 lakh warrants to promoters @ Rs 354 per share. Considering LHCL’s huge land bank position in metros like Mumbai, Bangalore and Pune coupled with rising property prices, this company is available fairly cheap at a market cap of Rs 800~850 cr. Sarcastically, scrip hit a new 52W high of Rs 390 on 1st Jan 2008 but collapsed 50% in the recent carnage. Although it can go down further, still investors can easily expect 50% return from hereon in 12~15 months.STOCK WATCH 19.01.2008
Date: 19.01.2008: Q3 results have started flowing in and as usal the companies with encouraging nos will out perform others. In such a scenario Eastern Silk (248.00) looks good. For the Dec qtr, sales have jumped up 35% to 169 cr and NP also increased by 40% to 25.50 cr posting a quarterly EPS of whopping Rs 16. It is among the few integrated players in textile registering an OPM & NPM of more than 20% & 10% respectively. It has recently completed expansion programme at its Anekal’s Unit 2 facility thereby taking the total fabric manufacturing capacity to 18.5 lac metres from 14 lac metres per annum. It is also setting up made-up plant at Bommasandra near Bangalore having an installed capacity of 1500 sets per day with an investment of 18 cr. For entire FY08 it is estimated to register sales of Rs 600 cr and PAT of Rs 80 cr. This translates into EPS of Rs 51 on equity of 15.80 cr. For future growth, company is looking to make some foreign acquisition for which it may raise 240 cr thru FCCB/GDR route. It is also contemplating to split the face value of share to 2/- Rs from 10/- Rs which will improve the liquidity going forward. A good bet in textile space.
Recently, JK lakshmi Cement (168.00) came out with decent set of nos. For the Dec qtr it sales improved by 25% to Rs 282 cr but NP grew by only 10% to Rs 61 cr due to higher interest and depreciation cost. But if we consider year to date figures upto Dec 2007, it has recorded 40% rise in sales to 816 cr and 75% increase in PAT to 203 cr. Interestingly, its nine month profit has already surpassed the entire FY07 profit of 178 cr by huge margin. To maintain its growth company is further expanding its capacity to 5 million from 3.4 million tonne by Oct 2008. On the other hand, it is betting high on RMC business as it has great potential along with high margins. Accordingly for FY08, it is now estimated to clock a turnover of Rs 1100 cr and net profit of Rs 250 cr which translates into EPS of Rs 44 on current equity and EPS of Rs 41 on diluted equity of Rs 61 cr. For future, it is contemplating to set up a Greenfield cement plant near Bhilai, Chhattisgarh with a capacity to produce 2.5 million tonne and hence looking to apply for limestone mining lease. A solid buy.
Post its Dec results share price of Kamanwala Housing (163.00) has tumbled down sharply as they don’t look so encouraging when compared to Dec’06 nos. Its revenue declined by massive 75% to Rs 16.50 cr whereas profit declined by only 20% to Rs 5 cr. But being in the real estate & construction sector and following the revenue model on sale of agreement basis, company is bound to post erratic and lumpy results on quarterly basis. Hence the picture changes for the combine nine months figures. Till now in this fiscal, it reported flat revenues to the tune of Rs 67.50 cr but profit shot up 80% to Rs 15 cr on the back of rising real estate prices. Copamy is mainly operating in Mumbai and has few good residential projects in Malad & Santacruz and huge commercial project in Bandra Kurla complex. It has several projects lined up for future in Andheri, Mahim, Goregaon etc and even in Hydrabad. Recently it also bought 10,000 sq mtr land in Turbhe for 15 cr. To sum up, company ia available fairly cheap at a market cap of less than Rs 100 cr. It can easily appreciate 50% from hereon.
Few days back Vakrangee Software (248.00) also came out with stunning nos for the Dec qtr. It recorded 100% growth in topline as well as bottomline to Rs 60 cr and Rs 13.50 cr respectively thereby posting an EPS of Rs 7 for the quarter. Effectively, it has already registered an EPS of Rs 17 for the nine months ending Dec 2007. Last year, company has imported world’s fastest printing system - Kodak Versamark VT3000 which can print customized design from page to page. This machine has not only helped the company to execute all election commission related work in house but also enabled it to get more business from the emerging opportunities like printing documents (including bills) for telecom companies, electricity supply companies, retail groups etc. Recently it has entered into a strategic alliance with Eastman Kodak company to offer mass customization & personalization of customer communication practices in India and has been granted with the Kodak Gold Plus accreditation status. Although, offlate there has been news of company losing the Nasik, Aurangabad and other region from its belt still it’s a good bet as company has bid for new orders worth 2500 cr through its alliance with Eastman Kodak Co. It is expected to report total revenue of Rs 200 cr and profit of Rs 41.50 cr for FY08 i.e. EPS of Rs 21 on current equity and EPs of Rs 19 on diluted equity of Rs 21.40. For FY09 it has the potential to post Rs 25 EPS on diluted equity. Accumulate at declines.
Small & Beautiful (Guj)
Date: 19.01.2008: After hitting a recent high of Rs 75, Gujarat Intrux (48.00) has corrected sharply to less than 50 levels giving a good opportunity to buy for long term. It’s a small company based in Gujarat and is mainly engaged in the production of stainless steel, alloy steel and non-alloy steel castings. Apart from catering to domestic market it has been exporting its product to Israel, U.K., Spain, Germany, U.S.A., and Australia. Due to robust demand for its product, company is planning to enhance its production capacity by 3600 MTPA. Whereas it’s existing production capacity is merely 1800 MTPA. Financially, it’s a debt free company and has been making highest tax provisioning of around 35% of PBT. For H1FY08, it registered 20% growth in topline to Rs 14 cr but NP was almost flat at Rs 1.40 cr. Hence it may clock a turnover of Rs 28 cr and profit of Rs 2.75 for FY08 i.e. EPS of Rs 8 on small equity of Rs 3.40 cr. However the huge fluctuation in the price of raw materials i.e. Scrap and Ferro alloys is a cause of concern. Still considering company’s expansion plan and management’s capability it can be added at declines.
Shilp Gravures (70.00) is undisputed leader in electro-mechanical engraving, with a substantial market share of around 40% for flexible packaging industry in India. In simple terms it manufactures electronically gravure/engraved cylinders which are eventually used for rotogravure printing. It has a 300-strong client list which includes India's most reputed names like HLL, Britannia, Amul, Nestle, Cadburys, Tata Tea, Pepsi Foods, Haldiram, P&G, Reliance, ITC, Colgate, Mcdowells etc thereby having a pan India presence. On the back of retail boom and strong demand from FMCG sector, company is doing exceedingly well. It has reported very encouraging nos for first two quarters because of higher realization and increased volume. Sales jumped up 45% to Rs 18 cr whereas PAT more than doubled to Rs 3.50 cr thereby registering a very healthy OPM of 44%. Interestingly its H1FY08 profits have already surpassed the entire FY07 net profit of Rs 2.90 cr. Hence accordingly it may end FY08 with sales of Rs 38 cr and NP of Rs 7.50 cr which leads to an EPS of Rs 12 on equity of Rs 6.15 cr. Keep accumulating at declines.
Span Diagnostic (90.00) is a pioneer and trend-setter of high quality products used by pathology & clinical laboratories in the diagnostics industry and also one of the largest manufacturers of diagnostic reagents. Hence it supplies variety of instruments and consumables besides reagents and kits required by modern clinical laboratory. To strengthen its market share in overall diagnostic market, it has recently formed a new subsidiary especially for R&D of instruments. It has exclusive tie-ups with reputed companies worldwide for marketing, distributing and servicing diagnostic products in India. Moreover company also undertakes contract manufacturing of a wide range of quality reagents and kits in bulk for private labels. For six months ending Sept’07 it has reported excellent nos with sales up 55% to Rs 32 cr and PAT up 130% to Rs 2.50 cr. Importantly it has been able to improve its operating margin to 14% against 11% last fiscal. So it may end FY08 with total revenue of Rs 70 cr and PAT of Rs 4.25 cr. This translates into EPS of Rs 13 on small equity of Rs 3 cr. Again buy at sharp declines only.
Sukhjit Starch (155.00) is mainly engaged in manufacturing edible and non edible maize starch, dextrine, liquid glucose and dextrose monohydrate. It also produces sorbitol, maize oil, maize gluten, maize husk, high maltose syrup, oxidized/pregelatinized starch etc. Notably, it is the only multi-locational group in India as of now with a combined installed capacity of 1,50,000 tons corn grind per annum. It is expected to report encouraging nos for Dec qtr as it started commercial production at its new Himachal Pradesh plant in July 2007. This new plant has enhanced the capacity by nearly 25% and is dedicated for high margin starch and derivative products especially for pharmaceutical industry taking shape in Baddi, HP. Company has an impressive clientele including corporates like Britannia, Dabur, Colgate, HLL, Heinz, Ballarpur, Berger paints, JCT, Mahavir Spinning, Wockhard etc. On a conservative basis, it is expected to end FY08 with sales of 175 cr and NP of 18.50 which translates into EPS of 25 Rs on equity of 7.40 cr. A safe bet in current market sentiment.
Lloyd Electric & Engg Ltd -178.00 Rs
Date: 19.01.2008 Lloyd Electric and Engineering Ltd (LEEL) was incorporated in 1988 primarily as a backward integrated unit of Fedders Lloyd Corp, the leading group company to manufacture coils for air conditioners. Hence it specializes in the custom design and manufacture of heating and cooling coils including 'U' bend and return bend tubes for heat exchanger coils, system tubing, header line etc and sheet metal items for air-conditioning and refrigeration applications. Over the year it has emerged as India’s largest manufacturer of evaporator and condenser (E&C) coils with around 60% market share. E&C coils are critical components in AC manufacturing next only to the compressor and account for approximately 20% of the cost of manufacture. Offlate, company has got itself forward integrated into lucrative business of contract manufacturing of window / split air conditioners for various multi national companies in India. Thus company is an OEM supplier to almost all AC manufacturers in India and its clientele includes Samsung, Electrolux, Carrier, Haier, Voltas, Blue Star, LG, Hitachi, Whirlpool, Diakin to name a few. Importantly, LEEL has also ventured into manufacturing of roof mounted packaged unit i.e. packaged AC for railway coaches on turnkey basis which includes designing, manufacturing, supplying, installation and maintenance. Hence it has set up service station all around India like at New Delhi, Mumbai, Chennai, Bangalore, Hyderabad, Lucknow, Jaipur, Guwahati and Culcutta specially for maintaining the AC package units installed on the railway coaches. Presently, LEEL derives roughly 60% revenue from coils, 30% revenue from contract manufacturing of AC’s and balance 10% from railways.Earlier, LEEL was operating thru two manufacturing facilities located at Bhiwadi in Rajasthan and Kala-Amb in Himachal Pradesh, but from last fiscal it commenced operation at its new plant in Dehradun (Uttaranchal) with an installed capacity of 2,00,000 coils & 2,00,000 airconditioners. Thus its total manufacturing capacity stands enhanced to 12,25,000 coils whereas assembling capacity got doubled to more than 4,00,000 ACs. The biggest positive for the company is that it enjoys a 10 year excise duty and income tax exemption at its Kala-Amb and Dehradun facilities and would be paying sales tax at a concessional rate. To expand its product range further, company is now diversifying to produce roll bond and frost free coils for refrigerators and has tied up with a Korean company, Hanyung Alcobis for the same. With this it would become the first manufacturer in India, as the entire requirements of these coils are generally met thru imports and that too mainly from Korea. Hence to maintain its future growth LEEL is in the process of setting up a Greenfield plant near JNTP port on Mumbai-Pune highway with an initial capacity to produce 2,00,000 frost-free refrigeration coils, 4,00,000 AC coil and 2,00,000 units of air conditioners. It has already acquired 25 acres land and is looking to start the plant by mid 2009. Meanwhile, LEEL has signed a MoU with Air International Transit Pty Limited, an Australia-based company for designing, manufacturing and supplying of AC package units to metro rail in India. Accordingly, company is actively pursuing Delhi Metro Rail Corporation (DMRC) Phase 1 extension and Phase 2, for the metro coach air conditioners and expects to get substantial orders in future. Besides company is also exploring the possibilities of export of coils and components for the new metros coming overseas.
To fund its expansion plan company been regularly raising capital thru equity route may it be GDR or preferential allotment of shares/warrants. After raising Rs 50 cr thru allotment of 40 lakh shares @ 125 Rs earlier, company has recently allotted 50 lakh warrants to be converted @ Rs 225 per share thereby making arrangement to get fund to the tune of Rs 100 cr in future. Further it is contemplating to raise Rs 200 cr thru QIB route which combine may lead to 40% equity dilution. However, in a continuing climate of economic buoyancy, the domestic market for Heating, Ventilation, Air-conditioning and Refrigeration industry (HVACR) is growing at a healthy pace. Secondly, with the increase in disposable income, change in lifestyle and easy availability of finance at low rate of interest has led to the sharp growth in air conditioner segment. Fundamentally, company is doing exceedingly well and has recorded 40% growth in topline as well as bottomline for H1FY08. In view of that it is expected to end FY08 with sales of Rs 650 cr and NP of Rs 58 cr i.e. EPS of Rs 19 on current equity of Rs 31 cr. However, frequent equity dilution may cap the upside potential of the share price. Still investors are recommended to buy at current levels with a price target of Rs 275 (60% appreciation) in 15 months.
Indo Asian Fusegear Ltd - 165.00 Rs
Date: 19.01.2008 From a modest beginning in 1958 by Mr. V.P. Mahendru, Indo Asian Fusegear Ltd (IAFL) has today, grown into a multi-product, multi-location company specializing in manufacturing and marketing a wide range of high-tech electrical products used for distribution, protection, control and conservation of electrical energy. Infact it enjoys the status of being the first company in India - to introduce miniature circuit board in homes, to produce residual current-operated circuit breakers with internationally recognized CB certification, to manufacture energy efficient compact fluorescent lamps and the only one to produce ROHS (Restriction of Hazardous Substances) compliant i.e. less mercury CFLs. Broadly, company deals in two segments - switchgear and lighting of which former contributes around 80% of the revenues and the balance 20% comes from lighting segment. Under switchgear division, it produces hundred of products such as MCB, MCCB, RCB, distribution boards, SPD, HRC fuses, cubicle switch, onload changeover, rewireble switches, feeder pillars, modular switches, wiring accessories etc. It also manufactures special application products like time switches, contactors, MPCB, relays, plug & socket etc. Under lighting category it deals in CFL, FTL (Fluorescent Tubular Lamps), domestic luminaires and commercial luminaires. Notably, IAFL is the largest manufacturer of CFLs and MCB’s in India. Besides, it is among the largest exporter of circuit protection equipments and CFLs to European countries including UK, Germany etc and Middle East, South Africa, Srilanka and Australia. As on today, exports contribute round about 20% of total sales.IAFL boast of having eight plants across Punjab, Haryana, UP, HP and Uttrakhand out of which five are dedicated for switchgear production, two for lighting business and one for wires & cable. Importantly, its new CFL & switchgear plant in tax free zone of Haridwar with a capacity of 10 & 15 million units respectively has started production recently only. With commencement of these facilities company has enhanced its production capacities substantially and expects to grow at a CAGR of 75~80% for next 2~3 years. It has entered into various technical and strategic tie-ups with international majors like Indo Kopp, Nordex Lighting, Theben, Woertz, Lovata electric etc. Notably, its brands like “Indo Asian”, “Indo Kopp” “Ecolite” & “Hausmann” are associated as quality products and are very well accepted not only in domestic market but globally as well. To compliment this, company has a wide geographical market coverage including 30 offices across India, 850+ distributors, 35000+ electrical retail outlets and overseas offices in Dubai & Germany. To tap the nearby countries, company has made some arrangement with the local players to distribute its products in Nepal and Srilanka. On the other hand, earlier it made a tie up with Brilliant AG-Germany for marketing their complete range of modern style indoor and outdoor lighting equipments, fittings & accessories in India.
As a part of diversification, IAFL is venturing into cables & wires manufacturing business and has recently promoted a subsidiary to implement Rs 100 cr project in phases. Further it has set up another wholly owned subsidiary to undertake power distribution projects on behalf of state electricity boards, corporations and utilities on franchise basis and has already secured two contracts for a period of three years aggregating to Rs 50cr from the electricity board of Madhya Pradesh for distributing power in Jabalpur. Meanwhile, company has set up a JV (51:49) with Simon-Europe to manufacture and market high quality wiring accessories, building automation and intelligent switching systems, especially for industrial and commercial use. This will be one of its kind plants in India which is being set up in Uttrakhand at an initial project cost of Rs. 30 cr and is estimated to commence operation by mid 2008. Moreover it is also putting up a facility in Saudi Arabia - in joint venture with Saudi National Glass, for manufacturing of CFLs and high intensity discharge lamps (HID Lamps), with an investment of Rs 20 cr.
In short, to leverage the burgeoning opportunities in the Indian and global power industry, IAFL has aggressively ramped up its production capacity and is diversifying into emerging business opportunities like home & building automation products, power distribution projects & wires/cable business. It is at the inflexion point and will report bumper nos for the FY09 on back of increased capacity and improved capacity utilization. Meanwhile for FY08, on a conservative basis it is estimated to clock a turnover of more than Rs 300 cr and PAT of Rs 20 cr i.e. EPS of Rs 14 on current equity of 14.60 cr. But it has the potential to post Rs 24 EPS for FY09. However company is looking to raise nearly Rs 200 cr thru equity route to fund its future growth plans which may dilute the equity substantially going forward. Despite this, investors are advised to buy at current levels for a price target of Rs 250 (50% appreciation) in 9~12 months.
J U S T C H I L L A X.!!!
Date: 23.01.2008 Dear investors,I know how painful it is to see our portfolio erode by 30~50% in a matter of two days. Its like, our hard earned money is just evaporating in front of us and we are helpless. Interestingly, this is happening without any unfolding of scam or political fallout or any major change in fundamentals on domestic front. But that’s how stock market is. So just Chillax – as we have no better option left with.To begin with, nobody on earth expected such a massive fall in such a short time. Although few analysts and broking firms were bearish on Indian market, but they too were shocked by the magnitude of fall and the pace at which market crashed. No doubt, large caps had run beyond the so called fundamentals and a healthy correction was overdue. But the main culprit for this carnage is the global factor; especially sub-prime issue & potential recession in USA. I am not sure, but I think the biggies like Morgan Stanley, Merrill Lynch, Citigroup, UBS have already taken a hit of 40~50 billion US $ in their books till now and the world is still busy in calculating the extent of total damage. To worsen the situation further, rumors are afloat that CITIBANK will file for bankruptcy, which I feel is a rumor only. However, the way Asian markets like Hang Seng, Nikkei, Straits, Kospi, Taiwan market or even European markets like Brazil, Russia, FTSE are correcting there is some serious problem.One can simply evaluate the pressure in which US Fed might be reeling under, as it has just announced an emergency interest rate cut by whopping 75 basis point taking it down to 3.5%. This is the biggest single rate cut in last two decades. This proves that USA’s economic condition is indeed deteriorating. In short, global issues will continue to haunt & dominate our domestic market. It will be interesting to see whether the ‘V” shape pull back takes place in our Indian market as anticipated by most of the market players. Personally, I am expecting a partial pull back but complete recovery or a new high will take much longer time. I hope and expect that our honorable FM - Mr. Chidambaram should announce some good news in this budget for our market as well as corporate world. To conclude, one may call this fall a deep correction or a crash but eventually it’s a comma and definitely not a full stop to the Indian bull market.And oh yes, if you are among the lucky few sitting on huge pile of cash, I would advise to invest 50% of it immediately at current levels and balance 50% at further 10% fall, in case it happens. Buy any quality mid cap or large cap company with strong fundamentals, great visibility and good management. As most of the scrips are at mouth watering level its very difficult for me to name few of them. Do your own due diligence.
RP subscribed 68.81 times
Date: 18.01.2008 The Initial Public Offering (IPO) of Reliance Power Limited which opened for subscription on January 15, 2008 has received overwhelming response from investors with the issue receiving 68.81 times overall & in retail 15 times till 4:00 PM on January 18, 2008 as per the data available with NSE website. The company is issuing 228,000,000 Equity Shares (excluding Promoters contribution of 32,000,000 equity shares) of Rs.10 each for cash at a price band of Rs. 405 TO Rs. 450 through 100% Book Building process.The Issue has received total bids for 15689368485 equity shares against the offer of 228000000 equity shares.The issue has received bids for 796744965 equity shares at cut-off price.The IPO closes for subscription today - January 18, 2008
IS USA the main problem?
Date: 17.01.2008 IS USA the main problem?As far as our clients & we concerned the US sub prime & related issues are already expected one month (December 2007) before that’s why we recommended our clients to sell 95% of position just last week. Our target in sensex remains un touched low level_______ _. There are some exceptional shares; we believe these shares to go higher levels even in negative market. So these 5% shares will be in focus in negative market.We are not expecting US problem to affect our earnings slow down directly our GDP growth, but there is one problem that cannot be avoided. As the other markets are depending mainly on USA those market will suffer painfully. The problem we are depending on these markets so the result is same.Even though the main problem we are expecting is coming Budget. The coming budget is very important than US issue because this is last budget of UPA, so this time they are planning to support poor people but not the market or companies. It’s an election trick. Even though the Finance Minister stated that there would be no change in GDP forecast Budget, we are little bit confused as the ruling party to face election they can go heavy pressure making budget to poor peoples favor.Lets wait for the big event……
JK Lakshmi Cement Ltd.
Date: 12.01.2008 (JKLC) was established in 1982 by hiving off the cement division from JK Corporation and is a part of well known HS Singhania group which has diversified interest in tyres, paper, sugar, clinical research, textile, auto ancillary etc. Since then, over the 25 years JKLC has emerged as a leading and reputed cement manufacturer in the northern and western markets. It basically markets three variants of cement under ‘JK LAKSHMI” brand which is a very popular brand today and is renowned for its strength, quality and performance. Besides, company has also forayed into lucrative ready mix concrete (RMC) & plaster of paris (POP) business thru its brand “JK Lakshmi Power Mix” & “JK Lakshmiplast” respectively. Apart from having its own marketing offices, company has a wide network of about 1,500 dealers spread across Rajasthan, Gujarat, Delhi, Haryana, UP, Uttaranchal, Punjab, J&K, HP and Mumbai. Presently, almost 65% of total sales of company accrue from northern region and balance 35% from western region.JKLC’s state-of-the-art plant located at Jaykaypuram, distt. Sirohi, Rajasthan boast of using latest technology from M/s Blue Circle Industries and modern equipments from M/s Fuller International of USA. To cash on the buoyancy in the cement industry, it has rapidly expanded its capacity to 3.40 million from 2.40 million TPA during last fiscal. With cement demand expected to remain robust in coming years, it is further enhancing its capacity to 5 million TPA by Oct 2008. On the back of continuous & serious efforts by the company, the blended cement now contributes nearly 70% of total sales against 46% earlier. Notably, blended cement has a better margin as the cost of production is low due to mixing of 20% fly ash. But most importantly, company has installed and commissioned two pet coke based captive power plants of 18 MW each in March’07 and July’07 respectively. With this it has become self sufficient in respect of power requirement and will also be able to bring down its power cost considerably to the extent of more than Rs 15 cr per annum. On the other hand, it is betting high on RMC business as it has great potential along with high margins. Currently it is operating 5 RMC plants, but is aggressively expanding to add at least 5 to 6 plants more in near future. Hence, in all it has capex of around Rs 400 cr of which nearly 25% will be funded thru debt and balance thru internal accruals. It will also be getting Rs 35 cr thru conversion of 41 lac warrants allotted to group company @ Rs 97 Rs per share in June’06.To maintain its growth momentum in future, JKLC intends to set up a Greenfield cement plant near Bhilai, Chhattisgarh with a capacity to produce 2.5 million TPA. For this company has identified couple of limestone mines and is looking to apply for mining lease. Meanwhile, it has replaced its high cost debts by cheaper funds to the extant of Rs 325 cr, which will reduce interest costs going forward and hence company has come out of the Corporate Debt Restructuring (CDR) purview. On the back of terrific nos for Sept qtr, it recorded 50% growth in sales to Rs 534 cr and Net profit increased by 130% to 142 cr for H1FY08. Hence even on a conservative basis, it may clock a turnover of 1100 cr and PAT of 210 cr for FY08 which translates into EPS of Rs 34 on fully diluted equity Rs 61.20 cr. However, the recent undue concession offered by the government for import of cement, including zero percent import duty, removal of countervailing duty and SAD, has put the Indian cement industry to a competitive disadvantage position which was already subjected to high cost of manufacturing vis-a-vis their counterparts in countries like China, Thailand, Indonesia. Despite this, investors are recommended to buy at current levels for a target of Rs 280 (55% return) in a year’s time.
Bihar Caustic & Chemicals Ltd.
Date: 12.01.2008 Bihar Caustic & Chemicals Limited (BCCL) was incorporated in 1976 as a joint venture between the Aditya Birla Group and the Bihar State Industrial Development Corporation, primarily with the objective of catering to the caustic soda requirements of Hindalco and to contribute towards the economic development of the backward region of Palamau district in Jharkhand. Today, it is among the leading caustic soda producer in the northern and eastern region of the country. Apart from caustic soda it also produces liquid chlorine, hydrochloric acid, sodium hypochlorite, compressed hydrogen and has recently ventured into aluminum chloride. In India, about 45% of the chemical industry depends upon the caustic soda industry as essential inputs for a host of industries like soap and detergent, aluminum, paper & newsprint, fibre, glass, tyre, chemicals & petrochemicals, pharmaceuticals, water treatment, dyes, textiles, oils, etc. However being a subsidiary of Hindalco Industries, BCCL is having an added advantage of assured off-take of caustic soda by the parent company. It also has a hydrogen bottling facility which provides an additional stream of revenue.In early 2006, BCCL shifted the manufacturing process of the plant from its earlier mercury technology to the latest energy efficient and environment friendly state-of-art membrane cell technology. Simultaneously it also expanded is caustic soda production capacity by 50% from 150 TPD to 225 TPD at an estimated investment of Rs.112 cr. So presently its plant boast of having an installed capacity of 225 TPD of caustic soda, 200 TPD of liquid chlorine, 130 TPD of hydrochloric acid, 150,000 Nm3/day of compressed hydrogen and 3 TPD of sodium hypo chlorite. Further, company is in process of expanding capacity of its caustic soda plant by 20% to 265 TPD by addition of electrolysers as well by debottlenecking. Hence in order to gainfully utilize the additional chlorine produced after expansion; BCCL has recently commissioned an aluminum chloride plant in Jan’07. This plant has a capacity of 12000 TPA and will boost the topline considerably once fully operational. Aluminum chloride is basically used as an input for manufacturing of aluminum. Secondly, it has also taken a decision for setting up a stable bleaching powder (SBP) plant at an estimated cost of Rs.7.50 cr which will consume another 20 MT of captive chlorine per day. Importantly, as caustic soda production is power intensive, BCCL has put up its own 30 MW coal based captive power plant due to which its energy costs are lower than its peers. Although company is vulnerable to caustic soda price movement but with aluminum sector expected to remain buoyant and Hindalco being its biggest customer, this is relatively a safer bet.To conclude, BCCL is poised for a good performance in the coming years due to the progressive improvement in capacity utilization of plant, projected expansion and addition of value added products like aluminum chloride and stable bleaching powder. Notably, BCCL also enjoys the highest operating margins among it peers - even better than Gujarat Alkalies and Chemfab Alkali. For H1FY08, its sales improved by 20% to Rs 79 cr and profit increased by 45% to Rs 21 cr. Accordingly it is estimated to clock a turnover of Rs 185 cr and PAT of Rs 45 cr which leads to an EPS of Rs 19 on current equity of 23.40 cr. Ironically, share price was trading around Rs 80 in Sept 2005 when Sensex was around 8500 and still this scrip is available around same levels even though Sensex has shot up to 21000. Hence it has been a huge underperformer despite sharp improvement in its fundamentals. Offlate, company has been on uptrend and hit a new high of Rs 105 few days back. There are also rumors that it may get merged with Hindalco industries. But if this happens, the true value of BCCL wont be unlocked, as the merger ratio will more favorable to the parent rather than subsidiary. Still investors are recommended to buy at current levels as scrip has the potential to touch Rs 150 in medium term.STOCK WATCH 11.01.2008
Date: 11.01.2008
More than copper and telecom, Bhagyanagar India (56.00) is now known as real estate and infrastructure company, as it presently owns around 175 acre of land bank valued at more than Rs 600 cr. Ironically the acquisition cost of land is one third of its present value which means company is sitting on a huge unrealized gains. To take the maximum benefit of the ongoing boom in real estate, company has aggressively forayed into real estate development and construction industry through its various subsidiaries and is, focusing mainly on housing and construction of IT Parks. Recently, it has formed a SPV along with IL&FS Infrastructure for undertaking, various infrastructure and entertainment projects such as theme parks, special economic zone, industrial parks etc on a large scale basis. On the other hand, it has successfully commissioned the wind power project with an installed capacity of 9 MW in Karnataka last fiscal. To concentrate on real estate business, company is planning to soon demerge its other divisions like copper, telecom, metals, auto components into a separate company. In order to fund its projects company had raised approx Rs 70 cr thru FCCB route @ 44 Rs per share in Oct 2006. Recently in Oct’07, it made a pref allotment of 1.15 cr warrants @ Rs 44 per share and now in Jan’08 it is making another placement of 55 lakh warrants @ Rs 90 per share. So it has made a funding arrangement of Rs 100 cr for future which will take its total diluted equity to Rs 21.40 cr. Scrip has the potential to shoot up 50% in 6~9 months.
Although share price of Andhra Petrochemicals (32.00) has doubled in the recent rally, still investors can accumulate this scrip at declines for further gains. It is the only producer of Oxo-Alcohols in India with a production capacity of 42,000 MTPA. The market demand for Oxo-Alcohols is currently estimated at 143,000 MTPA, out of which company caters to 30% demand and the balance 70% is met through imports. To secure a greater share of the market and meet the growing demand, company is in undergoing expansion and modernization programme to increase its production capacity to 73,000 MTPA. However, the enhanced capacity is expected to be operational only by Sept 2009. Importantly, company has been able to save a massive Rs 12 cr per annum only on power cost as it has installed and commissioned 2400 KVA uninterrupted power supply system and discontinued the operation of D.G.Sets from last fiscal. For FY07 company made a strong turnaround as sales increased by 35% to Rs 266 cr but NP zoomed up to Rs 36 cr compared to Rs 2 cr in FY06. It even gave 10% as maiden dividend. On the back of higher realizations and better efficiency, it has reported encouraging nos for the first two quarters as well and is expected to end FY08 with sales of Rs 300 cr and PAT of Rs 48 cr i.e. EPS of Rs 6 on equity of Rs 85 cr. As per grapevine, India’s leading corporate entity is eyeing to acquire this company. At the same time promoters i.e. Andhra Sugars have increased their stake by 4% in last one year thru creeping acquisition.
El forge (81.00) manufactures carbon, alloy and stainless steel forged components which are mainly used to manufacture engine parts, transmission parts, steering and suspension parts, break assembly parts, chassis parts, drive line and electrical parts. To move up the value chain, company is gradually shifting its product mix to machined components which have comparatively higher margins than forged products. Hence, it has recently put up a machine shop facility at Chromepet, especially for MICO. Moreover it is also set up a world class manufacturing facility at Sriperambadur near Chennai which has started commercial production recently, thereby enhancing the installed capacity to 23200 MTPA from 18200 MTPA. To fund this expansion company had raised around Rs 15 cr last year thru pref allotment of 12.15 lakh shares @ Rs 120 per share. And today it is available at good 30% discount to allotment price. For future growth company is betting on exports since India is becoming a major source of supply of forgings to the global auto industry. Financially, company has reported decent nos for the H1FY08 and is expected to end FY08 with consolidated sales of Rs 185 cr and profit of Rs 10.50 cr which works out to an EPS of Rs 12 on equity of Rs 8.50 cr. Currently FII’s including Goldman Sach, BSMA etc are holding 18% stake. Keep accumulating at declines.
Jupiter Bioscience (175.00) is poised to become a global peptide solutions group having a broad canvas of peptide chemistry products, peptide reagents, coupling reagents, protective agents and supplier of key ingredients used in peptide based pharmaceuticals. Its operating in a very niche segment and is among the few companies in the world to have competency in synthesis of peptides. Company is on a very strong growth trajectory as it has recently raised 100 cr thru QIP route @ Rs 153 per share. It is setting up a 5500 sq ft manufacturing facility in Maryland, US to cater the USA, Canada and European markets. It is also looking to acquire few companies globally. Importantly, it has entered into a 10-year product purchase agreement with Ranbaxy on peptide pharmaceutical for gloabal market and as per contract allotted 31.77 lakh warrants @ Rs 147. Recently, it cancelled the 27.50 lakh equity shares allotted to promoters and instead issued 40 lakh warrants @ Rs 182 to strategic investors. So another Rs 100 cr funds ready to come into company on conversion of warrants. Moreover it has already invested whopping Rs 85 cr in a subsidiary company – Sven Genetech which was till now busy in setting up of infrastructure etc. For FY08, on a standalone basis, Jupiter Bio is expected to report total revenue of Rs 125 cr and PAT of Rs 30 cr i.e. EPS of nearly Rs 20 on current equity of 15.40 cr. Post all the warrant conversion, the equity will get diluted to Rs 22.50 cr but at the same time company’s topline as well as bottomline will shoot up accordingly. With 33% FII holding, it is trading fairly cheap at a current market cap of less than Rs 300 cr.
Small & Beautiful
Date: 10.01.2008
Shree Ganesh Forgings (91.00): specializes in producing complete line of stainless steel, carbon steel and alloy steel forgings for various industries including automotive. Infact it boasts of making more than 2500 varieties of specialized items on piecemeal production and manufactures different variety of flanges and fittings weighing from 0.5 kg to 1000 kg. Recently company has acquired 100% stake in Hertecant N V Belgium & ELFE France from Outo Kumpu – Sweden which are reportedly doing well. Importantly its project to double the capacity from 11,000 tonnes to 22,800 tonne is almost completed and expected to commence production soon. Two press machines with 2500 tonne and 4000 tonne capacity and 48 computer numerically controlled (CNC) robotic machining lines has been already installed. On a consolidated basis company is estimated to clock a turnover of Rs 225 cr and bottomline of 20 cr thereby posting an EPS of Rs 16 on current equity of Rs 12.50 cr. Scrip has consolidated for long time and is poised to move up sharply post Q3 nos.
Orient Ceramics (64.00): produces wall as well as floor tiles under the brand name “Orient” and offers one of the largest range by way of designs, colors, sizes, choice of surface finishes etc. It also makes special tiles under various collections branded as Artline, Midline, Vivaldi, Novista, Goemetricos & Egyptian Rustic collection which are unique and based on some theme, finish, pattern, cost etc. Besides, company has created a niche for itself thru “Rangoli” - its designer collection which is fusion of tradition with modernity. With the introduction of latest machinery, it has started producing high value glazed and polished vitrified tiles from current fiscal. Further, it has converted all manufacturing lines to fuel saving single fast firing technology. To increase the presence in south, it has opened a regional distribution centre in Bangalore apart from strengthening its dealership network. Fundamentally also company has been successful in maintaining its profit margin despite intense competition. On the back of expanded capacity to 220,000 TPA, it is estimated to clock a turnover of 240 cr and NP of 11.50 cr i.e. EPS of Rs 11 on equity of 10.50 cr. Moreover, a company having a gross block of 157 cr; is available at an enterprise value of merely 125 cr which is extremely cheap by any standards. It’s an indirect bet on infrastructure play.
South India Paper mills (85.00): is having strong presence in packing paper and paper boards apart from manufacturing writing and printing paper. On back of robust demand for packaging grades of paper, company is implementing a brown field expansion with an investment of about 110 cr. It will more than double its paper manufacturing capacity to 105,000 TPA from 55,000 TPA currently. To support the enhanced energy requirements, it will also be augmenting its captive power generation capacity by 3.50 MW. Besides expansion, company is going for forward integration into high quality corrugated boards and intends to have at least one 100% owned facility and possibly one facility under joint venture near Chennai. However, the new paper capacity is expected to be commissioned by December 2008 and corrugated boards’ facility to start by June 2008. Meanwhile, company continues to report decent set of nos and is expected to end FY08 with sales of 125 cr and net profit of 12.50 cr. This translates into EPS of 17 Rs on equity of 7.50 cr. Considering company’s aggressive expansion plan and strong fundamentals, the share price can move up to 120 Rs at a modest discounting by 7x times. A slow but steady performer.
Although share price of Andhra Petrochemicals (32.00): has doubled in the recent rally, still investors can accumulate this scrip at declines for further gains. It is the only producer of Oxo-Alcohols in India with a production capacity of 42,000 MTPA. The market demand for Oxo-Alcohols is currently estimated at 143,000 MTPA, out of which company caters to 30% demand and the balance 70% is met through imports. To secure a greater share of the market and meet the growing demand, company is in undergoing expansion and modernization programme to increase its production capacity to 73,000 MTPA. However, the enhanced capacity is expected to be operational only by Sept 2009. Importantly, company has been able to save a massive Rs 12 cr per annum only on power cost as it has installed and commissioned 2400 KVA uninterrupted power supply system and discontinued the operation of D.G.Sets from last fiscal. For FY07 company made a strong turnaround as sales increased by 35% to Rs 266 cr but NP zoomed up to Rs 36 cr compared to Rs 2 cr in FY06. It even gave 10% as maiden dividend. On the back of higher realizations and better efficiency, it has reported encouraging nos for the first two quarters as well and is expected to end FY08 with sales of Rs 300 cr and PAT of Rs 48 cr i.e. EPS of Rs 6 on equity of Rs 85 cr. As per grapevine, India’s leading corporate entity is eyeing to acquire this company. At the same time promoters i.e. Andhra Sugars have increased their stake by 4% in last one year thru creeping acquisition.
Shree Ganesh Forgings (91.00): specializes in producing complete line of stainless steel, carbon steel and alloy steel forgings for various industries including automotive. Infact it boasts of making more than 2500 varieties of specialized items on piecemeal production and manufactures different variety of flanges and fittings weighing from 0.5 kg to 1000 kg. Recently company has acquired 100% stake in Hertecant N V Belgium & ELFE France from Outo Kumpu – Sweden which are reportedly doing well. Importantly its project to double the capacity from 11,000 tonnes to 22,800 tonne is almost completed and expected to commence production soon. Two press machines with 2500 tonne and 4000 tonne capacity and 48 computer numerically controlled (CNC) robotic machining lines has been already installed. On a consolidated basis company is estimated to clock a turnover of Rs 225 cr and bottomline of 20 cr thereby posting an EPS of Rs 16 on current equity of Rs 12.50 cr. Scrip has consolidated for long time and is poised to move up sharply post Q3 nos.
Orient Ceramics (64.00): produces wall as well as floor tiles under the brand name “Orient” and offers one of the largest range by way of designs, colors, sizes, choice of surface finishes etc. It also makes special tiles under various collections branded as Artline, Midline, Vivaldi, Novista, Goemetricos & Egyptian Rustic collection which are unique and based on some theme, finish, pattern, cost etc. Besides, company has created a niche for itself thru “Rangoli” - its designer collection which is fusion of tradition with modernity. With the introduction of latest machinery, it has started producing high value glazed and polished vitrified tiles from current fiscal. Further, it has converted all manufacturing lines to fuel saving single fast firing technology. To increase the presence in south, it has opened a regional distribution centre in Bangalore apart from strengthening its dealership network. Fundamentally also company has been successful in maintaining its profit margin despite intense competition. On the back of expanded capacity to 220,000 TPA, it is estimated to clock a turnover of 240 cr and NP of 11.50 cr i.e. EPS of Rs 11 on equity of 10.50 cr. Moreover, a company having a gross block of 157 cr; is available at an enterprise value of merely 125 cr which is extremely cheap by any standards. It’s an indirect bet on infrastructure play.
South India Paper mills (85.00): is having strong presence in packing paper and paper boards apart from manufacturing writing and printing paper. On back of robust demand for packaging grades of paper, company is implementing a brown field expansion with an investment of about 110 cr. It will more than double its paper manufacturing capacity to 105,000 TPA from 55,000 TPA currently. To support the enhanced energy requirements, it will also be augmenting its captive power generation capacity by 3.50 MW. Besides expansion, company is going for forward integration into high quality corrugated boards and intends to have at least one 100% owned facility and possibly one facility under joint venture near Chennai. However, the new paper capacity is expected to be commissioned by December 2008 and corrugated boards’ facility to start by June 2008. Meanwhile, company continues to report decent set of nos and is expected to end FY08 with sales of 125 cr and net profit of 12.50 cr. This translates into EPS of 17 Rs on equity of 7.50 cr. Considering company’s aggressive expansion plan and strong fundamentals, the share price can move up to 120 Rs at a modest discounting by 7x times. A slow but steady performer.
Although share price of Andhra Petrochemicals (32.00): has doubled in the recent rally, still investors can accumulate this scrip at declines for further gains. It is the only producer of Oxo-Alcohols in India with a production capacity of 42,000 MTPA. The market demand for Oxo-Alcohols is currently estimated at 143,000 MTPA, out of which company caters to 30% demand and the balance 70% is met through imports. To secure a greater share of the market and meet the growing demand, company is in undergoing expansion and modernization programme to increase its production capacity to 73,000 MTPA. However, the enhanced capacity is expected to be operational only by Sept 2009. Importantly, company has been able to save a massive Rs 12 cr per annum only on power cost as it has installed and commissioned 2400 KVA uninterrupted power supply system and discontinued the operation of D.G.Sets from last fiscal. For FY07 company made a strong turnaround as sales increased by 35% to Rs 266 cr but NP zoomed up to Rs 36 cr compared to Rs 2 cr in FY06. It even gave 10% as maiden dividend. On the back of higher realizations and better efficiency, it has reported encouraging nos for the first two quarters as well and is expected to end FY08 with sales of Rs 300 cr and PAT of Rs 48 cr i.e. EPS of Rs 6 on equity of Rs 85 cr. As per grapevine, India’s leading corporate entity is eyeing to acquire this company. At the same time promoters i.e. Andhra Sugars have increased their stake by 4% in last one year thru creeping acquisition.
Small & Beautiful (Guj)
Date: 07.01.2008
Syncom Formulation (58.00) : is a Mumbai based small pharmaceutical companies offering more than 250 products in various dosage forms including tablets, capsules, dry syrups, ointments/creams, dry powders, injections and ampoules. Being WHO-GMP certified, company's products are exported to more than 15 countries including China, Vietnam, Latin American Countries Kenya, Uganda, Sudan, Russia, Ukraine, Maldova and Domino Republic. It also offers comprehensive contract manufacturing services including pilot plants, technical services, quality control and regulatory services for both domestic as well as foreign companies. Its prestigious expansion cum modernisation project at Pithampur is near completion. Last fiscal, launched a new division "Cratus Life Care" to expand its operations in domestic market and expects this division to become the driver for growth in the coming years. For FY08 it is expected to clock a turnover of Rs 70 cr and net profit of around Rs 4.50 cr i.e. EPS of Rs 8 on equity of Rs 5.92 cr. Hence, this debt free and constant dividend paying company can be bought at current market cap of Rs 35 cr.
D&H Welding Electrodes (42.00) :is one of an established manufacturer of welding consumables inclding submerged arc welding flux and wires, low heat input welding alloys, welding trans and rectifier, manual metal arc electrode etc. Thus it offers a wide range of welding electrodes for diverse applications and has developed various special and ultra-special electrodes to meet the ever increasing and multifarious needs of customers. Last fiscal it successfully commissioned the flux-cored wire project. To maintain its future growth company is planning to expand the existing manufacturing capacity by 2500 MT per annum thru a capex of Rs 3 cr and is putting special thrust on export. Although no extraordinary growth is expected in this company still for FY08 it may do a sale of about Rs 38 cr and net profit of Rs 2.60 cr. This leads to an EPS of Rs 5 on equity of Rs 5.60 cr. Can be bought only at sharp declines.
Led by two technocrats - Jitendra Sura and Tejas Sura, Conart Engineers (45.00): is a small infrastructure company involved in detailed engineering, procurement and construction of industrial, commercial & residential projects. It specializes mainly in civil construction projects for the textile, pharmaceutical, heavy engineering, chemical industries, commercial complexes, effluent treatment systems etc, which involve civil engineering and structural work, sanitation & plumbing, etc. However, company couldn’t capitalize the ongoing boom in infrastructure sector as well as strong industrial growth. For FY07, it reported a flat topline of Rs 19 cr and a decline of 30% in net profit to Rs 0.74 cr. But for H1FY08 things have improved a bit with 30% & 45% growth in topline and bottomline respectively. Still, being a more than three decade old company it has far more potential to perform. Accordingly its is estimated to may end FY08 with revenue of Rs 25 cr and PAT of Rs 1.25 cr i.e. EPS of Rs 4 on small equity of Rs 3 cr. Like Petron Engineering this is also a good takeover candidate and may change hands sooner or later.
Lokesh Machines (142.00): is engaged in the design, development and manufacture of custom built special purpose machines and general purpose CNC (computerized numerical controls) machines along with their components. Presently, it derives 70% revenue from machining division whereas rest 30% comes from auto component division. Company primarily caters to customers in the auto OEM, auto ancillaries and general engineering space with separate dedicated facilities for M&M and Ashok Leyland. Off late, it has also made a foray in the overseas markets and has also got 100 machine order from its technical partner Wenig Wemas-Germany. For the latest Sept qtr, sales grew by 25% to 28 cr and profit increased by 50% to 3.40 cr. To fund its growth plan company came out with an IPO at Rs.140 per share in April 2006 and raised Rs.42 cr. On listing day it hit a high of 300 Rs, whereas currently it’s available at 50% discount to that. For FY08 it is expected to clock a turnover of 110 cr and PAT of 14.50 cr which leads to an EPS of Rs 12 on equity of Rs 11.80 cr. Scrip has the potential to touch Rs 200 in few months.
Syncom Formulation (58.00) : is a Mumbai based small pharmaceutical companies offering more than 250 products in various dosage forms including tablets, capsules, dry syrups, ointments/creams, dry powders, injections and ampoules. Being WHO-GMP certified, company's products are exported to more than 15 countries including China, Vietnam, Latin American Countries Kenya, Uganda, Sudan, Russia, Ukraine, Maldova and Domino Republic. It also offers comprehensive contract manufacturing services including pilot plants, technical services, quality control and regulatory services for both domestic as well as foreign companies. Its prestigious expansion cum modernisation project at Pithampur is near completion. Last fiscal, launched a new division "Cratus Life Care" to expand its operations in domestic market and expects this division to become the driver for growth in the coming years. For FY08 it is expected to clock a turnover of Rs 70 cr and net profit of around Rs 4.50 cr i.e. EPS of Rs 8 on equity of Rs 5.92 cr. Hence, this debt free and constant dividend paying company can be bought at current market cap of Rs 35 cr.
D&H Welding Electrodes (42.00) :is one of an established manufacturer of welding consumables inclding submerged arc welding flux and wires, low heat input welding alloys, welding trans and rectifier, manual metal arc electrode etc. Thus it offers a wide range of welding electrodes for diverse applications and has developed various special and ultra-special electrodes to meet the ever increasing and multifarious needs of customers. Last fiscal it successfully commissioned the flux-cored wire project. To maintain its future growth company is planning to expand the existing manufacturing capacity by 2500 MT per annum thru a capex of Rs 3 cr and is putting special thrust on export. Although no extraordinary growth is expected in this company still for FY08 it may do a sale of about Rs 38 cr and net profit of Rs 2.60 cr. This leads to an EPS of Rs 5 on equity of Rs 5.60 cr. Can be bought only at sharp declines.
Led by two technocrats - Jitendra Sura and Tejas Sura, Conart Engineers (45.00): is a small infrastructure company involved in detailed engineering, procurement and construction of industrial, commercial & residential projects. It specializes mainly in civil construction projects for the textile, pharmaceutical, heavy engineering, chemical industries, commercial complexes, effluent treatment systems etc, which involve civil engineering and structural work, sanitation & plumbing, etc. However, company couldn’t capitalize the ongoing boom in infrastructure sector as well as strong industrial growth. For FY07, it reported a flat topline of Rs 19 cr and a decline of 30% in net profit to Rs 0.74 cr. But for H1FY08 things have improved a bit with 30% & 45% growth in topline and bottomline respectively. Still, being a more than three decade old company it has far more potential to perform. Accordingly its is estimated to may end FY08 with revenue of Rs 25 cr and PAT of Rs 1.25 cr i.e. EPS of Rs 4 on small equity of Rs 3 cr. Like Petron Engineering this is also a good takeover candidate and may change hands sooner or later.
Lokesh Machines (142.00): is engaged in the design, development and manufacture of custom built special purpose machines and general purpose CNC (computerized numerical controls) machines along with their components. Presently, it derives 70% revenue from machining division whereas rest 30% comes from auto component division. Company primarily caters to customers in the auto OEM, auto ancillaries and general engineering space with separate dedicated facilities for M&M and Ashok Leyland. Off late, it has also made a foray in the overseas markets and has also got 100 machine order from its technical partner Wenig Wemas-Germany. For the latest Sept qtr, sales grew by 25% to 28 cr and profit increased by 50% to 3.40 cr. To fund its growth plan company came out with an IPO at Rs.140 per share in April 2006 and raised Rs.42 cr. On listing day it hit a high of 300 Rs, whereas currently it’s available at 50% discount to that. For FY08 it is expected to clock a turnover of 110 cr and PAT of 14.50 cr which leads to an EPS of Rs 12 on equity of Rs 11.80 cr. Scrip has the potential to touch Rs 200 in few months.
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