However, it has to be noted that some more prices hikes are imminent particularly to tackle packaging cost
pressures. As per the Dabur management, it has seen 20% inflation in packing materials which would reflect in 2QFY09 numbers. Marico is planning a yet another round of price increases in Parachute – after its 5% hike in April 2008. The hike in Parachute was 3% last year. Such steep and successive price hikes by companies could slow volumes 2QFY09 onwards. Another fallout of sharp price increases would be down trading by consumers. Currently, we are not seeing any but one needs to monitor 2QFY09 for it.
Empirical evidence shows that inflation had a correlation of 0.5 with the sector's sales growth and a correlation of 0.26 with profit growth between FY92-FY08. However, if one were to split the time horizon between FY92-96 (correlation 0.75), FY97-03 (correlation 0.003), and FY04-FY08 (correlation-0.64). The period between 1990-1996, represented an inflationary scenario where inflation averaged between 8-14%. In this scenario, sales growth for the sector averaged 20-22% owing to penetration gains and price hikes. In 1997-2003, sector sales (averaged at 15.9%) were not driven by penetration gains and were more a function of income. The inflation in this period averaged around 5%. In this period, there were major promotions and price wars which depressed topline growth. However, the correlation had turned negative between FY04-08 and sector sales picked up from 5-15% led by volume growth on the back of a strong economy. The inflation in this period averaged 4-5%. It is only in the last six months that significant price hikes have been affected – implying that correlation may improve.
We believe moderately higher inflation is good for the sector as seen in 2004-2007. But the current level of inflation is likely to but brakes on strong volume growth (despite correlation between sector sales and inflation being negative in the recent past). The earnings growth could slowdown due to margin pressure particularly due high raw materials prices. Further, most companies are already availing excise benefits and therefore no further cushion is available.
Market Technicals for the week ending 08th Aug
Indian Markets Technicals
Both Nifty & Sensex has become a bit strong at these levels. The trend for fresh buying positions will continue if the markets continue to trade beyond 4331 & 14355. There are chances that Nifty may move 182 - 183 points up & Sensex may move 653 - 654 points up. There are chances of a weekly movement of around 525 points & 1910 points in Nifty & Sensex respectively.
If the markets sustain above 4504 & 14983 levels, then they will try to touch 4595 & 15310 levels.
On the other hand, market has a weak support at 4240 & 14028 because the markets may further fall down to 4068 & 13400 levels from this point due to panic selling & profit booking which can act as a strong support.
US Markets Technicals
Both Nasdaq & Dow has become a bit weak at these levels. The trend for fresh buying positions will continue if the markets continue to trade beyond 2307 & 11346. There are chances that Nasdaq may move 91 - 92 points up & Dow may move 481 - 482 points up. There are chances of a weekly movement of around 185 points & 920 points in Nasdaq & Dow respectively.
If the markets sustain above 2356 & 11566 levels, then they will try to touch 2402 & 11807 levels.
On the other hand, market has a weak support at 2261 & 11105 because the markets may further fall down to 2212 & 10884 levels from this point due to panic selling & profit booking which can act as a strong support.
Intraday Market Technicals for 04th August
Both Nifty & Sensex has become very strong at these levels. The trend for fresh buying positions will continue if the markets continue to trade beyond 4357 & 14457. There are chances that Nifty & Sensex may open 29 - 30 points down & 116 - 117 points down. There are chances of an intraday movement of around 240 points & 845 points in Nifty & Sensex respectively.
If the markets sustain above 4479 & 14881 levels, then they will try to touch 4544 & 15106 levels.
On the other hand, market has a weak support at 4291 & 14232 because the markets may further fall down to 4170 & 13807 levels from this point due to panic selling & profit booking which can act as a strong support.
Derivatives Calls
Futures
Buy Nifty Aug' 08 Futures above 4442.00 levels with a target of 4530.00 & with a stoploss/ average below 4398.00.
Buy Crompton Greaves Aug' 08 Futures above 254.00 levels with a target of 271.00 & with a stoploss/ average below 245.00.
Options
Buy Nifty 4500.00 CE Aug' 08 with a target of 190.00 & with a strict stoploss below 100.00.
Buy Polaris 110.00 CA Aug' 08 with a target of 7.50 & with a strict stoploss below 2.50.
Long Term Delivery Calls
We strongly recommend a buy on Astral Poly Technik at current levels with a long-term target of 318.00.
We strongly recommend a buy on Satyam Computers at current levels with a long-term target of 639.00.
Medium Term Delivery Calls
Buy Syndicate Bank if it sustains above 56.25 levels with a medium-term target of 62.00 & with a stoploss/ average below 53.00.
Short Term Delivery Calls
Buy Omaxe if it sustains above 127.00 levels with a short-term target of 149.00 & with a stoploss/ average below 116.00.
Buy Ahmednanagr Forgings if it sustains above 106.00 levels with a short-term target of 125.00 & with a stoploss/ average below 96.00.
Dated: August 4, 2008
CUMMINS (284)
India’s leading manufacturer of diesel engines and value packages serving the Power Generation, Industrial and Automotive Markets. It also caters to the growing market for gas and dual fuel engines.
Buy for a 1st target of 310 and 2nd target of 345 with a stop loss of 272
Time Tenor: 1 Month
Risk Reward Ratio = 1:2.16 and 1:5.08
Probable Profit % -- T1 = 9% and T2 = 21%
Loss Probable Loss % -- 4%
BUY CORPORATION BANK
Recommendation: Buy
CMP = Rs 253 (at the time of this recommendation)
Price target: Currently reviewing…
Key points:
- Corporation Bank reported a PAT of Rs 184.3 crore, indicating a growth of 4.1% yoy. The net interest income was Rs 378.0 crore, up by 7.2% yoy despite a healthy growth in the advances (28.3% yoy). The non-interest income provided some relief with a 32.7% growth yoy.
- The operating expenses were Rs 214.6 crore during the quarter. The expenses were contained primarily due to a 13.0% decline in staff expenses, while other operating expenses grew by 12.4% yoy. In line with the robust growth in the non-interest income and the contained growth in the expenses, the pre-provisioning profit registered a healthy growth of 16.5% yoy.
- Notably, the provisions witnessed a huge 400% jump and stood at Rs 100.8 crore – mainly because of a significant (Rs 248 crore—net of tax) marked to market loss on the bank’s investment book. The asset quality of the bank remained healthy with an improvement on absolute and relative basis. The gross non-performing assets stood at 1.46% (down 61 basis points yoy), while the net non-performing assets were down by 10 basis points to 0.36%.
- The capital adequacy ratio was healthy at 12.43% as at the end of June 2008, compared with 13.3% a year ago. The growth in advances was healthy at 28% yoy, while the deposits registered a growth of almost 26% yoy. The healthy business growth implies that the bank is again focusing on building the advances book after a muted performance in Q4FY2008, when the bank was focusing on rebalancing its advances book.
- At the current market price of Rs 253, this stock is trading at 4.5x EPS for 2009E earnings per share.
- I am currently reviewing the stock’s valuation and would report it shortly on this portal.
STOCK WATCH
By Saarthi
Once again
Micro Technologies (
has announced excellent results for Q1FY09. Total
revenue as well as net profit shot up by 65% to Rs.58 cr. and Rs.17.50 cr. respectively recording an EPS of Rs.16 in this
single quarter itself. For FY08, it had recorded an EPS of Rs.48 with net profit of Rs.53 cr. on its total revenue of Rs.171 cr.
The company is a global provider of security, safety and life-support solutions with the first of its kind and innova tive
products for security of home, office, shop, vehicle, laptop, mobile etc. It also has a business agreement with MTNL as
well as Airtel to offer Lost
called ‘Buddy Tracking System’ to know the real time location of users. Given the current share market condition, the
company has again reduced the FCCB conversion price by 18% from Rs.304 to Rs.250. Although this indicates tha t both
bondholders and the company are interested in conversion, not redemption, this will lead to further equity dilution by 45
lakh shares. For FY09, it is expected to report a topline of Rs.250 cr. with bottomline of Rs.70 cr. i.e. an EPS of Rs.54 on its
fully diluted equity of Rs.13 cr. Even at modest discounting by 8 times, the share price has the potential to hit a new high
of above Rs.400 in 12-15 months.
******
Recently,
Ramsarup Industries Ltd. (Code: 532690) (Rs.122)
has come out with decent Q1FY09 results while sales grew
by 10% to Rs.383 cr., net profit increased by 25% to Rs.15.80 cr. on the back of better operating margins. The company
manufactures a variety of steel wires (mainly used by the power industry) and TMT Bars. To cater to the rising demand,
the company is expanding its total wire manufacturing capacities from 233,000 tonnes to 600,000 tonnes including the
production of Low Relaxation Pre-stressed Concrete (LRPC) wires over the next two years. It has acquired 60 acres of
land in West Bengal and the major plant and machinery are being imported from
raw material supplies, the company took over Balasore Minerals Co., which has iron ore, limestone and dolomite mines
located in neighbouring Orissa. But importantly, the company is merging its group company called ‘Ramsarup Loha
Udyog’, which is emerging as an integrated steel producer with captive production of sponge iron, pig iron, billets, power
etc. As no official figures are available for the group company, on a standalone basis the company is expected to clock a
turnover of Rs.1750 cr. with PAT of Rs.65 cr. for FY09. This translates into an EPS of Rs.37 on its current equity of Rs.17.50
cr. Post merger, its equity is expected to get diluted to about Rs.35 cr.
******
Gujarat Apollo Industries Ltd. (Code: 522217) (Rs.182)
is into manufacturing and after sales service of road building
equipments like asphalt plants, pavers finishers, wet mix plants, bitumen sprayers, compaction equipment, road making
machineries, crushing & screening machines etc. It controls more than 60% of the market in the product segments in
which it operates. With over 1,400 customers and about 3,500 equipments. To consolidate its position, it has been
investing in associate companies and has already made Apollo Earthmovers and Apollo Industrial Products Ltd. as its
subsidiaries. Another group company called Apollo Construction Equipments Ltd. is expected to come under its fold this
fiscal. For Q1FY09, it registered a net profit of Rs.7.15 cr. on consolidated sales of Rs.61 cr. Accordingly for full FY09, it
may post an sales of Rs.280 cr. with PAT of Rs.33 cr., which works out to an EPS of Rs.30 on its diluted equity of Rs.11.05
cr. The share has the potential to move up to Rs.240 in the short-term once the sentiment improves. Accumulate at every
decline.
******
For Q1FY09,
Lokesh Machines Ltd. (Code: 532740) (Rs.56)
reported almost flat numbers with net profit of Rs.3.10 cr. on
sales of Rs.20.50 cr. and declared a dividend of 25%, which gives a yield of nearly 5% on CMP. Importantly, it reported a
higher operating margin of 37%, which indicates that the company may be able to maintain its profit going forward. The
company 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. It derives 70% revenue from the
machining division while the rest 30% comes from its auto components division. It primarily caters to customers in the
auto OEM, auto ancillaries and general engineering space and supplies to Tata Motors, Bajaj Auto, Force Motors,
Cummins, Bharat Forge, Kirloskar Oil Engines, Everest Kanto Cylinders etc. and with separate dedicated facilities for
M&M and Ashok Leyland. Although it concentrates mainly on the domestic market, it has lately also forayed into
overseas markets with good orders. On a conservative basis, it can report sales of Rs.110 and PAT of Rs.11 cr. i.e. an EPS
of Rs.9 on its equity of Rs.11.80 cr. for FY09. At a reasonable discounting by 8 times, the share price may shoot up to Rs.75
within a year.
FIFTY FIFTY
By Kukku
Investment Call
* Andhra Sugars Ltd. (ASL) (Rs.106)
was established on 11 August 1947. It ma nufactures and sells Sugar and Organic &
Inorganic Chemicals manufactured at its plants located at Tanuku, Kovvur, Taduvai, Saggonda and Bhimadole in Andhra
Pradesh. Non-conventional wind energy is generated at Ramagiri in Andhra Pradesh and at Veeranam in Tirnulvelli
District of Tamil Nadu. Of these, Sugar and Caustic Soda are the major product segments.
Sugar is manufactured at a 5000 TCD capacity plant at Sugar Unit-I at Tanuku, a 2500 TCD capacity plant at Sugar Unit-II
at Taduvai and a 1600 TCD capacity plant at Sugar Unit-III at Bhimadole.
Molasses, which is a by-product of Sugar manufacturing, is the raw material for ASL’s Alcohol plant at Tanuku, which
produces Industrial Alcohol and Ethanol. The distillery adopts the continuous process for producing Industrial Alcohol,
which is the raw material for ethanol and other organic chemicals manufactured at its chemical complex at Tanuku.
Bagasse, which is the cane residue at the suga r plants after extraction of juice, is used to fuel the co-generation of power.
Carbon dioxide, which is a by-product of fermentation at the distillery is purified and used as a raw material to produce
Salicylic Acid that is needed to manufacture Aspirin.
The company has one of the most cost efficient Caustic Soda plants in the country and uses the latest membra ne cell
technology. The manufacturing cost of ASL is among the lowest in the Chlor-Alkali industry. As the company operates
two Ca ustic Soda units where electricity is the raw material along with salt, it is necessary to have access cheap power.
Hence the company operates a wind power unit at Ramagiri and a co-generation power plant at Taduvai.
It also has a subsidiary, JOCIL Ltd. at Dokiparru 15 kms. from
Glycerine (1,800 TPA), Soaps (25,000 TPA). This company has also commissioned a 6 MW Bio-mass based co-generation
facility. ASL has consistent dividend track record and declared 60% for FY05. ASL holds 55.02% of its equity capital with
an investment of Rs.4.41 cr.
For FY08, ASL’s net profit declined 33.97% to Rs.42.36 cr. against Rs.64.15 cr. during FY07. Sales declined 19.24% to
Rs.46 5.30 cr. in FY08 as against Rs.576 .12 cr. in FY07. The income of Rs.20.55 cr. is an extraordinary item on account of the
write back provision for diminution in the value of investment made in Andhra Petrochemicals Ltd. provided in FY02.
ASL has an equity of Rs.27.11 cr. and has declared a dividend of 50% for FY08.
The stock is recommended for buying in view of the better outlook for both caustic soda & sugar sectors.
Recently, it reported very encouraging results for Q1FY09
with sales moving up to Rs.127 cr. from Rs.95 cr. while net
profit jumped to Rs.12.2 cr. from Rs.0.34 cr. The company has
earned mainly profit from its chemical unit. With the benefit
of better prices in coming quarters, ASL is expected to report a
sharp rise in profit over the next two years. Its consolidated
results shall be still better.
The company is liberal in dividend distribution and the
current stock price is cum dividend while its book value is
Rs.110, which may not allow the stock to go down much.
ASL’s current ma rket cap is just Rs.266 cr. while its subsidiary,
JOCIL had market value of Rs.25 cr. in 1998 while the current
value will be much higher. ASL’s investment of Rs.28 cr. in
Andhra Petrochemcials is worth Rs.49 cr. today.
Investors can safely accumulate this stock for 75-100% growth
over the next one year.
Market Guidance
* Rishi Laser (Rs.71)
has proposed a resolution for
Transfer of Dodballapur (
a separate company, which will be its subsidiary. This
subsidiary will manufacture components under a MoU with
L&T Komatsu Ltd. and L&T Capital Company Ltd. will hold
26% shares in the said subsidiary.
This is a positive development for the company. Its order
position is also said to be strong and we may see a sharp
improvement in sales & profits over next few years. Investors
can accumulate this stock on dips for good long term growth.
*
Net profit of
TIL (Rs.368)
shot up by 45% to Rs.5.72 cr. in
Click here to view full image
Q1FY09 as against Rs.3.95 cr. in Q1FY08. Sales rose 41.95 % to
Rs.185.59 cr. in Q1FY09 as against Rs.130.74 cr. during Q1FY08. Though the results are encouraging but manpower cost
has flared up by 60% in this quarter while the purchase of traded items shot by almost 100% in this quarter. Investors can
continue to hold this stock.
*
We had alerted that
Piramal Glass (Rs.167)
had very high debts. The company has reported a loss of around Rs.13 cr.
for Q1FY09 due to high interest cost of Rs.25 cr.
* Jetking (Rs.313)
has added several new centres in Tier II and Tier III cities like
Guwahati. The company has also planned a foothold in the East & South, which will yield better results over next few
years. Investors can accumulate this stock on dips for good long-term growth.
* Ashiana Housing’s (Rs.62)
Q1FY09 results are encouraging as net profit has shot up from Rs.3.8 cr. to Rs.5.5 cr. while
sales went up from Rs.15.5 cr. to Rs.20.3 cr. Long-term investors can take benefit of this sharp fall to accumulate this stock
as its projects are in II or III Tier cities for the middle income group.
* DIC
net profit rose 76% to Rs.4.59 cr. in Q1FY09 as against Rs.2.61 cr. during Q1FY08. Sales rose 18.27%
to Rs.117.62 cr. in Q1FY09 as against Rs.99.45 cr. during Q1FY08. Its quarterly standalone EPS is around Rs.5. The
company ha s not decla red consolidated results for the first two quarters. If the current performance is any indication, then
full year consolidated EPS may be above Rs.25. Investors can accumulate this stock on dips as a safe investment for good
long-term growth.
*
Results of
Impex Ferro Tech (Rs.32)
are very encouraging as net profit shot up from just Rs.87 lakh in Q1FY08 to Rs.7.06
cr. for Q1FY09 on 42% higher sales. Full year EPS is likely to be around Rs.12/13 subject to firm product prices. Stay
invested for a target price of Rs.50.
*
Net profit of
Excel Industries (Rs.64)
shot up to Rs.5.33 cr. in Q1FY09 as against Rs.0.94 cr. in Q1FY08. Sales rose 35% to
Rs.70.41 cr. in Q1FY09 from Rs.52.33 cr. in Q1FY08. Investors can hold on to the stock for a target price of Rs.80 over the
next few months.
*
As mentioned earlier, Tata Motors, Maruti and Mahindra & Mahindra have taken a hit in profit margins. We may see a
further fall in margins in the current quarter also.
Tata Motors
(Rs.399)
recorded Rs.316 cr. as other income in Q1FY09
without which it’s net profit would have been lower.
* BEML (Rs.702)
reported net loss of Rs.17.43 cr. in Q1FY09. The company is not able to pass on the increase in input
costs.
* First Leasing (Rs.44)
of cum dividend 22.5% is under accumulation by knowledgeable investors. Its book value is Rs.80,
FY08 EPS was Rs.13.6 and its 52-week high/low was Rs.102/38. Its 3-year low is Rs.35.5.
* Kesar Enterprises (Rs.71)
has reported highly encouraging results with net profit in Q4 flaring up to Rs.7.03 cr. against
loss of Rs.12.93 cr. during the previous corresponding period. The outlook of the company is encouraging. Accumulate on
dips. The stock has shot up from Rs.55 to Rs.71 in the last one week.
* Sakthi Sugar (Rs.100)
reported encouraging results and the stock shot up from Rs.66 to Rs.100 level in less than 10 days.
The stock was recommended in this column from time to time.
* Wall Street Finance (Rs.65)
- Good developments are said to be taking place. Investors can stay invested for a target
price of Rs.100.
* Elecon Engineering (Rs.89)
– There are indications from a recent conference call that margins of the company shall be
maintained in the current year. Investors can keep a watch to add this stock on dips.
Note:
There is lot of value buying in fundamentally strong stocks as many such stocks are available at their 2/3 years’
low. Moreover, the reaction in crude prices has supported the upmove as discussed in the last few issues.
Investors can accumulate the stocks discussed above on every dip keeping a watch on crude oil prices. Investors must
note that high crude prices and high interest rates will not stay for long.
Sugar & caustic soda stocks were discussed in this column from time to time. Most of these companies have come out
with encouraging results and these stocks flared up by 20-40% in the last few days. Stay invested in this sector for good
long-term growth.
EXPERT EYE
By V. H. Dave
Incorporated in 1976 and promoted by Ashok Jaipuria,
Cosmo Films Ltd. (CFL) (Code: 508814) (Rs.95.95)
is a market
leader in manufacturing & exporting of BOPP (Bi-axially Oriented Polypropylene) Films. CFL exports its products to 50
countries and has its own captive power plant of 8 MW capacity, which ensures good quality uninterrupted power
supply for its production at an economical cost.
CFL’s plans of more than doubling its capacities are on track. Its first line of approx 40, 000 MT/year capacity is expected
to start production by FY09 at an investment of Rs.120 cr. It further plans to increase capacities from 56,000 MT to 1,36,000
MT of BOPP Films and 24,000 MT to 33,500 MT value add film to by fiscal 2010 making it one of the largest players in this
segment. The capacity of its high margin products like thermal metallized films is also being enhanced from 3,000 TPA to
6,600 TPA by 2009.
Being non-toxic and totally recyclable, this wonder thermoplastic material is also preferred for its superior moisture
retention, strength, flexibility and better optical properties that provide higher visual aesthetics.
CFL is one of the lowest cost producers of BOPP Films in the world. It produces a wide variety of BOPP Films such as
transparent, pigmented, pearlised, antifog, speciality, holography, pressure sensitive, synthetic paper films etc.
Apart from the FMCG sector being the major consumer, BOPP Films also find application in various other industries like
textile, food processing, stationery, cigarette over wraps, cosmetics, toiletries, label films, self adhesive tapes,
holography/lamination etc. Its main clients in the FMCG sector are Parle, Britannia,
Dabur, which use tetrapacks and BOPP Films for packing their products.
Due to the small market size and demand-supply mismatch, the company presently exports 60% of its production. In fact,
CFL is the largest BOPP Films exporter from India supplying to over 60 countries across USA, Europe,
other parts of
To fund its ongoing expansion, the company has allotted 31 lakh warrants to the promoter group to be converted into
equity at Rs.107 per share.
Despite the industry encountering an overcapacity scenario in the domestic and global markets, CFL has been working at
100% capacity utilisation together with regular expansions.
Because of organised retailing, increasing mall culture and higher spending capacity, the FMCG and food processing
industries is witnessing phenomenal growth and the domestic BOPP Films market growing at 15-20% p.a. However,
rising crude oil prices may affect its margins in future.
To maintain and grow its bottomline, CFL is focusing on value added growth compared to volume growth by selling
more value-added specialty products like multi-layer barrier laminates and thermal lamination films on paper based
products as their margins are better.
On the other hand, it is targeting high-end profitable markets to improve its realisation and has accordingly set up a
wholly-owned subsidiary in
effective and innovative packaging solutions to its customers.
The company's profitability got a boost after repayment of long-term debts of Rs.30 cr. reducing its interest liability in
FY08 to Rs.12.8 cr. from Rs.15.2 cr. in FY07. Repayment of forex loans borrowed for earlier expansions also led to gains of
Rs.5.2 cr., which was not considered in the calculation of net profit.
During Q4FY08, CFL’s net profit advanced by 53% to Rs.14.8 cr. on 5% higher sales of Rs.144 cr. During FY08, while, its
net sales grew by around 9% the net profit advanced by 64% to Rs.40.8 cr. yielding an EPS of Rs.21. A dividend of 50%
was paid. During Q1FY09, net profit advanced by 59% to Rs.14.5 cr. on 33% higher sales of Rs.186 cr. Q1EPS stands at
Rs.7.5.
Its equity capital is Rs.19.4 cr. and with reserves of Rs.161.4 cr., the book value of the share works out to Rs.93. The
promoters hold 44% in the equity capital, Foreign holding is 21%, Institutions/mutual funds hold 2%, corporate holding
of 8.5%, which leaves 24.5% with the investing public.
Although CFL has major presence in overseas markets, it does not face anti-dumping duties, since its sales are still well
below benchmark volumes. Over the next two years, it plans to decouple itself from the commodity cycle downturn in
BOPP Films by actively getting into thermal films.
The company’s leadership position, integrity of its
management, massive addition to the gross block of
(now over Rs.450 cr.), expansion and demand of its
products all give good visibility to revenue &
profitability in the current year.
During FY09, CFL is likely to register sales of Rs.675
cr. and post a net profit of Rs.50.5 cr., which would
give an EPS of Rs.26.
At CMP of Rs.96, the share is trading at a P/E of 3.4
on an estimated EPS of Rs.26 for FY09. The share is
recommended with a target price of Rs.115 in the
medium-to-short-term. The 52-week high/low of its
share has been Rs.166/80.
******
The shares of
Hyderabad Industries Ltd. (HIL)
(Code: 509675)
(
Rs.168.70)
are recommended for
steady appreciation in the long-term. The share has
come off its 52-week high of Rs.337 and currently
Click here to view full image
trades at a forward P/E of 4.8 on its estimated EPS
of Rs.35 for FY09. The counter has been buzzing with a lot of interest from knowledgeable quarters on excellent Q1FY09
results.
HIL, a C K Birla Group company was incorporated as
November 1985. It is into the business of producing building products, engineering goods and industrial products and
came out with its first public issue in 1946. A group company,
April 2005.
HIL markets its product, asbestos cement (AC) sheets, under the well-known brand ‘Charminar’. It is also the largest
manufacturer of calcium silicate, insulation blocks, pipe sections and jointing for gasketing thereby meeting the critical
needs of the fertilizer, engineering and chemical industries. It also manufactures aerocon prefab panels, which find
application in the construction of residential quarters, malls, shopping complexes etc. These products are also used in
various corporate offices for office partitioning.
It’s new Fibre Cement Sheet Plant of 1, 20, 000 TPA was set up at a cost of Rs.30 cr. at Sathariya Industrial Development
Area, Jaunpur (U.P) and commenced commercial production from 3rd July 2006. This is among the most modern plants
in the country with state-of-the-art process automation and pollution control equipment. With this addition, HIL’s
production capacity has risen to about 7 lakh TPA. Efforts to enhance production and productivity at the existing plants
are also continuing.
During Q1FY09, its net profit shot up by 54% to Rs.17.1 cr. on 21% higher sales of Rs.176 cr. and the EPS works out to
Rs.22.9. During FY08, HIL earned 14% lower net profit of Rs.14 cr. on 11% increased sales of Rs.483 cr. Its EPS was Rs.18.6
and dividend of 50% was paid.
HIL has a tiny equity capital of just Rs.7.5 cr. and with reserves of Rs.139 cr., the book value of the share works out to
Rs.195 making it a bonus candidate.
The promoters hold 43% in its equity capital, FIIs hold 2.5%, FIs/Mutual funds holds 8.1%, Andhra Pradesh government
holds 4.1%, non-corporate promoters hold 8.4% leaving 33.9% with the public.
HIL has acquired 20 acres of land at Balasore in Orissa and set up a sheeting plant with an initial capacity of 1,25,000 TPA.
It is also in the process setting up an Autoclaved Aerated Concrete Blocks plant in the western region. Substantial
progress has taken place in this project and commercial production is likely to start this fiscal. Coming to its future
prospects, the government's focus on rural development is likely to heighten activity in the rural housing sector, which
will lead to higher demand for asbestos-based roofing sheets in the medium-term.
Asbestos sheets are a cheaper alternative to galvanized steel
sheets. As rising steel prices have made galvanized steel sheets
more expensive, with rising income and improved standard of
living in rural areas, the demand for asbestos sheets is expected
to grow by 15% over the next 2/3 years.
Outlook for prefab structures appear extremely bright as they
are built with aerocon panels are an ideal alternative to
conventional brick-based structures for their durability and
lightweight. The demand for these products remains strong
thanks to the buoyancy in both the construction industry and
the economy.
With strong earnings and financials and improved industry
prospects, HIL is in a strong position to reward shareholders
with free shares. The last bonus was in 1989 in 1:1 ratio. As the
book value of the share is likely to cross the Rs.230 mark in
FY09, HIL may consider liberal bonus in the current year.
Considering the bright prospects of the cement products
industry, the company’s future expansion, its leadership
position in the industry, strong financials coupled with bonus
expectations, the shares of HIL can be considered for long-term
gains.
For FY09, sales are expected to advance by 35% to Rs.650 cr. and
net profit would rise to Rs.26.5, which would give an EPS of
Rs.35.
At the CMP of Rs.169, the share is trading at a P/E of 4.8 on its
estimated EPS of Rs.35 for FY09. Investment in this share is
likely to fetch a decent apprecia tion of about 50% in 6-9 months.
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The 52-week high/low of the share has been Rs.337/123.
******
The share of
Manugraph India Ltd. (MIL) (Code: 505324) (Rs.90.25)
is
recommended for decent appreciation in the
medium-to-long-term gain. The leader in the manufacture of web offsets and sheet fed offset presses; MIL has recently
produced good Q1FY09 numbers and may even consider a liberal bonus in the current year.
Established in 1972 by Mr. S. M. Shah, MIL is
the years, it has emerged as a thriving, nimble, printing machinery enterprise due to its ability to transform itself rapidly
to meet the challenges of a highly competitive global economy and its commitment to become a supplier of choice
delighting customers with its services and products. Constant modernisation and introduction of state-of-the-art
technology has enabled it to stay ahead in the industry and surpass all expectations.
In the web offset segment, its domestic customers include The Times Of
Chitralekha, Malayala Manorama, Hind Samachar,
category, MIL's clientele consists of Magna Graphics Pvt Ltd, PS Press, S T Reddier & Sons, Herneggar Offset Druck
(
During FY08, MIL registered 133% higher net profit of Rs.62 cr. on 15% higher sales of Rs.423 cr. yielding an EPS of
Rs.20.4 and it paid a dividend of 200%. During Q1FY09, sales have advanced by 38% to Rs.133 cr. and net profit by 30% to
Rs.16.7 cr. This Q1FY09 profit has come after incurring a foreign currency loss of Rs.4.2 cr. against foreign loans.
In its relentless efforts to meet the needs and demands of its customers, MIL has made rapid progress in the international
market. Leading publishers from South America, Europe, Middle East,
MIL’s presses. Its exports during FY08 stood at nearly Rs.140 cr. mainly on account of acquisitions in the
Seeing the opportunity in the American market, MIL has purchased Dauphin Graphics Machines Inc. in
Pennsylvania, at a cost of about Rs.88 cr. and renamed it as Manugraph DGM Inc. (MDGM). The company is No. 1 in the
US market in the four page segment complementing MIL’s product range.
The promoters hold 57% in its equity capital. Foreign holding is 7.4%. Mutual fund/institutions hold 14.6%, non-
corporate promoters hold 1.5% leaving 19.5% with the investing public.
In
market share, its presses are present in nearly all-major publication houses. With presses having speeds ranging from
35,000 – 55,000 copies per hour, it can meet their production needs efficiently. Its technical expertise and thrust towards
quality improvement are its principal strengths and owes its leadership position in printing presses to its technical
competence.
The printing industry in
fastest growing industries in
investment of over Rs.8,000 cr. This industry provides direct employment to over 6,00,000 people and indirect
employment to another 2,00,000. It is obvious that with the growth in literacy in
demand for various inputs in the printing industry. Also due to the printing revolution globally, the prospects for the
printing industry appear bright.
In the current fiscal, the demand for 4-page single width single circumference market, which constitutes 90% of MIL’s
business, continues to remain good. The thrust on the export fronts has also resulted in creating new markets in
Netherlands and Indonesia and expansion of business in the existing markets of CIS countries, Middle East and Latin
regional and English dailies, which continue to bring in this 4-page market.
The explosive growth in the newspaper business over the past couple of years has led to a substantial scaling up of
revenues and earnings for MIL. As the English and vernacular language papers are in the process of expanding their
footprint, the demand for the company's products are likely to remain robust.
The process of synergising its energies is in progress and the benefits thereof are visible. Endeavours to outsource
component parts from
Based on the current going, MIL is all set to
register an EPS of Rs.26 on the face value of
Live market intra-day calls
Rs.2 per share. On its tiny equity of just Rs.6
A running commentary of intra-day trading recommendations on
cr., MIL’s reserves are expected to cross
your mobile or Yahoo Messenger every trading day of the month
Rs.285 cr., which may prompt the
for Rs.3,000 per month.
management to declare handsome bonus
For 1-day free trial call Money Times to register. Provide your
apart from a hefty dividend.
mobile number or
Currently, the shares of MIL are traded at
Email: moneytimes@vsnl.com
Rs.90 at a P/E multiple of 3.4 on its estimated
EPS of Rs.26 for FY09. Applying a reasonable
P/E of 6, the share has all the potential to breach the Rs.150-mark in six-to-nine months yielding an absolute appreciation
of over 65%. The 52-week high/low of the share has been Rs.204/64.
TECHNO FUNDA
By Nayan Patel
Panama Petrochem Ltd.
BSE Code: 524820
Last Close: Rs.127.55
Panama Petrochem Ltd. is a leading manufacturer and exporter of petroleum speciality products. Its products are in great
demand by various industries like Inks & Resins, Textiles, Rubber, Pharmaceuticals, Cosmetics, Power Cables and other
industrial applications. The company has consistently provided quality services since 1975. It has four manufacturing
units at Ankleshwar (Gujarat), Daman (
technology, relevant infrastructure and storage capacities.
It has a low equity of just Rs.4.76 cr., supported by hefty reserves of above Rs.50 cr. The promoter hold 38.69% stake,
foreign investors hold 3.51%, corporate bodies hold 17.31% and the investing public holds 40.20%.
The company has posted extraordinary results for the Q1FY09. Net sales jumped 98% to Rs.98 cr., while net profit jumped
82% to Rs.7.03 cr. against Rs.3.85 cr. in Q1FY08 and posted a quarterly EPS of Rs.14.76 and the company has announced
40% dividend. The stock is available at just Rs.127 cum dividend and is traded at a P/E ratio of just 2.9.
It is very good stock for short to long term investment. Buy with stop loss of Rs.115. On the upper side, the stock will go
up to Rs.141 level in the short-term and can go up to Rs.175 in the long-term. If we apply a P/E of even 5, then also the
stock can easily go up to Rs.225 level.
MONEY FOLIO
Austral Coke & Projects IPO opens on 7
August
th
Austral Coke & Projects Ltd. (ACPL), engaged in manufacture of Low Ash Metallurgical Coke (LAM Coke) and
equipment rental, refractory and textile trading, proposes an IPO of 72,60,000 equity shares of Rs.10 each through 100%
book building process in price band of Rs.164 to Rs.196 per share. The issue opens on 7 August and closes on 13 August
2008 and will be listed on the BSE and the NSE. CARE Ltd. has assigned ‘IPO Grade 2’ to the issue signifying below
average fundamentals.
The object of issue is to part finance its expansion plan involving setting up a 1,50,000 TPA of LAM Coke and setting up a
8 MW captive power plant (CPP) through waste heat recovery. The project is coming up at Sindhudurga in
ACPL is setting up in-house refractory unit so as to improve the quality of operations. The company may also utilise
residual funds raised for acquiring coal mines either in
quality coal on regular basis is critical for running its operations successfully. It has successfully placed 27,40,000 equity
shares to
Jyothy Laboratories launches Fabric Spa
Jyothy Laboratories, among the fastest growing consumer goods company has ventured into a new business ‘Fabric Spa’,
a complete rejuvenating solutions for garments under its subsidiary Jyothy Fabricare Services Ltd. (JFSL) wherein it aims
to provide World Class Laundry at affordable price at your doorstep.
The new initiative is a one stop solution to pamper and rejuvenate garments at affordable prices. The services at the Spa
range from basic solutions like: Wet
will broadly target three segments – Super Premium, Premium and Economy. The initial cost for this new venture is
around Rs.40 cr.
To begin with, the venture would comprise of one main service station (MSS), five quick service station (QSS) and 50
collection and delivery stations (CDC). The MSS will have capacity to service 30,000 garments a day or 10 tonnes.
ING Investment Management launches first Global Commodity Equity Fund
ING Investment Management India has launched the ING Optimix Global Commodities Fund, an open ended Fund of
Funds (FoF) Scheme for long-term growth by investing in global commodity mutual funds, which invest in commodity
related securities. The scheme opened on 29 July and will close on 25 August 2008.
ING’s Multi-Manager investment solution, ING OptiMix, seeks to create a portfolio of funds that offers a risk-adjusted
solution that is optimal for investors. The multi-manager investment process involves strategic and tactical asset
allocation, underlying manager selection and allocation, and ongoing monitoring and review of each of the underlying
managers. The Multi Manager FoF concept helps to reduce risk by diversification of investment styles and processes used
by various underlying managers.
Commodities are expected to continue to be driven by a strong fundamental demand from emerging economies due to
ongoing urbanization, infrastructure development and improved consumption habits of growing middle class
population.
Mastek launches new corporate brand identity with 'Prism logo'
Mastek Ltd., a leading IT solutions player with global operations in providing new technology and IP-led enterprise
solutions to insurance, government and financial service organizations worldwide, has launched its new brand identity
through the Mastek Prism Logo.
Its new brand identity symbolises a high-end speciality in building IT applications that enable and empower customers in
their business innovation and transformation initiatives.
Rolta Announces acquires WhittmanHart Consulting, USA
Rolta India Ltd., a leading IT company, has signed an agreement to acquire WhittmanHart Consulting (WHC) , the
Consulting Division of WhittmanHart Inc., a premier Chicago based company providing value driven solutions in digital
communications, process improvement, and enabling technologies for over 20 years.
WHC is a management and technology consulting services firm that delivers solutions with a unique blend of industry
relevance, business process innovation and technology expertise. The company is recognized today as an industry
leading provider of consulting services in the Business Intelligence (BI) arena, particularly focused on the Hyperion
software technology acquired by Oracle Corporation in 2007. WhittmanHart, Inc. will reta in and continue to operate
WhittmanHart Interactive, its leading interactive agency, in a standalone capacity.
Persistent Systems plans IPO
Persistent Systems Ltd., a leading technology company providing software product development services, plans to enter
the capital market with a public issue of 4,974,836 equity shares of Rs.10 each for cash at a price to be decided through a
100% book building process.
The funds are proposed to be used for expansion of its facilities at Hinjewadi in Pune and
hardware and software infrastructure and setting up a SEZ unit in
CORPORATE RESULTS
Sujana Towers FY08 net at Rs.15.14 cr.
Sujana Towers Ltd., a part of well-diversified Rs.3,000 cr.
based Sujana Group, has recorded a net profit of Rs.15.14 cr. for the
quarter ended 30 June 2008 on net sales of Rs.164.56 cr. The EPS for
the quarter was Rs.3.66 .
The results of the previous corresponding quarter is not given, as the
company emerged by way of demerger of Sujana Metal Products
Ltd. pursuant to the scheme of arrangement and amalgama tion as
approved by High Court on 10 April 2007, which came into effect
from 4 May 2007.
For the year ended 30 June 2008, it posted sales of Rs.617.54 with net
profit of Es.51.57 cr. recording an EPS of Rs.11.60.
IRB Q1 Net up by 71.20% at Rs.54.17 cr.
IRB Infrastructure Developers Ltd., one of the largest toll road
operating company in
Rs.54 .17 cr. for the quarter ended 30 June 2008.
Its PAT for the quarter was Rs.54.17 cr. as against Rs.126.57 cr. for
full FY08, which amounts to an increase of 71.20% on a quarterly
basis. The company’s total income for Q1FY09 was Rs.235.91 cr. as
against Rs.784.73 cr. for FY08.
The fully diluted EPS for the quarter stands at Rs.1.63.
Sujana Metal Products net up by 570.78%
Sujana Metal Products Ltd. (SMPL), a part of the diversified Rs.3,000
cr.
570.78% rise in net profit at Rs.20.65 cr. for the quarter ended 30 June
2008 against Rs.3.08 cr. in the previous corresponding period. Net
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sales for the quarter rose by 94.67 % to Rs.422.29 cr. from Rs.216.93
cr. in the previous corresponding period.
For the year ending 30 June 20 08, it reported a rise of 111.99% higher net profit at Rs.48.61 cr. against Rs.22.93 cr. in the
previous fiscal. Net sales for the year rose by 99.51% to Rs.1498.20 cr. against Rs.750.92 cr. in the previous fiscal. The EPS
has shot up to Rs.6.64. The basic EPS was Rs.6.64 for the year against Rs.4.41 in the last fiscal.
BoI Net up by 78% from Rs.315 cr. to Rs.562 cr.
With a 25% growth in Net Interest Income and 49% growth in Non Interest Income, Bank of
YoY growth of 78% in Net Profit at Rs.562 cr. in Q1FY09 from Rs.315 cr. in Q1FY08. This was despite increase in mark to
market provisions to Rs.129 cr. on the investment portfolio of the bank.
BoI’s Total Income for Q1FY08 rose to Rs.4115 cr. from Rs.3108 cr., propelled by a growth in Non Interest Income from
Rs.381 cr. to Rs.566 cr.
Gross NPAs of the bank as on 30 June 2008 were contained at 1.64% from 2.29% as on 30 June 2007.
Sujana Universal Q4FY08 zooms
Sujana Universal Industries Ltd., the domestic appliances manufacturer, has reported a 997% rise in its net profit at
Rs.5.49 cr. for the quarter ending on 30 June 2008 from Rs.50 lakh in the previous corresponding period.
On a standalone basis, the net profit rose by 8.03% to Rs.23.6 cr. for the financial year ended 30 June 2008 from Rs.21.9 cr.
last fiscal.
BoB Q1FY09 improves
Bank of
at rs.860.19 cr. on 32.6% higher Total Business of Rs.2,66,122 cr.
BoB’s Total Advances were up by 42.1%, Total Deposits were up by 26.5% and Total Income was up by 25.8%. Net NPAs
were down to 0.52% from 0.67% a year ago and its Capital Adequacy Ratio stood at 13.19% as per Base II.
Allied Digital Q1FY09 net up by 73%
Allied Digital Services Ltd. (ADSL), a Systems Integrator and IT Infrastructure Management Services Provider
company, has recorded 38% higher total income of Rs.90.20 cr. for Q1FY09 against Rs.65.23 cr. in Q1FY08. Net Profit
after Tax was 73% higher at Rs.15.66 cr. as against Rs.9.05 cr. in Q1FY08.
ADSL has recently acquired 80.5% stake in IT Infrastructure Management/Remote Management Services provider,
EnPointe Global Services Llc., a carved out subsidiary of EnPointe Technologies Inc. (ENPT) a NASDAQ listed company
with revenues over US $340 million. This acquisition is revenue and earnings accretive to ADSL and will serve as a
platform for other inorganic growth initiatives across the globe.
BoM Registers Q1 net at Rs.46.63 cr.
Bank of Mahara shtra (BoM) has recorded 23.48 % higher Total business of Rs.72090 cr. for Q1FY09 against Rs.58381 cr. in
Q1FY08.
Net Profit for the quarter stood at Rs.46.63 cr. as against Rs.81.58 cr. in Q1FY08. The decline was on account of higher
depreciation in its investment portfolio caused by market forces. Total Income during the quarter increased by 19.23% to
Rs.1040 .68 cr. over Q1FY08.
The interest spread increased from Rs.306.47 cr. to Rs.317.21cr., registering growth of 3.50%.
SEL Manufacturing net up by 178% for Q1FY09
SEL Manufacturing Company Ltd. (SEL) has posted encouraging results for Q1FY09. The standalone total income
zoomed by 201% to Rs.176.87 cr. from Rs.57.21 cr. in Q1FY08. Net profit shot up by 178% to Rs.19.14 cr. from Rs.6.07 cr. in
Q1FY08. The basic & diluted EPS has gone up to Rs.10.91 in Q1FY09 from Rs.6.18 in Q1FY08.
Its consolidated total income zoomed to Rs.179.74 cr. from Rs.59.59 cr. in Q1FY08. Consolidated net profit shot up by
Rs.23.08 cr. from Rs.8.31 cr. in Q1FY08 with basic & diluted EPS of Rs.13.81 from Rs.8.47 in Q1FY08.
Aarti Industries Q1FY09 net zooms by 536%
Aarti Industries Ltd., a leading manufacturer of Basic Chemicals, Speciality Chemicals and Pharmaceuticals, has recorded
85% higher turnover at Rs.361.7 cr. In Q1FY09 from Rs.194.3 cr. in Q1FY08. PAT also zoomed to Rs.33.2 cr. in Q1FY09
536% higher from Rs.5.2 cr. in Q1FY08 recording an EPS Rs.4.56.
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