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Birla Cotsyn India Ltd – Stock Investment

admin — Sun, 12 Apr 2009 06:02:51 +0000

Birla Cotsyn India Ltd

BSE CODE – 533006
PRICE ON 10/04 – 03.86
SECTOR – Textile
BUY RANGE – - 04.00 – 05.00
52W Low/High – 03.00/17.50

Birla Cotsyn (India) is engaged in cotton ginning, pressing and oil expelling. It was converted into a public limited company with effect from May 30, 2006 and is part of the Yash Birla group.

The company has its units located in Khamgaon, Ghatanji and Dhulia. The textile project at Malkapur has been granted the mega project status by the Maharashtra government and will get fiscal benefits over the next 5 years.

As part of phase II of its expansions plans, the company will manufacture finished cloth with an installed capacity of 50,000 meters per day by setting up a dyeing and processing unit. In addition to the current expansion plans, it plans to start manufacturing its own branded garments in 2009 and has put up around 20 retail outlets across major cities in the country.

EVINIX ACCESSORIES LTD – Short Term Investment

admin — Sun, 12 Apr 2009 05:58:03 +0000

EVINIX ACCESSORIES LTD

BSE CODE – 532818
PRICE ON 10/04 – 02.40
SECTOR – Fashion Accessories/Apparels
BUY RANGE – - 01.50 – 3.00
52W Low/High – 01.49/18.70

Evinix Accessories (EVINIX) is in the business of designing and manufacturing fashion accessories and garments for exports as well as domestic markets. The company offers products in two categories. Fashion accessories includes caps, hats and bandanas, sports bags, ladies fashion bags, soft travel bags, wallets, leather belts, fashion belts, coin purses, travel kits, gift giveaways, wraps, stoles, scarves and shawls, baby bibs, cribs blanket and beddings. Fashion apparels include kidswear like trousers and tops (denim and non denim) and women`s wear like tops and dresses.

The company also undertakes bulk trading of processed and greigh fabrics. Two plants including a 100% export oriented unit in Faridabad, Haryana have in-house facilities for fabrication, washing and embroidery.

The combined installed capacity for fashion accessories and garments is 2 million pieces. The capacity after ongoing expansion, including the unit at NSEZ, Noida, would be 3,000,000 garments and 3,500,000 accessories.

The major buyer of products in the domestic markets includes Adidas India Marketing, Gokaldas India and Arvind Brands in Bangalore, V & S International Haryana. The company has entered into a licensing and sales agreement for caps and bags in the Gini & Jony brand. Overseas buyers include The GAP USA; Esprit Europe Trading & Product Development, Germany; Next Retail, UK; H & M Hennes & Mauritz, Sweden; Fashion Box Industries, Italy; and Debenhams Retail, UK.

Some of the new international brands on this division’s client list include American Eagle (US), Cecil (Germany), Next (UK), Fun & Basics (Spain), along with domestic brands like Puma and Gant. Evinix has been adding new products and new buyers at a very rapid pace in the Fashion Accessories segment. The company employs more than 700 people in the manufacturing facilities and also has a management and administrative staff of 150 people.

Cut Stores

CUT, a MaBS (Many Brand Store), addresses the young audience between 16 and 35 years, and is a home to 61 global brands (Adidas, Puma, Kappa, 454, Purple Wine, Reebok, Lee, Levi’s, Mercedes Benz, to name a fews). CUT is an acronym for Comfortable, Urban and Trendy. Evinix is setting up CUT stores (averaging 4000-5000 sq feet) in fast urbanizing young Indian towns. Company-owned and company managed, the CUT stores are brand selective and sell merchandise across the entire range of Apparel, Footwear and Accessories for young men and women. Strategically located on the high streets, close to universities and youth hang-outs, the stores boast of truly youthful and high spirited ambience.

Certifications/Awards
Registration by the Fair Trade Organisation, UK, as per international standards set by the international certification body, Fairtrade Labelling Organisation International (FLO).

Worldwide Responsible Apparel Production (WRAP) registration, USA, as a mark of compliance with a growing list of retailer requirements and audits of factories, based upon 12 principles established by WRAP.

Garmenting, knitting and processing operations have been evaluated, approved and certified by Control Union, Switzerland, earlier known as SKAL.

Awarded Silver Trophy, the second highest award in the 100% EOU/EPZ- Made-ups category, for determined marketing and promotional efforts that led to cotton made-ups exports of over Rs. 5 crores (for outstanding export performance in the year 2001-02) by TEXPROCIL, The Cotton Textiles Export Promotion Council, India.

One of the few companies to get a certificate of quality from Flocert, Germany, for maternity wear.

PASS (Perfect Asia Sourcing Services) is a hologram of quality certification. Every product quality-checked through CUT, is fixated with a unique PASS hologram, doubly assuring the authenticity of the quality of the product.

I expect, this scrip will be a multibagger with in few years or after the recession menace. They have all that stuff to make our teens addicted.

Western India Shipyard Limited – Multibagger

admin — Sun, 12 Apr 2009 05:52:16 +0000

BSE CODE – 531217
PRICE ON 10/04 – 5.20
SECTOR – Ship/Rig Repairing/Manufacturing
BUY RANGE – - 3.00 – 5.00
52W Low/High – 03.10/35.00

Bajaj Auto – Multibagger

admin — Wed, 08 Apr 2009 15:15:20 +0000

About The Company

It just comes as a complete surprise to see that a loss making unit, which has shut down its main business of making scooters since 2006 and its present activity is limited to the manufacture of pressure die casting dies, jigs and fixtures primarily for two and three-wheeler industry and posts a net loss for QFY09, continues to remain a gainer on the bourses.About The Results

The company has a net sales of Rs.71 lakhs and on this sales, it continues to have a staggering employee cost of Rs.3.28 crore. It posted an other income of Rs.2.17 crore. In Q2FY09, it posted its best ever PAT of Rs.12.98 crore and this was mainly on account of the interest received on Income-Tax refunds. This was at nil for Q3FY09. Infact it plans to make provision for tax and deferred tax only in Q4. Yet, its net loss for the current third quarter was at Rs.1.10 crore.

Cues In the Company

1. There has been talk of Blackstone wanting to buy out the 27% stake held by Western Maharashtra Development Corporation (WMDC) but that has apparently not happened.

2. Its holdings in Bajaj companies is the most obvious answer. It holds 16.39 lakh shares in Bajaj Auto Finance as on 31st Dec 2008. And as on 30th Sept 2008, it held 33.87 lakh shares each in Bajaj Holdings, Bajaj Finserve and Bajaj Auto. So the value of investments in these three companies alone is itself worth Rs.317 crore. And this valuation is based as of now, when the markets are so low.

3. Another big positive for the company is that it is totally debt-free, it has got absolutely no term loans or unsecured loans or working capital loans and is stated to have cash close to Rs 95-100 crore in its books.

About The Stock

Value buying could be done in this stock waiting for a ripe time to arrive for value buying.

Unitech Ltd – Short Term Investment

admin — Wed, 08 Apr 2009 15:11:13 +0000

Company: Unitech Ltd.

Industry: Real Estate

CMP and PE Ratio: Rs. 37.50 with a PE ratio of 5.91

Industry Outlook:

Before October 2007, real estate in India was one of the hottest industry with real estate stocks making new highs and sustaining unbelievable valuations. Now almost everyone is bearish on real estate and real estate stocks. In my opinion the industry wll remain affected for maybe a few years, but the industry should make a big reversal sometime in the future. The reason being that there is immense scope for low cost housing and real estate development in tier 2 and 3 cities in India.

Company Analysis:

During the boom time, Unitech was just one of the real estate companies posting stellar resuts and going for massive expansion plans. This lead to the company over leveraging itself and Unitech is one of the highest leveraged companies in the real estate pack. So right now, with real estate industry slowing down significantly the company is having immense problems servicing its debt.

From the buy or sell perspective I would personally not take any long term position in real estate stocks for now. There will be trading opportunities and capitalizing on them would make more sense. I can assure readers that real estate industry and real estate stocks are not going up in a hurry. Infact more problems might come up for real estate players in the next 1-2 years. So my view is that any long term position in real estate should be avoided for now.

In accordance with this general view my suggestion would be not to buy Unitech. Of course when markets reach levels like 7000-8000 on the Sensex, then there are trading opportunities even in real estate stocks.

IKF Technologies Ltd – Short Term Investments

admin — Wed, 08 Apr 2009 15:08:47 +0000

Company: IKF Technologies Ltd

Industry: IT and Bio Diesel

CMP and PE Ratio: Rs. 2.74 with a PE ratio of 66.99

Peer Companies for IKF: Southern Online Bio Technologies Ltd

Sales Mix for FY 08: 99.99% of the revenue for the company came from IT enabled services during the year ended 31st March FY 08.Bio Diesel Industry Outlook:

Industry still at a very nascent stage in India. So enormous growth opportunities exist.

High raw material cost is a big concern for the industry and margins for bio diesel companies are not expected to be great.

Many big players like Reliance, Emami, Jain Irrigation, Tata Chemicals are already planning or making big time entry into this industry.

IKF – Financial Analysis:

The company is still at a very early stage of its growth and hence it would not be fair to talk much on its financials as of now. The company has expanded its equity base significantly over the past few years for its expansion activities. The positive thing is that IKF is a debt free company.

For the fiscal year ended 31st March 2008, revenue surged nearly 100%. But the operating cash flow for the company turned significantly negative.

Being a small company, IKF might find it difficult to raise more funds in this scenario for any further expansion it might be looking at. This is a big challenge for the company.

Business Analysis:

So far, the main revenue generator for IKF has been its IT and IT enabled services. The bio diesel initiative has not started to contribute to the company’s revenue as on 31st March 2008. In my opinion even the IT and ITES segment revenue for the company will be affected going forward owing to the current global crisis.

While the company has talked a lot about its bio diesel initiatives in the past, nothing substantial has happened so far. In my opinion this initiative for the company might not be a great success. Moreover the company its small and just at its beginning it is trying to put its hands into too many things. This might not work out well for the company in the short term as well as in the long run.

Allcargo Global Logistics Ltd – Short Term Investment

admin — Wed, 08 Apr 2009 02:28:01 +0000

Company: Allcargo Global Logistics Ltd.

Industry: Transport – Road

CMP and PE Ratio: Rs. 787.3 with a PE ratio of 18.2

Peer Companies for Allcargo Global Logistics Ltd: Transport Corporation of India Ltd and Container Corporation of India Ltd.Valuation of Allcargo Global Logistics Ltd compared to peers: Allcargo looks relatively expensive when compared strictly on a PE basis with its peers.

Financial Analysis:

Income Statement: The company has shown robust topline and bottomline growth over the past few years. The operating, gross and net profit margin for the company has also improved over this period. The FY 08 EPS of the company stood at Rs. 43.2

Cash Flow: Allcargo has generaged positive operating cash flow and also made significant capital expenditure in the past few years. The FY 07 free reserves per share of the company was at Rs. 178.50.

Balance Sheet: As of December 2007, the company had good reserves and a very low debt making the balance sheet look attractive and healthy. The book value per share as on 31st December 2007 for Allcargo stood at Rs. 188.50 per share.

Business Analysis:

As of 31st December 2007 the main revenue generators for the company were (a)Mutimodal Transport Operations – 67.12% revenue (b) Container Freight Station – 25.85% revenue (c) Service (Freight & Hire Charter) – 6.68% revenue and Other Services -0.33%.

The logistics industry growth has a very high positive correlation with the economic growth. Thus, in my opinion the company will see some slowdown in its revenue in the near term. The low crude oil prices will benefit the company in many ways but the global slowdown will take its tool on the logistics industry as well.

On a long term basis I would say that the logistics industry in India will really make it big. Players like Allcargo, CONCOR and others will see their business grow several times from what it is now.

Jindal Drilling & Industries Ltd – Short Term Investment

admin — Wed, 08 Apr 2009 02:24:16 +0000

Company: Jindal Drilling & Industries Ltd.

Industry: Oil Drilling And Exploration

CMP and PE Ratio: Rs. 386.15 with a PE Ratio of 48.21

Peer Companies for Jindal Drilling & Industries Ltd: Oil & Natural Gas Corporation Ltd, Aban Offshore Ltd and Shiv-Vani Oil & Gas Exploration Services Ltd.

Valuation of Jindal Drilling & Industries Ltd compared to peers: Just based on the PE ratio the valuation for Jindal Drilling looks expensive as compared to its peers.

Financial Analysis:

Income Statement: The revenue has shown decent growth over the past 5 years with FY 08 EPS for the company at Rs. 8.3. The first nine months of the current fiscal has also been robust with the topline and bottomline showing good growth.

Cash Flow: Jindal Drilling has been generating positive operating cash flow in the past three years. This is always a good thing in times of slowdown and credit crunch. The company has also made significant capital expenses, particularly in the last fiscal. This should translate into higher revenue growth for the company in the future.

Balance Sheet: The balance sheet of the company looks good with decent equity and reserves coupled with a low amount of leverage.

Business Analysis:

Jindal Drilling is 100% into oil drilling and exploration activities. So the growth of the company and its margins largely depends on the crude oil prices, which is a function of the economy. The crude oil prices are expected to remain volatile with a bull run for the commodity not coming anytime soon. So in the next 1-2 years one can expect that the business of the company will remain sublime.

In my opinion Jindal group is an excellent business group and hence the long term prospects for this company should be good. But right now the valuation dont look very compelling for me to go out and buy this stock.

Compared to its peers, the company is trading at a premium and thus, whenever the markets significantly correct again i would expect the stock to come down substantially. Hence, while its a good company if I had to buy a stock in this space today itself I would rather buy a ONGC then Jindal Drilling.

Facor Alloys Ltd- Stock Analysis

admin — Sun, 05 Apr 2009 12:48:14 +0000

Company: Facor Alloys Ltd.

Industry: Ferro Alloys

CMP and PE Ratio: Rs. 2.85 with a PE ratio of 0.79

Product mix for Facor Alloys: High Carbon Ferro Chrome – 99.91% and By Products – 0.08%
Application of Ferro Alloys: Ferro Alloys are used as de-oxidants and as a catalyst for imparting alloying properties to special steel and are key inputs in steel manufacturing. So clearly it depends to a large extent on the growth or de-growth of the steel industry.

Financial Analysis:

Income Statement – Facor has shown robust topline growth in the last four years. The operating,net profit and gross profit margin for the company has also increased over the last four years. The company has also been able to sustain stable revenue for the first nine months of the current fiscal, with a slight drop in margins. Overall the income ststement reflects decent performance by the company.

Cash Flow – Facor allows has mixed operating cash flow over the years and has not made huge capital investments. This is indicative of the c=fact that facor was not on a big expansion spree even during the boom period.

Balance Sheet – The balance sheet of the company cannot be called a really healthy or great one. But the company is not really overleveraged and in my opinion there is no big risk in the balance sheet.

Business Analysis:

Ferro Alloys being the key inputs for Steel Industry, and thus the future of Ferro Alloys Industry is largely dependent on the growth of Steel sector. So one can expect the company not to really do well in the near term. But for a country like India, where huge infrastructure needs to be built in the future the demand foir steel would be very high and thus the ferroy alloy industry is also bound to do well.

The stock price for Facor Alloys also looks very attractive and I believe that long term investors can get good returns if the stock is bought at this level. Again I dont know if the stock price will go down more or not. It might possible go down more. But any really down market can be a good time to consider some exposure to this stock.

Karuturi Global Ltd – Stock Analysis

admin — Sun, 05 Apr 2009 12:43:13 +0000

Company: Karuturi Global Ltd.

Industry: Floriculture and Agriculture

CMP and PE Ratio: Rs. 8.50 with a PE ratio of 31.94

Product Mix for Karuturi Global: (1)Horticulture – 87.95% (2) Other Sales – 6.58% (3) Software development charges and other service – 5.45%Financial Analysis:

Income Statement - On a standalone basis the topline growth has not been very robust so far for the company. However, the operating margin, net profit margin and gross profit margins have improved substantially over the years. On a consolidated basis the company has shown excellent growth and the trend is expected to be mantained in the near future.

Balance Sheet – The company has gone for significant equity dilution and has also leveraged itself substantially in the past few years. But this should not be a matter of great concern if the company is successful in executing its big plans especially in Ethopia.

Cash Flow – Karuturi has been able to generate positive operating cash flow on a consolidated basis and this is positive for a company which is already significantly leveraged.

Business Analysis:

As of 31st March 2008, Karuturi Global has 298 hectares under cultivation (excluding 40 hectares under contract farming in India). The company’s 100 hecatres of land in Ethopia is expected to be fully operational this fiscal year itself. Karuturi has acuuired additional 385 hectares of land in Ethopia, of which 25 hectares will be operational in FY 09 and the remaining in FY 2010-11. This effectively will lead to doubling of rose revenue for the company.

The bigger business prospect for the company will be its agro based cultivation initiative in Ethopia. By FY 2011-12 the company expects its agri business to generate more revenue then the rose business. I personally believe that its a great business initiative if the company can stick to its plan and achieve it.

Karuturi also has plans to foray into bottling of baby corn, jalapenos & green ball peppers, for which a huge global demand exists.

Karuturi Global has also taken the initiative of opening floriculture retail stores in India. Its first store is already operational in Bangalore and it plans to open 50 such stores in the next few years.