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Sri Nachchamai Cotton Mills Ltd – BUY

admin — Tue, 04 May 2010 01:14:31 +0000

Salem based Sri Nachchamai Cotton Mills is engaged in the production of Cotton yarn, having installed capacity of
40,000 spindles. Last year, company had made losses due to lower realisation, lower demand and high raw material
prices. However,in current year, situation has changed dramatically wherein selling price of Cotton yarn have spiralled up sharply, leading to good profitability and hence, the recommendation After reporting loss last year, company has bounced back in Current Year with with EPS of Rs. 4/- for Half Year Ending Dec. 09. Cotton yarn prices have gone up further in last 2-3 months and hence, performance of H2 should be much better than H1 Current market cap of Sri Nachchamai is just Rs 10 cr whereas company is likely earn cash profit of 6.60 cr in current year alone. Further, stock is trading at: 1. 2.23xFy10E Eps 2. 1.55xFy10E Cash EPS Although Sri Nachchamai is a small player in cotton
yarn industry, still current valuations are extremely cheap. Investment in Sri Nachchamai at current levels should yield 50% appreciation in less than 9 months. Buying recommended

Ratnamani Metals – Stocks To Watch

admin — Sun, 25 Apr 2010 12:27:26 +0000

Ratnamani Metals

CMP Rs. 126.00

BSE Code : 52011

Despite Ratnamani Metals making new 52W high, investors can but this scrip for handsome gain in short as well long
term. Over the years company has emerged as a single stop provider for the steel piping solutions for array of lications required for the large projects in oil & gas and power sector.
It makes high frequency welded (HFW) & electric resistance welded (ERW) pipes apart from manufacturing longitudinal submerged arc welded [L-SAW] pipes & helical submerged arc welded [H-SAW] pipes of large diameter which are primarily used for continuous transportation of large quantities of oil, natural gas and water over the long distances. To maintain its growth momentum company has been constantly enhancing its production capacity and presently also is in the midst of adding 50,000 TPA of HSAW in the current fiscal to take the total installed capacity to 4,20,000 TPA. Besides, as a part of forward integration, it has set up a 3 layer polyethylene and epoxy coating line with capacity of 2.7 million sq mtrs.

Incidentally company’s net interest cost has come down significantly thereby giving a fillip to its bottomline. It has already posted an EPS of Rs 12.50 till date in the first nine months. For FY10 it is expected to clock a turnover of Rs
725 cr and PAT of Rs 75 cr i.e. EPS of Rs 17 on equity of Rs 9 cr having face value as Rs 2/- per share for FY10. And for FY11 it can post an EPS of more than Rs 20. Even at an forward discounting by 8x times, scrip can shoot up to Rs 160 within 9~12 months.

Balaji Amines – Short Term Investment

admin — Sun, 25 Apr 2010 12:22:38 +0000

Balaji Amines

CMP Rs. 167.00

BSE Code : 530999

Most of the mid caps and small caps are hitting new highs but Balaji Amines is still available at 15% discount to its 52W high of Rs 195 made in Jan’10. It is among the few handful manufacturers across the world producing methylamines, ethylamines and their erivatives, as amine manufacturing technology is a closely guarded process. Few months ago it commissioned Gamma Butyro Lactone (GBL) plant with a capacity of 18 MT / day which is first of its kind in India and is again a 100% import substitute. Recently it commenced production of PVP K-30 which is an import substitute, at its new plant having installed capacity of 1200 MT. Because of the backward integration and introduction of niche products, company has been able to boost its operating margin considerably. In near future company is looking to set up a three-star hotel at its surplus land in Solapur, Maharashtra with an investment of Rs 30 cr. It has already finalized a deal with the Sarovar group for managing the hotel. On a conservative conservative basis for FY10 it is expected to register sales of Rs 260 cr and PAT of Rs 22 cr i.e. EPS of Rs 34 on equity of Rs 6.50 cr. Scrip can cross Rs 200 easily in short term.

Jindal Poly Films – Short Term Investment

admin — Wed, 21 Apr 2010 03:28:44 +0000

Jindal Poly Films (Code : 500227) India’s largest manufacturer and exporter of flexible packaging films, Jindal Polyfilms is engaged into production of polyester films (BOPET), polypropylene films (BOPP), metallised films and coated films with in house ability to produce polyester chips for captive consumption. Financially, company didn’t take the benefit of recent amendment in AS11 and provided huge forex loss to the tune of Rs 61 cr in P&L a/c for FY09. But in the FY10 it is has recorded gains instead. Accordingly for the nine months ending Dec’09, its revenue improved by nearly 10% to Rs 1155 cr but PAT doubled to 159 cr. EPS of Rs 64 for FY10. Interestingly company has been announcing regular buy back since last couple of years and has even been increasing the buy-back price. In the first buy back which it closed in April 2009, company had bought back an aggregate of 32,34,492 equity share at an average market price of Rs 270.17 per share absorbing a total amount of Rs 87.38 cr. It came with second buy back @ Rs 400 and now recently it announced third buy back @ Rs 450 per share. Long term investors should keep accumulating at every decline.

Buy STERLITE TECHNOLOGIES – Emkay Research Stock Tips

admin — Mon, 26 Oct 2009 02:55:48 +0000

STERLITE TECHNOLOGIES
Reco price: Rs 313
Current market price: 314.50
Target price: Rs 365
Upside: 16.1%
Brokerage: Emkay Research

Sterlite Technologies reported a net profit of Rs 54.7 crore in September 2009 quarter, slightly ahead than estimates, led by strong margin expansion and lower interest expenses. Although revenues fell by 30 per cent y-o-y to Rs 465.8 crore, EBIDTA was in line with estimates, helped by healthy conversion margin of Rs 17,000 per tonne in the power conductors business compared to Rs 13,000-14,000 per tonne guided by the management. The EBIDTA margins at 19.1 per cent were highest in last 7 years, and were also helped by increased optic fibre realisations. Revenues fell due to lower than expected revenues from copper cables business and lower realisation of conductors due to fall in aluminium prices. Due to lower revenues from copper cables business and delay in capacity expansion in H2 of 2009-10, the brokerage has reduced its revenue estimates by 8.3 per cent and 1.4 per cent for 2009-10 and 2010-11, respectively. But, EBIDTA estimates have been increased by 6-8 per cent, due to higher conversion margin in conductors, resulting in an EPS upgrade of 11 per cent each for the current and next two fiscal years. Given the improving margin profile, strong earnings growth and improving return ratios, the stock is due for further re-rating.

HINDUSTAN ZINC – Angel Broking Stock Tips

admin — Mon, 26 Oct 2009 02:53:49 +0000

HINDUSTAN ZINC
Reco price: Rs 868
Current market price: 934
Target price: Rs 950
Upside: 1.7%
Brokerage: Angel Broking

On the back of improved demand outlook and prices, the brokerage has upgraded its 2009-10 and 2010-11 EPS estimates for Hindustan Zinc by 3 per cent and 11.7 per cent, respectively. The company has posted a mere 1.6 per cent growth in revenue to Rs 1,818 crore for September 2009 quarter, which was lower than estimates. Sales grew primarily on account of the increase in zinc and lead realisations, besides an 11 per cent depreciation in the rupee’s value. Notably, refined zinc and lead realisations grew 16.6 per cent and 9.3 per cent y-o-y, respectively, during the quarter.

On the operating front as well, EBITDA margins improved by 430 basis points to 59.1 per cent y-o-y mainly due to higher sales volumes and realisations of refined zinc and silver. Fall in various expenses also helped improve margins. Hindustan Zinc’s net profit fell marginally by 2.6 per cent to Rs 935 crore on account of lower other income (down 15 per cent y-o-y) and higher tax rate. The brokerage has upgraded the stock to ‘accumulate’ valuing the stock at 5.5 times its 2010-11 estimated enterprise value (EV)/EBITDA.

Dabur – Edelweiss Stock Tips

admin — Mon, 21 Sep 2009 03:02:50 +0000

Company: Dabur

Broking House: Edelweiss

Current Price: Rs 134.05

FMCG major Dabur’s focus launching new products will help it maintain strong growth momentum. Its four new products — Total protect, Vatika almond enriched hair oil, Real Burrst and UVEDA— are in various stages of rollouts. The company is also confident on sustained growth momentum in rural demand, which constitutes 20 per cent of its total sales. It has diversified raw material base and will reap the benefits of benign input costs scenario in terms of achieving better margins. Its international business is expected to rise by 25 per cent. The losses in the retail business are expected to come down to Rs 12 crore as against Rs 17.8 crore in FY09. The stock is trading at 19.9x FY11E EPS.

Company: Dabur

Broking House: Edelweiss

Current Price: Rs 134.05

FMCG major Dabur’s focus launching new products will help it maintain strong growth momentum. Its four new products — Total protect, Vatika almond enriched hair oil, Real Burrst and UVEDA— are in various stages of rollouts. The company is also confident on sustained growth momentum in rural demand, which constitutes 20 per cent of its total sales. It has diversified raw material base and will reap the benefits of benign input costs scenario in terms of achieving better margins. Its international business is expected to rise by 25 per cent. The losses in the retail business are expected to come down to Rs 12 crore as against Rs 17.8 crore in FY09. The stock is trading at 19.9x FY11E EPS.

Buy HPCL – Anand Rathi Financial Services

admin — Sun, 13 Sep 2009 11:19:34 +0000

HPCL
Reco Price: Rs 361
Target price: Rs 470
Upside: 21.25%
Brokerage: Anand Rathi Financial Services

Recent statements from the government (specifically, the Ministry of Petroleum and Natural Gas) have been positive, indicating the possibility where OMCs might not have to bear any subsidy. Also, brokerages expect lower crude/product prices in months ahead and subsequent lower debt load.

With the steep fall in crude prices and lower product prices, the working capital requirements and debt load of HPCL have fallen sharply compared to FY09. These along with lower interest cost should help the company to report improved profitability. This is also a reason that the brokerage forecast a 92 per cent y-o-y jump in FY10E EPS over FY09 to Rs 42.6, on the back of lower under-recoveries (partially on cooking fuels), lower interest costs and inventory gains. The brokerage recommended the stock at Rs 361 and raised its target price to Rs 470, which is based on 50 per cent historical discount to Sensex PE of 17 times and value of its investments in MRPL, at a 25 per cent of holding company discount.

Stock Advice On YES Bank

admin — Sun, 26 Apr 2009 04:30:08 +0000

Yes Bank has posted good results for Q4 with total income rising to Rs.656 crores against Rs.494 crores in the corresponding quarter of the previous year. PAT for the quarter is at Rs.80.11 crores against Rs.64.50 crores, resulting in an EPS of Rs.2.70 for Q4, against Rs.2.18 of the corresponding quarter of the previous year.

On an annualized basis, the performance of the bank has been quite exemplary with total income at Rs.2,438 crores against Rs.1,665 crores of FY 08 while EPS for FY 09 touched in double digit at Rs.10.25 against Rs.7 of FY 08. It has been feared that NPAs of bank will rise, due to defaults and slowdown, but, this has not seen happening adversely in case of the bank. Net NPA of the Bank, as at 31-03-09, has been at 0.33%, while gross NPA is at 0.68% with capital adequacy ratio of 16.63%. Even, average return on assets has been at 1.52% on annualized basis.
Share touched its 52 week low of Rs.41, on 9th March 09, when all the private sector banking stocks took a beating. Since then, it has been going up and now ruling at Rs.77, which discounts its historic earnings by less than 8 times. It is certain to see growth from bank, even in FY 10 and an EPS of Rs.12 is most likely, which discounts the current price by about 6.50 times. Those who have 6 months view can expect the share price to move in three digits. Price behaviour of this stock remind us of old price movement pattern of HDFC Bank, about 12 years back, which has now become a private sector giant. This Bank also has all such ingredients to grow big in the long run.

Stock Advice On ITC

admin — Thu, 23 Apr 2009 13:11:05 +0000

Stock Advice On ITC – HSBC

Price increases on the Goldflake brand to add INR0.20 for FY10e EPS but slowdown in hotels reduces gains marginally

We still believe that the budget will be the single most important event for ITC; we revise our two scenarios

We arrive at a new price target of INR193 (previously INR172) based on SOTP and retain our Neutral rating.Price increases on Goldflake. ITC has raised the prices of Goldflake Kings from INR4 to INR4.4 per stick. We had mentioned in our previous report dated 18 February that Goldflake Regulars is another likely candidate for price increase and we now believe that the price increase in Kings will be shortly followed by one in Regulars, although the company has not confirmed this. We believe that the annualised impact of these price

increases on EPS is INR0.88. However, as the budget is due in Q2 FY10, we build in the impact only for Q1 FY10, which works out to INR0.20.

FMCG, hotels overhang likely to continue. We believe that the situation in the hotel industry is likely to turn out worse than what we had built in our estimates. We therefore reduce our FY10e hotels EBIT by 8.8%. We forecast FMCG losses in FY09e at INR4.6bn and we believe that this will come down to INR3.6bn for FY10e, which is still sizeable. We believe that these concerns are fairly priced in the stock. Our FY10e EPS changes from INR10.23 to INR10.38.

Change in estimates and valuation. Our EPS estimate for FY10e changes from INR10.23 to INR10.38 as a result of increase in cigarettes EBIT by 2.3% and decrease in hotels EBIT by 8.8%. We revise our scenario analysis to take into account these changes, as well as the absence of any tax hikes in Q1 due to the delayed budget this year. Our low tax scenario derives a price target of INR217 and high tax scenario, INR166. We take an average to arrive at our revised target price of INR193 and retain our Neutral rating.