Dhanuka Pesticides - Rs.104.00

Incorporated in 1985 and promoted by the Dhanuka Group, Dhanuka Pesticides Ltd (DPL) is engaged in the manufacture of various technical-grade pesticides, which include insecticides and weedicides and has emerged as one of the top pesticides formulators and marketing organisation in India. The Dhanuka Group is a well established manufacturer / formulator of a wide range of popular pesticides; in ECS, Granules, Wettables & Dust Formulations of Insecticides, Fungicides, Weedicides, PGR, Growth Stimulant and Wetting Agents. Whereas DPL’s product profile includes Methomyl 12.5; L, Ethofenprox 10%; Validamycin 3%; L, Kasugamycin 3%; L, Cypermethrin 10%; EC, Cypermethrin 25%; Fenvalerate 20%; Cartap hydrochloride 50%; Methomyl 40%; and Cartap hydrochloride 4% G.

DPL's production facilities are located in Gurgaon district of Haryana, It has a technical tie-up with Du Pont of USA for the formulations of pesticides using as methomyl raw material. Apart from this it has entered into a series of technical tie-up agreements with a number of Japanese multinationals like Takeda Chemicals Industries Ltd for Cartap Hydrochloride and Validamycin, Mitsui Chemicals Inc for Etofenprox, Hokko Chemicals Ind. Co. Ltd. for Kasugamycin etc. Last year, DPL launched a new insecticide under the brand name ‘DHAWA’ (Indoxacarb 14.5% SC) which got a huge response from the cotton dominant Indian market. It is an eco-friendly and safe molecule with widespread application to control the insects in cotton especially for American bollworm, a major cotton insect. The company is also launching a new, safe and eco-friendly herbicide under the brand name 'QURIN' (Chlorimuron Ethyl 25% WP), in a marketing tie-up with E.I.Du-Pont India. The Dhanuka group has a huge network of distributors, preferred dealers and retailers (over 8000) supported by its branch offices in almost every state. Moreover for the future growth DPL, it is strengthening in house R & D for process improvement and new molecules, obtain safer and eco-friendly products through tie-ups, extend and implement the cause of right and judicious use of pesticides and consequently sustained growth of the group. Besides, an export remains a huge potential market.

India primarily being an agriculture country, the government has put special thrust on agricultural development for higher GDP growth. And with the Meteorological Department predicting good monsoon this season also, it will be a bumper year for DPL. With an increasing trend in the use of pesticides and other crop protection methods by Indian farmers, DPL has a very bright future ahead. For the nine months ending 31st Dec 2004, its Net Sales jumped around 120% to Rs.49 cr. and NP tripled to Rs.3 cr. For the full year, it is expected to report an EPS of Rs.20, which may shoot up to Rs.24 in FY06. Long term investors can accumulate this scrip at sharp declines on expectation of 100% returns in 15~18 months.

Kilburn Engineering - Rs.64.00

Incorporated in 1987, Kilburn Engineering Ltd. (KIL) is an associate company of Williamson Magor Ltd., which is one of the 20 large industrial groups operating in India. The company specialises in process design, engineering, manufacture, installation and commissioning of turnkey plants/systems for petrochemicals, chemicals, fertilizers, refineries, oil & gas, food processing, etc. It is also engaged in designing, manufacturing, marketing, field erection and commissioning of industrial drying system, oil field and air handling equipment. KIL is well-known in the field of industrial drying, its core strength being ‘Heat and Mass Transfer Systems’. Besides, it has expertise in chemical engineering and chemical treatment process and also deals in fabrication equipments like heat exchangers, evaporators, reactors etc.

KIL has a modern and well-equipped workshop equipped with machining, fabrication, testing and allied facilities and has a technical collaboration with Nara Machinery Co of Japan and Carrier Vibrating Equipment of USA. It has been awarded ISO-9001: 2000 Quality System Certification by M/S. Det Norske Veritas (DNV) of the Netherlands and has been accredited by the RVA. The company exports equipments to over 25 countries worldwide including Japan, Italy, USA, France, China, Taiwan and Malaysia etc. In the domestic market GAIL, HLL, IPCL, Gujarat Alkalies, GNFC, L&T, DCM Shriram, Nirma, HPCL are among its reputed clients. This year, it started supplying new Phase V Tea Dryer to Kenya Tea Development Authority. KIL has also designed and developed equipment for the rice mill industry to diversify its product range. It has also successfully negotiated to export Paddle dryers to M/s. Komline Sanderson, USA. Few months back, it supplied dryers to Ivory Coast in Africa for processing of desiccated coconut. It is also focusing on the food processing industry, which has a huge growth potential. KIL is putting more thrust on exports and intends to take it to 40% of total sales from the current 25%. In short, it has a very healthy order book position, which includes repeat orders from world-class companies.

Under the rehabilitation scheme sanctioned by the BIFR, KIL has got various fiscal reliefs, benefits and concessions from the lenders/bankers due to which it turned around last fiscal ending Sept 04. In February 2004, it sold off a property in Baroda for a one-time settlement with financial institutions and paid off Rs.16 cr. It has brought down its debt from Rs.87 cr. to Rs.24 cr. and expects to wipe out all its carry forward losses by 2006~07. Recently, the company issued Right shares to raise funds for its working capital requirement. In future, it may also re-locate its Mumbai factory in Bhandup, and sell this prime property and improve its operating efficiency using the funds generated. For the six months ending March 2005, its turnover has more than doubled to Rs.25 cr. and NP stood at Rs.3.75 cr. compared to Net Loss of Rs.5.70 cr. For full FY05, it may report sales of Rs.55 cr. and NP of Rs.8 cr. resulting in an EPS of Rs.12 on it current equity of Rs.6.75 cr. Diluted EPS on its expanded equity may amount to Rs.8. For FY06, it can post an EPS of Rs.14 on the expanded equity. For investors, it is a very good bet from the engineering sector and they can expect a price target of Rs.150 in 15 months.

STOCK WATCH

Laffans Petro (Code No: 524522) (Rs.24) is engaged in manufacturing ethylene oxide derivatives such as Ethoxylates, Glycol Ethers, Acetates, Triethonal-amine, and Brake fluids. Due to higher demand and better price realisation on its products, Laffans Petrochemicals has improved its operating efficiency and is expected to perform much better in coming quarters. For FY05 ending Sept 2005, it may report an EPS of more than Rs.5 and the share price can appreciate by 50% in the next 12 months. A good medium term bet. Due to the uptrend in the Steel sector and strong demand for their products the refractory industry is enjoying the best of times. Raasi Refractories (Code No: 502271) (Rs.29) is a Hyderabad based small player that has posted a good turnaround. It also manufactures high temperature shuttle kiln, heavy-duty top and bottom pressing hydraulic presses, PLC controlled heavy-duty mechanical presses, high intensity mixing equipment and latest lab equipment such as Hot MOR testing machine and photometer. For the nine months ending 31st Dec’ 04, its topline tripled to Rs.16 cr. and it reported a NP of Rs.1.30 cr. against a Net loss of 1.20 cr. in the corresponding previous period. It is expected to report an EPS of Rs.5 for FY05, which may shoot upto Rs.7 for FY06.

The cool off in metal prices will have a positive impact on Ashok Leyland (Code No: 500477) (Rs.24) to a certain extent. It reported an excellent performance for the March 2005 quarter with Sales jumping 30% to Rs.1460 cr. and NP zooming 65% to Rs.143 cr. including Rs.33 cr. as other income. It posted an EPS of Rs.2.30 for FY05 and may report Rs.2.60 for FY06. The outlook for the commercial vehicle segment is very robust and may continue to grow in double digits. The share price has the potential to hit Rs.35 in 12~15 months

Since the last few weeks, companies engaged in agro and food products are attracting market attention with rising sharply on the bourses. At this stage, one can take some exposure in Jhunjhunwala Vanaspati (Code No: 519248) (Rs.26.50) and keep accumulating it at declines. It reported pretty decent numbers for the March 2005 quarter and ended FY05 with an EPS of Rs.8.5. In the current small cap bull run, this scrip can cross Rs.50.

In the Chemicals sector, National Peroxide (Code No: 500298) (Rs.4479.85) this Bombay Dyeing Group Company was very popular one time. It is engaged in manufacturing of Hydrogen Peroxide is trading reasonably cheap. It has a very small equity of Rs.2.30 cr. and very low floating stock since its face value is Rs.100 and the promoters hold 65%. Due to increased production and higher price realization, it reported fabulous numbers for FY05.Sales increased 30% to Rs.75 cr. and NP doubled to Rs.14.30 cr. reporting an EPS of Rs.620. For FY06 it can post an EPS of Rs.720

Lot of positive developments is taking place in Tinplate Company (Code No: 504966) (Rs.55.65). The company is already implementing a phase-wise expansion programme of its existing unit which will take its tinplate making capacity to around 4,00,000 TPA in the next few years. It is also planning to set up a greenfield project with state-of-the-art tinning line in Jamshedpur at an investment of Rs.100 cr. The company has also started offering cost effective packaging solutions to the end-user industry. Besides, it is putting more thrust on exports and intends to become a dominant player in South East and West Asian markets. For the March 2005 quarter it reported stunning numbers posting a quarterly EPS of Rs.5. For FY06, it can report an EPS of Rs.14. A strong long term buys.