STOCK WATCH
After an amazing run upto Rs.240 level, GM Breweries (Code No: 507488) (Rs.179) has now corrected sharply, giving a good opportunity to buy. With every passing quarter, its sales/ net profit is rising, whereas its OPM has improved substantially at 28% for the March 2006 quarter compared to 9% in June 2005 quarter. It reported stunning results for the March quarter as revenue increased by 50% to Rs.44 cr. and net profit jumped 250% to Rs.7.40 cr. reporting a quarterly EPS of Rs.8. For the full year, it recorded a turnover of Rs.155 cr. and net profit of Rs.13 cr. assuming the same track record; we expect it to end FY07 with total revenue of Rs.185 cr. and net profit of Rs.22 cr. This translates into an EPS of Rs.24 on its current equity of Rs.9.36 cr. At a reasonable P/E discounting of 14-18 times, the scrip should trade in the range of Rs.330-430. It’s a pure value buy, which can give handsome returns if held for the long term.
Kwality Dairy (India) Ltd. (Code No:531882) (Rs.23) is a professionally managed company, manufacturing a wide range of dairy products in bulk as well as in consumer packs, which include skimmed milk powder, dairy whitener, whole milk powder, ice cream mix powder, butter and ghee. It has reputed brands like ‘Indiana’ and ‘Kream Kountry’. FMCG biggies like HLL, Nestle, Birtannia, Cadburys, Parle, Mothers Dairy etc. are a few of its clients. In the near future, it is planning to launch Rasgula, Gulab Jamun, fresh paneer, malted foods etc. It has reported encouraging results for the March 2006 quarter with 35% rise in sales as well as net profit. For the full year, its topline grew by 37% to Rs.99 cr. and PBT increased by 55% to Rs.5.15 cr. After providing for deferred tax, its EPS comes to around Rs.2.20. For FY07, it may report an EPS of above Rs.3. Being in the growing food processing sector, this scrip is trading reasonably cheap with forward discounting by 7 times. Its 52-week high is Rs.42 and current market cap is only Rs.42 cr. The share price can appreciate 50% in 12-15 months.
All the negative news like labour unrest, management quality etc is already factored in the share price of Triveni Glass (Code No: 502281) (Rs.60). That’s why the scrip is available at 50% discount to its recent high of Rs.128 even in an all time high market. Post restructuring, the company has made a strong turnaround and for the nine months ending 31st December 2005, it recorded sales and net profit of Rs.140 cr. and Rs.8 cr. respectively. For FY07, it may report sales of Rs.225 cr. and net profit of more than Rs.15 cr., which means an EPS of Rs.12 on its diluted equity of Rs.12.60 cr. Compares to its peers, it is trading quite cheap at its current market cap of Rs.50 cr. Although promoter quality and holding is a concern, we still think it’s a value buy, which can give decent returns in such a bullish market.
International Conveyors (Code No: 509709) (Rs.135) is manufactures PVC conveyor belts, which find application in mining and material handling. Due to limited demand from the domestic market, the company is making special thrust on exports and has ambitious plans to increase its share in the lucrative international market. On the back of better operating efficiency, it reported excellent results for last the two quarters. If it continues on the same track for the March quarter as well, then the scrip will shoot up like anything. However, considering the company’s growth plan, we estimate it to report a topline of Rs.45 cr. and PAT of Rs.4.25 cr. for FY07, which works out to an EPS of Rs.18 on its tiny equity of Rs.2.40 cr. At a reasonable P/E discounting of 12 times, the scrip has the potential to cross Rs.220 in the medium term. Buy before it declares the FY06 results.
Textile scrips are back in action especially the spinning sector. Kallam Spinning (Code No: 530201) (Rs.27) appears to be one of the cheapest buys at the current levels. For the nine months ending 31st December 2005, its sales was marginally up at Rs.24 cr. but its net profit spurted 70% to Rs.2.80 cr. due to better operating efficiency. For the full year, it can report sales and net profit of Rs.33 cr. and Rs.3.50 cr. respectively, which is an EPS of Rs.5 on equity of Rs.6.85 cr. The company is undertaking a Rs.22 cr. capex to increase its production capacity by 30% to 44700 spindles from 33650 spindles. Hence, the company is estimated to end FY07 with a turnover of Rs.40 cr. and net profit of Rs.4.50 cr. i.e. an EPS of Rs.7. With the company enjoying net profit in double digits, the share price has the potential to appreciate 50% in 6-9 months. A good bet in the spinning sector.
Kwality Dairy (India) Ltd. (Code No:531882) (Rs.23) is a professionally managed company, manufacturing a wide range of dairy products in bulk as well as in consumer packs, which include skimmed milk powder, dairy whitener, whole milk powder, ice cream mix powder, butter and ghee. It has reputed brands like ‘Indiana’ and ‘Kream Kountry’. FMCG biggies like HLL, Nestle, Birtannia, Cadburys, Parle, Mothers Dairy etc. are a few of its clients. In the near future, it is planning to launch Rasgula, Gulab Jamun, fresh paneer, malted foods etc. It has reported encouraging results for the March 2006 quarter with 35% rise in sales as well as net profit. For the full year, its topline grew by 37% to Rs.99 cr. and PBT increased by 55% to Rs.5.15 cr. After providing for deferred tax, its EPS comes to around Rs.2.20. For FY07, it may report an EPS of above Rs.3. Being in the growing food processing sector, this scrip is trading reasonably cheap with forward discounting by 7 times. Its 52-week high is Rs.42 and current market cap is only Rs.42 cr. The share price can appreciate 50% in 12-15 months.
All the negative news like labour unrest, management quality etc is already factored in the share price of Triveni Glass (Code No: 502281) (Rs.60). That’s why the scrip is available at 50% discount to its recent high of Rs.128 even in an all time high market. Post restructuring, the company has made a strong turnaround and for the nine months ending 31st December 2005, it recorded sales and net profit of Rs.140 cr. and Rs.8 cr. respectively. For FY07, it may report sales of Rs.225 cr. and net profit of more than Rs.15 cr., which means an EPS of Rs.12 on its diluted equity of Rs.12.60 cr. Compares to its peers, it is trading quite cheap at its current market cap of Rs.50 cr. Although promoter quality and holding is a concern, we still think it’s a value buy, which can give decent returns in such a bullish market.
International Conveyors (Code No: 509709) (Rs.135) is manufactures PVC conveyor belts, which find application in mining and material handling. Due to limited demand from the domestic market, the company is making special thrust on exports and has ambitious plans to increase its share in the lucrative international market. On the back of better operating efficiency, it reported excellent results for last the two quarters. If it continues on the same track for the March quarter as well, then the scrip will shoot up like anything. However, considering the company’s growth plan, we estimate it to report a topline of Rs.45 cr. and PAT of Rs.4.25 cr. for FY07, which works out to an EPS of Rs.18 on its tiny equity of Rs.2.40 cr. At a reasonable P/E discounting of 12 times, the scrip has the potential to cross Rs.220 in the medium term. Buy before it declares the FY06 results.
Textile scrips are back in action especially the spinning sector. Kallam Spinning (Code No: 530201) (Rs.27) appears to be one of the cheapest buys at the current levels. For the nine months ending 31st December 2005, its sales was marginally up at Rs.24 cr. but its net profit spurted 70% to Rs.2.80 cr. due to better operating efficiency. For the full year, it can report sales and net profit of Rs.33 cr. and Rs.3.50 cr. respectively, which is an EPS of Rs.5 on equity of Rs.6.85 cr. The company is undertaking a Rs.22 cr. capex to increase its production capacity by 30% to 44700 spindles from 33650 spindles. Hence, the company is estimated to end FY07 with a turnover of Rs.40 cr. and net profit of Rs.4.50 cr. i.e. an EPS of Rs.7. With the company enjoying net profit in double digits, the share price has the potential to appreciate 50% in 6-9 months. A good bet in the spinning sector.
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