Vallabh Steel (Code No.: 513397) (Rs.37) is a leading manufacturer and exporter of MS ERW Galvanized Pipes, CR Sheets/ Coils, Precision Tubes/ Hollow Sections etc. It is exporting to various countries including South Africa, UAE, Europe, China, Male, Mozambique, Singapore and USA under the brand name of ‘Oswal’. As a step towards backward integration, the company has set up a sponge iron plant of 350 TPD capacity and recently started the commercial production. For the full year FY06, the company is expected to clock a turnover of around Rs.325 cr. with net profit of Rs.5 cr., which will lead to an EPS of Rs.10 on its small equity of Rs.4.95 cr. For FY07, it can report an EPS of Rs.12. The company has huge reserves of Rs.25 cr., which translates into a book value of around Rs.60. Having 52 Week H/L of Rs.66/30 it seems a good bet although the investor unfriendly attitude of the management is a cause of concern.
Due to panic selling, the share price of Aarti Drugs (Code No.: 524348) (Rs.81) touched a new low of Rs.68 a few days back. The fundamentals as well as future prospects of the company are quite promising as its Tarapur facility may get USFDA approval this fiscal. Besides, it commands a leadership position with over 70% market share for more than 15 principal products including Secnidazole, Ornidazole, Metronidazole etc. It has a strong presence in the anti-diarrhoea, anti-inflammatory therapeutic segments with products such as Tinidazole, Metronidazole, Nimesulide, Rofecoxib and is the largest producer of Benzene based basic and intermediate chemicals in India. For FY06, it registered a top-line and bottom-line of Rs.253 cr. and Rs.12.70 cr. respectively. This works out to an EPS of Rs.11 on its current equity of Rs.11.70 cr. Although the management has declared a lower dividend of 15%, the scrip has the potential to double in a year’s time.
Hind Industries Ltd. (Code No.:526307) (Rs.27) along with its group company is the largest producer and exporter of fresh and frozen meat of buffalo, goat, sheep etc. Importantly, it is the only group in the country to have unique facilities of slaughtering animals which have been bred and reared on the strict guidelines set by the O.I.E. Paris. It exports mostly to Middle East countires, Egypt, Indonesia, Malaysia, Mauritus, Phillipines Thailand, East & West Africa countries and CIS countries. Although its sales were down 14% for FY06 to Rs.84 cr., its net profit jumped 130% to Rs.4.10 cr. on the back of higher price realization and better profit margins. This works out to an EPS of Rs.5 on its equity of Rs.8.60 cr. The hidden value for this company is in its subsidiary ‘Hind Agro Industries Ltd.’, which has a top-line of around Rs.350 cr. and which may be merged later with the company and will unlock shareholder value. This scrip is still available at a market cap of only Rs.22 cr. A pure value buy!
Diamines & Chemicals Ltd. (Code No.: 500120) (Rs.70) is a leading producer of ethylenediamine and polamines such as diethylenetriamine, triethlenetetramine and other polyethylene polyamines It also manufactures Piperazine anhydrous and piperazine 65% and is the only domestic supplier of piperazine to the pharma and other industries. It has also set up Wind Mill of 1.25 MW capacity for captive power consumption which started power generation in March’06 and will reduce its power cost substantially. For FY06, while sales increased by 15% to Rs.21 cr. net profit spurted 35% to Rs.6.11 cr. registering an EPS of Rs.9 on its equity of Rs.6.50 cr. Notably, the investor- friendly management declared 50% dividend (15% + 35%) i.e. a payout ratio of around whopping 55% which is excellent by any standard. The dividend yield works out to more than 7% at CMP. Keep accumulating at every decline.
The government is putting special thrust on food & agro processing industry as this sector is the main contributor to high GDP growth. This augurs well for Agro Dutch Industries (Code No.: 519281) (Rs.26), which is the world’s largest producer and exporter of mushrooms. More than 22% of the import of mushrooms in USA is sourced from Agro Dutch Industries. It is setting up a new facility to produce 14,000 tonnes of frozen mushrooms for which the realization is better than that of canned ones. This will take its total production capacity to 50,000 tonnes. Being an integrated player, it is also putting up an additional can-manufacturing facility in Chennai at Rs.50 cr. For FY06, it can report sales of Rs.150 cr. and PAT of Rs.14 cr. i.e. EPS of Rs.5 on its expanded equity of Rs.29.50 cr. For FY07, it can even post EPS of Rs.7. A screaming buy at current levels.
Hind Industries Ltd. (Code No.:526307) (Rs.27) along with its group company is the largest producer and exporter of fresh and frozen meat of buffalo, goat, sheep etc. Importantly, it is the only group in the country to have unique facilities of slaughtering animals which have been bred and reared on the strict guidelines set by the O.I.E. Paris. It exports mostly to Middle East countires, Egypt, Indonesia, Malaysia, Mauritus, Phillipines Thailand, East & West Africa countries and CIS countries. Although its sales were down 14% for FY06 to Rs.84 cr., its net profit jumped 130% to Rs.4.10 cr. on the back of higher price realization and better profit margins. This works out to an EPS of Rs.5 on its equity of Rs.8.60 cr. The hidden value for this company is in its subsidiary ‘Hind Agro Industries Ltd.’, which has a top-line of around Rs.350 cr. and which may be merged later with the company and will unlock shareholder value. This scrip is still available at a market cap of only Rs.22 cr. A pure value buy!
Diamines & Chemicals Ltd. (Code No.: 500120) (Rs.70) is a leading producer of ethylenediamine and polamines such as diethylenetriamine, triethlenetetramine and other polyethylene polyamines It also manufactures Piperazine anhydrous and piperazine 65% and is the only domestic supplier of piperazine to the pharma and other industries. It has also set up Wind Mill of 1.25 MW capacity for captive power consumption which started power generation in March’06 and will reduce its power cost substantially. For FY06, while sales increased by 15% to Rs.21 cr. net profit spurted 35% to Rs.6.11 cr. registering an EPS of Rs.9 on its equity of Rs.6.50 cr. Notably, the investor- friendly management declared 50% dividend (15% + 35%) i.e. a payout ratio of around whopping 55% which is excellent by any standard. The dividend yield works out to more than 7% at CMP. Keep accumulating at every decline.
The government is putting special thrust on food & agro processing industry as this sector is the main contributor to high GDP growth. This augurs well for Agro Dutch Industries (Code No.: 519281) (Rs.26), which is the world’s largest producer and exporter of mushrooms. More than 22% of the import of mushrooms in USA is sourced from Agro Dutch Industries. It is setting up a new facility to produce 14,000 tonnes of frozen mushrooms for which the realization is better than that of canned ones. This will take its total production capacity to 50,000 tonnes. Being an integrated player, it is also putting up an additional can-manufacturing facility in Chennai at Rs.50 cr. For FY06, it can report sales of Rs.150 cr. and PAT of Rs.14 cr. i.e. EPS of Rs.5 on its expanded equity of Rs.29.50 cr. For FY07, it can even post EPS of Rs.7. A screaming buy at current levels.
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