STOCK WATCV
Canfin Homes (Code:511196) (Rs.59) has been a laggard for quite some time in spite of its strong fundamentals and great dividend yield. The reason was the constant selling by the promoter group institutions like HDFC and UTI. In the last two years, the promoters stake has come down to 29% from 54%. But importantly Canara Bank now holds the whole 29% stake and it does not want to dilute its stake. For the Sept.’06 quarter the company has once again come out with flying colours. Its total revenue grew by 35% to Rs.48 cr. whereas PAT increased by whopping 60% to Rs.8.90 cr., thereby registering an EPS of more than Rs.4 for the quarter. For the full year FY07, it may report a top line of Rs.190 cr. and net profit of Rs.33 cr. i.e. EPS of Rs.16. This means that the scrip is currently trading at a P/E ratio of less than 4. With a staggering book value of Rs.85 and dividend yield of around 5%, this scrip is bound to cross Rs.100 in the medium term. A screaming buy.
Thirumalai Chemicals (Code:500412) (Rs.180) has world scale plants for manufacturing diverse products including Phthalic Anhydride (PAN), Maleic Anhydride (MAN), Fumaric Acid, Food Acids etc. Due to some changes in its marketing strategies, the company has improved its capacity utilization leading to higher sales volume and thereby bringing economies of scale. For the Sept.’06 quarter, sales increased by 15% to Rs.139 cr. and net profit increased by 25% to Rs.10 cr. posting an EPS of Rs.10 for the quarter. For the six months ending Sept.’06, its net profit is Rs.20 cr. compared to Rs.14.50 cr. for the entire last year. For the full year Fy07 it may clock a turnover of Rs.525 cr. and net profit of Rs.35 cr. i.e. EPS of Rs.35 on its current equity of Rs.10.25 cr. However the shutting down of its Maleic Anhydride plant last month will affect the bottom-line marginally. Buy on declines.
Although Sagar Cement (Code:502090) (Rs.131) has doubled in the recent rally, but it still has great potential to rise further. After reporting stunning numbers for the June’06 quarter, the company has once again declared mind-blowing numbers for the Sept.’06 quarter. Sales have jumped 70% to Rs.27 cr. whereas net profit stood at Rs.5.25 cr. in spite of a huge tax provision of Rs.4.20 cr. For the current six months its sales were Rs.56 cr. and net profit was Rs.15 cr. compared to Rs.32 cr. and loss of Rs.1 cr. in the previous corresponding period. Notably, its OPM has improved substantially to 40% from 6% last year because of better price realization and a drastic fall in ‘other expenditure’. Assuming the same trend for the second half, it may end FY07 with sales of Rs.120 cr. and net profit of Rs.26-27 cr. resulting in an EPS of Rs.21 on its fully diluted equity of Rs.13 cr. At a reasonable P/E ratio of 8, the scrip can touch Rs.175 in the short to medium-term.
Easun Reyrolle (Code:532751) (Rs.590) is as a strong and independent solutions provider in the areas of power system protection, control, automation, metering and switching segments. It has recently ventured into a new business area i.e. construction of projects on turnkey basis under which it will mainly concentrate on substation projects and power system automation projects. Recently, it announced encouraging numbers for the Sept’06 quarter. Total revenue jumped by 25% to Rs.31.70 cr. and net profit grew by 10% to Rs.3.9 cr. For future growth, it is setting up a 45,000 sq. ft. world class manufacturing facility at Hosur for medium voltage switchgear at an investment of Rs.12 cr. For the full year FY07, it is estimated to report a top-line of Rs.125 cr. and bottom-line of Rs.15 cr. This works out to an EPS of Rs.48 on its tiny equity of Rs.3.33 cr. With a huge reserve of Rs.35 cr., it is a strong bonus candidate as well. Accumulate at dips.
Thirumalai Chemicals (Code:500412) (Rs.180) has world scale plants for manufacturing diverse products including Phthalic Anhydride (PAN), Maleic Anhydride (MAN), Fumaric Acid, Food Acids etc. Due to some changes in its marketing strategies, the company has improved its capacity utilization leading to higher sales volume and thereby bringing economies of scale. For the Sept.’06 quarter, sales increased by 15% to Rs.139 cr. and net profit increased by 25% to Rs.10 cr. posting an EPS of Rs.10 for the quarter. For the six months ending Sept.’06, its net profit is Rs.20 cr. compared to Rs.14.50 cr. for the entire last year. For the full year Fy07 it may clock a turnover of Rs.525 cr. and net profit of Rs.35 cr. i.e. EPS of Rs.35 on its current equity of Rs.10.25 cr. However the shutting down of its Maleic Anhydride plant last month will affect the bottom-line marginally. Buy on declines.
Although Sagar Cement (Code:502090) (Rs.131) has doubled in the recent rally, but it still has great potential to rise further. After reporting stunning numbers for the June’06 quarter, the company has once again declared mind-blowing numbers for the Sept.’06 quarter. Sales have jumped 70% to Rs.27 cr. whereas net profit stood at Rs.5.25 cr. in spite of a huge tax provision of Rs.4.20 cr. For the current six months its sales were Rs.56 cr. and net profit was Rs.15 cr. compared to Rs.32 cr. and loss of Rs.1 cr. in the previous corresponding period. Notably, its OPM has improved substantially to 40% from 6% last year because of better price realization and a drastic fall in ‘other expenditure’. Assuming the same trend for the second half, it may end FY07 with sales of Rs.120 cr. and net profit of Rs.26-27 cr. resulting in an EPS of Rs.21 on its fully diluted equity of Rs.13 cr. At a reasonable P/E ratio of 8, the scrip can touch Rs.175 in the short to medium-term.
Easun Reyrolle (Code:532751) (Rs.590) is as a strong and independent solutions provider in the areas of power system protection, control, automation, metering and switching segments. It has recently ventured into a new business area i.e. construction of projects on turnkey basis under which it will mainly concentrate on substation projects and power system automation projects. Recently, it announced encouraging numbers for the Sept’06 quarter. Total revenue jumped by 25% to Rs.31.70 cr. and net profit grew by 10% to Rs.3.9 cr. For future growth, it is setting up a 45,000 sq. ft. world class manufacturing facility at Hosur for medium voltage switchgear at an investment of Rs.12 cr. For the full year FY07, it is estimated to report a top-line of Rs.125 cr. and bottom-line of Rs.15 cr. This works out to an EPS of Rs.48 on its tiny equity of Rs.3.33 cr. With a huge reserve of Rs.35 cr., it is a strong bonus candidate as well. Accumulate at dips.
GNFC (Code:500670) (Rs.106) basically manufactures and distributes fertilizers like Urea, Ammonium Nitro-phosphate, Calcium Ammonium Nitrate and chemicals like Ammonia, Weak Nitric Acid, Concentrated Nitric Acid, Methanol, Acetic Acid, Formic Acid etc. Purely on fundamental basis, it is trading fairly cheap and with a nominal risk of major correction from the current level. Its Sept’06 quarter was not that encouraging on account of a fall in margin due to increased in power cost and other expenditure. Its turnover grew by 25% to Rs.688 cr. but net profit was flat at Rs.74 cr. However for the full year FY07, it is estimated to report sales of Rs.2450 cr. and net profit of Rs.275 cr. on standalone basis. This works to an EPS of Rs.19 on its equity of Rs.146.50 cr. Besides, the merger with Narmada Chematur will make it fundamentally much stronger as it will bring in additional profit of around Rs.60 cr. but the equity dilution will be of only Rs.9 cr. So on a consolidated basis, it may report an EPS of Rs.22. Notably, GNFC has brought down its debt to Rs.270 cr. from Rs.500 cr. and has huge reserves of more than Rs.1000 cr. Besides, it is a good dividend paying company with an uninterrupted dividend track record for the last two decades.
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