STOCK WATCH
Apart from being a leading caustic soda manufacturer, Chemfab Alkali (105.00) has ventured into fast growing retail health care segment and also manufactures water purifying machinery & sells packaged drinking water under brand name “TEAM”. It is also the only Indian manufacturer of multi bore hollow fibre ultra filtration membranes, whose marketing is done by M/s Dupont, worldwide. Notably, company has already opened three outlets of ‘Team Health Shoppe’ at Chennai to market its own ‘Team Eubio’ care products as well as proven products from other manufacturers. Thru these shops it offers a range of health care, body care, beauty care, skin care hair care and other nutritional food products. Its ‘Energy Herbal Water’ which can neutralize acidic wastes in the body and reduce weight has been a super hit and is witnessing strong demand. Few months back, due to some labor unrest at the manufacturing plant, its last two quarter performance got hit badly but now everything is fine and company is back on track. Thus, it is expected to report sales of 110 cr and profit of 16.50 cr for FY08 which leads to an EPS of 18 Rs on small equity of 4.60 cr with face value as Rs 5/-. Despite marginal fall in net profit this fiscal, company is expected to maintain 100% dividend which gives a handsome dividend yield of around 5%. Moreover in future, management may de-merge its health care division which will lead to re-rating of the company.
Blue Bird (72.00) is one of the leading manufacturers of paper based notebook products and office stationery products like executive notepads, diaries, arch-lever files, perforated pads, registers, filler papers and folders. Although notebook forms the core business with more than 80% revenue, company has also ventured into publishing academic textbooks and self study books for children apart from general publications in subjects such as ayurveda and biographies. It also offers commercial printing under which it designs and prints annual reports, brochures, catalogues, offer documents, coffee table books, calendars, greeting cards, magazines, text books, publications etc. In order to cater the central and south India market efficiently, company has recently put up two new plants at Indore and Bangalore apart from having its main plant in Pune. It is also expanding its distribution network and has ambitious growth plans for publication division. Although, its H1FY08 nos are not so encouraging, still it is expected to end FY08 with sales of 550 cr and PAT of 30 cr i.e. EPS of Rs 9 on equity of 35 Rs. Considering its IPO at Rs 105 in Nov 2006 and 52 week H/L as Rs 128/55, it still has the potential to rise 20~25 % in short term.
Like other IT scrips, investors are selling Tera software (82.00) also in fear of rupee appreciation with knowing that company derives 100% of its revenues from the domestic markets. Hence it is totally unaffected by any sort of rupee appreciation against US dollar. It is actually is one of the leading e-governance solution providers, undertaking data entry/scanning works for digitization of information maintained under Right to Information Act. It also undertakes short-term projects like issue of photo ID cards, ration cards and election commission cards. In consortium with Electronics Corporation of India Ltd, company has bagged huge e-governance order, taking its total order book position to around 250 crore to be executed in next five years. Recently, company has been selected as empanelled vendor for rollout of IT services in govt sector through National Informatics Centre Services Inc. for a period of one year which can be extended for another one year. On the back of excellent half yearly nos, company is estimated to report total revenue of 75 cr and PAT of 16 cr i.e. EPS of 13 Rs on equity of 12.50 cr for FY08. Moreover company has few acres of surplus land in Hyderabad, which it plans to either sell or enter into JV with infrastructure company. At a modest discounting by 12x times, share price has the potential to cross 150 Rs in medium term. In short it’s a mini Vakrangee Software.
Roto Pumps (64.00) is a reputed manufacturer of progressive cavity pumps and twin screw pumps which have very wide application in agriculture, domestic and industrial sector. Besides India, it has warehouse cum marketing office in Australia and U.K. and also good network of distributors spread across the globe. On the back of strong industrial growth and robust demand for its product, company has undertaken an expansion cum modernization plan at its manufacturing facilities. It recorded 24% growth in sales to 18 cr and 40% rise in net profit to 1.20 cr for half year ending Sept’07. Accordingly it may register a topline of 40 cr and bottom-line of 2.75 cr for fiscal year 2008. This translates into EPS of 9 Rs on a small equity of 3.09 cr. Hence with promoters holding 70% stake, the floating stock is very low. This means scrip can see a vertical rise if it catches market fancy. Moreover for FY09, company has the potential to post an EPS of more than Rs 12. At the current enterprise value of Rs 26 cr, scrip is trading fairly cheap. Long term investors should keep accumulating at decline for a price target of 100 Rs in 12~15 months.
Blue Bird (72.00) is one of the leading manufacturers of paper based notebook products and office stationery products like executive notepads, diaries, arch-lever files, perforated pads, registers, filler papers and folders. Although notebook forms the core business with more than 80% revenue, company has also ventured into publishing academic textbooks and self study books for children apart from general publications in subjects such as ayurveda and biographies. It also offers commercial printing under which it designs and prints annual reports, brochures, catalogues, offer documents, coffee table books, calendars, greeting cards, magazines, text books, publications etc. In order to cater the central and south India market efficiently, company has recently put up two new plants at Indore and Bangalore apart from having its main plant in Pune. It is also expanding its distribution network and has ambitious growth plans for publication division. Although, its H1FY08 nos are not so encouraging, still it is expected to end FY08 with sales of 550 cr and PAT of 30 cr i.e. EPS of Rs 9 on equity of 35 Rs. Considering its IPO at Rs 105 in Nov 2006 and 52 week H/L as Rs 128/55, it still has the potential to rise 20~25 % in short term.
Like other IT scrips, investors are selling Tera software (82.00) also in fear of rupee appreciation with knowing that company derives 100% of its revenues from the domestic markets. Hence it is totally unaffected by any sort of rupee appreciation against US dollar. It is actually is one of the leading e-governance solution providers, undertaking data entry/scanning works for digitization of information maintained under Right to Information Act. It also undertakes short-term projects like issue of photo ID cards, ration cards and election commission cards. In consortium with Electronics Corporation of India Ltd, company has bagged huge e-governance order, taking its total order book position to around 250 crore to be executed in next five years. Recently, company has been selected as empanelled vendor for rollout of IT services in govt sector through National Informatics Centre Services Inc. for a period of one year which can be extended for another one year. On the back of excellent half yearly nos, company is estimated to report total revenue of 75 cr and PAT of 16 cr i.e. EPS of 13 Rs on equity of 12.50 cr for FY08. Moreover company has few acres of surplus land in Hyderabad, which it plans to either sell or enter into JV with infrastructure company. At a modest discounting by 12x times, share price has the potential to cross 150 Rs in medium term. In short it’s a mini Vakrangee Software.
Roto Pumps (64.00) is a reputed manufacturer of progressive cavity pumps and twin screw pumps which have very wide application in agriculture, domestic and industrial sector. Besides India, it has warehouse cum marketing office in Australia and U.K. and also good network of distributors spread across the globe. On the back of strong industrial growth and robust demand for its product, company has undertaken an expansion cum modernization plan at its manufacturing facilities. It recorded 24% growth in sales to 18 cr and 40% rise in net profit to 1.20 cr for half year ending Sept’07. Accordingly it may register a topline of 40 cr and bottom-line of 2.75 cr for fiscal year 2008. This translates into EPS of 9 Rs on a small equity of 3.09 cr. Hence with promoters holding 70% stake, the floating stock is very low. This means scrip can see a vertical rise if it catches market fancy. Moreover for FY09, company has the potential to post an EPS of more than Rs 12. At the current enterprise value of Rs 26 cr, scrip is trading fairly cheap. Long term investors should keep accumulating at decline for a price target of 100 Rs in 12~15 months.
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