STOCK WATCH
To take the advantage of the increased demand of Indian pharmaceutical products in the international market, Ahlcon Parenterals (68.00) - manufacture of life saving Intravenous Fluids and medical disposals, has off late made arrangements with several international agencies for increasing the base of export markets. It has recently added many new foreign customers to its existing list and is putting special thrust to increase direct and indirect exports. It has already filed product dossiers in both the regulated as well as unregulated markets and the registration formalities with more than fifteen countries are in progress. Accordingly company has upgraded its production facilities to conform to latest GMP standards as per international guidelines and specific requirement of the giant pharma customers. Since the plant is working at 100% capacity utilization, company is undergoing aggressive expansion to almost triple the small volume parenteral capacity from 59 million units to 162 million units. At the same time, it will continue to produce 32 million units of large volume parenteral. On the back of lackluster performance for the Sept qtr, scrip has been an underperformer for quite long time. As company is facing stiff competition in domestic market, it may end FY08 with sales of 55 cr and NP of 7.50 cr i.e. EPS of 10 Rs on equity of 7.20 cr. But with new capacity becoming operational and increase revenue from exports it has the potential to report an EPS of Rs 14 for FY09. Keep accumulating at declines
Seshasayee Paper (202.00) is engaged in manufacturing of printing/writing papers, packing/wrapping papers and specialty papers. Presently, it has the pulping capacity of 230 TPD and paper manufacturing capacity of 115,000 TPA. To enhance its environmental performance, it is implementing Mill Development Plan at estimated cost of 350 cr which will make the company self sufficient in wood pulp requirements. Under this plan, company is replacing its 30 yr old wood pulp mill of 230 TPD capacity with a comparatively newer but second hand pulp mill from USA which has advanced technological features, like RDH Pulping, Oxygen De-lignification, ECF Bleaching etc apart from having higher capacity of 350 TPD. However due to delay in supply of some key equipment, the project is expected to complete by March 2008. Meanwhile to de-risk its dependence on government and other agencies, company has entered into agreements with farmers holding over 3000 acres of land and planted Eucalyptus Hybrid/ Casuarina varieties to develop its own source of plantations. For FY08 it is expected to clock a turnover of 500 cr and NP of 45 cr which works out to an EPS of 40 Rs on equity of 11.25 cr. Despite company having high debt equity ratio, scrip can be bought at declines.
Eastern Silk (230.00) is among the few companies to be fully integrated from spinning, yarn dyeing, weaving, printing, embroidery, fabric dyeing, finishing to making made-ups. It has gradually moved up the value chain by putting special thrust on production of machine made high fashion fabric and home furnishing. It has recently completed expansion programme at its Anekal’s Unit 2 facility thereby taking the total fabric manufacturing capacity to 18.5 lac metres from 14 lac metres per annum. It is also setting up made-up plant at Bommasandra near Bangalore having an installed capacity of 1500 sets per day with an investment of 18 cr and is expected to commence operation in this fiscal itself. Incidentally, company derives 80% of total revenue from export, but at the same time 70% of raw material is imported by the company. Secondly, company also undertakes hedging activities and hence is protected from rupee appreciation to some extent. It reported encouraging nos for the first two quarters and is estimated to clock a turnover of 550 cr and PAT of 68 cr for FY08. This translates into EPS of Rs 43 on equity of 15.80 cr. For future growth, company is looking to make some foreign acquisition for which it may raise 240 cr thru FCCB/GDR route. It is also contemplating to split the face value of share to 2/- Rs from 10/- Rs which will improve the liquidity going forward.
Murudeshwar Ceramics (112.00) is one of the leading manufacturers of vitrified tiles, ceramic tiles and granites in India with its popular brand 'NAVEEN’. Importantly, company derives nearly 80% of revenue from sales of vitrified tiles which enjoy higher margin than the rest two. On the back of constant expansion, its present capacity stands at 6.3 million sq mtr of vitrified tiles, 2.7 million sq mtr of ceramic tiles and only 72,000 sq mtr for granites. Notably, institutional clients constitute 60% of total sales and retail clients constitute balance 40%. This is backed by a strong marketing network with 6 distributors, 74 show rooms, 45 depots and about 400 dealers spread across India. With the ongoing boom in construction sector, increasing mall culture and strong demand for hi-tech commercial complexes, the future prospect of the company is quite promising. It is expected to report a topline of 275 cr and bottomline of 30 cr on conservative basis for FY08. This works out to an EPS of 17 Rs on equity of Rs 17.50 cr. Notably, its Cash EPS stands at whopping 32 Rs. As current fiscal being a silver jubilee year for the company, it may declare liberal bonus for its shareholders. At CMP, scrip is trading at a P/E ratio of merely 6.5x times and is available at an EV of 400 cr which is below its gross block value of Rs 470 cr. However, icing on the cake is the 20 acres surplus land owned by the company near electronic city where it intends to develop IT park. Share price can shoot up to 175 Rs in medium term.
Seshasayee Paper (202.00) is engaged in manufacturing of printing/writing papers, packing/wrapping papers and specialty papers. Presently, it has the pulping capacity of 230 TPD and paper manufacturing capacity of 115,000 TPA. To enhance its environmental performance, it is implementing Mill Development Plan at estimated cost of 350 cr which will make the company self sufficient in wood pulp requirements. Under this plan, company is replacing its 30 yr old wood pulp mill of 230 TPD capacity with a comparatively newer but second hand pulp mill from USA which has advanced technological features, like RDH Pulping, Oxygen De-lignification, ECF Bleaching etc apart from having higher capacity of 350 TPD. However due to delay in supply of some key equipment, the project is expected to complete by March 2008. Meanwhile to de-risk its dependence on government and other agencies, company has entered into agreements with farmers holding over 3000 acres of land and planted Eucalyptus Hybrid/ Casuarina varieties to develop its own source of plantations. For FY08 it is expected to clock a turnover of 500 cr and NP of 45 cr which works out to an EPS of 40 Rs on equity of 11.25 cr. Despite company having high debt equity ratio, scrip can be bought at declines.
Eastern Silk (230.00) is among the few companies to be fully integrated from spinning, yarn dyeing, weaving, printing, embroidery, fabric dyeing, finishing to making made-ups. It has gradually moved up the value chain by putting special thrust on production of machine made high fashion fabric and home furnishing. It has recently completed expansion programme at its Anekal’s Unit 2 facility thereby taking the total fabric manufacturing capacity to 18.5 lac metres from 14 lac metres per annum. It is also setting up made-up plant at Bommasandra near Bangalore having an installed capacity of 1500 sets per day with an investment of 18 cr and is expected to commence operation in this fiscal itself. Incidentally, company derives 80% of total revenue from export, but at the same time 70% of raw material is imported by the company. Secondly, company also undertakes hedging activities and hence is protected from rupee appreciation to some extent. It reported encouraging nos for the first two quarters and is estimated to clock a turnover of 550 cr and PAT of 68 cr for FY08. This translates into EPS of Rs 43 on equity of 15.80 cr. For future growth, company is looking to make some foreign acquisition for which it may raise 240 cr thru FCCB/GDR route. It is also contemplating to split the face value of share to 2/- Rs from 10/- Rs which will improve the liquidity going forward.
Murudeshwar Ceramics (112.00) is one of the leading manufacturers of vitrified tiles, ceramic tiles and granites in India with its popular brand 'NAVEEN’. Importantly, company derives nearly 80% of revenue from sales of vitrified tiles which enjoy higher margin than the rest two. On the back of constant expansion, its present capacity stands at 6.3 million sq mtr of vitrified tiles, 2.7 million sq mtr of ceramic tiles and only 72,000 sq mtr for granites. Notably, institutional clients constitute 60% of total sales and retail clients constitute balance 40%. This is backed by a strong marketing network with 6 distributors, 74 show rooms, 45 depots and about 400 dealers spread across India. With the ongoing boom in construction sector, increasing mall culture and strong demand for hi-tech commercial complexes, the future prospect of the company is quite promising. It is expected to report a topline of 275 cr and bottomline of 30 cr on conservative basis for FY08. This works out to an EPS of 17 Rs on equity of Rs 17.50 cr. Notably, its Cash EPS stands at whopping 32 Rs. As current fiscal being a silver jubilee year for the company, it may declare liberal bonus for its shareholders. At CMP, scrip is trading at a P/E ratio of merely 6.5x times and is available at an EV of 400 cr which is below its gross block value of Rs 470 cr. However, icing on the cake is the 20 acres surplus land owned by the company near electronic city where it intends to develop IT park. Share price can shoot up to 175 Rs in medium term.
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