STOCK WATCH
HBL Power Systems (300.00) is the leader in design, development and manufacture of industrial & specialized batteries, allied electronic products and DC systems in India. Infact it is the market leader in VRLA (valve regulated lead acid) and NCPP (nickel cadium pocket plate) batteries and enjoys 50% market share of domestic telecom market. Moreover it is among the very few companies in the world making ultra high specialties batteries for military use like thermal, reserve and torpedo batteries. Ironically, it stands 3rd globally for Nicad Passenger aircraft batteries and ranks 2nd for industrial alkaline batteries. Apart from supplying various batteries for train lighting, air conditioned coaches etc, of late company has designed and developed wide range of microprocessor based signaling products and power systems to cater to the needs of Indian Railways. Recently company has put up two new factories at Vizianagaram and SEZ Vizag in Visakhapatnam under a capex of Rs 150. For FY08, it is expected to clock a turnover of Rs 1000 cr and NP of Rs 72 cr leading to an EPS of Rs 30 on equity of Rs 24.30 cr. A solid bet.
For the latest March qtr, JK Lakshmi (112.00) reported 10% growth in sales as well as profit to Rs 291 cr and Rs 68 respectively. Accordingly, for the entire FY08 its sales was up 30% to Rs 1107 cr and PAT increased by 25% to Rs 224 cr. This leads to an EPS of Rs 37 on equity of Rs 61 cr. On this it declared a total dividend of 25% for the year. To maintain its momentum company is expanding its cement capacity to 5 million from 3.6 million tonne by end of this calendar year. On the other hand, it is betting high on its lucrative RMC business and intends to add 5 more RMC plants in the current fiscal thereby taking its total number of RMC units to 14. Moreover it has replaced its high cost debts by cheaper funds and has considerably reduced its interest cost. By 2011, company plans to complete the setting up of 2.70 million tonne Greenfield cement plant at Chhattisgarh under a capex of Rs 1100 cr and has already got the limestone mining lease approval. Despite govt’s interference to control the cement prices, this company is expected to grow at a healthy pace in coming years.
Simplex Casting (71.00) is engaged in manufacturing of heavy engineering castings in various grades for industries like steel, rail, mining, cement, power and other engineering sectors. To derisk its business model company is now moving up the value chain and is venturing into the machined castings. This will improve the margins going forward and will also lead to addition of new clients which seek the machined components. For the March qtr although its sales improved by 10% to Rs 44 cr but PAT declined marginally to rs 2 cr. However for the full year it recorded 10% and 30% growth in sales and NP to Rs 150 cr and Rs 7.40 cr respectively. Hece it posted an EPS of more than Rs 12 on equity of Rs 6 cr. Couple of month back it bagged a prestigious order worth Rs 14 cr from Indian railways for supply of coco bogies and expects to get more such order in future. Currently it has a very healthy order book position of Rs 120 cr which includes export orders worth Rs 30 cr. Interestingly it has plans to venture into project execution and turnkey business of steel plants and also intends to forward integrate into valve manufacturing business, which is a very high margin business. Although rising input cost is a cause of concern, still it’s a decent buy at current levels.
In the last few months, price of newsprint have shot up nearly 40% and is being sold at more than Rs 35000 per tonne. This augurs well for Rama Paper (23.00) as it derives nearly 60% revenue from newsprint segment. Its 6 MW co-generation captive power plant is fully operational now. Further company has undertaken expansion project of putting MG Machine to manufacture Tissue / Poster Paper thru a capex of Rs 24 cr. In the last two years, promoter have infused more than Rs 15 cr of their own money by taking preferential allotment of 45 lac equity shares @ 35 Rs per share. However, despite 500 basis point improvement in operating margin, company reported flat numbers for FY08 due to substantial increase in interest & depreciation cost. Its sales and PBT remained flat at Rs 84.50 cr and Rs 8 cr respectively. But, on the back of lower tax provisioning its PAT was up 90% to Rs 7 cr posting an EPS of Rs 7 for FY08. It is expected to declare 10% dividend which means a good yield at CMP. Buy at sharp declines.
For the latest March qtr, JK Lakshmi (112.00) reported 10% growth in sales as well as profit to Rs 291 cr and Rs 68 respectively. Accordingly, for the entire FY08 its sales was up 30% to Rs 1107 cr and PAT increased by 25% to Rs 224 cr. This leads to an EPS of Rs 37 on equity of Rs 61 cr. On this it declared a total dividend of 25% for the year. To maintain its momentum company is expanding its cement capacity to 5 million from 3.6 million tonne by end of this calendar year. On the other hand, it is betting high on its lucrative RMC business and intends to add 5 more RMC plants in the current fiscal thereby taking its total number of RMC units to 14. Moreover it has replaced its high cost debts by cheaper funds and has considerably reduced its interest cost. By 2011, company plans to complete the setting up of 2.70 million tonne Greenfield cement plant at Chhattisgarh under a capex of Rs 1100 cr and has already got the limestone mining lease approval. Despite govt’s interference to control the cement prices, this company is expected to grow at a healthy pace in coming years.
Simplex Casting (71.00) is engaged in manufacturing of heavy engineering castings in various grades for industries like steel, rail, mining, cement, power and other engineering sectors. To derisk its business model company is now moving up the value chain and is venturing into the machined castings. This will improve the margins going forward and will also lead to addition of new clients which seek the machined components. For the March qtr although its sales improved by 10% to Rs 44 cr but PAT declined marginally to rs 2 cr. However for the full year it recorded 10% and 30% growth in sales and NP to Rs 150 cr and Rs 7.40 cr respectively. Hece it posted an EPS of more than Rs 12 on equity of Rs 6 cr. Couple of month back it bagged a prestigious order worth Rs 14 cr from Indian railways for supply of coco bogies and expects to get more such order in future. Currently it has a very healthy order book position of Rs 120 cr which includes export orders worth Rs 30 cr. Interestingly it has plans to venture into project execution and turnkey business of steel plants and also intends to forward integrate into valve manufacturing business, which is a very high margin business. Although rising input cost is a cause of concern, still it’s a decent buy at current levels.
In the last few months, price of newsprint have shot up nearly 40% and is being sold at more than Rs 35000 per tonne. This augurs well for Rama Paper (23.00) as it derives nearly 60% revenue from newsprint segment. Its 6 MW co-generation captive power plant is fully operational now. Further company has undertaken expansion project of putting MG Machine to manufacture Tissue / Poster Paper thru a capex of Rs 24 cr. In the last two years, promoter have infused more than Rs 15 cr of their own money by taking preferential allotment of 45 lac equity shares @ 35 Rs per share. However, despite 500 basis point improvement in operating margin, company reported flat numbers for FY08 due to substantial increase in interest & depreciation cost. Its sales and PBT remained flat at Rs 84.50 cr and Rs 8 cr respectively. But, on the back of lower tax provisioning its PAT was up 90% to Rs 7 cr posting an EPS of Rs 7 for FY08. It is expected to declare 10% dividend which means a good yield at CMP. Buy at sharp declines.
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