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Pitti Lamination (34.00) is primarily engaged in manufacture of electrical steel laminations and stampings which form a critical part in all types of industrial motors, alternators, pump sets, aeronautics, windmill generators and DG sets. It even produces small laminations via High Speed Press for compressors. With its installed capacity of 25,000 MTPA, company is presently working at 70% capacity utilization leaving ample scope for future growth. Besides in Jan 2008 it has completed its forward integration plan and has put up a project for fabrication of steel stator bodies, machining of stator bodies and dropping of assembled stator core into the stator body. This will result in value addition and considerable improvement in the margins. However due to share rupee appreciation during FY08 it reported lower OPM of 12% against 14% in FY07. Accordingly it sales improved by 15% to Rs 170 cr but PAT declined by 35% to Rs 6.50 cr after huge tax provisioning of Rs 4 cr equivalent to 40% of PBT. It declared 20% dividend which gives a yield of nearly 6% at CMP. With rupee being stable above Rs 42 it has the potential to clock a turnover of Rs 200 cr and PAT of Rs 9 cr i.e. EPS of Rs 10 on equity of Rs 9.50 cr for FY09. A strong buy.
Cosmo Films (80.00) is the pioneer and one of the largest manufacturers of Bi-axially Oriented Polypropylene Films (BOPP) in India with an installed capacity of 77,000 MTPA. It also manufactures thermal lamination film, an export focused product, which has higher margins. To maintain its future growth company is expanding its capacity by adding two BOPP lines of 40000 MT each. The first line is expected to be commissioned before March, 2009 for which orders have been placed for all major equipments. In addition, it is also adding two new lines in thermal lamination and increasing its capacity from 13500 to 19500 MT per annum. To fund all these it recently placed 31 lakh warrants to be converted @ Rs 107 per share. It has also taken the approval for issue of 10 lakh equity shares under ESOP. For FY08 it sales improved by 10% to Rs 585 cr but its NP zoomed up 80% due to better operating margin, lower interest & lower depreciation cost. It reported an EPS of Rs 23 and declared 50% dividend which give an yield of more than 6% at CMP. However in this year it may face margin pressure due to rise in crude oil with polypropylene being its main raw material. Hence it may clock a turnover of Rs 625 and profit of Rs 35 cr i.e. EPS of Rs 16 for FY09 on diluted equity of Rs 22.50 cr
Accurate Transformers (95.00) is engaged in manufacturing of power as well as distribution transformers ranging from 1 MVA to 40 MVA - in up to 220 KV class. It is looking to venture into manufacturing of higher capacity Power Transformers of 160 MVA from FY10. It also carries out rural electrification project which involves the complete setting up of electricity in remote areas including the laying of lines, poles and substations. Unfortunately, despite having installed capacity of more than 8000 MVA company is working at very low capacity utilization of less than 50% due to high working capital requirement and shortage of funds. As its preferential allotment of 31 lakh warrants @ 56 Rs to promoter has been shelved by the SEBI, company is scouting for strategic investor to fund its working capital requirement and capex for 160 MVA transformers. For FY08 it sales improved by 15% to Rs 197 cr and PAT grew by 25% to Rs 7.90 cr. Incidentally, this translates into an healthy EPS of Rs 27 on a very tiny equity of Rs 2.97 cr. On back of huge investment in power sector in coming years, company can report an EPS of more than Rs 35 for FY09. It’s a screaming buy at an enterprise value of merely Rs 50 cr.
3i Infotech (100.00) is the fourth largest Indian software products company offering a comprehensive range of software products & solutions primarily for banking, insurance, capital markets, mutual funds, telecom, manufacturing, retail & distribution industries. For the latest March qtr its revenue increased by 70% to Rs 352 cr and net profit jumped up 60% to Rs 50 cr. With significant growth anticipated in the transaction services business in India, company has set up a hub and spoke model spanning across the country with cost efficient delivery capabilities and is into processing of credit cards, insurance applications, contact point verification, soft collections, cheque clearing services, reconciliations, etc. As on date company is having a very healthy order book position of Rs 865 cr. For entire FY08 it recorded 80% and 75% growth in sales and NP to Rs 1223 and Rs 183 cr respectively. This translates into EPS of Rs 14 on current equity of 130.50 cr. However the EPS works to Rs 11 on fully diluted equity (conversion of all FCCB) of Rs 165 cr. Recently company has acquired a strategic stake of 26% in Hyderabad-based Locuz Enterprise Solutions Ltd for an undisclosed amount, with a commitment to acquire remaining stake over a period. A strong and a safe bet.
Cosmo Films (80.00) is the pioneer and one of the largest manufacturers of Bi-axially Oriented Polypropylene Films (BOPP) in India with an installed capacity of 77,000 MTPA. It also manufactures thermal lamination film, an export focused product, which has higher margins. To maintain its future growth company is expanding its capacity by adding two BOPP lines of 40000 MT each. The first line is expected to be commissioned before March, 2009 for which orders have been placed for all major equipments. In addition, it is also adding two new lines in thermal lamination and increasing its capacity from 13500 to 19500 MT per annum. To fund all these it recently placed 31 lakh warrants to be converted @ Rs 107 per share. It has also taken the approval for issue of 10 lakh equity shares under ESOP. For FY08 it sales improved by 10% to Rs 585 cr but its NP zoomed up 80% due to better operating margin, lower interest & lower depreciation cost. It reported an EPS of Rs 23 and declared 50% dividend which give an yield of more than 6% at CMP. However in this year it may face margin pressure due to rise in crude oil with polypropylene being its main raw material. Hence it may clock a turnover of Rs 625 and profit of Rs 35 cr i.e. EPS of Rs 16 for FY09 on diluted equity of Rs 22.50 cr
Accurate Transformers (95.00) is engaged in manufacturing of power as well as distribution transformers ranging from 1 MVA to 40 MVA - in up to 220 KV class. It is looking to venture into manufacturing of higher capacity Power Transformers of 160 MVA from FY10. It also carries out rural electrification project which involves the complete setting up of electricity in remote areas including the laying of lines, poles and substations. Unfortunately, despite having installed capacity of more than 8000 MVA company is working at very low capacity utilization of less than 50% due to high working capital requirement and shortage of funds. As its preferential allotment of 31 lakh warrants @ 56 Rs to promoter has been shelved by the SEBI, company is scouting for strategic investor to fund its working capital requirement and capex for 160 MVA transformers. For FY08 it sales improved by 15% to Rs 197 cr and PAT grew by 25% to Rs 7.90 cr. Incidentally, this translates into an healthy EPS of Rs 27 on a very tiny equity of Rs 2.97 cr. On back of huge investment in power sector in coming years, company can report an EPS of more than Rs 35 for FY09. It’s a screaming buy at an enterprise value of merely Rs 50 cr.
3i Infotech (100.00) is the fourth largest Indian software products company offering a comprehensive range of software products & solutions primarily for banking, insurance, capital markets, mutual funds, telecom, manufacturing, retail & distribution industries. For the latest March qtr its revenue increased by 70% to Rs 352 cr and net profit jumped up 60% to Rs 50 cr. With significant growth anticipated in the transaction services business in India, company has set up a hub and spoke model spanning across the country with cost efficient delivery capabilities and is into processing of credit cards, insurance applications, contact point verification, soft collections, cheque clearing services, reconciliations, etc. As on date company is having a very healthy order book position of Rs 865 cr. For entire FY08 it recorded 80% and 75% growth in sales and NP to Rs 1223 and Rs 183 cr respectively. This translates into EPS of Rs 14 on current equity of 130.50 cr. However the EPS works to Rs 11 on fully diluted equity (conversion of all FCCB) of Rs 165 cr. Recently company has acquired a strategic stake of 26% in Hyderabad-based Locuz Enterprise Solutions Ltd for an undisclosed amount, with a commitment to acquire remaining stake over a period. A strong and a safe bet.
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