STOCK WATCH
South India Paper Mills (50.00) declared flat performance for the March’09 qtr as sales declined marginally to Rs 27 cr and PAT remained flat at Rs 2.10 cr. It reported an OPM of 15% which is highest in the last four quarters. However for entire FY09 it reported a 30% decline in net profit to Rs 8.25 cr on flat sales of Rs 126 cr. This translates into EPS of Rs 11 on equity of Rs 7.50 cr. Despite a sharp fall in profit, company declared the same amount of dividend i.e. 30% as given last year which proves the investors friendly attitude of the management. At CMP the dividend yield works out to an healthy 6%. Company is having strong presence in packing paper and paper boards apart from manufacturing writing and printing paper. On back of robust demand, company is implementing a brown field expansion with an investment of about 110 cr under which it will more than double its paper manufacturing capacity to 115,000 TPA from 55,000 TPA currently. It will also be augmenting its captive power generation capacity by 3.50 MW. Besides expansion, company is going for forward integration into high quality corrugated boards and intends to have at least one 100% owned facility and possibly one facility under joint venture near Chennai. It is one of well managed company which has the potential to clock an EPS of 16~18 Rs for FY10. Scrip can easily appreciate 50% within a year.
Although share price of Gremach Infrastructure’s (40.00) has more than doubled in short time and also has an operator play, still aggressive investors can buy at current levels. It hasn’t yet declared its March’09 quarter performance and is expected to come out with its nos by end of this month. Company’s main activity is to provide rental of construction/earthmoving machineries to infrastructure companies including L&T, Punj Lloyd, Shapoorji Pallonji, Gammon India, HCC, Gannon Dunkerley etc. It has a huge asset bank of heavy equipments ranging from compacters, rollers, concrete mixers, dozers, forklifts, loaders to excavators, PTR, dumpers, electronic sensor pavers, kerb laying machine, concrete batching and mixing plant. In addition to renting its owned equipments, it also hires equipments owned by other parties and rent to its own clients. For the first nine months ending Dec’08 it has already registered an EPS of Rs 15 by earning PAT of Rs 23.30 cr on topline of Rs 238 cr. Although off late company has witnessed sharp fall in demand due to slowdown in construction sector, but going forward it is expected to regain normal business. Interestingly, it has got in-principle approval for 100 hectar Metal SEZ at Kolhapur & another at Dhule in Maharashtra. It has also taken 75% controlling stake in 11 Coal mine licenses in Mozambique. To fund its growth plant company has raised almost Rs 200 cr in Feb 2008 thru FCCB route to be converted into equity @ Rs 376 per share. Ironically, share price which hit a high of Rs 504 in Jan’08 went down to hit a low of Rs 18 in March 2009.
Although Rama Paper (10.00) seems to be operator scrip, investors can accumulate it at current levels for handsome gain in long term. Technically scrip has consolidated for long time and has relatively lower risk of downfall. Financially company has once again reported dismissal performance for the March’09 quarter with an profit margin of barely 5% at the operating level. However for entire FY09 it has recorded a decent OPM of more than 13% which is still very low against 19% last fiscal. Interestingly due to lower tax provisioning company has been able to report 25% higher net profit to Rs 3.90 cr for FY09 against Rs 3.00 cr last fiscal. At the same time it sales improved by 25% to Rs 107 cr. Thus company has reported an EPS of Rs 4 for FY09 and is trading at a PE of 2.5x times. Company derives nearly 60% revenue from newsprint segment. Of late it has also put up 6 MW co-generation captive power plant which is fully operational now. Further it 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. Recently company has taken approval from the member to convert preference shares of Rs 5 cr to equity shares which may lead to further equity dilution. Despite company having very debt equity ratio it available cheap at a market cap of Rs 7~8 cr. At the same time, investors are informed that promoter’s reputation is now taken well by the market veterans.
Tera Software (38.00) 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. Last year company successfully executed Maharashtra Vikri Kar Seva Project in Maharashtra State (VAT Implementation of Maharastra sales tax department) on BOOR (Build own operate and refresh) model as the scope of work was computerization of sales Tax department in the entire state of Maharashtra. Of late company has been able to procure additionally six new projects of the State Government of Andhra Pradesh, Karnataka, Rajasthan, West Bengal and Himachal Pradesh. It also ventured into imparting computer education in more than 225 schools in Goa and AP by establishing the computer labs with Computers and providing the teaching staff and maintenance of systems. For the latest March’09 quarter it reported 25% decline in net profit to Rs 2.35 cr despite healthy growth of 90% in topline to Rs 29 cr. Accordingly for full FY09 its net profit fell by 15% to Rs 10.50 cr, although its total revenue increased by 40% to Rs 83 cr. This works to an EPS of Rs 8.50 on equity of Rs 12.50 cr. Company is expected to declare 20% dividend which leads to a yield of 5% at CMP. Moreover company has few acres of surplus land in Hyderabad, which it can either sell or enter into JV with infrastructure company. Worth accumulating at sharp declines.
Although share price of Gremach Infrastructure’s (40.00) has more than doubled in short time and also has an operator play, still aggressive investors can buy at current levels. It hasn’t yet declared its March’09 quarter performance and is expected to come out with its nos by end of this month. Company’s main activity is to provide rental of construction/earthmoving machineries to infrastructure companies including L&T, Punj Lloyd, Shapoorji Pallonji, Gammon India, HCC, Gannon Dunkerley etc. It has a huge asset bank of heavy equipments ranging from compacters, rollers, concrete mixers, dozers, forklifts, loaders to excavators, PTR, dumpers, electronic sensor pavers, kerb laying machine, concrete batching and mixing plant. In addition to renting its owned equipments, it also hires equipments owned by other parties and rent to its own clients. For the first nine months ending Dec’08 it has already registered an EPS of Rs 15 by earning PAT of Rs 23.30 cr on topline of Rs 238 cr. Although off late company has witnessed sharp fall in demand due to slowdown in construction sector, but going forward it is expected to regain normal business. Interestingly, it has got in-principle approval for 100 hectar Metal SEZ at Kolhapur & another at Dhule in Maharashtra. It has also taken 75% controlling stake in 11 Coal mine licenses in Mozambique. To fund its growth plant company has raised almost Rs 200 cr in Feb 2008 thru FCCB route to be converted into equity @ Rs 376 per share. Ironically, share price which hit a high of Rs 504 in Jan’08 went down to hit a low of Rs 18 in March 2009.
Although Rama Paper (10.00) seems to be operator scrip, investors can accumulate it at current levels for handsome gain in long term. Technically scrip has consolidated for long time and has relatively lower risk of downfall. Financially company has once again reported dismissal performance for the March’09 quarter with an profit margin of barely 5% at the operating level. However for entire FY09 it has recorded a decent OPM of more than 13% which is still very low against 19% last fiscal. Interestingly due to lower tax provisioning company has been able to report 25% higher net profit to Rs 3.90 cr for FY09 against Rs 3.00 cr last fiscal. At the same time it sales improved by 25% to Rs 107 cr. Thus company has reported an EPS of Rs 4 for FY09 and is trading at a PE of 2.5x times. Company derives nearly 60% revenue from newsprint segment. Of late it has also put up 6 MW co-generation captive power plant which is fully operational now. Further it 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. Recently company has taken approval from the member to convert preference shares of Rs 5 cr to equity shares which may lead to further equity dilution. Despite company having very debt equity ratio it available cheap at a market cap of Rs 7~8 cr. At the same time, investors are informed that promoter’s reputation is now taken well by the market veterans.
Tera Software (38.00) 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. Last year company successfully executed Maharashtra Vikri Kar Seva Project in Maharashtra State (VAT Implementation of Maharastra sales tax department) on BOOR (Build own operate and refresh) model as the scope of work was computerization of sales Tax department in the entire state of Maharashtra. Of late company has been able to procure additionally six new projects of the State Government of Andhra Pradesh, Karnataka, Rajasthan, West Bengal and Himachal Pradesh. It also ventured into imparting computer education in more than 225 schools in Goa and AP by establishing the computer labs with Computers and providing the teaching staff and maintenance of systems. For the latest March’09 quarter it reported 25% decline in net profit to Rs 2.35 cr despite healthy growth of 90% in topline to Rs 29 cr. Accordingly for full FY09 its net profit fell by 15% to Rs 10.50 cr, although its total revenue increased by 40% to Rs 83 cr. This works to an EPS of Rs 8.50 on equity of Rs 12.50 cr. Company is expected to declare 20% dividend which leads to a yield of 5% at CMP. Moreover company has few acres of surplus land in Hyderabad, which it can either sell or enter into JV with infrastructure company. Worth accumulating at sharp declines.
