STOCK WATCH
More than copper and telecom, Bhagyanagar India (56.00) is now known as real estate and infrastructure company, as it presently owns around 175 acre of land bank valued at more than Rs 600 cr. Ironically the acquisition cost of land is one third of its present value which means company is sitting on a huge unrealized gains. To take the maximum benefit of the ongoing boom in real estate, company has aggressively forayed into real estate development and construction industry through its various subsidiaries and is, focusing mainly on housing and construction of IT Parks. Recently, it has formed a SPV along with IL&FS Infrastructure for undertaking, various infrastructure and entertainment projects such as theme parks, special economic zone, industrial parks etc on a large scale basis. On the other hand, it has successfully commissioned the wind power project with an installed capacity of 9 MW in Karnataka last fiscal. To concentrate on real estate business, company is planning to soon demerge its other divisions like copper, telecom, metals, auto components into a separate company. In order to fund its projects company had raised approx Rs 70 cr thru FCCB route @ 44 Rs per share in Oct 2006. Recently in Oct’07, it made a pref allotment of 1.15 cr warrants @ Rs 44 per share and now in Jan’08 it is making another placement of 55 lakh warrants @ Rs 90 per share. So it has made a funding arrangement of Rs 100 cr for future which will take its total diluted equity to Rs 21.40 cr. Scrip has the potential to shoot up 50% in 6~9 months.
Although share price of Andhra Petrochemicals (32.00) has doubled in the recent rally, still investors can accumulate this scrip at declines for further gains. It is the only producer of Oxo-Alcohols in India with a production capacity of 42,000 MTPA. The market demand for Oxo-Alcohols is currently estimated at 143,000 MTPA, out of which company caters to 30% demand and the balance 70% is met through imports. To secure a greater share of the market and meet the growing demand, company is in undergoing expansion and modernization programme to increase its production capacity to 73,000 MTPA. However, the enhanced capacity is expected to be operational only by Sept 2009. Importantly, company has been able to save a massive Rs 12 cr per annum only on power cost as it has installed and commissioned 2400 KVA uninterrupted power supply system and discontinued the operation of D.G.Sets from last fiscal. For FY07 company made a strong turnaround as sales increased by 35% to Rs 266 cr but NP zoomed up to Rs 36 cr compared to Rs 2 cr in FY06. It even gave 10% as maiden dividend. On the back of higher realizations and better efficiency, it has reported encouraging nos for the first two quarters as well and is expected to end FY08 with sales of Rs 300 cr and PAT of Rs 48 cr i.e. EPS of Rs 6 on equity of Rs 85 cr. As per grapevine, India’s leading corporate entity is eyeing to acquire this company. At the same time promoters i.e. Andhra Sugars have increased their stake by 4% in last one year thru creeping acquisition.
El forge (81.00) manufactures carbon, alloy and stainless steel forged components which are mainly used to manufacture engine parts, transmission parts, steering and suspension parts, break assembly parts, chassis parts, drive line and electrical parts. To move up the value chain, company is gradually shifting its product mix to machined components which have comparatively higher margins than forged products. Hence, it has recently put up a machine shop facility at Chromepet, especially for MICO. Moreover it is also set up a world class manufacturing facility at Sriperambadur near Chennai which has started commercial production recently, thereby enhancing the installed capacity to 23200 MTPA from 18200 MTPA. To fund this expansion company had raised around Rs 15 cr last year thru pref allotment of 12.15 lakh shares @ Rs 120 per share. And today it is available at good 30% discount to allotment price. For future growth company is betting on exports since India is becoming a major source of supply of forgings to the global auto industry. Financially, company has reported decent nos for the H1FY08 and is expected to end FY08 with consolidated sales of Rs 185 cr and profit of Rs 10.50 cr which works out to an EPS of Rs 12 on equity of Rs 8.50 cr. Currently FII’s including Goldman Sach, BSMA etc are holding 18% stake. Keep accumulating at declines
Jupiter Bioscience (175.00) is poised to become a global peptide solutions group having a broad canvas of peptide chemistry products, peptide reagents, coupling reagents, protective agents and supplier of key ingredients used in peptide based pharmaceuticals. Its operating in a very niche segment and is among the few companies in the world to have competency in synthesis of peptides. Company is on a very strong growth trajectory as it has recently raised 100 cr thru QIP route @ Rs 153 per share. It is setting up a 5500 sq ft manufacturing facility in Maryland, US to cater the USA, Canada and European markets. It is also looking to acquire few companies globally. Importantly, it has entered into a 10-year product purchase agreement with Ranbaxy on peptide pharmaceutical for gloabal market and as per contract allotted 31.77 lakh warrants @ Rs 147. Recently, it cancelled the 27.50 lakh equity shares allotted to promoters and instead issued 40 lakh warrants @ Rs 182 to strategic investors. So another Rs 100 cr funds ready to come into company on conversion of warrants. Moreover it has already invested whopping Rs 85 cr in a subsidiary company – Sven Genetech which was till now busy in setting up of infrastructure etc. For FY08, on a standalone basis, Jupiter Bio is expected to report total revenue of Rs 125 cr and PAT of Rs 30 cr i.e. EPS of nearly Rs 20 on current equity of 15.40 cr. Post all the warrant conversion, the equity will get diluted to Rs 22.50 cr but at the same time company’s topline as well as bottomline will shoot up accordingly. With 33% FII holding, it is trading fairly cheap at a current market cap of less than Rs 300 cr.
Although share price of Andhra Petrochemicals (32.00) has doubled in the recent rally, still investors can accumulate this scrip at declines for further gains. It is the only producer of Oxo-Alcohols in India with a production capacity of 42,000 MTPA. The market demand for Oxo-Alcohols is currently estimated at 143,000 MTPA, out of which company caters to 30% demand and the balance 70% is met through imports. To secure a greater share of the market and meet the growing demand, company is in undergoing expansion and modernization programme to increase its production capacity to 73,000 MTPA. However, the enhanced capacity is expected to be operational only by Sept 2009. Importantly, company has been able to save a massive Rs 12 cr per annum only on power cost as it has installed and commissioned 2400 KVA uninterrupted power supply system and discontinued the operation of D.G.Sets from last fiscal. For FY07 company made a strong turnaround as sales increased by 35% to Rs 266 cr but NP zoomed up to Rs 36 cr compared to Rs 2 cr in FY06. It even gave 10% as maiden dividend. On the back of higher realizations and better efficiency, it has reported encouraging nos for the first two quarters as well and is expected to end FY08 with sales of Rs 300 cr and PAT of Rs 48 cr i.e. EPS of Rs 6 on equity of Rs 85 cr. As per grapevine, India’s leading corporate entity is eyeing to acquire this company. At the same time promoters i.e. Andhra Sugars have increased their stake by 4% in last one year thru creeping acquisition.
El forge (81.00) manufactures carbon, alloy and stainless steel forged components which are mainly used to manufacture engine parts, transmission parts, steering and suspension parts, break assembly parts, chassis parts, drive line and electrical parts. To move up the value chain, company is gradually shifting its product mix to machined components which have comparatively higher margins than forged products. Hence, it has recently put up a machine shop facility at Chromepet, especially for MICO. Moreover it is also set up a world class manufacturing facility at Sriperambadur near Chennai which has started commercial production recently, thereby enhancing the installed capacity to 23200 MTPA from 18200 MTPA. To fund this expansion company had raised around Rs 15 cr last year thru pref allotment of 12.15 lakh shares @ Rs 120 per share. And today it is available at good 30% discount to allotment price. For future growth company is betting on exports since India is becoming a major source of supply of forgings to the global auto industry. Financially, company has reported decent nos for the H1FY08 and is expected to end FY08 with consolidated sales of Rs 185 cr and profit of Rs 10.50 cr which works out to an EPS of Rs 12 on equity of Rs 8.50 cr. Currently FII’s including Goldman Sach, BSMA etc are holding 18% stake. Keep accumulating at declines
Jupiter Bioscience (175.00) is poised to become a global peptide solutions group having a broad canvas of peptide chemistry products, peptide reagents, coupling reagents, protective agents and supplier of key ingredients used in peptide based pharmaceuticals. Its operating in a very niche segment and is among the few companies in the world to have competency in synthesis of peptides. Company is on a very strong growth trajectory as it has recently raised 100 cr thru QIP route @ Rs 153 per share. It is setting up a 5500 sq ft manufacturing facility in Maryland, US to cater the USA, Canada and European markets. It is also looking to acquire few companies globally. Importantly, it has entered into a 10-year product purchase agreement with Ranbaxy on peptide pharmaceutical for gloabal market and as per contract allotted 31.77 lakh warrants @ Rs 147. Recently, it cancelled the 27.50 lakh equity shares allotted to promoters and instead issued 40 lakh warrants @ Rs 182 to strategic investors. So another Rs 100 cr funds ready to come into company on conversion of warrants. Moreover it has already invested whopping Rs 85 cr in a subsidiary company – Sven Genetech which was till now busy in setting up of infrastructure etc. For FY08, on a standalone basis, Jupiter Bio is expected to report total revenue of Rs 125 cr and PAT of Rs 30 cr i.e. EPS of nearly Rs 20 on current equity of 15.40 cr. Post all the warrant conversion, the equity will get diluted to Rs 22.50 cr but at the same time company’s topline as well as bottomline will shoot up accordingly. With 33% FII holding, it is trading fairly cheap at a current market cap of less than Rs 300 cr.
