Dhanuka Pesticides - Rs.104.00

Incorporated in 1985 and promoted by the Dhanuka Group, Dhanuka Pesticides Ltd (DPL) is engaged in the manufacture of various technical-grade pesticides, which include insecticides and weedicides and has emerged as one of the top pesticides formulators and marketing organisation in India. The Dhanuka Group is a well established manufacturer / formulator of a wide range of popular pesticides; in ECS, Granules, Wettables & Dust Formulations of Insecticides, Fungicides, Weedicides, PGR, Growth Stimulant and Wetting Agents. Whereas DPL’s product profile includes Methomyl 12.5; L, Ethofenprox 10%; Validamycin 3%; L, Kasugamycin 3%; L, Cypermethrin 10%; EC, Cypermethrin 25%; Fenvalerate 20%; Cartap hydrochloride 50%; Methomyl 40%; and Cartap hydrochloride 4% G.

DPL's production facilities are located in Gurgaon district of Haryana, It has a technical tie-up with Du Pont of USA for the formulations of pesticides using as methomyl raw material. Apart from this it has entered into a series of technical tie-up agreements with a number of Japanese multinationals like Takeda Chemicals Industries Ltd for Cartap Hydrochloride and Validamycin, Mitsui Chemicals Inc for Etofenprox, Hokko Chemicals Ind. Co. Ltd. for Kasugamycin etc. Last year, DPL launched a new insecticide under the brand name ‘DHAWA’ (Indoxacarb 14.5% SC) which got a huge response from the cotton dominant Indian market. It is an eco-friendly and safe molecule with widespread application to control the insects in cotton especially for American bollworm, a major cotton insect. The company is also launching a new, safe and eco-friendly herbicide under the brand name 'QURIN' (Chlorimuron Ethyl 25% WP), in a marketing tie-up with E.I.Du-Pont India. The Dhanuka group has a huge network of distributors, preferred dealers and retailers (over 8000) supported by its branch offices in almost every state. Moreover for the future growth DPL, it is strengthening in house R & D for process improvement and new molecules, obtain safer and eco-friendly products through tie-ups, extend and implement the cause of right and judicious use of pesticides and consequently sustained growth of the group. Besides, an export remains a huge potential market.

India primarily being an agriculture country, the government has put special thrust on agricultural development for higher GDP growth. And with the Meteorological Department predicting good monsoon this season also, it will be a bumper year for DPL. With an increasing trend in the use of pesticides and other crop protection methods by Indian farmers, DPL has a very bright future ahead. For the nine months ending 31st Dec 2004, its Net Sales jumped around 120% to Rs.49 cr. and NP tripled to Rs.3 cr. For the full year, it is expected to report an EPS of Rs.20, which may shoot up to Rs.24 in FY06. Long term investors can accumulate this scrip at sharp declines on expectation of 100% returns in 15~18 months.

Kilburn Engineering - Rs.64.00

Incorporated in 1987, Kilburn Engineering Ltd. (KIL) is an associate company of Williamson Magor Ltd., which is one of the 20 large industrial groups operating in India. The company specialises in process design, engineering, manufacture, installation and commissioning of turnkey plants/systems for petrochemicals, chemicals, fertilizers, refineries, oil & gas, food processing, etc. It is also engaged in designing, manufacturing, marketing, field erection and commissioning of industrial drying system, oil field and air handling equipment. KIL is well-known in the field of industrial drying, its core strength being ‘Heat and Mass Transfer Systems’. Besides, it has expertise in chemical engineering and chemical treatment process and also deals in fabrication equipments like heat exchangers, evaporators, reactors etc.

KIL has a modern and well-equipped workshop equipped with machining, fabrication, testing and allied facilities and has a technical collaboration with Nara Machinery Co of Japan and Carrier Vibrating Equipment of USA. It has been awarded ISO-9001: 2000 Quality System Certification by M/S. Det Norske Veritas (DNV) of the Netherlands and has been accredited by the RVA. The company exports equipments to over 25 countries worldwide including Japan, Italy, USA, France, China, Taiwan and Malaysia etc. In the domestic market GAIL, HLL, IPCL, Gujarat Alkalies, GNFC, L&T, DCM Shriram, Nirma, HPCL are among its reputed clients. This year, it started supplying new Phase V Tea Dryer to Kenya Tea Development Authority. KIL has also designed and developed equipment for the rice mill industry to diversify its product range. It has also successfully negotiated to export Paddle dryers to M/s. Komline Sanderson, USA. Few months back, it supplied dryers to Ivory Coast in Africa for processing of desiccated coconut. It is also focusing on the food processing industry, which has a huge growth potential. KIL is putting more thrust on exports and intends to take it to 40% of total sales from the current 25%. In short, it has a very healthy order book position, which includes repeat orders from world-class companies.

Under the rehabilitation scheme sanctioned by the BIFR, KIL has got various fiscal reliefs, benefits and concessions from the lenders/bankers due to which it turned around last fiscal ending Sept 04. In February 2004, it sold off a property in Baroda for a one-time settlement with financial institutions and paid off Rs.16 cr. It has brought down its debt from Rs.87 cr. to Rs.24 cr. and expects to wipe out all its carry forward losses by 2006~07. Recently, the company issued Right shares to raise funds for its working capital requirement. In future, it may also re-locate its Mumbai factory in Bhandup, and sell this prime property and improve its operating efficiency using the funds generated. For the six months ending March 2005, its turnover has more than doubled to Rs.25 cr. and NP stood at Rs.3.75 cr. compared to Net Loss of Rs.5.70 cr. For full FY05, it may report sales of Rs.55 cr. and NP of Rs.8 cr. resulting in an EPS of Rs.12 on it current equity of Rs.6.75 cr. Diluted EPS on its expanded equity may amount to Rs.8. For FY06, it can post an EPS of Rs.14 on the expanded equity. For investors, it is a very good bet from the engineering sector and they can expect a price target of Rs.150 in 15 months.

STOCK WATCH

Laffans Petro (Code No: 524522) (Rs.24) is engaged in manufacturing ethylene oxide derivatives such as Ethoxylates, Glycol Ethers, Acetates, Triethonal-amine, and Brake fluids. Due to higher demand and better price realisation on its products, Laffans Petrochemicals has improved its operating efficiency and is expected to perform much better in coming quarters. For FY05 ending Sept 2005, it may report an EPS of more than Rs.5 and the share price can appreciate by 50% in the next 12 months. A good medium term bet. Due to the uptrend in the Steel sector and strong demand for their products the refractory industry is enjoying the best of times. Raasi Refractories (Code No: 502271) (Rs.29) is a Hyderabad based small player that has posted a good turnaround. It also manufactures high temperature shuttle kiln, heavy-duty top and bottom pressing hydraulic presses, PLC controlled heavy-duty mechanical presses, high intensity mixing equipment and latest lab equipment such as Hot MOR testing machine and photometer. For the nine months ending 31st Dec’ 04, its topline tripled to Rs.16 cr. and it reported a NP of Rs.1.30 cr. against a Net loss of 1.20 cr. in the corresponding previous period. It is expected to report an EPS of Rs.5 for FY05, which may shoot upto Rs.7 for FY06.

The cool off in metal prices will have a positive impact on Ashok Leyland (Code No: 500477) (Rs.24) to a certain extent. It reported an excellent performance for the March 2005 quarter with Sales jumping 30% to Rs.1460 cr. and NP zooming 65% to Rs.143 cr. including Rs.33 cr. as other income. It posted an EPS of Rs.2.30 for FY05 and may report Rs.2.60 for FY06. The outlook for the commercial vehicle segment is very robust and may continue to grow in double digits. The share price has the potential to hit Rs.35 in 12~15 months

Since the last few weeks, companies engaged in agro and food products are attracting market attention with rising sharply on the bourses. At this stage, one can take some exposure in Jhunjhunwala Vanaspati (Code No: 519248) (Rs.26.50) and keep accumulating it at declines. It reported pretty decent numbers for the March 2005 quarter and ended FY05 with an EPS of Rs.8.5. In the current small cap bull run, this scrip can cross Rs.50.

In the Chemicals sector, National Peroxide (Code No: 500298) (Rs.4479.85) this Bombay Dyeing Group Company was very popular one time. It is engaged in manufacturing of Hydrogen Peroxide is trading reasonably cheap. It has a very small equity of Rs.2.30 cr. and very low floating stock since its face value is Rs.100 and the promoters hold 65%. Due to increased production and higher price realization, it reported fabulous numbers for FY05.Sales increased 30% to Rs.75 cr. and NP doubled to Rs.14.30 cr. reporting an EPS of Rs.620. For FY06 it can post an EPS of Rs.720

Lot of positive developments is taking place in Tinplate Company (Code No: 504966) (Rs.55.65). The company is already implementing a phase-wise expansion programme of its existing unit which will take its tinplate making capacity to around 4,00,000 TPA in the next few years. It is also planning to set up a greenfield project with state-of-the-art tinning line in Jamshedpur at an investment of Rs.100 cr. The company has also started offering cost effective packaging solutions to the end-user industry. Besides, it is putting more thrust on exports and intends to become a dominant player in South East and West Asian markets. For the March 2005 quarter it reported stunning numbers posting a quarterly EPS of Rs.5. For FY06, it can report an EPS of Rs.14. A strong long term buys.

Syncom Formulations - Rs.95.00

Incorporated in 1988, Syncom Formulations (India) Ltd (SFL) is promoted by Kedarmal Bankda, Ajay Kumar Bankda and Vijay Kumar Bankda. The company is mainly engaged in pharmaceutical formulations. Its state-of- the-art manufacturing facilities located at Pithampur in Dhar district of Madhya Pradesh and Palghar in Thane near Mumbai. It’s an ISO 9001:2000 certified company. Keeping in view the shifting consumer preferences for the use of herbal products, the company has initiated steps to aggressively manufacture and market of herbal products. Some of the products already marketed are Edicare, Attom Megacaps, Ecziguard, Yes Antacid salt etc. For future growth, the company is putting more thrust on exports and has successfully established its footprint in more than 15 countries of Africa, Latin America, C.I.S. and Asia. To expand its market reach, SFL is in the process of appointing a distributors in Kenya, Tanzania, Philippines, Russia, Ukraine, Moldova and the Domino Republic.

Interestingly, SFL has more than 250 products to offer in ethical, generics, OTC and the herbal range. It is planning to increase its product offering upto 500 products within the next 2/3 years and has earmarked significant resources for product registration process in various overseas markets. Additionally, it has a basket of 20 well-tested and proven herbal products and has high level plans for marketing. SFL is planning an aggressive entry into branded herbal market of South Africa and Europe for which it has already appointed a distributor in South Africa and negotiations are on with an international player to market its herbal range in Europe. It plans to capture a significant market share in these markets through joint promotional activities. SFL has also entered into long-term sales contracts with its distributors in Vietnam, Cambodia, Philippines, and Nigeria.

Besides, the company is negotiating with a Latin American company for contract manufacturing of its brands at its WH0-GMP certified facility. It is also planning to offer comprehensive contract manufacturing services including pilot plant, technical services, quality control and regulatory services for both domestic as well as foreign companies. To take advantage of the burgeoning contract manufacturing, SFL plans to make substantial investment in a new export oriented unit in a special economic zone (SEZ) at Pithampur near Indore. Apart from its contract manufacturing focus, the company has prepared a blueprint to tap the virgin markets of West Africa by increased focus on licensing arrangements with various international players.

To fund all this expansion and growth plans, the promoters are infusing fresh capital regularly as and when required. Earlier in March’05, they made preferential issue of 2.65 lakh shares to themselves at Rs.90 and are now planning to issue 2.78 lakh shares at Rs.84. For FY05, its net sales increased by 21% to Rs.53.50 cr. whereas NP zoomed 135% to Rs.7.10 cr. leading to an EPS of Rs.13. For FY06, we expect it to report Net Sales of Rs.65 cr. and NP of Rs.10 cr., which means an EPS of Rs.18. Investors are recommended to buy this scrip at dips with a price target of Rs.150 in 8~12 months. Long -term investors can even expect a price of Rs.250 in 24 months.

Sanjivani Parenteral - Rs.64.00

Incorporated in 1994, Sanjivani Parenteral Ltd. (SPL) is jointly promoted by a team of pharma professionals. The company’s chairman, Mr. Anami H. Khemka, is associated with the Pharmaceutical Industry for more than 10 years with specialisation in marketing & exports and has good commercial relations with first line pharmaceutical companies. Basically, SPL is a contract manufacturing company specialising in injectibles for the institutional and hospital segments and its key clientele include Ranbaxy, Zydus Cadila, Alkem, Macleods, IPCA Labo, Intas, Glenmark, Medley and Shreya Life Sciences among others. It operates in the antibiotic injectible space (anti-inflammatory, microbial, emetic, allergic and spasmodic) with products like Ceftrimax, Ivimax, Piptaz, Cefepime and C-Bactum.

SPL’s manufacturing facility is WHO GMP certified and is located at Taloja in Maharashtra and can manufacture high grade antibiotics and life saving injectibles used in various pre and post operative infections. SPL is one of the fastest growing companies in contract manufacturing and has a healthy order book. Recently, it bagged a huge order of approx Rs.32 cr. from Kerala Government for supplying sterile cephalosporins for a period of 2 yrs. Earlier, it had received Rs.7 cr. order to supply cephalosporin injectables to the CIS market for a period of 18 months. It has already filed two DMFs (drug master files) in the CIS countries and expects to register 12 more products there. Besides for the first time, Sanjivani has launched its own drugs, Cobaz (Mecobalamine Injection) and Trenaxa (Tranexamic Acid) in the domestic market a few months back through its marketing partner, V.H.Bhagat Pharma, and has fetched a good response from the market. With this initial success, the company is planning to launch a third product Meropenam, a CNS Drug used for brain fever. SPL also intends to introduce Aprotimin injectibles used in heart ailments and the anti-amoebic Ornidazole injectibles. Moreover, SPL has received a contract manufacturing order from a mid-sized Indian pharma company for a novel drug which is a big breakthrough for the company. The Tamil Nadu (TN) Govt. team has inspected its facility and the company may announce some fresh orders soon. On the export front, the company is now trying to supply its products to other markets like Vietnam and Malaysia. There is also a possibility of a merger of Sanjivani Paranterals with its sister concern, Sanjivani Pharmaceuticals, which will give access to an additional basket of Anti-HIV drugs.
With every passing quarter, the company has become stronger and bigger. The board has decided to make a preferential allotment to promoters to raise Rs.2 cr. for setting up an UK MHRA approved facility. The company is in a process of transferring its debt from a co-operative bank to a nationalised bank, to reduce the cost of borrowing from the present level of 13% to about 10%. For FY05, it posted stunning numbers. Sales jumped 135% to Rs.31 cr. and NP stood at Rs.2.80 cr. compared to 0.16 cr. last year. Considering the company’s aggressive growth plan for FY06, we expect it to report Net Sales of Rs.60 cr. and NP of Rs.6 cr. leading to an EPS of Rs.12 on its current equity and approx Rs.10 on the diluted equity. Investors are strongly recommended to buy with a price target of Rs.100 in 12 months

The company has filed its dossier for registration in the Russian market for Cepreomycin, which falls under the anti-T B category. The major player in the market is ELI-Lilly of USA. The market size as on today (December 16, 2004) is 15 million US$. Sanjivani Paranteral Ltd has informed that the Board of Directors at its meeting on April 20, 2005 has decided to issue a Convertible Warrants to the promoters and their relatives aggregate to Rs.2 cr. subject to increase in the Authorised Capital of the Company. Further, the company has informed that the Board has also decided to call a General Meeting for this purpose.
The Company has further informed that it has bagged order for the supply of 3 million units of Cephalosporin to CIS Market which is to be executed within 18 months, and the approximate value of the order is USD 1.50 million.