STOCK WATCH
Petron Engineering (Code No: 530381) (Rs.254.50) came out with its much-awaited June’05 numbers. Though its turnover increased by 17% to Rs.67.20 cr. but its NP doubled to Rs.4 cr. in spite of higher tax provision of Rs.2 cr. Its OPM for this qtr stood at 13% compared to 8% last year. It has a very healthy order position of more than Rs.350 cr. and institutional investors have started to take an interest in this company. In future, Petron Engg. is expected to come out with preferential allotment at a healthy premium to the current market price. With an expected EPS of around Rs.18, the scrip is trading reasonably cheap compared to its peers making it a best buy in the infrastructure sector.
Due to removal of quota system under WTO, textile companies are expected to witness a phenomenal growth for which reason Kallam Spinning (Code No: 530201) (Rs.31.70), a South based cotton yarn manufacturer is undergoing expansion. By its Rs.18 cr. capex plan it will increase the spinning capacity from 22,608 to 33,648 spindles by March 2006. The whole expansion will be financed by debt and internal accruals without any equity dilution. For FY06, the company is estimated to report sales of Rs.40 cr. and NP of around Rs.5 cr. i.e. an EPS of Rs.7 and may even declare more than Re.1 as dividend. For FY07, it will report much better numbers due to expansion. A good long term bet.
Manali Petrochemicals (Code No: 500268) (Rs.22.90) is planning financial restructuring under which its accumulated losses of Rs.35 cr. will be set off completely by 25% reduction in the paid up value of its share capital to the extent of Rs.28 cr. together with an amount of Rs.7 cr. out of the Share Premium Account. Although numbers of shares and EPS figures will not change, this will lead to a re-rating of its share price due to a healthier balance sheet. For FY06, it can report Sales of Rs.350 cr. and NP of Rs.40 cr. Share price target of Rs.30 can be expected in 6~9 months.
Sugar is not the currently flavour giving good opportunity to accumulate strong sugar stocks. Upper Ganges (Code No: 530505) (Rs.259.35), a KK Birla group company, which has a cane crushing capacity of 12500 TCD, seems a good bet at CMP. Company has finalised the merger of the sugar division of New India Sugar Mills with a capacity of 17,500 TCD with its subsidiary Saran Trading Company Ltd. Besides, it has approved the expansion of the its distillery at Sehor from its existing capacity of 55 to 100 KLPD. To fund this expansion, the company will come out with a right issue in the near future, which will trigger the scrip to new highs.
Market players due average numbers in the last two qtrs, in general, are ignoring the Pharma sector. Still, its future prospects are very promising and it’s a good defensive sector in the current market. Aarti Drugs (Code No: 524348) (Rs.132.90) is one such pharma company, which is ignored by investors and dumped by punters because of being in T2T category. For the June qtr, Sales decreased 8% to Rs.61 cr. but NP jumped 32% to Rs.4.10 cr. due to better operating margins and lower interest cost. For FY06, it may post sales of Rs.300 cr. and NP of around Rs.22 cr. Accumulate at current levels as the scrip seems to have bottomed out with a price target of Rs.200 in 6~9 months.
In the current small cap carnage, aggressive investors can buy DHP India (Code No: 531306) (Rs.20.90) at current levels. This Kolkata based company manufactures domestic pressure regulators for LPG cylinders, hosepipes and their parts. Due to declining demand in the domestic market, the company is exploring the export market, which is much bigger. It is also setting up a new factory at Howrah in West Bengal and which is expected to start operations this fiscal itself. It will double the current manufacturing capacity. For FY05 its Sales & NP increased by 55% to Rs.6 cr. and Rs.1.2 cr. respectively registering an EPS of Rs.4. It even declared Rs.1 dividend for FY05. Share price can rise 50% in 6 months or so.
Manali Petrochemicals (Code No: 500268) (Rs.22.90) is planning financial restructuring under which its accumulated losses of Rs.35 cr. will be set off completely by 25% reduction in the paid up value of its share capital to the extent of Rs.28 cr. together with an amount of Rs.7 cr. out of the Share Premium Account. Although numbers of shares and EPS figures will not change, this will lead to a re-rating of its share price due to a healthier balance sheet. For FY06, it can report Sales of Rs.350 cr. and NP of Rs.40 cr. Share price target of Rs.30 can be expected in 6~9 months.
Sugar is not the currently flavour giving good opportunity to accumulate strong sugar stocks. Upper Ganges (Code No: 530505) (Rs.259.35), a KK Birla group company, which has a cane crushing capacity of 12500 TCD, seems a good bet at CMP. Company has finalised the merger of the sugar division of New India Sugar Mills with a capacity of 17,500 TCD with its subsidiary Saran Trading Company Ltd. Besides, it has approved the expansion of the its distillery at Sehor from its existing capacity of 55 to 100 KLPD. To fund this expansion, the company will come out with a right issue in the near future, which will trigger the scrip to new highs.
Market players due average numbers in the last two qtrs, in general, are ignoring the Pharma sector. Still, its future prospects are very promising and it’s a good defensive sector in the current market. Aarti Drugs (Code No: 524348) (Rs.132.90) is one such pharma company, which is ignored by investors and dumped by punters because of being in T2T category. For the June qtr, Sales decreased 8% to Rs.61 cr. but NP jumped 32% to Rs.4.10 cr. due to better operating margins and lower interest cost. For FY06, it may post sales of Rs.300 cr. and NP of around Rs.22 cr. Accumulate at current levels as the scrip seems to have bottomed out with a price target of Rs.200 in 6~9 months.
In the current small cap carnage, aggressive investors can buy DHP India (Code No: 531306) (Rs.20.90) at current levels. This Kolkata based company manufactures domestic pressure regulators for LPG cylinders, hosepipes and their parts. Due to declining demand in the domestic market, the company is exploring the export market, which is much bigger. It is also setting up a new factory at Howrah in West Bengal and which is expected to start operations this fiscal itself. It will double the current manufacturing capacity. For FY05 its Sales & NP increased by 55% to Rs.6 cr. and Rs.1.2 cr. respectively registering an EPS of Rs.4. It even declared Rs.1 dividend for FY05. Share price can rise 50% in 6 months or so.
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