STOCK WATCH
Zenith Fibres Ltd. (Code:514266) (Rs.27.05) is the only company in India manufacturing the entire range of polypropylene staple fibre which is extensively used in filter grade fabrics, flooring and automobile carpets, geotextiles, knitted materials, thermal- bonded fabrics, hygiene products, construction industry etc. It is also into spinning and marketing of 100% polypropylene yarn. Last week, it came out with decent set of numbers for Sept’06 quarter registering 25% increase in sales at Rs.9 cr. and net profit grew by 30% to Rs.0.75 cr. Interestingly, the company is doling out hefty dividend at a payout ratio of more than 35% since the last four years. For FY06, it gave 15% dividend, which works to a whopping yield 6% at CMP. For FY07, it is expected to clock a turnover of Rs.32 cr. and net profit of Rs.2.20 cr. i.e. EPS of Rs.4 on its equity of Rs.5.10 cr. With a current market cap of Rs.13 cr. and huge dividend yield, it’s a pure value buy.
In the current overheated market, Ador Fontech (Code:530431) (Rs.84.10) is among the safest and risk-free engineering scrip with a great dividend yield as well. Its 52-week high/low is Rs.151/Rs.75 and is currently trading around Rs.85. With Rs.4 as dividend, the yield works out to around 5% and the downside is almost negligible. Its user industry segments such as steel, metallurgical complexes, mining, cement, power etc. have ambitious expansion plans, which augur well for the company. For the Sept’06 quarter, both its turnover and net profit grew by 15% to Rs.19.50 cr. and Rs.1.20 cr. respectively reporting a quarterly EPS of Rs.3.40. To maintain growth, the company is constantly adding new customers and new products and services needed by them. Hence for FY07, it can clock a turnover of around Rs.80 cr. and profit of Rs.4 cr., which leads to an EPS of Rs.12 on its tiny equity of Rs.3.50 cr. The scrip can easily appreciate by 50% in a year’s time.
On the back of robust demand, paper prices are ruling high and another price hike is around the corner with BILT having already raised paper prices by Rs.300-1000 per tonne. Rama Paper (Code:500357) (Rs.30.15) has recently increased its capacity to 44500 TPA by adding some balancing equipment and has plans to augment it further to 79500 TPA. For the September’06 quarter, sales improved by 20% to Rs.22 cr. whereas PBT increased by 80% to Rs.2.90 cr. It is also in the process of installing a 6 MW power plant for captive consumption, which will reduce its power cost substantially. For the full year FY07, it may report sales of Rs.90 cr. with net profit of Rs.8 cr., which means an EPS of Rs.11 on its equity of Rs.7.60 cr. It is also expected to return to the dividend paying list from FY07. With 52-week high/low as Rs.44/Rs.20 and a market cap of merely Rs.21 cr., it is available extremely cheap and can double in 9-12 months. A screaming buy!
Gujarat Apollo Equipment (Code:522217) (Rs.167.65) is a leading manufacturer of Asphalt based road construction & maintenance equipment and produces the entire range like Asphalt plants, soil stabilization plants, indirect heating equipment, paver finisher, bitumen sprayer, rollers, kerb paver and road maintenance equipments like milling machines and recycling machines. It has reported encouraging numbers for September’06 quarter. Sales jumped by 35% to Rs.29 cr. and net profit has spurted by 50% to Rs.3.60 cr. On half-yearly basis, the picture is much rosier with Sales improving by 60% to Rs.63 cr. and net profit zooming by 80% to Rs.6.80 cr. The company, in technical collaboration with Wheelaborator Clean Water Systems of USA, controls 60% of the market segment in which it operates. With a healthy order book position, it may end FY07 with top-line of Rs.140 cr. and bottom-line of Rs.14 cr. i.e. an EPS of Rs.20 on its equity of Rs.7 cr. Assuming a reasonable discounting by 14, its share price can shoot upto Rs.280. If finalized, its 1:2 right issue at Rs.100 will be icing on the cake.
Recently, Syncom Formulation (Code:524470) (Rs.48.95) came out with satisfactory set of numbers. Sales grew by 17% to Rs.17 cr. but net profit dipped by 9% to Rs.1.85 cr. due to lower margin. The expansion cum modernisation being carried out at its Pithampur plant is almost complete. Meanwhile, the company is now focusing more on the domestic market and has set up a new sales division in the name of ‘Cratus Life Care’. For the full year FY07, it can register sales of Rs.65 cr. with net profit of Rs.5.50 cr. This works to an EPS of Rs.9 on its fully-diluted equity of Rs.5.92 cr. It has an interrupted track record of dividend for the last 10 years and has paid 15% for FY06. Earlier, the company had raised capital through preferential allotment of shares at Rs.90 and Rs.102 and recently at Rs.54. The scrip has bottomed out at current levels and the risk of further downfall is negligible.
In the current overheated market, Ador Fontech (Code:530431) (Rs.84.10) is among the safest and risk-free engineering scrip with a great dividend yield as well. Its 52-week high/low is Rs.151/Rs.75 and is currently trading around Rs.85. With Rs.4 as dividend, the yield works out to around 5% and the downside is almost negligible. Its user industry segments such as steel, metallurgical complexes, mining, cement, power etc. have ambitious expansion plans, which augur well for the company. For the Sept’06 quarter, both its turnover and net profit grew by 15% to Rs.19.50 cr. and Rs.1.20 cr. respectively reporting a quarterly EPS of Rs.3.40. To maintain growth, the company is constantly adding new customers and new products and services needed by them. Hence for FY07, it can clock a turnover of around Rs.80 cr. and profit of Rs.4 cr., which leads to an EPS of Rs.12 on its tiny equity of Rs.3.50 cr. The scrip can easily appreciate by 50% in a year’s time.
On the back of robust demand, paper prices are ruling high and another price hike is around the corner with BILT having already raised paper prices by Rs.300-1000 per tonne. Rama Paper (Code:500357) (Rs.30.15) has recently increased its capacity to 44500 TPA by adding some balancing equipment and has plans to augment it further to 79500 TPA. For the September’06 quarter, sales improved by 20% to Rs.22 cr. whereas PBT increased by 80% to Rs.2.90 cr. It is also in the process of installing a 6 MW power plant for captive consumption, which will reduce its power cost substantially. For the full year FY07, it may report sales of Rs.90 cr. with net profit of Rs.8 cr., which means an EPS of Rs.11 on its equity of Rs.7.60 cr. It is also expected to return to the dividend paying list from FY07. With 52-week high/low as Rs.44/Rs.20 and a market cap of merely Rs.21 cr., it is available extremely cheap and can double in 9-12 months. A screaming buy!
Gujarat Apollo Equipment (Code:522217) (Rs.167.65) is a leading manufacturer of Asphalt based road construction & maintenance equipment and produces the entire range like Asphalt plants, soil stabilization plants, indirect heating equipment, paver finisher, bitumen sprayer, rollers, kerb paver and road maintenance equipments like milling machines and recycling machines. It has reported encouraging numbers for September’06 quarter. Sales jumped by 35% to Rs.29 cr. and net profit has spurted by 50% to Rs.3.60 cr. On half-yearly basis, the picture is much rosier with Sales improving by 60% to Rs.63 cr. and net profit zooming by 80% to Rs.6.80 cr. The company, in technical collaboration with Wheelaborator Clean Water Systems of USA, controls 60% of the market segment in which it operates. With a healthy order book position, it may end FY07 with top-line of Rs.140 cr. and bottom-line of Rs.14 cr. i.e. an EPS of Rs.20 on its equity of Rs.7 cr. Assuming a reasonable discounting by 14, its share price can shoot upto Rs.280. If finalized, its 1:2 right issue at Rs.100 will be icing on the cake.
Recently, Syncom Formulation (Code:524470) (Rs.48.95) came out with satisfactory set of numbers. Sales grew by 17% to Rs.17 cr. but net profit dipped by 9% to Rs.1.85 cr. due to lower margin. The expansion cum modernisation being carried out at its Pithampur plant is almost complete. Meanwhile, the company is now focusing more on the domestic market and has set up a new sales division in the name of ‘Cratus Life Care’. For the full year FY07, it can register sales of Rs.65 cr. with net profit of Rs.5.50 cr. This works to an EPS of Rs.9 on its fully-diluted equity of Rs.5.92 cr. It has an interrupted track record of dividend for the last 10 years and has paid 15% for FY06. Earlier, the company had raised capital through preferential allotment of shares at Rs.90 and Rs.102 and recently at Rs.54. The scrip has bottomed out at current levels and the risk of further downfall is negligible.
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