STOCK WATCH
Cement companies are expected to report fantastic numbers for the Dec.’06 quarter on back of higher price realization. JK Lakshmi Cement (Code: 500380) (Rs.143.10) belonging to the reputed HS Singhania Group and owner of the popular ‘JK Lakshmi’ brand is a good bet at the current levels. For the first half, while net sales jumped 40% to Rs.352 cr., net profit tripled to Rs.62 cr. In a couple of months, its additional capacity of 5,00,000 tonnes will commence production and another 5,00,000 tonnes by Dec.’07 thereby taking its total cement production capacity to 4 million tonnes. Moreover, it is setting up a 36 MW pet coke based captive power plant in the next 6 months, which will bring down its power cost substantially. For FY07, it is estimated to register a topline of Rs.725 cr. with PAT of Rs.115 cr., which means an EPS of Rs.18 on its fully-diluted equity of Rs.65 cr. The scrip can rise 50% in 9~12 months. Buy at dips.
ITL Industries (Code: 522183) (Rs.35.50) is an established metal cutting solutions provider offering a wide range of machine tools and cutting lubricants apart from trading in hydraulic power packs and hydraulic presses. It recently completed its modernisation and expansion project with a capex of Rs.2.5 cr. and has also acquired land in the SEZ in Pithampur for meeting global opportunities. Notably, its orders in hand is at a historic high with more than Rs.18 cr. due to the good demand for tube & pipe manufacturing machines along with its recently launched circular saw machine. Although its first half was not spectacular, for full year FY07 it is expected to report a total revenue of Rs.22 cr. with and NP of Rs.1.60 cr. This will lead to an EPS of Rs.5 on its equity of Rs.3.25 cr. For FY08, it can post an EPS of more than Rs.6 on a conservative basis. At a reasonable discounting by 12 times against its FY08 earning, the scrip has the potential to go up to Rs.75.
Transpek Industry (Code: 506687) (Rs.88.60) is Asia’s largest manufacturer of Thionyl Chloride, which is an intermediate for crop protection chemicals in the agrochemicals industry. Besides, the company is also focusing on other market segments such as intermediates for pharmaceuticals, dyes and polymers. Last fiscal, due to adoption of improved technology and de-bottlenecking of certain equipment, it enhanced its production capacity to 19500 TPA from 16500 TPA. For H1FY07, sales increased by 40% to Rs.47.50 cr. and NP zoomed 120% to Rs.4.30 cr. Notably, its OPM improved substantially from 16% last year to 21.50% this year. Currently, it is implementing further expansion of thionyl chloride capacity to 24,000 TPA and is also starting production of the second stream of continuous Acid Chloride plant with double capacity. For the full year FY07, it may report sales of Rs.100 cr. with NP of Rs.9 cr. i.e. an EPS of Rs.18 on its equity of Rs.5.07 cr. At a reasonable discounting of 8 times, the scrip has the potential to cross Rs.150 in 9~12 months.
Sagar Cement (Code: 502090) (Rs.126.40) is one of the reputed cement manufacturers from South India having a clinker capacity of 0.55 million tonnes and grinding capacity of 0.3 million tonnes. It sells its product under the brand name of ‘Sagar Priya’ and enjoys one of the highest margins in the industry mainly on account of low power and freight costs. For the first half ending Sept 2007, its sales jumped by 75% to Rs.56 cr. and NP stood at a whopping Rs.15 cr. against a net loss of 0.97 cr. in the corresponding period last year. To meet the increasing demand, the company is aggressively expanding its clinker capacity by 4 times to 2 million tonnes and grinding capacity by 6 times to 2 million tonnes. For the full year FY07, it can clock a turnover of Rs.125 cr. with net profit of Rs.28.50 cr. This works out to an EPS of Rs.22 on its diluted equity of Rs.13 cr. Scrip is bound to cross Rs.175 sooner than later. Grab it before it shoots up.
Span Diagnostics (Code:524727) (Rs.51.55) is a pioneer and trendsetter of high quality products used by pathology & clinical laboratories in the diagnostics industry and is also one of the largest manufacturers of diagnostic reagents. It also has exclusive tie-ups with reputed companies worldwide for marketing, distributing and servicing their products in India and also takes contract manufacturing of a wide range of quality reagents and kits in bulk for private labels. For H1FY07, its sales increased by 25% to Rs.14.70 cr. whereas PAT zoomed up 170% to Rs.1.03 cr. Considering the strong demand for its products and rise in contract manufacturing, it may end FY07 with total revenue of Rs.55 cr. and net profit of Rs.2.25 cr. i.e. an EPS of Rs.7 on its small equity of Rs.3 cr. Accumulate at sharp declines.
ITL Industries (Code: 522183) (Rs.35.50) is an established metal cutting solutions provider offering a wide range of machine tools and cutting lubricants apart from trading in hydraulic power packs and hydraulic presses. It recently completed its modernisation and expansion project with a capex of Rs.2.5 cr. and has also acquired land in the SEZ in Pithampur for meeting global opportunities. Notably, its orders in hand is at a historic high with more than Rs.18 cr. due to the good demand for tube & pipe manufacturing machines along with its recently launched circular saw machine. Although its first half was not spectacular, for full year FY07 it is expected to report a total revenue of Rs.22 cr. with and NP of Rs.1.60 cr. This will lead to an EPS of Rs.5 on its equity of Rs.3.25 cr. For FY08, it can post an EPS of more than Rs.6 on a conservative basis. At a reasonable discounting by 12 times against its FY08 earning, the scrip has the potential to go up to Rs.75.
Transpek Industry (Code: 506687) (Rs.88.60) is Asia’s largest manufacturer of Thionyl Chloride, which is an intermediate for crop protection chemicals in the agrochemicals industry. Besides, the company is also focusing on other market segments such as intermediates for pharmaceuticals, dyes and polymers. Last fiscal, due to adoption of improved technology and de-bottlenecking of certain equipment, it enhanced its production capacity to 19500 TPA from 16500 TPA. For H1FY07, sales increased by 40% to Rs.47.50 cr. and NP zoomed 120% to Rs.4.30 cr. Notably, its OPM improved substantially from 16% last year to 21.50% this year. Currently, it is implementing further expansion of thionyl chloride capacity to 24,000 TPA and is also starting production of the second stream of continuous Acid Chloride plant with double capacity. For the full year FY07, it may report sales of Rs.100 cr. with NP of Rs.9 cr. i.e. an EPS of Rs.18 on its equity of Rs.5.07 cr. At a reasonable discounting of 8 times, the scrip has the potential to cross Rs.150 in 9~12 months.
Sagar Cement (Code: 502090) (Rs.126.40) is one of the reputed cement manufacturers from South India having a clinker capacity of 0.55 million tonnes and grinding capacity of 0.3 million tonnes. It sells its product under the brand name of ‘Sagar Priya’ and enjoys one of the highest margins in the industry mainly on account of low power and freight costs. For the first half ending Sept 2007, its sales jumped by 75% to Rs.56 cr. and NP stood at a whopping Rs.15 cr. against a net loss of 0.97 cr. in the corresponding period last year. To meet the increasing demand, the company is aggressively expanding its clinker capacity by 4 times to 2 million tonnes and grinding capacity by 6 times to 2 million tonnes. For the full year FY07, it can clock a turnover of Rs.125 cr. with net profit of Rs.28.50 cr. This works out to an EPS of Rs.22 on its diluted equity of Rs.13 cr. Scrip is bound to cross Rs.175 sooner than later. Grab it before it shoots up.
Span Diagnostics (Code:524727) (Rs.51.55) is a pioneer and trendsetter of high quality products used by pathology & clinical laboratories in the diagnostics industry and is also one of the largest manufacturers of diagnostic reagents. It also has exclusive tie-ups with reputed companies worldwide for marketing, distributing and servicing their products in India and also takes contract manufacturing of a wide range of quality reagents and kits in bulk for private labels. For H1FY07, its sales increased by 25% to Rs.14.70 cr. whereas PAT zoomed up 170% to Rs.1.03 cr. Considering the strong demand for its products and rise in contract manufacturing, it may end FY07 with total revenue of Rs.55 cr. and net profit of Rs.2.25 cr. i.e. an EPS of Rs.7 on its small equity of Rs.3 cr. Accumulate at sharp declines.
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