MUHURAT PICKS
ITL Industries (Code: 522183) (Rs.28) is an established metal cutting solutions provider offering a wide range of machine tools and cutting lubricants. It is also engaged in the trading of hydraulic power packs and hydraulic presses. Apart from making Industrial Blades, Power Hackshaw Machines, Special Purpose Machines, Hydro Testers, Lubricants and other supporting equipments it also manufactures Tube and Pipe Mills, Section Mills, Straightening Machines, Draw Benches, Automatic Cut-offs, Accumulators etc. Last fiscal, it developed and manufactured India’s first high speed CNC circular sawing machine, which was well accepted by the market. Its modernization and expansion project with a capex of Rs.2.5 cr. is almost complete now. In addition, the company has acquired land in the SEZ in Pithampur for meeting global opportunities. Its orders in hand are at a historic high in excess of Rs.18 cr. due to the good demand for its Tubes & Pipes manufacturing machines along with its recently launched circular saw machine. When the market is at its all time high, this scrip is available cheap at its current market cap of just Rs.10 cr. With an expected EPS of Rs.6, its share price can easily double in a year’s time.
Although sugar prices have corrected sharply in the recent past, Indian Sucrose Ltd. (Code: 500319) (Rs. 29.65), a Punjab based small sugar company is expected to perform better in absolute terms going forward. The company has already expanded its crushing capacity from 3500 to 5000 TCD and has further increased it to 6000 TCD from the current season. It has also installed 12 MW of co-generation facility at its plant, which will reduce power cost. Importantly, from this month the company is penetrating the lucrative retail business by introduction of retail packs of 1 Kg, 5 Kg & 10 Kg under the brand name ‘SWEETO’ which is under the process of registration. Moreover to encash the ethanol demand, it is planning to set up a greenfield distillery project at its factory for which the Letter of Intent from Punjab Government has already been obtained. Besides, last December it took over Cosmos Industries having 2500 TCD sugar plant in Sangrur Punjab. In short, the scrip is available extremely cheap and has the potential to double in a year’s time. The management is also planning to list the share on NSE, which will boost the sentiment as well as the liquidity of the scrip.
Rama Papers Ltd. (Rs.28) is one of the reputed producers of newsprints, writing and printing paper and enjoys strong brand loyalty as 80% of its customers are dealing with company for more than 5 years. To encash the strong demand and better price realization, the company is implementing aggressive expansion and modernization to enhance the capacities of its existing three units. It has recently added some balancing equipment to increase capacity by 10% to 44500 TPA. It is also putting up an additional line of paper manufacturing machine to produce tissue paper and post paper of 18380 TPA. Besides, it is in the process of installing a 6 MW power plant for captive consumption, which will reduce its power cost by Rs.800 per tonne of paper produced. With the completion of all the projects, its total production capacity will stand augmented to 79500 TPA. To part fund this expansion, the promoters have infused fresh money to the tune of Rs.9 cr. by way of preferential allotment of 25 lakh shares at Rs.35 per share to themselves, which raises their equity stake to more than 50% in the company. They may raise more money through the equity route, which may dilute the share capital but will eventually lead to an increase in liquidity as well as market cap. This scrip may nearly double in a year’s time.
Jupiter Bioscience Ltd. (Code: 524826) (Rs.118) is a Hyderabad based Pharma company whose core competence lies in the areas of Peptide Chemistry, Organic Chemistry, Chiral Chemistry, Life Sciences and Biotechnology. In fact, it is the only peptide company in Asia with technology to manufacture peptides from the basic stage and among the ten-peptide companies in the world. For future growth, the company has a massive expansion plan of Rs.100 cr. under which it plans to set up a manufacturing base in USA to cater to the regulated markets and a facility at Hyderabad. Recently, the company acquired a manufacturing facility for Rs.15 cr. from M/S. Aurobindo Pharma as a part of its expansion programme for commercialization of speciality APIs, Chiral intermediates and key Organic intermediates and Bulk Peptide raw materials. It is further spending close to Rs.25 cr. for expanding this facility. The company has invested around Rs.30 cr. for acquiring the share capital of its 100% wholly owned subsidiary, Sven Genetech, which is growing at a rapid pace. Its other subsidiary, Jupiter Bioscience USA, is in the process of setting up a GMP facility in Maryland for the manufacture of custom peptides, clinical peptides and peptide-based generic APIs. To fund its capex plan, the company made preferential allotment of 27.50 lakh shares to promoters and is planning to raise further Rs.90 cr. through FCCB/ADR/GDR route. Although some analysts are not happy with the accounting policy for its R&D expenses, we are optimistic about the company’s future and rise in share price as well.
GM Breweries Ltd. (Code: 507488) (Rs.124) is available at a P/E ratio of less than 8 whereas the industry average P/E for the breweries and distilleries sector is above 40 times. This company is engaged in the manufacture of alcoholic liquor and has the facility to blend and bottle both Indian made foreign liquor (IMFL) and country liquor though it concentrates on country liquor. Its products have been enjoying consistently good brand image from consumers for the past several years and the company enjoys a virtual monopoly in the country liquor segment in the districts of Mumbai and Thane. It is the single largest country liquor manufacturer in Maharashtra with an installed capacity of more than 55 million bulk litres (BL) per annum. As it is still working at 75% capacity, its existing capacity will take care of its requirement for at least in the next 5 years and the company does not foresee any technological obsolescence for its products. Interestingly, it hasn’t diluted its equity since the IPO in 1994 and has an uninterrupted record of dividend payment from the day of its listing. With such strong fundamentals and an expected EPS of Rs.15, how long can this scrip remain low?
Belonging to well known Ruchi Soya group, National Steel & Agro Ltd. (Code: 513179) (Rs.23) manufactures galvanized corrugated & plain steel sheets as well as coils under the brand name ‘Appu’. It also has a cold rolling mill and a modern state-of-the-art colour coating line which produces sophisticated and unlimited range of coloured steel with high corrosion resistance and excellent aesthetics for use in a variety of industries such as buildings, hotels and the automotive sector. To cater to the increasing demand, the company is constantly expanding its capacity and currently has a capacity of 2,10,000 TPA of galvanized steel, 2,40,000 TPA of cold roll steel and 80,000 TPA of colour coated line. Interestingly, inspite of such wide fluctuations in steel and raw material prices, the company is reporting almost consistent margins since more than 2 years. The company has been funding all its massive expansion through debt and internal accruals and has not diluted its equity in the last 15 years. However, it hasn’t declared a dividend. Still, it has huge reserves of around Rs.135 cr. on current equity of Rs.32.60 cr. leading to a book value of Rs.52. Against expected sales of Rs.2200 cr., its has market cap of only Rs.75 cr. making the company one of the lowest market cap sales ratio. For FY07, it can report net profit of Rs.25 cr. i.e. EPS of Rs.8, which means that CMP of Rs.23 the scrip is trading at a P/E ratio of less than 3. Just for information, in April’05 even the interest transfer of around 25 lakh shares between the promoters took place at Rs.30.
Rama Papers Ltd. (Rs.28) is one of the reputed producers of newsprints, writing and printing paper and enjoys strong brand loyalty as 80% of its customers are dealing with company for more than 5 years. To encash the strong demand and better price realization, the company is implementing aggressive expansion and modernization to enhance the capacities of its existing three units. It has recently added some balancing equipment to increase capacity by 10% to 44500 TPA. It is also putting up an additional line of paper manufacturing machine to produce tissue paper and post paper of 18380 TPA. Besides, it is in the process of installing a 6 MW power plant for captive consumption, which will reduce its power cost by Rs.800 per tonne of paper produced. With the completion of all the projects, its total production capacity will stand augmented to 79500 TPA. To part fund this expansion, the promoters have infused fresh money to the tune of Rs.9 cr. by way of preferential allotment of 25 lakh shares at Rs.35 per share to themselves, which raises their equity stake to more than 50% in the company. They may raise more money through the equity route, which may dilute the share capital but will eventually lead to an increase in liquidity as well as market cap. This scrip may nearly double in a year’s time.
Jupiter Bioscience Ltd. (Code: 524826) (Rs.118) is a Hyderabad based Pharma company whose core competence lies in the areas of Peptide Chemistry, Organic Chemistry, Chiral Chemistry, Life Sciences and Biotechnology. In fact, it is the only peptide company in Asia with technology to manufacture peptides from the basic stage and among the ten-peptide companies in the world. For future growth, the company has a massive expansion plan of Rs.100 cr. under which it plans to set up a manufacturing base in USA to cater to the regulated markets and a facility at Hyderabad. Recently, the company acquired a manufacturing facility for Rs.15 cr. from M/S. Aurobindo Pharma as a part of its expansion programme for commercialization of speciality APIs, Chiral intermediates and key Organic intermediates and Bulk Peptide raw materials. It is further spending close to Rs.25 cr. for expanding this facility. The company has invested around Rs.30 cr. for acquiring the share capital of its 100% wholly owned subsidiary, Sven Genetech, which is growing at a rapid pace. Its other subsidiary, Jupiter Bioscience USA, is in the process of setting up a GMP facility in Maryland for the manufacture of custom peptides, clinical peptides and peptide-based generic APIs. To fund its capex plan, the company made preferential allotment of 27.50 lakh shares to promoters and is planning to raise further Rs.90 cr. through FCCB/ADR/GDR route. Although some analysts are not happy with the accounting policy for its R&D expenses, we are optimistic about the company’s future and rise in share price as well.
GM Breweries Ltd. (Code: 507488) (Rs.124) is available at a P/E ratio of less than 8 whereas the industry average P/E for the breweries and distilleries sector is above 40 times. This company is engaged in the manufacture of alcoholic liquor and has the facility to blend and bottle both Indian made foreign liquor (IMFL) and country liquor though it concentrates on country liquor. Its products have been enjoying consistently good brand image from consumers for the past several years and the company enjoys a virtual monopoly in the country liquor segment in the districts of Mumbai and Thane. It is the single largest country liquor manufacturer in Maharashtra with an installed capacity of more than 55 million bulk litres (BL) per annum. As it is still working at 75% capacity, its existing capacity will take care of its requirement for at least in the next 5 years and the company does not foresee any technological obsolescence for its products. Interestingly, it hasn’t diluted its equity since the IPO in 1994 and has an uninterrupted record of dividend payment from the day of its listing. With such strong fundamentals and an expected EPS of Rs.15, how long can this scrip remain low?
Belonging to well known Ruchi Soya group, National Steel & Agro Ltd. (Code: 513179) (Rs.23) manufactures galvanized corrugated & plain steel sheets as well as coils under the brand name ‘Appu’. It also has a cold rolling mill and a modern state-of-the-art colour coating line which produces sophisticated and unlimited range of coloured steel with high corrosion resistance and excellent aesthetics for use in a variety of industries such as buildings, hotels and the automotive sector. To cater to the increasing demand, the company is constantly expanding its capacity and currently has a capacity of 2,10,000 TPA of galvanized steel, 2,40,000 TPA of cold roll steel and 80,000 TPA of colour coated line. Interestingly, inspite of such wide fluctuations in steel and raw material prices, the company is reporting almost consistent margins since more than 2 years. The company has been funding all its massive expansion through debt and internal accruals and has not diluted its equity in the last 15 years. However, it hasn’t declared a dividend. Still, it has huge reserves of around Rs.135 cr. on current equity of Rs.32.60 cr. leading to a book value of Rs.52. Against expected sales of Rs.2200 cr., its has market cap of only Rs.75 cr. making the company one of the lowest market cap sales ratio. For FY07, it can report net profit of Rs.25 cr. i.e. EPS of Rs.8, which means that CMP of Rs.23 the scrip is trading at a P/E ratio of less than 3. Just for information, in April’05 even the interest transfer of around 25 lakh shares between the promoters took place at Rs.30.
