Rajoo Engineers Ltd - Rs.54.00

Rajoo Engineers Ltd. (REL) was incorporated in Dec.'86 as a small set up mainly to manufacture bag-making machines.In 1988, it diversified into manufacturing plastic processing machinery for extrusion processing of various thermoplastic raw materials into compounds such as profiles, pipes, blown films, cables and wire insulation sheathings, flat cast films, sheet extrusion, raffia tapes, monofilaments, co-extruded films, calendering, thermoforming and strapping. Today it has impressive range of monolayer blown film lines for processing diverse variety of plastics from commodity polymers like LDPE, LLDPE, HDPE, PP to EVA, Nylon, PVC and PS. It has simultaneously taken strides in multilayer blown film extrusion systems, mono and multilayer sheet extrusion systems, pipe and profile lines and also thermoformers. It is also into sale and service of various assemblies related to extrusion systems like screen changers, air rings, die -heads, bare
extruders, bubblecages, winders etc.

REL has huge state of the art manufacturing facilities at Rajkot and Manavadar spread across 17000 sq. mts. and built-up area of 8000 sq. mts. Its central operation is controlled from Ahmedabad whereas it has other professional sales and service set-up in Delhi, Kolkata, Bangalore, Chennai and Hyderabad. It has a modern design office including Research & Development (R&D) centre, where most advanced engineering softwares are used to facilitate new developments and also to upgrade the existing technology of the company's products. REL is regularly exporting its products worldwide and has an installation base in Tanzania, Kenya, Nigeria, South Africa, Russia, Sri Lanka, Bangladesh, Malaysia, Abu Dhabi, Kuwait, Pakistan, Nepal, Vietnam, Lusaka, Namibia, Zambia and more significantly in the sophisticated markets of U.K. and U.S.A. Incidentally in the last couple of years, it has made a successful entry into European markets and has supplied the highest outputs sheet line to Germany, which is considered to be the Mecca of the plastic industry. It also articipated
in the world's second largest plastic exhibition ‘Plastindia 2006’ which was held in Delhi.

The ever growing high-end packaging material requirement from all sectors creates a huge potential for the company's products. Besides, due to increased globalisation and with many European processors looking at India for hi-tech, low cost machineries, exports will remain a lucrative area in coming years. For the six months ending 30th Sept.’06 sales improved by 7% to Rs.12.50 cr. but net profit more than doubled to Rs.1.10 cr. due to higher operating profit. Traditionally, its second half is much better. Hence it is expected to end FY07 with sales of Rs.35 cr. and net profit of Rs.1.85 cr. This works out to an EPS of Rs.6 on its small equity of Rs.3 cr. The management is quite investor-friendly and has been paying handsome dividends since the last five years. For FY07, it may declare 18% dividend, which gives an yield of more than 3%. At a current market cap of just Rs.17 cr., this scrip is trading fairly cheap compared to Kabra Extrusion whose market cap is around Rs.90 cr. With its 52-week high at Rs.64, investors are advised to buy only at declines with a price target of Rs.75 (40% return) in 12-15 months.