Most investors believe that Kallam Spinning Mills Ltd. (Code: 530201) (Rs.22.40) has posted bad numbers for the Dec.’06 quarter as its NP has plunged by 20% to Rs.0.23 cr. Actually, it has declared mind-blowing results with the highest sales and profit figures in its history. Sales increased by 70% to Rs.15 cr. and PBT jumped by 80% to Rs.2.70 cr. However following its conservative accounting procedure, it provided a whopping Rs.2.30 cr. as deferred tax provisioning in this single quarter. If not, its NP would have been huge Rs.2.50 cr. i.e. quarterly EPS of Rs.3.60 since the company has completed Phase – I of its expansion by adding 11040 spindles in last quarter only, the same kind of topline will be maintained in future also. Besides it’s undergoing Phase-II expansion by adding another 11040 spindles to be completed by mid-2007 which will take its total spindle capacity to nearly 45000 spindles. For FY07, it is expected to clock a turnover of Rs.52 cr. with NP of Rs.4 cr., which leads to an EPS of Rs.6 on its current equity of Rs.6.85 cr. Although, it has a huge debt of Rs.40 cr., the scrip still has the potential to rise by 50% in 6¬9 months.
In the Cement sector, Deccan Cements Ltd. (Code: 502137) (Rs.169.50) is doing extremely well. It’s a south based cement manufacturer having a mini cement plant of nearly 3,00,000 tonnes capacity and slag cement production capacity of 5,00,000 tonnes. For the Dec.’2006 quarter, its sales shot up by 60% to Rs.43 cr. whereas NP quadrupled to Rs.7.80 cr. due to higher price realisation. Importantly, the company has a captive power generation facility through the hydel as well as windmill route, which makes it one of the lowest cost producers of cement. In future, the company plans to set up a massive 10 lakh tonnes cement plant along with captive power facility to emerge as a bigger player in the South Indian market. Importantly, from the last six quarters the company is constantly increasing its OPM with every passing quarter. For Dec.’06 quarter, its OPM stood at 30% compared to 12% last fiscal. Considering its first nine months figures, it may end FY07 with turnover of Rs.170 cr. and after making tax provisions of Rs.14.50 cr. it may report net profit of Rs.28 cr. This translates into a whopping EPS of Rs.40 on its small equity of Rs.7 cr. At a reasonable discounting of 6, the share price can touch Rs.240 in short to medium term. The management may even declare Rs.5 as dividend for FY07. A good bet.
Another company from the Textile sector, which reported good numbers, is Winsome Textile Inds. Ltd. (Code: 514470) (Rs.60.05). Although sales fell by 10% to Rs.32 cr. its PAT quadrupled to Rs.3.75 cr. due to better profit margin and other income of Rs.1.50 cr. Notably, its closing stocks shot up substantially for the Dec.’06 quarter, which means its will report good sales for the running quarter. For future growth, the company has undertaken modernisation cum expansion projects to add 13000 spindles, 10 TPD dyeing, 2.50 MW Hydro power plant along with complete replacement of old ring frames at a capex of Rs.117 cr. For the first nine months, it has already clocked a revenue of Rs.102.50 cr. and NP of Rs.9.76 cr. without tax provisioning. Hence on a conservative basis, it may end FY07 with sales of around Rs.140 cr. and NP of Rs.9.50 cr. i.e. EPS of Rs.16 on its small equity of Rs.5.87 cr. With 58% promoter holding and Enterprise value of merely Rs.100 cr., this is a screaming buy even at current levels.
Agro Dutch Industries Ltd. (Code: 519281) (Rs.32.55) reported fantastic results for the Dec.’06 quarter. While sales grew by 35% to Rs.48 cr. its net profit zoomed by 70% to Rs.10.85 cr. registering a quarterly EPS of Rs.3.70. Notably, its OPM shot up to 37% from a mere 19% in the preceding two quarters. In order to become the world’s largest mushroom producer, it is expanding its mushroom growing capacity from 36,000 to 50,000 TPA apart from doubling its can making capacity to 12000 tonnes. It has already clocked sales and profit of Rs.154 cr. and Rs.19.50 respectively for the first nine months. Hence on a conservative basis, it is expected to end FY07 with a topline of more than Rs.200 cr. and net profit of Rs.19 cr. after making total tax provisioning of nearly Rs.9 cr. for the full year. This works out to an EPS of Rs.6.50 on its current equity of Rs.29.56 cr. As the promoters themselves are planning to invest Rs.28 cr. through preferential allotment of 1 cr. warrants to be converted at Rs.28 per share, it’s a risk-free buy at current levels. Although the company is not paying any dividend, its share price is bound to hit Rs.50 in a year’s time.
In the Cement sector, Deccan Cements Ltd. (Code: 502137) (Rs.169.50) is doing extremely well. It’s a south based cement manufacturer having a mini cement plant of nearly 3,00,000 tonnes capacity and slag cement production capacity of 5,00,000 tonnes. For the Dec.’2006 quarter, its sales shot up by 60% to Rs.43 cr. whereas NP quadrupled to Rs.7.80 cr. due to higher price realisation. Importantly, the company has a captive power generation facility through the hydel as well as windmill route, which makes it one of the lowest cost producers of cement. In future, the company plans to set up a massive 10 lakh tonnes cement plant along with captive power facility to emerge as a bigger player in the South Indian market. Importantly, from the last six quarters the company is constantly increasing its OPM with every passing quarter. For Dec.’06 quarter, its OPM stood at 30% compared to 12% last fiscal. Considering its first nine months figures, it may end FY07 with turnover of Rs.170 cr. and after making tax provisions of Rs.14.50 cr. it may report net profit of Rs.28 cr. This translates into a whopping EPS of Rs.40 on its small equity of Rs.7 cr. At a reasonable discounting of 6, the share price can touch Rs.240 in short to medium term. The management may even declare Rs.5 as dividend for FY07. A good bet.
Another company from the Textile sector, which reported good numbers, is Winsome Textile Inds. Ltd. (Code: 514470) (Rs.60.05). Although sales fell by 10% to Rs.32 cr. its PAT quadrupled to Rs.3.75 cr. due to better profit margin and other income of Rs.1.50 cr. Notably, its closing stocks shot up substantially for the Dec.’06 quarter, which means its will report good sales for the running quarter. For future growth, the company has undertaken modernisation cum expansion projects to add 13000 spindles, 10 TPD dyeing, 2.50 MW Hydro power plant along with complete replacement of old ring frames at a capex of Rs.117 cr. For the first nine months, it has already clocked a revenue of Rs.102.50 cr. and NP of Rs.9.76 cr. without tax provisioning. Hence on a conservative basis, it may end FY07 with sales of around Rs.140 cr. and NP of Rs.9.50 cr. i.e. EPS of Rs.16 on its small equity of Rs.5.87 cr. With 58% promoter holding and Enterprise value of merely Rs.100 cr., this is a screaming buy even at current levels.
Agro Dutch Industries Ltd. (Code: 519281) (Rs.32.55) reported fantastic results for the Dec.’06 quarter. While sales grew by 35% to Rs.48 cr. its net profit zoomed by 70% to Rs.10.85 cr. registering a quarterly EPS of Rs.3.70. Notably, its OPM shot up to 37% from a mere 19% in the preceding two quarters. In order to become the world’s largest mushroom producer, it is expanding its mushroom growing capacity from 36,000 to 50,000 TPA apart from doubling its can making capacity to 12000 tonnes. It has already clocked sales and profit of Rs.154 cr. and Rs.19.50 respectively for the first nine months. Hence on a conservative basis, it is expected to end FY07 with a topline of more than Rs.200 cr. and net profit of Rs.19 cr. after making total tax provisioning of nearly Rs.9 cr. for the full year. This works out to an EPS of Rs.6.50 on its current equity of Rs.29.56 cr. As the promoters themselves are planning to invest Rs.28 cr. through preferential allotment of 1 cr. warrants to be converted at Rs.28 per share, it’s a risk-free buy at current levels. Although the company is not paying any dividend, its share price is bound to hit Rs.50 in a year’s time.
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