STOCK WATCH
Although most fertilizer scrips are buzzing on the bourses; Liberty Phosphate (Code: 530273) (Rs.20) is trading at a steep discount from its 52 week high of Rs.55. It is the largest manufacture of Single Super Phosphate (SSP) commanding more than 14% market share. Presently, the group has manufacturing capacity of 7,25,000 MTPA of SSP fertilizer and 1,65,000 MTPA of NPK. It is planning to put-up new projects in other states like UP, Haryana and Central MP and establish a SSP plant at Visakappatnum with capacity of 1,32,000 MTPA. It may also announce the merger of its other two group companies with itself in the near future. Although its last two quarters were not that great, still it may end FY07 with sales of Rs.175 cr. and net profit of Rs.2.50 cr. on a standalone basis which would amount to an EPS of Rs.4 on its equity of Rs.4.13 cr. As the company has allotted around 20 lakh shares at Rs.25 to the promoters and others, the scrip is bound to rise 50% in a few months. A strong buy.
Although Suryalata Spinning Mills (Code: 514138) (Rs.55) didn’t post a great result for the December 2006 quarter, the scrip is buzzing on the bourses. Sales increased by 10% to Rs.50 cr. but net profit fell 30% to Rs.1.50 cr. due to higher tax provisions and interest cost. The company is in the midst of aggressive expansion of Rs.126 cr., which includes adding 45,000 new spindles and setting up of weaving and processing unit with a capacity of 50,000 meters a day. It has already commenced trial production at its new spinning plant of 20,000 spindles for polyester viscose yarn in Mahabubnagar, AP. Now that its total production capacity stands enhanced from 64368 to 84368 spindles. It may clock a turnover of Rs.200 cr. and net profit of Rs.6.75 cr. for FY07 i.e. EPS of Rs.12 on its current equity of Rs.5.45 cr. With a book value of Rs.54 and EV of merely Rs.85, it’s trading fairly cheap compared to its peers.
International Conveyors (Code: 509709) (Rs.171.85) is engaged in manufacturing PVC conveyor belts used in mining and material handling activities. It reported stunning results for the December 2006 quarter. Sales jumped by 60% to Rs.13.50 cr. whereas PBT spurted by 50% to Rs.2.30 cr. As company did not made any tax provision for this quarter net profit shot up 120% compared to Rs.1.06 cr. last year. Due to limited demand in domestic market, the company is putting special thrust on exports and has ambitious plan to increase its share in the lucrative global market. For the full year FY07, it may register a top-line of Rs.45 cr. and bottom-line of Rs.5 cr., which works out to an EPS of Rs.21 on its tiny equity of Rs.2.40 cr. Notably, a FII has accumulated 9% stake in the last two quarters from the open market. Scrip has the potential to touch Rs.250 in a year’s time. Buy only at sharp declines.
VST Tillers Tractors (Code: 531266) (Rs.145.75) is engaged in manufacturing of farm equipments like power tillers, low HP (sub 20 HP) tractors, diesel engines and precision components. For December 2006, its sales grew by 25% to Rs.40.50 cr. but net profit almost doubled to Rs.3.60 cr. registering an EPS of more than Rs.6 for the quarter. For the first nine months it has already clocked a sales of Rs.116 cr. and PAT of Rs.8.55 cr. Interestingly to remain the top player, VST is importing tillers in the CKD form from China, assembling them at its Hosur facility and marketing them under a new brand ‘Dragon Power Tiller’. With the GDP growth rate above 9%, the company is expected to end FY07 with turnover of Rs.160 cr. and net profit of Rs.11 cr., which works out to an EPS of Rs.19 on its equity of Rs.5.76 cr. As per unconfirmed reports, it has some surplus property in Bangalore, which may fetch a handsome value to the company.
Although Suryalata Spinning Mills (Code: 514138) (Rs.55) didn’t post a great result for the December 2006 quarter, the scrip is buzzing on the bourses. Sales increased by 10% to Rs.50 cr. but net profit fell 30% to Rs.1.50 cr. due to higher tax provisions and interest cost. The company is in the midst of aggressive expansion of Rs.126 cr., which includes adding 45,000 new spindles and setting up of weaving and processing unit with a capacity of 50,000 meters a day. It has already commenced trial production at its new spinning plant of 20,000 spindles for polyester viscose yarn in Mahabubnagar, AP. Now that its total production capacity stands enhanced from 64368 to 84368 spindles. It may clock a turnover of Rs.200 cr. and net profit of Rs.6.75 cr. for FY07 i.e. EPS of Rs.12 on its current equity of Rs.5.45 cr. With a book value of Rs.54 and EV of merely Rs.85, it’s trading fairly cheap compared to its peers.
International Conveyors (Code: 509709) (Rs.171.85) is engaged in manufacturing PVC conveyor belts used in mining and material handling activities. It reported stunning results for the December 2006 quarter. Sales jumped by 60% to Rs.13.50 cr. whereas PBT spurted by 50% to Rs.2.30 cr. As company did not made any tax provision for this quarter net profit shot up 120% compared to Rs.1.06 cr. last year. Due to limited demand in domestic market, the company is putting special thrust on exports and has ambitious plan to increase its share in the lucrative global market. For the full year FY07, it may register a top-line of Rs.45 cr. and bottom-line of Rs.5 cr., which works out to an EPS of Rs.21 on its tiny equity of Rs.2.40 cr. Notably, a FII has accumulated 9% stake in the last two quarters from the open market. Scrip has the potential to touch Rs.250 in a year’s time. Buy only at sharp declines.
VST Tillers Tractors (Code: 531266) (Rs.145.75) is engaged in manufacturing of farm equipments like power tillers, low HP (sub 20 HP) tractors, diesel engines and precision components. For December 2006, its sales grew by 25% to Rs.40.50 cr. but net profit almost doubled to Rs.3.60 cr. registering an EPS of more than Rs.6 for the quarter. For the first nine months it has already clocked a sales of Rs.116 cr. and PAT of Rs.8.55 cr. Interestingly to remain the top player, VST is importing tillers in the CKD form from China, assembling them at its Hosur facility and marketing them under a new brand ‘Dragon Power Tiller’. With the GDP growth rate above 9%, the company is expected to end FY07 with turnover of Rs.160 cr. and net profit of Rs.11 cr., which works out to an EPS of Rs.19 on its equity of Rs.5.76 cr. As per unconfirmed reports, it has some surplus property in Bangalore, which may fetch a handsome value to the company.
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