STOCK WATCH
Eastern Silk Inds. Ltd. (Code: 590022) (Rs.243.05) is a leading manufacturer & exporter of silk fabrics with nearly 30% share of the organised silk market. It is present across the entire value chain from yarn to basic/design fabrics to embroidered fabrics and made-ups. It is now aggressively shifting towards the lucrative machine-made fabrics instead of handloom and powerloom fabrics. Secondly, it is implementing a huge capex of Rs.300 cr. to expand its weaving capacity and foray into home furnishing and made-ups business in a big way. Since the last four years, its OPM is constantly improving and is expected to be 20% for FY07 compared to 10% in FY03 and is expected to register net sales of Rs.475 cr. with net profit of Rs.63 cr. This translates into an EPS of Rs.40 on its current equity of Rs.15.80 cr. Currently, the scrip is trading at a P/E multiple of just 6 and has the potential to touch Rs.320 in the medium-term. It has also decided to split the face value of its Rs.10 paid-up share to Rs.2, which will improve its liquidity going forward.
Coral Laboratories Ltd. (Code: 524506) (Rs.119.50) manufactures a variety of formulations in capsules, dry syrup, tablets, liquid orals, special diagnostic kits, ointments, creams, injections, eye/ear drops etc. catering to inflammatory, bacterial, biotic, protein deficiencies and skin conditions. Last year, after expanding the capacity of its Daman plant, the company set up a new UK MHRA and US FDA compliant formulations plant n at Dehradun in Uttarkhand, which enables it to enter the regulatory export markets of developed countries. Its second project for the manufacture of 'Betalactum' is almost completed and the third project for injectibles is under implementation. Although its third quarter was not so great, it may still end FY07 with sales of Rs.32 cr. and net profit of Rs.6.50 cr. This translates into an EPS of Rs.18 on its current equity of Rs.3.57 cr. For FY08, it can report sales and net profit of Rs.40 cr. and Rs.8.50 cr. respectively. Buy on sharp declines only.
ITL Industries Ltd. (Code: 522183) (Rs.28.40) is a reputed metal cutting solutions provider offering a wide range of machine tools and cutting lubricants besides trading in 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. It has already completed its modernization and expansion project with a capex of Rs.2.5 cr. last year and has also acquired the land in the SEZ in Pithampur for meeting global opportunities. Notably, it has healthy orders in hand due to good demand for tubes & pipes manufacturing machines along with its newly launched circular saw machine. The company is expected to declare very good numbers for the March’07 quarter and may end FY07 with sales of Rs.21 cr. with net profit of Rs.1.50 cr. i.e. an EPS of Rs.5 on its tiny equity of Rs.3.25 cr. At the current market cap of merely Rs.9 cr., it’s a risk-free buy, which can double in a year’s time
Coral Laboratories Ltd. (Code: 524506) (Rs.119.50) manufactures a variety of formulations in capsules, dry syrup, tablets, liquid orals, special diagnostic kits, ointments, creams, injections, eye/ear drops etc. catering to inflammatory, bacterial, biotic, protein deficiencies and skin conditions. Last year, after expanding the capacity of its Daman plant, the company set up a new UK MHRA and US FDA compliant formulations plant n at Dehradun in Uttarkhand, which enables it to enter the regulatory export markets of developed countries. Its second project for the manufacture of 'Betalactum' is almost completed and the third project for injectibles is under implementation. Although its third quarter was not so great, it may still end FY07 with sales of Rs.32 cr. and net profit of Rs.6.50 cr. This translates into an EPS of Rs.18 on its current equity of Rs.3.57 cr. For FY08, it can report sales and net profit of Rs.40 cr. and Rs.8.50 cr. respectively. Buy on sharp declines only.
ITL Industries Ltd. (Code: 522183) (Rs.28.40) is a reputed metal cutting solutions provider offering a wide range of machine tools and cutting lubricants besides trading in 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. It has already completed its modernization and expansion project with a capex of Rs.2.5 cr. last year and has also acquired the land in the SEZ in Pithampur for meeting global opportunities. Notably, it has healthy orders in hand due to good demand for tubes & pipes manufacturing machines along with its newly launched circular saw machine. The company is expected to declare very good numbers for the March’07 quarter and may end FY07 with sales of Rs.21 cr. with net profit of Rs.1.50 cr. i.e. an EPS of Rs.5 on its tiny equity of Rs.3.25 cr. At the current market cap of merely Rs.9 cr., it’s a risk-free buy, which can double in a year’s time
Few days back, GM Breweries Ltd. (Code: 507488) (Rs.89.90) came out with average numbers for the March’07 quarter. It made an all time high sales of Rs.47 cr., although it’s just 7% higher on YOY basis. It seems that the company made some accounting adjustment in FY06 and reported Rs.7.40 cr. net profit for the March 2006 quarter. However, for March 2007 quarter, it earned a decent OPM of 15% whereas its net profit stood at just Rs.3.60 cr. For the full year FY07, net sales increased by 12% to Rs.173 cr. whereas its OPM worked out to 13%. After a tax provision of Rs.6.20 cr. (i.e. 34% on the PBT), it reported a PAT of Rs.11.90 cr. This translates into an EPS of Rs.13 on its equity of Rs.9.36 cr. In spite of fall in profit in absolute terms, the company declared 18% dividend compared to 15% last year. For FY08, the company can clock a turnover of Rs.190 cr. with net profit of Rs.15 cr. i.e. an EPS of Rs.16. At a forward discounting by 8 times, the scrip can easily touch Rs.125 in a good market.
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