Manugraph India - 130.00 Rs

Established in 1972 and promoted by Mr. S.M. Shah, Manugraph India Ltd (MIL) is today, country’s largest manufacturer of newspaper web-offset and sheet fed offset presses. With a whopping 70% market share, company is the undisputed leader in domestic market with its product present in nearly all-major publication houses. It manufactures printing presses used by the newspaper industry and also makes products that are used for printing a variety of business/entertainment material such as brochures, pamphlets and booklets. Notably MIL is the only organized and niche player in manufacturing and installing the printing press, hence is the Tier-I supplier to large publishing houses like Times of India group, Indian Express group, Dainik Jagran Prakashan group, Hindustan Times, and other regional newspapers and publications like Gujarat Samachar, Malayala Manorama, Hindu, Sandesh , Deccan Chronicle etc.

MIL has two modern manufacturing plants at Kolhapur, Maharashtra, with a total installed capacity of 830 printing units. It makes various types of machinery with speed ranging from 25000 to 55000 copies per hour. Frontline, Hiline, Manuline, Starline, Newsline, Shiva, Cityline Express, Printmagic etc are its popular and successful brand names. Notably company has a tie up with MAN Roland, Germany under which they will sell MIL’s product worldwide and at the same time company gets the production and sales rights for the Uniset 60 newspaper printing machine manufactured by MAN Roland in India. MAN Roland is the worldwide leader in manufacturing web offset and sheet offset printing machines and has strong marketing reach across 50 countries. Currently exports contribute more than 30% of revenue with products being exported across the world.

Last year in Nov’06, MIL acquired Dauphin Graphic Machines Inc (DGM), a leading manufacturer of web offset printing machines based in Pennsylvania, USA for approx Rs 86 cr. Notably, DGM with annual sales of more than Rs 300 cr enjoys 60% market share in US/Canadian market for single-wide, one around press. Post this acquisition, MIL has become the world’s largest manufacturers of the single width press. For partial funding of this takeover, company made preferential allotment of around 4 lac shares @ 248 /- to FII’s. For FY07 it reported sales and NP of 369 cr and 46.50 cr respectively which means EPS of 15 Rs on a tiny equity of 6.08 cr having FV of 2/- Rs per share. Although its margin seems to be under pressure due to rising raw material cost, still for FY08 it may clock a turnover of 400 cr and NP of 45 cr on a standalone basis. ie EPS of 15 Rs. On a consolidated basis it is expected to report total revenue of more than 750 cr. Hence at a current market cap of less than 400 cr, scrip is trading fairly cheap. Incidentally in such a high market scrip is trading at its 52W low, hence investors are advised to buy at current levels with a price target of 210 Rs (ie 60% appreciation) in 12~15 months.