Stock Watch
Offlate, steel scrips have made a smart recovery and share price of companies like SAIL, Tata Steel, JSW etc are near its 52W high. On the other hand small cap steel scrips like Modern Steel haven’t rallied at all. The company is primarily engaged in manufacturing of special and alloy steel, stainless steel and bright bars. For FY07 although its topline grew by 15% to 276 cr but due to lower margin NP declined by 35% to 7.30 cr registering an EPS of 15 Rs on small equity of 4.80 cr. However for future growth company is enhacing the melting capacity from 1,00,000 to 2,27,000 MTPA and rolling capacity will be increased from 50,000 MTPA to 1,54,000 MTPA. Assuming that company maintains its OPM of 7%, it may end FY08 with sales of more than 300 cr and NP of atleast 8.50 cr on a conservative basis. This means EPS of 18 Rs on current equity. At CMP, company is available fairly cheap at an enterprise value of 100 cr.
Deepak Fertlizer has once again come out with good set of nos for the March quarter. Its turnover grew by 25% to 211 cr whereas PBT shot up by 85% to 39 cr. However due to extraordinary income of 13 cr in Mar’06 the NP stood almost flat at 28 cr. On a full year basis it recorded sales of 833 cr (up 50%) and NP of 93 cr (up 17%) which led to an EPS of 10.50 Rs on equity of 88.20 cr. Last year company commissioned its 70000 TPA Iso Propyl Alcohol (IPA) plant thereby becoming the only producer of IPA in India. Secondly company is setting up a greenfield integrated complex for nitric acid and ammonium nitrate at Paradip in Orissa which is expected to complete by 2009-10. Besides it is establishing Ammonia storage with 15000 MT capacity at Nhava Sheva port near Mumbai. Meanwhile, it has leased over 75% space of Ishanya, its design centre and speciality mall, to segment leaders in retail. Also company is in the process of securing additional supply of natural gas from other sources which will improve its capacity utilization and margin going forward. With an expected EPS of 12 Rs for FY08, share price can appreciate to 120 Rs in medium term.
Recently, Gonterman pipers one of the leading manufacturers of cast rolls and forged rolls announeced encouraging result for the March quarter. Sales grew by 25% to 41 cr whereas PBT increased by 145% to 6.90 cr compare to 2.80 cr last fiscal. After making tax provision of whopping 3 cr the NP stood at 3.90 cr ie EPS of nearly 3 Rs for the quarter. For the entire FY07 it recorded net sales and NP of 148 and 12.20 cr respectively. This translates into EPS of 9 Rs on equity of 13.90 cr. Notably, company’s OPM improved substantially to 22% against 17% last year. With domestic as well international steel industry adding capacity at fast pace, company is implementing expansion-cum-modernization plan of Rs.40 cr. to enhance its production capcity to 18,000 MT of fininshed roll from 12,000 MT. However for FY08 company is estimated to report sales of 175 cr and NP of 17 cr which works out to an EPS of 12 Rs on current equity. Secondly company has revalued its assets in FY07 which will boost its book value to the extent of 30 Rs per share. Scrip can give 50% return within a year.
Indo Tech Transformers is one of the leading manufacturers of power and distribuition transformer based in south India. For the March quarter it recorded 80% growth in sales to 57 cr and NP jumped up 160% to 10.30 cr registering qtrly EPS of almost 10 Rs. Ironically it reported an all time high OPM of 27% against 13% last year. For the full year its revenue increased by 70% to 156 cr and PAT shot up by 130% to 25.50 cr ie EPS of 24 Rs on equity of 10.62 cr. The present order book of the compony is around 150 cr and is expected to shoot up as company has bid for 350¬400 cr worth of tenders. Moreover its new power transformer plant at Kancheepuram with a capacity of 4000 MVA is expected to go on stream from Aug 2007. Meanwhile its Dry type transformer plant at Thirumazhisai with an installed capacity of 100 MVA is expected to commence operation shortly. Consrdering all the factor it is estimated to clock a turnover of 225 and profit of 34 cr for FY08 ie EPS of 32 Rs. Buy only at sharp declines.
Deepak Fertlizer has once again come out with good set of nos for the March quarter. Its turnover grew by 25% to 211 cr whereas PBT shot up by 85% to 39 cr. However due to extraordinary income of 13 cr in Mar’06 the NP stood almost flat at 28 cr. On a full year basis it recorded sales of 833 cr (up 50%) and NP of 93 cr (up 17%) which led to an EPS of 10.50 Rs on equity of 88.20 cr. Last year company commissioned its 70000 TPA Iso Propyl Alcohol (IPA) plant thereby becoming the only producer of IPA in India. Secondly company is setting up a greenfield integrated complex for nitric acid and ammonium nitrate at Paradip in Orissa which is expected to complete by 2009-10. Besides it is establishing Ammonia storage with 15000 MT capacity at Nhava Sheva port near Mumbai. Meanwhile, it has leased over 75% space of Ishanya, its design centre and speciality mall, to segment leaders in retail. Also company is in the process of securing additional supply of natural gas from other sources which will improve its capacity utilization and margin going forward. With an expected EPS of 12 Rs for FY08, share price can appreciate to 120 Rs in medium term.
Recently, Gonterman pipers one of the leading manufacturers of cast rolls and forged rolls announeced encouraging result for the March quarter. Sales grew by 25% to 41 cr whereas PBT increased by 145% to 6.90 cr compare to 2.80 cr last fiscal. After making tax provision of whopping 3 cr the NP stood at 3.90 cr ie EPS of nearly 3 Rs for the quarter. For the entire FY07 it recorded net sales and NP of 148 and 12.20 cr respectively. This translates into EPS of 9 Rs on equity of 13.90 cr. Notably, company’s OPM improved substantially to 22% against 17% last year. With domestic as well international steel industry adding capacity at fast pace, company is implementing expansion-cum-modernization plan of Rs.40 cr. to enhance its production capcity to 18,000 MT of fininshed roll from 12,000 MT. However for FY08 company is estimated to report sales of 175 cr and NP of 17 cr which works out to an EPS of 12 Rs on current equity. Secondly company has revalued its assets in FY07 which will boost its book value to the extent of 30 Rs per share. Scrip can give 50% return within a year.
Indo Tech Transformers is one of the leading manufacturers of power and distribuition transformer based in south India. For the March quarter it recorded 80% growth in sales to 57 cr and NP jumped up 160% to 10.30 cr registering qtrly EPS of almost 10 Rs. Ironically it reported an all time high OPM of 27% against 13% last year. For the full year its revenue increased by 70% to 156 cr and PAT shot up by 130% to 25.50 cr ie EPS of 24 Rs on equity of 10.62 cr. The present order book of the compony is around 150 cr and is expected to shoot up as company has bid for 350¬400 cr worth of tenders. Moreover its new power transformer plant at Kancheepuram with a capacity of 4000 MVA is expected to go on stream from Aug 2007. Meanwhile its Dry type transformer plant at Thirumazhisai with an installed capacity of 100 MVA is expected to commence operation shortly. Consrdering all the factor it is estimated to clock a turnover of 225 and profit of 34 cr for FY08 ie EPS of 32 Rs. Buy only at sharp declines.
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