Stock Watch
As predicted earlier, Easun Reyrolle came out with stunning nos for the March quarter. It reported an all time high sales of 46 cr (up 45%) whereas NP zoomed up by 135% to 6.80 cr registering a mind blowing EPS of 20 Rs for the quarter. However for the full year its sales improved by 25% to 133 cr and profit grew by 35% to 17.70 cr. This translates into yearly EPS of 53 Rs on a very tiny equity of 3.33 cr. It also announced 12 Rs as total dividend (incl 2/- Rs as interim) which is the highest in its history. Offlate company has ventured into a new business area i.e. construction of projects on turnkey basis under which it will mainly concentrate on substation projects and power system automation project. For future growth it is setting up a 45,000 sq ft world class manufacturing facility at Hosur for medium voltage switchgear with an investment of Rs.12 cr. For FY08 it may clock a turnover of 175 cr and PAT of 23.50 ie EPS of 64 on diluted equity of 3.66 cr. To improve the liquidity management has already announced the stock split to 2/- Rs face value and with an estimated book value of 175 Rs (ie reserves of 65 cr) they may declare a bonus as well in future. Scrip can trade around 250 Rs post split.
Recently, International Combustion also announced every encouraging result. Sales increased by 15% to 24 cr and profit jumped up 50% to 2.80 cr ie EPS of around 12 Rs for the quarter. For the entire FY07, it recorded 20% growth in sales to 80 cr and an impressive 45% rise in NP to 8.30 cr. This works out to an EPS of 35 Rs on equity of 2.40 cr. Notably, this is after writing of 1.30 cr as bad debts else its NP would have been 9.50 cr. Due to some growth plans, it declared 50% dividend, same as last year. Company is a leading manufacturer of heavy engineering equipment, geared motors and gear boxes, vibrating screens and feeders, bulk material handling equipment, rubber/polyurethane screen decks and liners, Raymond grinding mills, air classifiers and flash drying system etc. Considering the strong economic growth coupled with huge outsourcing prospects it may end FY08 with topline of 100 cr and net profit of 11 cr which leads to an EPS of 46 Rs on current equity. Besides with more than 30 cr of reserves ie book value of 125 Rs, management may declare a liberal bonus this year. Share price can double in a years time. A screaming buy.
Having technical collabaration with Benteler of Germany, Gandhi Special Tubes is one of the leading manufacturers of small diameter welded steel tubes, cold drawn seamless steel tubes, tubular components and cold formed nuts. For the March’07 quarter its sales as well as PBT grew by 20% to 18 cr and 5.20 respectively. However due to higher tax provisioning its NP stood at 3.35 cr against 6.25 cr last year. On the full years basis the turnover increased by 10% to 61.50 whereas profit before tax grew marginally to 19.50 cr. After tax provisioning of 6.50 cr (against 2.40 cr) NP delined to 13 cr compare to 16 cr last fiscal. Hence it reported an EPS of 17.50 Rs on equity of 7.35 cr and gave 40% dividend for FY07. It has a impressice clientele including biggies like Godrej, Voltas, Tata Motors, Ashok Leyland, M&M, Maruti etc. Although its margins seem to under pressure due to rise in steel prices, still being a niche player it can report sales of 75 cr and NP of 15 cr for FY08 ie EPS of 20. With 52week H/L as 110/180 Rs scrip has the potential to touch 160 Rs in good sentiment
As textile sector is out of flavour, companies like Shri Lakshmi Cotsyn are available at reasonably cheap valuations.It has been manufacturing suiting shirting, embroideried and quilted fabric, industrial fabric apart from processing cotton sheeting. Recently it has set up a gigantic plant in Fatehpur andstarted producing denim, terry towel, wider width sheeting, heavy weight bottomwear fabric etc. It is also venturing into garment manufacturing in a big way. For the March quarter it reported 65% jump in sales to Rs.154 cr. whereas net profit almost tripled to Rs.12 cr. and registered 18% OPM against 8% in the last fiscal. For FY07 ending June’07 it can report sales of 550 cr and NP of 35 cr which can shoot upto 725 cr and 45 cr repectively for FY08. This means EPS of 24 Rs and 30 Rs on diluted equity of 14.80 cr. Company is rasing around 85 cr thru FCCB/GDR route which can dilute the equity further to around 21 cr. Buy at sharp declines only.
Recently, International Combustion also announced every encouraging result. Sales increased by 15% to 24 cr and profit jumped up 50% to 2.80 cr ie EPS of around 12 Rs for the quarter. For the entire FY07, it recorded 20% growth in sales to 80 cr and an impressive 45% rise in NP to 8.30 cr. This works out to an EPS of 35 Rs on equity of 2.40 cr. Notably, this is after writing of 1.30 cr as bad debts else its NP would have been 9.50 cr. Due to some growth plans, it declared 50% dividend, same as last year. Company is a leading manufacturer of heavy engineering equipment, geared motors and gear boxes, vibrating screens and feeders, bulk material handling equipment, rubber/polyurethane screen decks and liners, Raymond grinding mills, air classifiers and flash drying system etc. Considering the strong economic growth coupled with huge outsourcing prospects it may end FY08 with topline of 100 cr and net profit of 11 cr which leads to an EPS of 46 Rs on current equity. Besides with more than 30 cr of reserves ie book value of 125 Rs, management may declare a liberal bonus this year. Share price can double in a years time. A screaming buy.
Having technical collabaration with Benteler of Germany, Gandhi Special Tubes is one of the leading manufacturers of small diameter welded steel tubes, cold drawn seamless steel tubes, tubular components and cold formed nuts. For the March’07 quarter its sales as well as PBT grew by 20% to 18 cr and 5.20 respectively. However due to higher tax provisioning its NP stood at 3.35 cr against 6.25 cr last year. On the full years basis the turnover increased by 10% to 61.50 whereas profit before tax grew marginally to 19.50 cr. After tax provisioning of 6.50 cr (against 2.40 cr) NP delined to 13 cr compare to 16 cr last fiscal. Hence it reported an EPS of 17.50 Rs on equity of 7.35 cr and gave 40% dividend for FY07. It has a impressice clientele including biggies like Godrej, Voltas, Tata Motors, Ashok Leyland, M&M, Maruti etc. Although its margins seem to under pressure due to rise in steel prices, still being a niche player it can report sales of 75 cr and NP of 15 cr for FY08 ie EPS of 20. With 52week H/L as 110/180 Rs scrip has the potential to touch 160 Rs in good sentiment
As textile sector is out of flavour, companies like Shri Lakshmi Cotsyn are available at reasonably cheap valuations.It has been manufacturing suiting shirting, embroideried and quilted fabric, industrial fabric apart from processing cotton sheeting. Recently it has set up a gigantic plant in Fatehpur andstarted producing denim, terry towel, wider width sheeting, heavy weight bottomwear fabric etc. It is also venturing into garment manufacturing in a big way. For the March quarter it reported 65% jump in sales to Rs.154 cr. whereas net profit almost tripled to Rs.12 cr. and registered 18% OPM against 8% in the last fiscal. For FY07 ending June’07 it can report sales of 550 cr and NP of 35 cr which can shoot upto 725 cr and 45 cr repectively for FY08. This means EPS of 24 Rs and 30 Rs on diluted equity of 14.80 cr. Company is rasing around 85 cr thru FCCB/GDR route which can dilute the equity further to around 21 cr. Buy at sharp declines only.
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