Stock Watch
Lakshmi Electricals, belonging to well known LMW group is engaged in the manufacturing of electrical components like switch gear, control panel, contactors, thermal overload relays, control relays and textile machinery components using engineering plastic. It reported decent set of nos for the March quarter as sales grew by 35% to 18.50 cr and NP shot up 40% to 1.95 cr. Even for the full year its sales increased by 40% to 68 cr and profit jumped up 50% to 7.90 cr. This translates into EPS of 32 Rs on a very tiny equity of 2.46 cr. For FY08, it is expected to clock a turnover of 80 cr and profit of 8.75 cr ie EPS of 36 Rs. At a reasonable discounting by 12x times scrip has the potential to touch 425 Rs. Moreover company has a hidden value in the form of its 100% profit making subsidiary called “Harshini Textile” having a spinning capacity of 25200 spindles. This can add further 50 Rs to the valuation of the company. In short a great buy at current levels.
Despite paper manufacturers raising the paper price regularly and doing well, market has ignored this sector completely. Recently, South India paper mills reported excellent result and declared 30% dividend which gives a yield of 5% at CMP of 60 Rs. For the March quarter, its sales grew marginally to 28 cr but NP zoomed up 120% to 2.85 cr registering a qtrly EPS of 3.80 Rs. For entire FY07 sales were up 13% to 113 cr and NP increased by 50% to 10.50 cr. This led to an EPS of 14 Rs on equity of 7.50 cr. Still the scrip gets poor discounting by merely 4x times and has a markep cap of 45 cr. Currently, company is in the midst of 55 cr expansion and forward integration project whereby it is enhacing its capacity from 55,000 TPA to 85000 TPA. The project is expected to complete by Dec 2007. Besides in future, it also intends to set up a green-field plant with an investment of 125 cr. Accordingly, for FY08 it is expected to report sales of more than 125 cr and NP of 11.50 cr ie EPS of 15 Rs. But the real growth will be in FY09 due to increase capacity, hence its good long term buy.
Dhunseri Tea is one of the oldest tea producers and a market leader in Rajasthan with brands like Kala Ghora, Lal Ghora, and Chotte lal. It has massive tea graden estate spread across 1800 hectare in Assam. For FY07 its sales improved by 15% to 67 cr but PAT doubled to 7 cr due to sharp jump in other income. This works to an EPS of 10 Rs on equity of 7 cr. It declared 17.50% as dividend against 12.50% last year. Interestingly, the promoters ie Dhanukas’s have long been associated with the capital market, and Mr C.K. Dhanuka is well known as an investor with a talent for identifying stocks that generate multiple returns. Hence as on date the company has an portfolio of around 30 cr with investment in scrips like Reliance, SBI, Financial Technology, Grasim, Jaiprakash Associate, Syngenta, Areva T&D, Divis, ICIC Bank to name a few. This is apart from its investment of 37 cr in group companies like South Asian Petrochem, Tezpore Tea etc. Ironically, Dhunseri is still sitting on unrealized gain of around 15~20 cr. Despite having a well set tea business, reputed brands, own tea estate and liquid cash worth 30 cr, this scrip is available at a market cap of merely 40 cr. A value buy
Roto Pumps is a reputed manufacturer of progressive cavity pumps and twin screw pumps which have very wide application in agriculture, domestic and industrial sector. Besides India, it has warehouse cum marketing office in Australia and U.K. and also good network of distributors spread across the globe. It recorded 25% growth in sales to 10.50 cr and 45% increase in profit to 0.55 cr for the March quarter. For FY07, sales stood at 34 cr against 24 cr last year whereas NP zoomed up 125% to 2 cr. This translates into EPS of 7 Rs on small equity of 3 cr on which it declared 15% dividend for FY07. Considering the strong demand, it may end FY08 with sales of 45 cr and profit of 3 cr ie EPS of 10 Rs. With its 52W high as 71 Rs, scrip is a safe bet at current levels and can appreciate by more than 50% in 12~15 months. However, the continuous rupee appreciation is a cause of concern for the company.
Despite paper manufacturers raising the paper price regularly and doing well, market has ignored this sector completely. Recently, South India paper mills reported excellent result and declared 30% dividend which gives a yield of 5% at CMP of 60 Rs. For the March quarter, its sales grew marginally to 28 cr but NP zoomed up 120% to 2.85 cr registering a qtrly EPS of 3.80 Rs. For entire FY07 sales were up 13% to 113 cr and NP increased by 50% to 10.50 cr. This led to an EPS of 14 Rs on equity of 7.50 cr. Still the scrip gets poor discounting by merely 4x times and has a markep cap of 45 cr. Currently, company is in the midst of 55 cr expansion and forward integration project whereby it is enhacing its capacity from 55,000 TPA to 85000 TPA. The project is expected to complete by Dec 2007. Besides in future, it also intends to set up a green-field plant with an investment of 125 cr. Accordingly, for FY08 it is expected to report sales of more than 125 cr and NP of 11.50 cr ie EPS of 15 Rs. But the real growth will be in FY09 due to increase capacity, hence its good long term buy.
Dhunseri Tea is one of the oldest tea producers and a market leader in Rajasthan with brands like Kala Ghora, Lal Ghora, and Chotte lal. It has massive tea graden estate spread across 1800 hectare in Assam. For FY07 its sales improved by 15% to 67 cr but PAT doubled to 7 cr due to sharp jump in other income. This works to an EPS of 10 Rs on equity of 7 cr. It declared 17.50% as dividend against 12.50% last year. Interestingly, the promoters ie Dhanukas’s have long been associated with the capital market, and Mr C.K. Dhanuka is well known as an investor with a talent for identifying stocks that generate multiple returns. Hence as on date the company has an portfolio of around 30 cr with investment in scrips like Reliance, SBI, Financial Technology, Grasim, Jaiprakash Associate, Syngenta, Areva T&D, Divis, ICIC Bank to name a few. This is apart from its investment of 37 cr in group companies like South Asian Petrochem, Tezpore Tea etc. Ironically, Dhunseri is still sitting on unrealized gain of around 15~20 cr. Despite having a well set tea business, reputed brands, own tea estate and liquid cash worth 30 cr, this scrip is available at a market cap of merely 40 cr. A value buy
Roto Pumps is a reputed manufacturer of progressive cavity pumps and twin screw pumps which have very wide application in agriculture, domestic and industrial sector. Besides India, it has warehouse cum marketing office in Australia and U.K. and also good network of distributors spread across the globe. It recorded 25% growth in sales to 10.50 cr and 45% increase in profit to 0.55 cr for the March quarter. For FY07, sales stood at 34 cr against 24 cr last year whereas NP zoomed up 125% to 2 cr. This translates into EPS of 7 Rs on small equity of 3 cr on which it declared 15% dividend for FY07. Considering the strong demand, it may end FY08 with sales of 45 cr and profit of 3 cr ie EPS of 10 Rs. With its 52W high as 71 Rs, scrip is a safe bet at current levels and can appreciate by more than 50% in 12~15 months. However, the continuous rupee appreciation is a cause of concern for the company.
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