STOCK WATCH
Belonging to BK Birla group, Mangalam Cement (170.00) has recently been discharged from the BIFR and ceases to be a sick unit. It has also changed the accounting year to March ending from the earlier Sept ending. Accordingly for FY07 (six months) it reported sales and PBT of 228 cr and 63 cr respectively. After huge tax provisioning of 21 cr, NP stood at 48 cr. On an EPS of 15 Rs company declared 2/- Rs as dividend. To cash on the increasing demand it is carrying out 0.5 million tonnes capacity expansion that will take the total capacity to 2 million tonnes by Dec 2007. Besides, it has installed 17.50 MW captive thermal power plant which will cater to 85% of companys requirement and will lead to saving of 12~15 cr per year. It is expected to commence its operation shortly. Hence for FY08 ending March 2008 it may report a turnover of 475 cr and PAT of 90 cr ie EPS of 32 Rs on equity of 28.25 cr. Interestingly, company is contemplating to debit the deferred tax to share premium account instead of P&L a/c, which will boost the bottomline further. Having a current market cap of 480 cr, share price can give 30~40% in a years time.
Rohit Ferro-tech (39.00), a leading producer of high carbon ferro chrome has recently announced very encouraging result for the June quarter. Sales more than tripled to 100 cr whereas profit shot up to 9.50 cr against 3.60 cr last year. This translates into quaterly EPS of 2.75 Rs on equity of 34.50 Rs. Recently company has set up a greenfeild plant in Orrisa thereby taking its total capacity to 165,000 MT from 55,000 MT. Besides it has applied for mining lease to the state government of Orissa for chrome ore as well as manganese ore which will make it an integrated player to some extent. On the back of massive expansion it is expected to clock a turnover of 400 cr and PAT of 35 cr for FY08 i.e. EPS of 10 Rs on current equity. Considering its issue price at 30 Rs and 52W high of 59, scrip may shoot up to 46~48 in short term. Moreover it is trading cum dividend (i.e. 10%) with a yield of around 3%. A good bet for short term as well as medium term.
Despite all apprehensions we are optimistic on spinning sector in the longer run. And Sambandam Spinning (108.00) is a good bet as all the negatives have already been factored in the share price. For FY07 its topline grew by 15% to 128 cr and PBT was up marginally to 13 cr. But due to lower tax provisioning it recorded 70% jump in NP level to 11 cr which led to an EPS of 26 Rs on small equity of 4.30 cr. Recently, it completed a 40 cr expansion of adding 13392 spindle thereby taking total capacity to more than 75000 spindles. Further it has started implementing 100 cr project to add another 30000 spindles and establish a weaving unit of 24 loom capacity by March 2009. For FY08 it is estimated to report a sales of 150 cr and NP of 10.50 cr ie EPS of 25 Rs on current equity. At a current enterprise value of 175 cr and with a dividend yield of more than 5% it’s a pure value buy. Sometimes it pays to take a contrarian call.
Ahlcon Parenterals (65.00) Ltd is engaged in manufacture of life saving Intravenous Fluids and medical disposals including dextrose, saline, electrolytes, amino acids, fat emulsion, blood substitutes, small volume injectables, eye drops etc. For FY07 its sales improved by 10% to 49 cr whereas profit increased by 20% to 8.20 cr registering an EPS of 11 Rs on equity of 7.20 cr. It declared 15% dividend. To increase its market share and cater to international market, company is setting up a new project to almost double its production capacities, which will be operational by the later half of August 2007. Offlate it has also diversified into value added ophthalmic products and is expanding its existing Infusions and anti- microbial solutions. For FY08 company is estimated to report a topline of 65 cr and bottomline of 10 cr ie EPS of 14 Rs on current equity. Therefore scrip is currently trading at a P/E ratio of less than 5x times and at a reasonable discounting by 7x times it can easily cross century mark.
Rohit Ferro-tech (39.00), a leading producer of high carbon ferro chrome has recently announced very encouraging result for the June quarter. Sales more than tripled to 100 cr whereas profit shot up to 9.50 cr against 3.60 cr last year. This translates into quaterly EPS of 2.75 Rs on equity of 34.50 Rs. Recently company has set up a greenfeild plant in Orrisa thereby taking its total capacity to 165,000 MT from 55,000 MT. Besides it has applied for mining lease to the state government of Orissa for chrome ore as well as manganese ore which will make it an integrated player to some extent. On the back of massive expansion it is expected to clock a turnover of 400 cr and PAT of 35 cr for FY08 i.e. EPS of 10 Rs on current equity. Considering its issue price at 30 Rs and 52W high of 59, scrip may shoot up to 46~48 in short term. Moreover it is trading cum dividend (i.e. 10%) with a yield of around 3%. A good bet for short term as well as medium term.
Despite all apprehensions we are optimistic on spinning sector in the longer run. And Sambandam Spinning (108.00) is a good bet as all the negatives have already been factored in the share price. For FY07 its topline grew by 15% to 128 cr and PBT was up marginally to 13 cr. But due to lower tax provisioning it recorded 70% jump in NP level to 11 cr which led to an EPS of 26 Rs on small equity of 4.30 cr. Recently, it completed a 40 cr expansion of adding 13392 spindle thereby taking total capacity to more than 75000 spindles. Further it has started implementing 100 cr project to add another 30000 spindles and establish a weaving unit of 24 loom capacity by March 2009. For FY08 it is estimated to report a sales of 150 cr and NP of 10.50 cr ie EPS of 25 Rs on current equity. At a current enterprise value of 175 cr and with a dividend yield of more than 5% it’s a pure value buy. Sometimes it pays to take a contrarian call.
Ahlcon Parenterals (65.00) Ltd is engaged in manufacture of life saving Intravenous Fluids and medical disposals including dextrose, saline, electrolytes, amino acids, fat emulsion, blood substitutes, small volume injectables, eye drops etc. For FY07 its sales improved by 10% to 49 cr whereas profit increased by 20% to 8.20 cr registering an EPS of 11 Rs on equity of 7.20 cr. It declared 15% dividend. To increase its market share and cater to international market, company is setting up a new project to almost double its production capacities, which will be operational by the later half of August 2007. Offlate it has also diversified into value added ophthalmic products and is expanding its existing Infusions and anti- microbial solutions. For FY08 company is estimated to report a topline of 65 cr and bottomline of 10 cr ie EPS of 14 Rs on current equity. Therefore scrip is currently trading at a P/E ratio of less than 5x times and at a reasonable discounting by 7x times it can easily cross century mark.
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