STOCK WATCH
Kamanwala Housing Construction Ltd (96.00) is engaged in real estate development of both residential as well as commercial property. It concentrates mainly in Mumbai city and is carrying out various residential projects at Andheri-E, Malad-W, Santacruz-W, Charni Road-E etc. Under commercial segment, it is developing ‘Pinnacle Corporate Park’ admeasuring 75,000 sq ft at Bandra Kurla complex apart from 1,00,000 sq ft residential cum commercial project at Versova, Andheri-W. On the back of booming real estate industry it made a strong turnaround for FY07 with sales of 83 cr (against 11 cr) and NP of 13 cr (against 0.50 cr). Moreover, it has also purchased two acre plot in Hyderabad and is developing another 35 acre land in joint venture with Prajay Syndicate. To fund its working capital requirement, it made pref allotment of 15.84 lakh equity shares and 19.95 lakh warrants @ 98 Rs per share in Dec 2006. Meanwhile, company has reported encouraging nos for the June qtr as well and is expected to end FY08 with topline of approx 125 cr and bottomline of 16 cr. This works out to an EPS of 25 Rs on fully diluted equity of 6.50 cr. Although its profit margin seems too high and company has a debt of more than 50 cr, still it has the potential to give 50% returns in a year’s time. Buy at sharp dips.
Ironically, Flat Products (312.00) is the only company in India having capabilities for designing, fabrication and installation of cold rolling mills, galvanizing lines and corrugating machines. It provides twenty different solutions to ferrous and non-ferrous metal processing industry with its unique strength, state-of-the-art equipment building, process technology and project management capabilities. Due to sharp rise in raw material cost and no escalation clause, its profit margin fell substantially in FY05 and FY06. But now the company is back on track and with steel & metal producers expanding aggressively worldwide including India, its order book is bulging constantly. For the June’07 quarter its sales jumped up 70% to 105 cr whereas NP shot up to 4.90 cr against 0.75 cr last year. Importantly, company has reported healthy OPM of 8~9% for the last two quarters. Hence, assuming it to clock 8% operating margin for FY08 it may report sales of 600 cr and PAT of 25 cr. This translates into EPS of 50 Rs on small equity of 4.94 cr. Secondly having a book value of around 170 Rs, scrip is ripe for bonus as well.
Pricol Ltd (27.00) is the largest manufacturer of dashboard instruments in India with nearly 80% market share. Infact it is a global supplier of automotive systems and component offering more than 60 products with over 2,000 variants. Inspite of having five manufacturing facilities across India, company has recently set up a greenfield plant in Pantnagar, Uttarakhand and is further putting up one more facility over there which is expected to commence operation shortly. For better customer service it has opened representative offices in USA and Germany and may also open in Italy soon. Moreover under a joint venture with Nava Khodro, it is setting up an assembly unit in Iran to be operational by end of this fiscal. For FY08, it is expected to clock a turnover of 650 cr and PAT of 35 cr i.e. EPS of approx 4 Rs on equity of 9 cr having face value as 1 Rs per share. Although its debt equity ratio is quite high but at the same time its gross block stands at whopping 395 cr. Due to some labour unrest at its Coimbatore factories, the share price has been beaten down to 52week low. Long term investors should take this opportunity and start accumulating at dips for a price target of 35 Rs in 12 months.
Shree Hari Chemicals (35.00) made a strong turnaround in FY07 with its operating margin shooting up to 15% against 6% in FY06 on back of higher price realization and better operating efficiency. It is one of the reputed manufactures and exporters of dyes and intermediaries and produces reactive, acid as well as direct dyes and a wide range of dye intermediaries like H-acid, Gama acid, Peri acid, vinyl suplhone etc. For the latest June’07 quarter its sales jumped up 40% to 16 cr and NP increased to 1.00 cr in comparison to 0.20 cr last year. On a very conservative basis also it is expected to clock a turnover of 75 cr and NP of 3.75 cr i.e. EPS of more than 8 Rs on equity of 4.50 cr. Importantly, company has decided to declare a maiden dividend for FY07 and is also planning to raise capital thru preferential allotment which may lead to re-rating of the scrip. At the current market cap of 16 cr, scrip is trading reasonably cheap and can give handsome return in medium term.
Ironically, Flat Products (312.00) is the only company in India having capabilities for designing, fabrication and installation of cold rolling mills, galvanizing lines and corrugating machines. It provides twenty different solutions to ferrous and non-ferrous metal processing industry with its unique strength, state-of-the-art equipment building, process technology and project management capabilities. Due to sharp rise in raw material cost and no escalation clause, its profit margin fell substantially in FY05 and FY06. But now the company is back on track and with steel & metal producers expanding aggressively worldwide including India, its order book is bulging constantly. For the June’07 quarter its sales jumped up 70% to 105 cr whereas NP shot up to 4.90 cr against 0.75 cr last year. Importantly, company has reported healthy OPM of 8~9% for the last two quarters. Hence, assuming it to clock 8% operating margin for FY08 it may report sales of 600 cr and PAT of 25 cr. This translates into EPS of 50 Rs on small equity of 4.94 cr. Secondly having a book value of around 170 Rs, scrip is ripe for bonus as well.
Pricol Ltd (27.00) is the largest manufacturer of dashboard instruments in India with nearly 80% market share. Infact it is a global supplier of automotive systems and component offering more than 60 products with over 2,000 variants. Inspite of having five manufacturing facilities across India, company has recently set up a greenfield plant in Pantnagar, Uttarakhand and is further putting up one more facility over there which is expected to commence operation shortly. For better customer service it has opened representative offices in USA and Germany and may also open in Italy soon. Moreover under a joint venture with Nava Khodro, it is setting up an assembly unit in Iran to be operational by end of this fiscal. For FY08, it is expected to clock a turnover of 650 cr and PAT of 35 cr i.e. EPS of approx 4 Rs on equity of 9 cr having face value as 1 Rs per share. Although its debt equity ratio is quite high but at the same time its gross block stands at whopping 395 cr. Due to some labour unrest at its Coimbatore factories, the share price has been beaten down to 52week low. Long term investors should take this opportunity and start accumulating at dips for a price target of 35 Rs in 12 months.
Shree Hari Chemicals (35.00) made a strong turnaround in FY07 with its operating margin shooting up to 15% against 6% in FY06 on back of higher price realization and better operating efficiency. It is one of the reputed manufactures and exporters of dyes and intermediaries and produces reactive, acid as well as direct dyes and a wide range of dye intermediaries like H-acid, Gama acid, Peri acid, vinyl suplhone etc. For the latest June’07 quarter its sales jumped up 40% to 16 cr and NP increased to 1.00 cr in comparison to 0.20 cr last year. On a very conservative basis also it is expected to clock a turnover of 75 cr and NP of 3.75 cr i.e. EPS of more than 8 Rs on equity of 4.50 cr. Importantly, company has decided to declare a maiden dividend for FY07 and is also planning to raise capital thru preferential allotment which may lead to re-rating of the scrip. At the current market cap of 16 cr, scrip is trading reasonably cheap and can give handsome return in medium term.
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