STOCK WATCH
Indag Rubber (46.00) is one of the reputed players in tyre retreading business. It operates thru franchisee business by offering the technology, specialized equipment, retreading material, technical back up etc to the franchisee. It has a state of the art manufacturing unit to produce precured tread rubber along with allied items like cushion gum, repair gum, envelopes, other accessories and specialized equipment for retreading. Retreading is basically a process of bonding a new flap of pre-vulcanized rubber in place of the worn-out flap which increases the tyre life. For the June qtr it posted stuning nos. Sales increased by 30% to 17 but NP jumped up 185% to 1.70 cr on back of higher operating margin. Notably, it registered an OPM of whopping 15% against 9% last fiscal. Moreover company has recently set up a new plant in Himachal Pradesh which will give a fillip to its topline this fiscal. Accordingly it is expected to clock a turnover of 70 cr and PAT of 5 cr i.e. EPS of 10 Rs on equity of 5.25 cr for FY08. Scrip can move up to 75 Rs in 12~15 months
Belonging to well known Rane group, Rane Madras (82.00) is a market leader in manufacturing of critical automotive components like steering linkages, ball joints, axial joints, suspension joints and manual steering gears. It is a preferred supplier to most of the OEM’s in India and caters to every segment of automobile industry viz. passenger cars, multi utility vehicles, light commercial vehicles, heavy commercial vehicles and farm tractors. In October last year it established a new facility in Chennai for producing outer ball joints with an investment of 14 crore. It has also set up a manufacturing facility at Uttrakand for supply of steering gears exclusively to Tata Motors Limited. For FY07, its sales increased by 20% to 330 cr but PAT shot up 60% to 13.60 cr posting an EPS of 13 Rs. It gave 40% dividend leading to a high yield of around 5% at CMP. Although its first qtr nos were not that encouraging, still it is estimated to clock a turnover of nearly 400 cr and profit of 15 cr i.e. EPS of 15 Rs on equity of 10.10 cr. However the rising interest cost due to higher debt is a negative aspect. Hence once should buy only at sharp declines.
Simmonds Marshall (54.00) is the market leader in Nyloc nuts and manufactures wide range world class nuts like flange, cage, weld, cap, castle, couplings, u-nuts, wheel nuts etc. It also has a cold forged automotive components division which is capable of cold forging small and shallow components for automobile manufacturers and their ancillaries. For the June qtr its sales grew by 15% to 6 cr but NP remained flat at 0.55 cr on back of higher interest and depreciation cost. On the back of strong demand, company has undertaken aggressive expansion plan to almost double its production capacity by this fiscal end. Moreover it is having healthy order book position which is considerably higher than its entire FY07 sales. Accordingly it may report sales of approx 30 cr and NP of 2.50 cr which works out to an EPS of 12 Rs on a tiny equity of 2.10 cr. Due to very low floating stock, scrip can easily appreciate 50% in a short term. Investors can buy at current levels with a price target of 75/- Rs in 6~9 months.
Uttam Galva (46.00) is the second largest manufacture of cold rolled and galvanized products like coils, plain sheets, corrugated sheets, CRCA and colour coated steel. It is undergoing massive expansion estimated to complete soon this year which will take its cold rolling capacity to 10,00,000 MTPA and galvanizing to 7,00,000 MTPA. Besdies, it already has a colour coating line with a capacity of 80,000 MTPA. In April’07 it raised 85 cr thru GDR @ 40 Rs per equity share. Earlier it had raised approx 200 cr thru FCCB which is yet to be converted into equity shares. Although the conversion price is Rs 64.50 per share we assume it to be finally converted into 44/- Rs per share. Hence after conversion we estimate fully diluted to be nearly 150.00 cr. With zinc prices remaining stable and steel price on an uptrend, company is expected to end FY08 with topline of 3500 cr and bottomline of 120 cr which means an EPS of 11.50 Rs on current equity. However on a fully diluted equity of approx 150 cr the EPS works out to 8 Rs. Technically, scrip has made a strong breakout and looks good for short term with a price target of 58 Rs.
Belonging to well known Rane group, Rane Madras (82.00) is a market leader in manufacturing of critical automotive components like steering linkages, ball joints, axial joints, suspension joints and manual steering gears. It is a preferred supplier to most of the OEM’s in India and caters to every segment of automobile industry viz. passenger cars, multi utility vehicles, light commercial vehicles, heavy commercial vehicles and farm tractors. In October last year it established a new facility in Chennai for producing outer ball joints with an investment of 14 crore. It has also set up a manufacturing facility at Uttrakand for supply of steering gears exclusively to Tata Motors Limited. For FY07, its sales increased by 20% to 330 cr but PAT shot up 60% to 13.60 cr posting an EPS of 13 Rs. It gave 40% dividend leading to a high yield of around 5% at CMP. Although its first qtr nos were not that encouraging, still it is estimated to clock a turnover of nearly 400 cr and profit of 15 cr i.e. EPS of 15 Rs on equity of 10.10 cr. However the rising interest cost due to higher debt is a negative aspect. Hence once should buy only at sharp declines.
Simmonds Marshall (54.00) is the market leader in Nyloc nuts and manufactures wide range world class nuts like flange, cage, weld, cap, castle, couplings, u-nuts, wheel nuts etc. It also has a cold forged automotive components division which is capable of cold forging small and shallow components for automobile manufacturers and their ancillaries. For the June qtr its sales grew by 15% to 6 cr but NP remained flat at 0.55 cr on back of higher interest and depreciation cost. On the back of strong demand, company has undertaken aggressive expansion plan to almost double its production capacity by this fiscal end. Moreover it is having healthy order book position which is considerably higher than its entire FY07 sales. Accordingly it may report sales of approx 30 cr and NP of 2.50 cr which works out to an EPS of 12 Rs on a tiny equity of 2.10 cr. Due to very low floating stock, scrip can easily appreciate 50% in a short term. Investors can buy at current levels with a price target of 75/- Rs in 6~9 months.
Uttam Galva (46.00) is the second largest manufacture of cold rolled and galvanized products like coils, plain sheets, corrugated sheets, CRCA and colour coated steel. It is undergoing massive expansion estimated to complete soon this year which will take its cold rolling capacity to 10,00,000 MTPA and galvanizing to 7,00,000 MTPA. Besdies, it already has a colour coating line with a capacity of 80,000 MTPA. In April’07 it raised 85 cr thru GDR @ 40 Rs per equity share. Earlier it had raised approx 200 cr thru FCCB which is yet to be converted into equity shares. Although the conversion price is Rs 64.50 per share we assume it to be finally converted into 44/- Rs per share. Hence after conversion we estimate fully diluted to be nearly 150.00 cr. With zinc prices remaining stable and steel price on an uptrend, company is expected to end FY08 with topline of 3500 cr and bottomline of 120 cr which means an EPS of 11.50 Rs on current equity. However on a fully diluted equity of approx 150 cr the EPS works out to 8 Rs. Technically, scrip has made a strong breakout and looks good for short term with a price target of 58 Rs.
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