STOCK WATCH
Despite all cats and dogs have rallied sharply in the recent bull run, share price of Sukhjit Starch (135.00) hasn’t moved anywhere for quite long time. Company is mainly engaged in manufacturing edible and non edible maize starch, dextrine, liquid glucose and dextrose monohydrate. It also produces sorbitol, maize oil, maize gluten, maize husk, high maltose syrup, oxidized/pregelatinized starch etc. It has an impressive clientele including corporates like Britannia, Dabur, Colgate, HLL, Heinz, Ballarpur, Berger paints, JCT, Mahavir Spinning, Wockhard etc. Although its Sept qtr were not that encouraging, still for H1FY08 it recorded 15% growth in sales to 85 and 40% increase in PAT to 10.30 cr posting an EPS of 14 Rs for six months. Notably, it is the only multi-locational group in India as of now with a combined installed capacity of 1,50,000 tons corn grind per annum. In July’07, company started commercial production at its new unit in HP which has enhanced the capacity by nearly 25% and is dedicated for high margin starch and derivative products especially for pharmaceutical industry taking shape in Baddi, Himachal Pradesh. On a conservative basis, it is expected to end FY08 with sales of 175 cr and NP of 18.50 which translates into EPS of 25 Rs on equity of 7.40 cr. Scrip has the potential to appreciate 30% in 6~9 months
Ironically, the share price of Rama Paper (28.00) which hit a high of Rs 59 in 2005 is hovering around half of that level in 2007, inspite of improvement in fundamaentals. Offlate company has increased its paper production capacity to 44500 TPA and is expected to enhance it to nearly 60000 TPA by March 2008. It is also putting up an additional line of paper manufacturing machine to produce tissue and poster paper with annual capacity of 18380 TPA under a capex of 24 cr. The civil and fabrication work is in progress for the same. But most importantly, company has put up 6 MW co-generation power plant for captive consumption which commenced operation recently and will lead to substantial saving in power and fuel cost. However, company reported lower sales for Sept qtr maybe due to some disruption in its manufacturing facility. Hence for FY08 it is estimated to clock a turnover of 80 cr and profit of 5.50 on back of higher operating margin. This can shoot up to 100 cr of sales and 8.50 of NP for FY09. With means an EPS of Rs 6 and 9 for FY08 and FY09 respectively on fully diluted equity of 9.70 cr. Last fiscal company raised around 16 cr thru equity route by making pref allotment to promoters and others @ 35 Rs. As on today promoters are holding 41% stake. At the CMP, company is available at an EV of 70 cr which is even less than its gross block of 79 cr. Buying strongly recommended as share price can shoot up 75 Rs in 12~15 months.
Although Deccan Cement has more than doubled, share price of Anjani Cement (36.00) is range bound since more than a year. Under the leadership of Mr. K V Vishnu Raju, company has made a strong turnaround in FY07 and is further growing at a healthy pace in FY08. It is in the process of continually increasing the capacities by modernization and up gradation. Last fiscal it installed balancing equipment and pollution reduction equipment to increase capacities and to reduce pollution. In line with its modernization and diversification plans, company acquired a grinding unit in an open auction conducted by A.P.I.D.C which has further augmented its grinding capacity. Notably, company has a captive limestone mine, captive power generation unit and state-of-the-art technology from Nihon of Japan. On the back of robust performance, company gave maiden dividend of 10% for FY07. For H1FY08 it registered 50% growth in sales to 59 cr and 60% rise in NP to 8.60 cr. On an estimated OPM of around 26~27%, it can record a PAT of 16 cr on topline of 125 cr for FY08. This works out to an EPS of 9 Rs on equity of 18.40 cr. Share price can easily appreciate 50% in six months or so. A screaming buy.
Ironically, the share price of Rama Paper (28.00) which hit a high of Rs 59 in 2005 is hovering around half of that level in 2007, inspite of improvement in fundamaentals. Offlate company has increased its paper production capacity to 44500 TPA and is expected to enhance it to nearly 60000 TPA by March 2008. It is also putting up an additional line of paper manufacturing machine to produce tissue and poster paper with annual capacity of 18380 TPA under a capex of 24 cr. The civil and fabrication work is in progress for the same. But most importantly, company has put up 6 MW co-generation power plant for captive consumption which commenced operation recently and will lead to substantial saving in power and fuel cost. However, company reported lower sales for Sept qtr maybe due to some disruption in its manufacturing facility. Hence for FY08 it is estimated to clock a turnover of 80 cr and profit of 5.50 on back of higher operating margin. This can shoot up to 100 cr of sales and 8.50 of NP for FY09. With means an EPS of Rs 6 and 9 for FY08 and FY09 respectively on fully diluted equity of 9.70 cr. Last fiscal company raised around 16 cr thru equity route by making pref allotment to promoters and others @ 35 Rs. As on today promoters are holding 41% stake. At the CMP, company is available at an EV of 70 cr which is even less than its gross block of 79 cr. Buying strongly recommended as share price can shoot up 75 Rs in 12~15 months.
Although Deccan Cement has more than doubled, share price of Anjani Cement (36.00) is range bound since more than a year. Under the leadership of Mr. K V Vishnu Raju, company has made a strong turnaround in FY07 and is further growing at a healthy pace in FY08. It is in the process of continually increasing the capacities by modernization and up gradation. Last fiscal it installed balancing equipment and pollution reduction equipment to increase capacities and to reduce pollution. In line with its modernization and diversification plans, company acquired a grinding unit in an open auction conducted by A.P.I.D.C which has further augmented its grinding capacity. Notably, company has a captive limestone mine, captive power generation unit and state-of-the-art technology from Nihon of Japan. On the back of robust performance, company gave maiden dividend of 10% for FY07. For H1FY08 it registered 50% growth in sales to 59 cr and 60% rise in NP to 8.60 cr. On an estimated OPM of around 26~27%, it can record a PAT of 16 cr on topline of 125 cr for FY08. This works out to an EPS of 9 Rs on equity of 18.40 cr. Share price can easily appreciate 50% in six months or so. A screaming buy.
The core competency of Albert David (95.00) lies in the manufacture of bulk drugs, specialty formulations, herbal/ayurvedic products, disposable syringes & needles and intravenous (IV) solutions. It has technical collaboration with the world's largest manufacturer of amino acids, Ajinomoto Co. Inc. of Japan and with Roussel Morishita of Japan for manufacturing and marketing a wide range of crystalline amino acids, infusion solutions, oral solids and liquids in India. To maintain its market share, company is undergoing modernization-cum-expansion program in all its manufacturing units involving a capital expenditures of about Rs.52 crores. The last phase of this program is likely to be completed this fiscal itself. For H1FY08, its sales as well as profit grew by 20% to 89 cr and 6.90 cr respectively. In near future, company is planning to include some new products such as Alamin-Xtra - a nutritional supplement, Evaston - a gynaecological product, Opthalmological range - the eye care products and Betahistine - the antivertigo drug. It is also looking to launch the brand extension product like Actibile-SR and Ferrochelate-XT (the new iron compound haematinic). For FY08 it may clock revenue of 175 cr and NP of 12.50 cr which leads to an EPS of 22 Rs on equity of 5.71 cr. At a modest P/E ratio of 7x times, scrip has the potential to touch 150 levels in medium term
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