STOCK WATCH
South India Paper mills (75.00) is having strong presence in packing paper and paper boards apart from manufacturing writing and printing paper. On back of robust demand for packaging grades of paper, company is implementing a brown field expansion with an investment of about 110 cr. It will more than double its paper manufacturing capacity to 105,000 TPA from 55,000 TPA currently. To support the enhanced energy requirements, it will also be augmenting its captive power generation capacity by 3.50 MW. Besides expansion, company is going for forward integration into high quality corrugated boards and intends to have at least one 100% owned facility and possibly one facility under joint venture near Chennai. However, the new paper capacity is expected to be commissioned by December 2008 and corrugated boards’ facility to start by June 2008. Meanwhile, company continues to report decent set of nos and is expected to end FY08 with sales of 125 cr and net profit of 12.50 cr. This translates into EPS of 17 Rs on equity of 7.50 cr. Considering company’s aggressive expansion plan and strong fundamentals, the share price can move up to 120 Rs at a modest discounting by 7x times. A slow but steady performer.
Haldyn Glass Gujarat (62.00) is engaged in mass production of clear glass bottles and containers with a furnace capacity of 160 TPD. It basically caters to industries such as liquor, pharmaceuticals, cosmetics, beverages, processed foods etc. Its brand name "HALDYN" enjoys very good reputation for top quality at competitive prices with timely deliveries in domestic market. Apart from having state-of-the-art manufacturing facility in Gujarat, it has full-fledged in-house design facilities and mould shop along with captive power plant and waste heat recovery system. It has the most coveted and excellent clientele with corporates like Mcdowells, Shaw Wallace, Reckitt & coleman, Parke Davis, Glaxo, Pfizer, Ranbaxy, Cadilla, Novartis etc. To capture the increasing demand of the user industry, company has installed a new furnace which is expected to become operational by early 2008. Notably, the liquor, FMCG and pharma industries who are the main user of company’s products are on an upswing due to strong economic growth. This has resulted in substantial surge in demand for the glass bottles, vials and containers. Moreover, Haldyn is looking to explore the untapped export market as well. For FY08, it is expected to report sales of 65 cr and PAT of 6.50 cr resulting into an EPS of 12 Rs on equity of 5.40 cr.
ABC Bearings (86.00) is India’s largest producer of taper roller bearing and third largest for cylindrical roller bearing after FAG and NRB. It supplies to all auto majors including Tata Motors, M&M, Ashok Leyland, Eicher Motors, Toyota, Swaraj Mazda etc. Currently it has a total installed capacity of 6.5 million bearings per annum which will be soon enhanced to 8.00 million thru the ongoing expansion plan. Due to stiff competition and in order to reduce its dependence on OEM’s, it is planning to increase its business from the replacement market as well. Few months back it has formed a 25% joint venture with NSK Ltd., Japan to set up a new plant in Chennai for manufacturing of bearings mainly for Japanese and other transplant customers. For future growth, it intends to enter the railway bearing segment and supply wheel bearings for freight wagons. However, on the bourses, the share price has tumbled down sharply and is hitting new lows due to dismissal performance by the company in the last two qtrs. Still it is expected to register a topline of 175 cr and profit of 19 cr excluding extraordinary expense of 4 cr on VRS. Hence, on an equity of 11.56 cr, EPS works out to 16 Rs. Moreover, most probably company is still sitting on a surplus land of around 18 acres in Lonavala. To conclude, at the current market cap of around 100 cr it’s a pure value buy. KIC Metalics (65.00) is primarily engaged in production of pig iron and iron casting having an installed capacity of 110,000 and 18,000 MTPA respectively. Notably, it has a coke oven plant with 144,000 MT capacity for conversion of coking coal to met coke. Although on a small scale, it also produces and markets Portland slag cement under the brand name “KAJARIA” and has a capacity of 33,000 MTPA. Off late, company has installed hot stoves in the blast furnace to bring down met coke consumption and is further looking to put up sinter plant to use low priced iron ore fines. Besides, for last couple of years company is looking to set up a 4 MW captive power plant using its waste blast furnace gas. In near future, it has plans for installation of electric steel making facility to produce steel billet initially and subsequently putting up finishing rolling mills. Hence, company intends to become a mini integrated steel manufacturer of sizeable capacity to produce cheapest steel. For H1FY08, it recorded 40% growth in sales to 107 cr and 55% increase in PBT to 5 cr. Accordingly it may end FY08 with sales of 225 cr and PAT of 6.50 cr i.e. EPS of 12 Rs on fully diluted equity of 5.60 cr. Keep accumulating at sharp declines.
Haldyn Glass Gujarat (62.00) is engaged in mass production of clear glass bottles and containers with a furnace capacity of 160 TPD. It basically caters to industries such as liquor, pharmaceuticals, cosmetics, beverages, processed foods etc. Its brand name "HALDYN" enjoys very good reputation for top quality at competitive prices with timely deliveries in domestic market. Apart from having state-of-the-art manufacturing facility in Gujarat, it has full-fledged in-house design facilities and mould shop along with captive power plant and waste heat recovery system. It has the most coveted and excellent clientele with corporates like Mcdowells, Shaw Wallace, Reckitt & coleman, Parke Davis, Glaxo, Pfizer, Ranbaxy, Cadilla, Novartis etc. To capture the increasing demand of the user industry, company has installed a new furnace which is expected to become operational by early 2008. Notably, the liquor, FMCG and pharma industries who are the main user of company’s products are on an upswing due to strong economic growth. This has resulted in substantial surge in demand for the glass bottles, vials and containers. Moreover, Haldyn is looking to explore the untapped export market as well. For FY08, it is expected to report sales of 65 cr and PAT of 6.50 cr resulting into an EPS of 12 Rs on equity of 5.40 cr.
ABC Bearings (86.00) is India’s largest producer of taper roller bearing and third largest for cylindrical roller bearing after FAG and NRB. It supplies to all auto majors including Tata Motors, M&M, Ashok Leyland, Eicher Motors, Toyota, Swaraj Mazda etc. Currently it has a total installed capacity of 6.5 million bearings per annum which will be soon enhanced to 8.00 million thru the ongoing expansion plan. Due to stiff competition and in order to reduce its dependence on OEM’s, it is planning to increase its business from the replacement market as well. Few months back it has formed a 25% joint venture with NSK Ltd., Japan to set up a new plant in Chennai for manufacturing of bearings mainly for Japanese and other transplant customers. For future growth, it intends to enter the railway bearing segment and supply wheel bearings for freight wagons. However, on the bourses, the share price has tumbled down sharply and is hitting new lows due to dismissal performance by the company in the last two qtrs. Still it is expected to register a topline of 175 cr and profit of 19 cr excluding extraordinary expense of 4 cr on VRS. Hence, on an equity of 11.56 cr, EPS works out to 16 Rs. Moreover, most probably company is still sitting on a surplus land of around 18 acres in Lonavala. To conclude, at the current market cap of around 100 cr it’s a pure value buy. KIC Metalics (65.00) is primarily engaged in production of pig iron and iron casting having an installed capacity of 110,000 and 18,000 MTPA respectively. Notably, it has a coke oven plant with 144,000 MT capacity for conversion of coking coal to met coke. Although on a small scale, it also produces and markets Portland slag cement under the brand name “KAJARIA” and has a capacity of 33,000 MTPA. Off late, company has installed hot stoves in the blast furnace to bring down met coke consumption and is further looking to put up sinter plant to use low priced iron ore fines. Besides, for last couple of years company is looking to set up a 4 MW captive power plant using its waste blast furnace gas. In near future, it has plans for installation of electric steel making facility to produce steel billet initially and subsequently putting up finishing rolling mills. Hence, company intends to become a mini integrated steel manufacturer of sizeable capacity to produce cheapest steel. For H1FY08, it recorded 40% growth in sales to 107 cr and 55% increase in PBT to 5 cr. Accordingly it may end FY08 with sales of 225 cr and PAT of 6.50 cr i.e. EPS of 12 Rs on fully diluted equity of 5.60 cr. Keep accumulating at sharp declines.
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