STOCK WATCH
Although share price of all the companies with real esate tag has shot up dramatically, Bombay Oxygen (8000.00) led by Mr. Shyma Ruia is trading at 40% discount to its recent high of Rs 13000. Company is basically into production of industrial gases like oxygen, nitrogen, argon, acetylene etc. Offlate, company has completely shifted its manufacturing plant from LBS Marg, Mulund-Mumbai to Kalwe-Thane thereby making the 14 acre land totally free for development. This is the prime propery just opposite famous Nirmal Life style mall and can be utilized for commercial as well as residential purpose. Ironically, company is available at an enterprise value of only Rs 130 cr although the value of this Mulund land alone is worth Rs 300 cr at current market price. And if company plans to develop it under joint venture it can easily generate Rs 500~600 cr in couple of years. Besides, being a 50 years old company it has a huge gross block 71 cr with Rs 11 cr debt on a very tiny equity of Rs 1.50 cr having face value of 100 Rs per share. On the back of healthy reserves of 37 cr its book value stands at Rs 2550. Promoters are holding 59% stake out of which 20% is under litigation and hence company is getting very poor valuation. Also scrip is traded only in physical form. Still it’s a value buy as share price can quadrupled once the matter is sorted out.
JK Lakshmi Cement (205.00) is expected to report very encouraging nos for Dec qtr on back of saving in power cost coupled with higher price realization for cement. Company has fully commissioned both its captive thermal power plants of 18 MW each, thereby making significant savings in power cost which will boost its bottomline. Secondly, company has replaced high cost debts by cheaper funds to the extant of Rs 325 crores, which will reduce interest costs going forward. On the other hand its expansion project for enhancing the capacity from 3.4 million MT to 5 million MT per annum is progressing as per schedule and is expected to be commissioned by Oct 2008. It is also looking to put up a new Greenfield plant in Chhattisgarh having the capacity to produce 2.5 million tonnes of cement per annum. Moreover, it is operating 5 RMC (ready-mix concrete) plants and hopes to add at least 5 to 6 plants more in near future. On the back of terrific nos for Sept qtr, it recorded 50% growth in sales to Rs 534 cr and Net profit increased by 130% to 142 cr for H1FY08. Hence even on a conservative basis, it may clock a turnover of 1100 cr and PAT of 210 cr for FY08 which translates into EPS of Rs 37 on current equity of Rs 57 cr and Rs 34 on diluted equity Rs 61.20 cr. Investors can buy at current levels for a target of Rs 280 in six months or so.
Although share price Liberty Phosphate (31.00) has shot up smartly in recent past still it’s trading cheap compare to other fertilizer scrips. Company is the largest manufacture of Single Super Phosphate, commanding more than 14% market share. Presently, it has four manufacturing units having total installed capacity of 463,000 MTPA of SSP fertilizer. Against this, its production stood at only 280,000 tonne for FY07 i.e. capacity utilization of merely 60%. For current fiscal company is estimated to produce and sell around 3,50,000 tonne representing 25% rise in volume terms compare to FY07. In order to fund its higher working capital requirement and improve the operating efficieny, company earlier raised Rs 10 cr thru preferential allotment of equity shares and redeemable preference shares. With this placement, promoter raised their stake to 43% currently from 36% in Dec’06. Now, company is meeting on 11th Jan 2008 to consider raising further capital thru another preferential allotment of equity shares to promoters. Hence company is now on a strong footing and may end FY08 with sales of 175 cr and PAT of 3 cr. This works out to an EPS of 5 Rs on diluted equity of 6.13 cr. At the current market cap of merely 20 cr, this scrip still has the potential to appreciate 50% from current levels. Accumulate at declines.
Once again GM Breweries (148.00) has come out with very encouraging set of nos for the Dec quarter. Although, sales improved by only 10% to Rs 49 cr but NP shot up 85% to Rs 4.40 cr on back of lower raw material cost. It recorded a healthy OPM of 14% against 10% last year. It is the single largest manufacturer of country liquor in the state of Maharashtra and enjoys virtual monopoly in the districts of Mumbai, Navi Mumbai and Thane. With the installation of additional bottling lines last fiscal, company now has the capacity to process 8.26 crores bulk litres of country liquor per annum. Hence it is expected to end FY08 with sales of Rs 190 cr and NP of Rs 15.50 cr. This works out to an an EPS of Rs 17 on equity of Rs 9.40 cr. Having a gross block of whopping Rs 68 cr, low debt equity ratio, strong cash flow, decent margins etc, company deserves much better discounting. With 68% holding promoters are investor friendly and has an uninterrupted record of dividend payment from the day of listing. At a modest discounting by 12x times, scrip has the potential to cross Rs 200 mark in 3~6 months. Long term investor can expect a price target of Rs 325 in 15~18 months.
JK Lakshmi Cement (205.00) is expected to report very encouraging nos for Dec qtr on back of saving in power cost coupled with higher price realization for cement. Company has fully commissioned both its captive thermal power plants of 18 MW each, thereby making significant savings in power cost which will boost its bottomline. Secondly, company has replaced high cost debts by cheaper funds to the extant of Rs 325 crores, which will reduce interest costs going forward. On the other hand its expansion project for enhancing the capacity from 3.4 million MT to 5 million MT per annum is progressing as per schedule and is expected to be commissioned by Oct 2008. It is also looking to put up a new Greenfield plant in Chhattisgarh having the capacity to produce 2.5 million tonnes of cement per annum. Moreover, it is operating 5 RMC (ready-mix concrete) plants and hopes to add at least 5 to 6 plants more in near future. On the back of terrific nos for Sept qtr, it recorded 50% growth in sales to Rs 534 cr and Net profit increased by 130% to 142 cr for H1FY08. Hence even on a conservative basis, it may clock a turnover of 1100 cr and PAT of 210 cr for FY08 which translates into EPS of Rs 37 on current equity of Rs 57 cr and Rs 34 on diluted equity Rs 61.20 cr. Investors can buy at current levels for a target of Rs 280 in six months or so.
Although share price Liberty Phosphate (31.00) has shot up smartly in recent past still it’s trading cheap compare to other fertilizer scrips. Company is the largest manufacture of Single Super Phosphate, commanding more than 14% market share. Presently, it has four manufacturing units having total installed capacity of 463,000 MTPA of SSP fertilizer. Against this, its production stood at only 280,000 tonne for FY07 i.e. capacity utilization of merely 60%. For current fiscal company is estimated to produce and sell around 3,50,000 tonne representing 25% rise in volume terms compare to FY07. In order to fund its higher working capital requirement and improve the operating efficieny, company earlier raised Rs 10 cr thru preferential allotment of equity shares and redeemable preference shares. With this placement, promoter raised their stake to 43% currently from 36% in Dec’06. Now, company is meeting on 11th Jan 2008 to consider raising further capital thru another preferential allotment of equity shares to promoters. Hence company is now on a strong footing and may end FY08 with sales of 175 cr and PAT of 3 cr. This works out to an EPS of 5 Rs on diluted equity of 6.13 cr. At the current market cap of merely 20 cr, this scrip still has the potential to appreciate 50% from current levels. Accumulate at declines.
Once again GM Breweries (148.00) has come out with very encouraging set of nos for the Dec quarter. Although, sales improved by only 10% to Rs 49 cr but NP shot up 85% to Rs 4.40 cr on back of lower raw material cost. It recorded a healthy OPM of 14% against 10% last year. It is the single largest manufacturer of country liquor in the state of Maharashtra and enjoys virtual monopoly in the districts of Mumbai, Navi Mumbai and Thane. With the installation of additional bottling lines last fiscal, company now has the capacity to process 8.26 crores bulk litres of country liquor per annum. Hence it is expected to end FY08 with sales of Rs 190 cr and NP of Rs 15.50 cr. This works out to an an EPS of Rs 17 on equity of Rs 9.40 cr. Having a gross block of whopping Rs 68 cr, low debt equity ratio, strong cash flow, decent margins etc, company deserves much better discounting. With 68% holding promoters are investor friendly and has an uninterrupted record of dividend payment from the day of listing. At a modest discounting by 12x times, scrip has the potential to cross Rs 200 mark in 3~6 months. Long term investor can expect a price target of Rs 325 in 15~18 months.
No comments:
Post a Comment