STOCK WATCH
India Glycols (335.00) is the first and only company in the world to produce ethylene oxide (EO)/mono ethyl glycol (MEG) from renewable agro route, based on molasses against the conventional route of making thru crude. For the Dec qtr it reported stunning nos as sales shot up by 70% to Rs 388 cr and profit jumped up 560% to Rs 67.50 cr posting an EPS of whopping Rs 24 for single quarter. Importantly it recorded an OPM of 27% against 10% last fiscal. To make itself backward integrated company has set up a new distillery with an annual production capacity of 66000 KBL, at Gorakhpur in Eastern U.P and has also recently taken over a sugar company called M/s. Shakumbari Sugar. Its newly set up RAB (concentrated sugarcane juice) unit to supplement ethanol requirement is completely operational now. Further company is diversifying into the field of herbal extraction through 100% EOU at Dehradun, Uttarakhand for high value Nutraceutical herbal extracts having utility in the pharmaceuticals, food and food supplements. Moreover, it is adding Extra Natural Alcohol (ENA) facility at Gorakhpur to meet the requirement of domestic and International market. For FY08 it is estimated to clock a turnover of Rs 1350 cr and PAT (excl extra ordinary income of forex gain) of Rs 165 cr i.e. EPS of Rs 59 on current equity of Rs 27.88 cr. On including forex gain EPS works out to Rs 68. A soild bet.
Indag Rubber (88.00) came out with excellent set of nos for Dec qtr. Sales improved by 25% to 20.50 cr but net profit jumped up 125% to 2.60 cr on back of increased capacity, higher realization and better operating efficiency. Most importantly, for the nine months ending Dec 2007 company has registered an OPM of 15% against 10% last year. It is one of the reputed players in tyre retreading business and 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. Notably, the operations at its new plant at Nalagarh, Himachal Pradesh have stabilised at a high level of efficiency. To maintain its growth, company is looking to increase its market share in Tamil Nadu, Karnataka and Kerela, which constitute 30 percent of-the Indian retreading market. Besides, due to termination of joint venture agreement with Bandag Inc. USA earlier, company is now exploring the export markets like Middle East, Africa etc. Accordingly it is expected to clock a turnover of Rs 75 cr and PAT of Rs 8 cr i.e. EPS of 15 Rs on equity of 5.25 cr for FY08. Buy at declines.
Cosmo Films (110.00) is the pioneer and one of the largest manufacturers of Bi-axially Oriented Polypropylene Films (BOPP) in India with an installed capacity of 77,000 MTPA. It also manufactures thermal lamination film, an export focused product, which has higher margins. For the Dec qtr its sales improved marginally to Rs 147 cr but PAT shot up by 170% to Rs 11.60 cr on back of back of better operating efficiency. To maintain its future growth company is expanding its capacity by adding two BOPP lines of 40000 MT each. The first line is expected to be commissioned before March, 2009 for which orders have been placed for all major equipments. In addition, it is also adding two new lines in thermal lamination and increasing its capacity from 13500 to 19500 MT per annum. To fund all these it recently placed 31 lakh warrants to be converted @ Rs 107 per share. It has also taken the approval for issue of 10 lakh equity shares under ESOP. For FY08 it is estimated to clock a turnover of Rs 600 cr and PAT of Rs 40 cr i.e. EPS of Rs 20.50 on current equity of 19.40 cr. At a modest discounting by 7x times scrip can touch Rs 150 in 6~9 months.
Roto Pumps (64.00) is a reputed manufacturer of progressive cavity pumps and twin screw pumps which have very wide application in agriculture, domestic and industrial sector. For the latest Dec quarter its sales improved by 15% to Rs 10.40 cr but net profit shot up 40% to 0.80 cr due to operating efficiency. Besides India, it has warehouse cum marketing office in Australia and U.K. and also good network of distributors spread across the globe. On the back of strong industrial growth and robust demand for its product, company has undertaken an expansion cum modernization plan at its manufacturing facilities. Accordingly it may register a topline of Rs 40 cr and bottom-line of Rs 3 cr for fiscal year 2008. This translates into EPS of Rs 10 on a small equity of 3.09 cr. Hence with promoters holding 70% stake, the floating stock is very low. This means scrip can see a vertical rise if it catches market fancy. Moreover for FY09, company has the potential to post an EPS of more than Rs 12~13. At the current enterprise value of Rs around Rs 25 cr, scrip is trading fairly cheap. Long term investors should keep accumulating at decline for a price target of 120 Rs in 12~15 months.
Indag Rubber (88.00) came out with excellent set of nos for Dec qtr. Sales improved by 25% to 20.50 cr but net profit jumped up 125% to 2.60 cr on back of increased capacity, higher realization and better operating efficiency. Most importantly, for the nine months ending Dec 2007 company has registered an OPM of 15% against 10% last year. It is one of the reputed players in tyre retreading business and 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. Notably, the operations at its new plant at Nalagarh, Himachal Pradesh have stabilised at a high level of efficiency. To maintain its growth, company is looking to increase its market share in Tamil Nadu, Karnataka and Kerela, which constitute 30 percent of-the Indian retreading market. Besides, due to termination of joint venture agreement with Bandag Inc. USA earlier, company is now exploring the export markets like Middle East, Africa etc. Accordingly it is expected to clock a turnover of Rs 75 cr and PAT of Rs 8 cr i.e. EPS of 15 Rs on equity of 5.25 cr for FY08. Buy at declines.
Cosmo Films (110.00) is the pioneer and one of the largest manufacturers of Bi-axially Oriented Polypropylene Films (BOPP) in India with an installed capacity of 77,000 MTPA. It also manufactures thermal lamination film, an export focused product, which has higher margins. For the Dec qtr its sales improved marginally to Rs 147 cr but PAT shot up by 170% to Rs 11.60 cr on back of back of better operating efficiency. To maintain its future growth company is expanding its capacity by adding two BOPP lines of 40000 MT each. The first line is expected to be commissioned before March, 2009 for which orders have been placed for all major equipments. In addition, it is also adding two new lines in thermal lamination and increasing its capacity from 13500 to 19500 MT per annum. To fund all these it recently placed 31 lakh warrants to be converted @ Rs 107 per share. It has also taken the approval for issue of 10 lakh equity shares under ESOP. For FY08 it is estimated to clock a turnover of Rs 600 cr and PAT of Rs 40 cr i.e. EPS of Rs 20.50 on current equity of 19.40 cr. At a modest discounting by 7x times scrip can touch Rs 150 in 6~9 months.
Roto Pumps (64.00) is a reputed manufacturer of progressive cavity pumps and twin screw pumps which have very wide application in agriculture, domestic and industrial sector. For the latest Dec quarter its sales improved by 15% to Rs 10.40 cr but net profit shot up 40% to 0.80 cr due to operating efficiency. Besides India, it has warehouse cum marketing office in Australia and U.K. and also good network of distributors spread across the globe. On the back of strong industrial growth and robust demand for its product, company has undertaken an expansion cum modernization plan at its manufacturing facilities. Accordingly it may register a topline of Rs 40 cr and bottom-line of Rs 3 cr for fiscal year 2008. This translates into EPS of Rs 10 on a small equity of 3.09 cr. Hence with promoters holding 70% stake, the floating stock is very low. This means scrip can see a vertical rise if it catches market fancy. Moreover for FY09, company has the potential to post an EPS of more than Rs 12~13. At the current enterprise value of Rs around Rs 25 cr, scrip is trading fairly cheap. Long term investors should keep accumulating at decline for a price target of 120 Rs in 12~15 months.
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