Small & Beautiful (Guj)
Grauer & Weil (110.00) is one of the very few metal finishing houses world over, capable of offering an integrated package of chemicals, plants, effluent treatment systems and waste recovery techniques from spent solutions. Besides, its 125,000 sq ft hi-tech mall called GROWEL 101 in Kandivali-Mumbai is doing extremely well. To cash on the burgeoning lease rental prices, it is aggressively constructing the Phase II, comprising a huge area of 300,000 sq ft. This is expected to get ready within this calendar year and is estimated to be leased out at an average rate of Rs 100 per sq ft per month. Further, it is planning to develop additional 300,000 sq ft under Phase-III to be ready by early 2010 thereby taking the total mall size to massive 625,000 sq ft. However it is expected to report total revenue & profit of Rs 185 cr and Rs 13 cr for FY08 which can shoot up to Rs 220 cr and Rs 20 cr for FY09. That translates into EPS of Rs 10 and Rs 16 respectively. At a reasonable discounting by 12x times against its FY09 earning scrip can shoot up to Rs 200 within a year. However only long term investors are advised to buy as any delay in construction of mall may restrict the short term rise in share price.
KIC Metalics (45.00) is primarily engaged in production of pig iron and iron casting having an installed capacity of 110,000 and 18,000 MTPA respectively. Further, 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. On the back of higher pig iron prices company is estimated to register sales of Rs 200 cr and PAT of Rs 6 cr for FY08. This works out to an EPS of Rs 11 Rs on fully diluted equity of Rs 5.60 cr. At current enterprise value of merely Rs 55 cr its worth a punt, as share price can shoot up to Rs 75 in 6~9 months.
Shree Ganesh Forgings (52.00) specializes in producing complete line of stainless steel, carbon steel and alloy steel forgings for various industries including automotive. Infact it boasts of making more than 2500 varieties of specialized items on piecemeal production and manufactures different variety of flanges and fittings weighing from 0.5 kg to 1000 kg. Recently company has acquired 100% stake in Hertecant N V Belgium & ELFE France from Outo Kumpu – Sweden which are reportedly doing well. Importantly its project to double the capacity from 11,000 tonnes to 22,800 tonne is almost completed. Two press machines with 2500 tonne and 4000 tonne capacity and 48 computer numerically controlled (CNC) robotic machining lines has been already installed. On a consolidated basis company is estimated to clock a turnover of Rs 225 cr and bottomline of Rs 17 cr thereby posting an EPS of Rs 14 on current equity of Rs 12.50 cr. Scrip has corrected sharply from a high of Rs 135 and hence can easily appreciate 50% from current levels. Despite being a commodity scrip buy and hold it patiently.
Andhra Petrochemicals (23.00) is the only producer of Oxo-Alcohols in India with a production capacity of 42,000 MTPA. The market demand for Oxo-Alcohols is currently estimated at 143,000 MTPA, out of which company caters to 30% demand and the balance 70% is met through imports. To secure a greater share of the market and meet the growing demand, company is in undergoing expansion and modernization programme to increase its production capacity to 73,000 MTPA. However, the enhanced capacity is expected to be operational only by Sept 2009. Incredibly, company has been able to save a massive Rs 12 cr per annum only on power cost as it has installed and commissioned 2400 KVA uninterrupted power supply system and discontinued the operation of D.G.Sets from last fiscal. After an impressive turnaround in FY07 along with maiden dividend, company is now estimated to clock a turnover of Rs 300 and profit of Rs 45 cr for FY08. This translates into a healthy EPS of Rs 5 on equity of Rs 85 cr. At CMP the dividend yield itself works out to more than 4%. Accumulate at declines.
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