STOCK WATCH
Being India’s largest manufacturer of evaporator and condenser (E&C) coils with around 60% market share, Lloyd Electric & Engineering (115.00) has got itself forward integrated into lucrative business of contract manufacturing of window / split air conditioners for various multi national companies in India. It is also into manufacturing of roof mounted packaged unit i.e. packaged AC for railway coaches on turnkey basis which includes designing, manufacturing, supplying, installation and maintenance. Interestingly, company is now diversifying to produce roll bond and frost free coils for refrigerators and has tied up with a Korean company, Hanyung Alcobis for the same. To maintain its future growth company is in the process of setting up a Greenfield plant near JNTP port. Meanwhile, it has signed a MoU with Air International Transit Pty Limited, an Australia-based company for designing, manufacturing and supplying of AC package units to metro rail in India. For FY08 it may clock a turnover of Rs 650 cr and PAT of Rs 58 cr i.e. EPS of Rs 19 on current equity of Rs 31 cr. Simply buy and hold.
Recently, Bihar Caustic (78.00) came out with disappointing nos for the March qtr. Sales increased by 25% to Rs 47.50 cr but PBT improved by only 5% to Rs 13.70 cr. It seems company is facing the heat of rising input cost of coal etc as it recorded lower OPM of 37% for the quarter. It declared 15% dividend for FY08 which was again below expectation. However due to lower tax cost company has been able to report healthy bottomline. For entire FY08 sales grew by 20% to Rs 174 cr whereas PAT shot up 45% to Rs 49 cr posting an EPS of Rs 21 on equity of Rs 23.40 cr. To maintain its growth, company is in process of expanding capacity of its caustic soda plant by 20% to 265 TPD by addition of electrolysers as well by debottlenecking. It has recently commissioned the stable bleaching powder plant with installed capacity of 60 TPD. Moreover its aluminium chloride project with a capacity of 12000 TPA is doing extremely well. In future company is expected to reduce its total debt which will bring the interest cost substantially. To conclude, company is still expected to maintain its EPS of Rs 20 for FY09 and is trading extremely cheap with Cash EPS of Rs 30, EV/EBIDTA of less than 4x times and expected book value of more than rs 75. Only long term investors should accumulate at declines.
Gontermann Piepers Ltd (65.00), an Ispat Group company is one of the leading manufacturers of Cast rolls and Forged rolls which find application primarily in steel industry. Not only in India, its products are widely appreciated in USA, Canada, China, South Africa, Taiwan, South Korea, Thailand, Indonesia and many more countries. Considering the future trend of business globally, company is giving thrust for new product development i.e. enhanced carbide rolls in ICDP variety and High Speed Steel Rolls. With domestic as well international steel industry adding capacity at fast pace, company has recently undergone expansion-cum-modernization plan of Rs.40 cr. to enhance its production capcity to 18,000 MT of fininshed roll from 12,000 MT. Further company is planning for some big expansion in future as it is contemplating to raise nearly 200 cr thru private placement/FCCB/GDR route. It is also scouting for inorganic growth opportunities in Europe to capitalize on current boom in steel industry and cater to European and US markets. For FY08 it is estimated to clock a turnover of Rs 175 cr and profit of Rs 15 cr i.e EPS of Rs 11 on current equity of Rs 13.90 cr. Scrip can shoot upto Rs 100 in 6~9 months.
Notably, Ind Swift Lab (52.00) has already received the USFDA approval in Sept 2007 for its API manufacturing facility at Derabassi Punjab for Clarithromycin. For other API’s, FDA inspection is expected to be done shortly. Presently, exports constitute around 45% of sales with company having presence in 45-50 countries - principally European countries, Asian countries, Latin American countries and Middle East. For future growth the company has a robust product pipeline of 25 products which includes few blockbuster drugs as well. It has successfully filed over 72 DMFs with the US, Canadian, UK and European Drug Authorities. The DMF filing will facilitate the launching of the drugs by the company upon the patent expiry in those countries. Hence company has been aggressively expanding its capacity and has quadrupled its Gross Block to nearly 400 cr from 100 cr two years back. Accordingly it may end FY08 with sales of Rs 450 cr and PAT of Rs 25 cr i.e. EPS of Rs 11 on current equity of Rs 22.80 cr. To fund its growth plan, company made a pref allotment of 28 lac warrants @ Rs 70 in March 2007 and recently allotted another 25 lac warrants @ 70 to promoter group. With a book value of whopping Rs 93 and expected CEPS of 18~20 Rs, scrip is trading extremely cheap at a P/E ratio of less than 5x times. A screaming buy at is has the potential to double in 12~15 months.
Recently, Bihar Caustic (78.00) came out with disappointing nos for the March qtr. Sales increased by 25% to Rs 47.50 cr but PBT improved by only 5% to Rs 13.70 cr. It seems company is facing the heat of rising input cost of coal etc as it recorded lower OPM of 37% for the quarter. It declared 15% dividend for FY08 which was again below expectation. However due to lower tax cost company has been able to report healthy bottomline. For entire FY08 sales grew by 20% to Rs 174 cr whereas PAT shot up 45% to Rs 49 cr posting an EPS of Rs 21 on equity of Rs 23.40 cr. To maintain its growth, company is in process of expanding capacity of its caustic soda plant by 20% to 265 TPD by addition of electrolysers as well by debottlenecking. It has recently commissioned the stable bleaching powder plant with installed capacity of 60 TPD. Moreover its aluminium chloride project with a capacity of 12000 TPA is doing extremely well. In future company is expected to reduce its total debt which will bring the interest cost substantially. To conclude, company is still expected to maintain its EPS of Rs 20 for FY09 and is trading extremely cheap with Cash EPS of Rs 30, EV/EBIDTA of less than 4x times and expected book value of more than rs 75. Only long term investors should accumulate at declines.
Gontermann Piepers Ltd (65.00), an Ispat Group company is one of the leading manufacturers of Cast rolls and Forged rolls which find application primarily in steel industry. Not only in India, its products are widely appreciated in USA, Canada, China, South Africa, Taiwan, South Korea, Thailand, Indonesia and many more countries. Considering the future trend of business globally, company is giving thrust for new product development i.e. enhanced carbide rolls in ICDP variety and High Speed Steel Rolls. With domestic as well international steel industry adding capacity at fast pace, company has recently undergone expansion-cum-modernization plan of Rs.40 cr. to enhance its production capcity to 18,000 MT of fininshed roll from 12,000 MT. Further company is planning for some big expansion in future as it is contemplating to raise nearly 200 cr thru private placement/FCCB/GDR route. It is also scouting for inorganic growth opportunities in Europe to capitalize on current boom in steel industry and cater to European and US markets. For FY08 it is estimated to clock a turnover of Rs 175 cr and profit of Rs 15 cr i.e EPS of Rs 11 on current equity of Rs 13.90 cr. Scrip can shoot upto Rs 100 in 6~9 months.
Notably, Ind Swift Lab (52.00) has already received the USFDA approval in Sept 2007 for its API manufacturing facility at Derabassi Punjab for Clarithromycin. For other API’s, FDA inspection is expected to be done shortly. Presently, exports constitute around 45% of sales with company having presence in 45-50 countries - principally European countries, Asian countries, Latin American countries and Middle East. For future growth the company has a robust product pipeline of 25 products which includes few blockbuster drugs as well. It has successfully filed over 72 DMFs with the US, Canadian, UK and European Drug Authorities. The DMF filing will facilitate the launching of the drugs by the company upon the patent expiry in those countries. Hence company has been aggressively expanding its capacity and has quadrupled its Gross Block to nearly 400 cr from 100 cr two years back. Accordingly it may end FY08 with sales of Rs 450 cr and PAT of Rs 25 cr i.e. EPS of Rs 11 on current equity of Rs 22.80 cr. To fund its growth plan, company made a pref allotment of 28 lac warrants @ Rs 70 in March 2007 and recently allotted another 25 lac warrants @ 70 to promoter group. With a book value of whopping Rs 93 and expected CEPS of 18~20 Rs, scrip is trading extremely cheap at a P/E ratio of less than 5x times. A screaming buy at is has the potential to double in 12~15 months.
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