Small & Beautiful (Guj)
Gandhi Special Tube (70.00) is engaged in the manufacture of small diameter welded and seamless tubes, which act as an import substitute. In the seamless tube segment, GSTL faces virtually no competition as the technology required to produce this is highly specialized. The welded tubes primarily find application in the Refrigerator, Automobile and general engineering industry and the seamless tubes are used in Diesel based automobiles and Hydraulic equipment. Importantly company derives more than 65 % revenue from seamless tubes which have higher profit margin. The company also manufactures tubular components like condensers, compressor parts, fuel injection tube assemblies, hydraulic tubes etc. In Nov 2007 it completed its Rs 35 expansion plan of increasing the capacity by 2400 tonne. Interestingly, for its power requirement company has put up 5 wind mills generating 5.35 MW of power. Despite the rise in raw material prices, company posted excellent performance for the June quarter as sales grew by 30% to Rs 23 cr whereas net profit shot up 60% to Rs 6.80 cr registering an EPS of Rs 5 for the single quarter. On a conservative basis it is expected to end FY09 with sales of Rs 100 cr and PAT of Rs 21 cr i.e. EPS of Rs 14. Scrip can easily appreciate 50% in a years time.
Although J Kumar (90.00) reported lower top line as well as bottom line for the June qtr in comparison to preceding March qtr, still it’s a good bet to buy at declines. For the June qtr its revenue and net profit stood at Rs 89 cr and Rs 7.60 cr respectively. It’s a Mumbai based small EPC company with a primary focus on construction of roads, flyovers, bridges, railway over bridges, subways, irrigation projects, commercial and residential buildings, railway buildings and piling works. It also has a ready mix concrete plant for captive use. Its operations are largely confined in the state of Maharashtra with majority in Mumbai itself. The company is a class I A contractor with PWD, Government of Maharashtra. Importantly, company owns a large fleet of modern construction equipments like Hydraulic piling rigs, Putmiester Mobile boom placer concrete pump and stationery concrete pumps, RMC plants, transit mixers, various capacity cranes, poclains, front end loaders, JCBs and tippers. Due to govt’s special focus & aggressive spending on infrastructure, company is witnessing best of its time and boast of having an all time high order book position to the tune of Rs 700 cr executable in next two years. Accordingly for FY09, it is estimated to report total revenue of Rs 400 cr and PAT of Rs 28 cr which leads to an EPS of Rs 14 on current equity of Rs 20.70 cr. In the beginning of the year, company raised more than Rs 70 cr thru IPO route @ Rs 110 per share. Investors can safe accumulate this scrip between Rs 75~80 levels.
Bharat Gears (35.00) is a global supplier of automotive gears and heat treatment furnaces. It manufactures a wide range of ring gears and pinions, transmission gears and shafts, differential gears, gear boxes etc which find application in heavy, medium and light duty trucks, buses, tractors, passenger cars, utility vehicles, and forklift trucks, etc. For FY08 its sales was up 20% to Rs 236 cr and net profit increased by 15% to Rs 10 cr thereby posting an EPS of Rs 13 on equity of Rs 7.80 cr. It again returned to list of dividend paying companies as it declared 10% dividend after a gap of 7 years. More importantly it has successfully brought its total debt to Rs 50 cr from Rs 80 cr in FY05. Thru its manufacturing plants in Mumbra, Thane and Faridabad, company caters to national and international majors like M&M, Tata Motors, Ashok Leyland, Bajaj Auto, Hero Motors, Hindustan Motors, BEML, JCB, Dana Corporation (USA), EATON (USA), and John Deere (New Holland). Unfortunately from a high of Rs 90 in Jan’08, the share price of the company has become one third and is available at an enterprise value of merely Rs 75 cr. For FY09 it is expected to report sales of Rs 250 cr and net profit of Rs 11 cr i.e. EPS of Rs 14 on current equity. Hence, despite rise in input cost and anticipated slowdown in auto sector, it’s a screaming buy at current levels.
Cosmo Films (80.00) 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. 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 sales improved by 10% to Rs 585 cr but its NP zoomed up 80% due to better operating margin, lower interest & lower depreciation cost. It reported an EPS of Rs 23 and declared 50% dividend which give an yield of more than 6% at CMP. However in this year it may face margin pressure due to rise in crude oil with polypropylene being its main raw material. Hence it may clock a turnover of Rs 625 and profit of Rs 35 cr i.e. EPS of Rs 16 for FY09 on diluted equity of Rs 22.50 cr
Although J Kumar (90.00) reported lower top line as well as bottom line for the June qtr in comparison to preceding March qtr, still it’s a good bet to buy at declines. For the June qtr its revenue and net profit stood at Rs 89 cr and Rs 7.60 cr respectively. It’s a Mumbai based small EPC company with a primary focus on construction of roads, flyovers, bridges, railway over bridges, subways, irrigation projects, commercial and residential buildings, railway buildings and piling works. It also has a ready mix concrete plant for captive use. Its operations are largely confined in the state of Maharashtra with majority in Mumbai itself. The company is a class I A contractor with PWD, Government of Maharashtra. Importantly, company owns a large fleet of modern construction equipments like Hydraulic piling rigs, Putmiester Mobile boom placer concrete pump and stationery concrete pumps, RMC plants, transit mixers, various capacity cranes, poclains, front end loaders, JCBs and tippers. Due to govt’s special focus & aggressive spending on infrastructure, company is witnessing best of its time and boast of having an all time high order book position to the tune of Rs 700 cr executable in next two years. Accordingly for FY09, it is estimated to report total revenue of Rs 400 cr and PAT of Rs 28 cr which leads to an EPS of Rs 14 on current equity of Rs 20.70 cr. In the beginning of the year, company raised more than Rs 70 cr thru IPO route @ Rs 110 per share. Investors can safe accumulate this scrip between Rs 75~80 levels.
Bharat Gears (35.00) is a global supplier of automotive gears and heat treatment furnaces. It manufactures a wide range of ring gears and pinions, transmission gears and shafts, differential gears, gear boxes etc which find application in heavy, medium and light duty trucks, buses, tractors, passenger cars, utility vehicles, and forklift trucks, etc. For FY08 its sales was up 20% to Rs 236 cr and net profit increased by 15% to Rs 10 cr thereby posting an EPS of Rs 13 on equity of Rs 7.80 cr. It again returned to list of dividend paying companies as it declared 10% dividend after a gap of 7 years. More importantly it has successfully brought its total debt to Rs 50 cr from Rs 80 cr in FY05. Thru its manufacturing plants in Mumbra, Thane and Faridabad, company caters to national and international majors like M&M, Tata Motors, Ashok Leyland, Bajaj Auto, Hero Motors, Hindustan Motors, BEML, JCB, Dana Corporation (USA), EATON (USA), and John Deere (New Holland). Unfortunately from a high of Rs 90 in Jan’08, the share price of the company has become one third and is available at an enterprise value of merely Rs 75 cr. For FY09 it is expected to report sales of Rs 250 cr and net profit of Rs 11 cr i.e. EPS of Rs 14 on current equity. Hence, despite rise in input cost and anticipated slowdown in auto sector, it’s a screaming buy at current levels.
Cosmo Films (80.00) 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. 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 sales improved by 10% to Rs 585 cr but its NP zoomed up 80% due to better operating margin, lower interest & lower depreciation cost. It reported an EPS of Rs 23 and declared 50% dividend which give an yield of more than 6% at CMP. However in this year it may face margin pressure due to rise in crude oil with polypropylene being its main raw material. Hence it may clock a turnover of Rs 625 and profit of Rs 35 cr i.e. EPS of Rs 16 for FY09 on diluted equity of Rs 22.50 cr
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