Small & Beautiful
Rama Paper (19.00) has reported satisfactory nos for the June qtr as its topline as well as bottomline both improved by 20% to Rs 25 cr and Rs 2.50 cr respectively. Although, its 6 MW co-generation captive power plant is fully operational it hasn’t led to much improvement in margins. Secondly the benefit of rise in paper prices has been set off by increase in input cost. Presently, company’s total installed capacity of its 3 units is 44000 TPA, located at Kiratpur, Distt Bijnor in Uttar Pradesh. Incidentally, it derives nearly 60% revenue from newsprint segment. As a part of diversification, company has undertaken expansion project of putting MG machine to manufacture 16320 TPA Tissue / Poster Paper thru a capex of Rs 24 cr. For Fy09 it may register sales of Rs 100 cr and net profit of Rs 8 cr i.e. EPS of Rs 8 on current equity. However company has got the approval for conversion of pref shares into equity which will dilute the equity to Rs 11.50 cr post conversion. Ironically, company has diluted its equity by 100% in last two years whereas its top line has hardly grown by 10% against that. Hence only aggressive investor are advised to buy at current levels as promoters are not trust worthy and possibly playing indirectly in their own scrip.
Last week Liberty Phosphate (19.00) reported terrific performance for the June quarter. Sales more than doubled to Rs 67 cr and net profit multiplied 10x times to Rs 4.60 against Rs 0.42 cr last year. It recorded an all time high EPS of Rs 7 for the single quarter. Incidentally, even after sharp rally post result scrip is still trading at 50% discount to its 52 week high of Rs 40. 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 fertilizers. With good rainfall expected this season and loan waiver scheme for farmers, company is expected to do well in the current year. For FY09 it can register sales of Rs 175 cr and profit of Rs 5.50 cr i.e. EPS of Rs 8 on equity of Rs 6.70 cr. Scrip can easily shoot up 30% in short term. Buy before its too late.
After ending FY08 on quite a buoyant note, Patels Airtemp (60.00) clocked 60% growth in sales to Rs 13.25 cr whereas its Net profit doubled to Rs 1.33 cr for Q1FY09. It is engaged in the manufacture and sale of extensive range of heat exchangers such as shell & tube type, finned tube type and air cooled heat exchangers, pressure vessels, air-conditioning and refrigeration equipments and turnkey HVAC projects in India & marketing of equipments even outside India. It has technical collaboration with M/S. TEK FINS Inc. USA for design and manufacture of air cooled heat exchangers. It supplies to core industrial sectors like power, refineries, fertilizers, cements, petrochemicals, pharmaceuticals, textiles and chemical Industries. For future growth company is concentrating more on high value added engineering products and has even got its product the coveted ASME `U' Stamp authorization. Accordingly, for FY09 it is expected to register a topline of Rs 60 cr and profit of Rs 5.50 cr. This leads to an EPS of Rs 11 on current equity of Rs 5 cr. Scrip has the potential to appreciate 50% within a year from current levels. Buy at declines. Royal Orchid (92.00) operates in hospitality sector with major presence in Bangalore. Currently it manages eight properties including five star hotels, budget, resort, serviced apartments etc with a total room strength of around 655 rooms. Interestingly, company follows a unique “Asset light” business model of taking properties on lease or entering into a contract for managing & operating the existing hotel instead of owning them outright. For the June qtr its revenue shot up 40% to Rs 38 cr but due to high interest and depreciation cost NP was up only 10% to Rs 6.80 cr. To cash on the huge opportunity in this industry, company has chalked out some very aggressive expansion plans for developing/acquiring 5star, 4 star and budget hotels. Of late it bought 30 acre property in Tanzania and also formed a joint venture with Parsvanath to develop 10 hotels at an investment of Rs 500 cr. Couple of months back it acquired 50% stake in Galaxy Beach Resort (65 rooms) in Goa. For FY09, it may report a consolidated revenue of more than Rs 160 cr and NP of Rs 30 cr i.e. EPS of Rs 11 on equity of Rs 27.25 cr. In case company is able to successfully execute as per its plan, then it can give handsome return over long run. Besides, its an excellent dividend yield stock as well.
Last week Liberty Phosphate (19.00) reported terrific performance for the June quarter. Sales more than doubled to Rs 67 cr and net profit multiplied 10x times to Rs 4.60 against Rs 0.42 cr last year. It recorded an all time high EPS of Rs 7 for the single quarter. Incidentally, even after sharp rally post result scrip is still trading at 50% discount to its 52 week high of Rs 40. 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 fertilizers. With good rainfall expected this season and loan waiver scheme for farmers, company is expected to do well in the current year. For FY09 it can register sales of Rs 175 cr and profit of Rs 5.50 cr i.e. EPS of Rs 8 on equity of Rs 6.70 cr. Scrip can easily shoot up 30% in short term. Buy before its too late.
After ending FY08 on quite a buoyant note, Patels Airtemp (60.00) clocked 60% growth in sales to Rs 13.25 cr whereas its Net profit doubled to Rs 1.33 cr for Q1FY09. It is engaged in the manufacture and sale of extensive range of heat exchangers such as shell & tube type, finned tube type and air cooled heat exchangers, pressure vessels, air-conditioning and refrigeration equipments and turnkey HVAC projects in India & marketing of equipments even outside India. It has technical collaboration with M/S. TEK FINS Inc. USA for design and manufacture of air cooled heat exchangers. It supplies to core industrial sectors like power, refineries, fertilizers, cements, petrochemicals, pharmaceuticals, textiles and chemical Industries. For future growth company is concentrating more on high value added engineering products and has even got its product the coveted ASME `U' Stamp authorization. Accordingly, for FY09 it is expected to register a topline of Rs 60 cr and profit of Rs 5.50 cr. This leads to an EPS of Rs 11 on current equity of Rs 5 cr. Scrip has the potential to appreciate 50% within a year from current levels. Buy at declines. Royal Orchid (92.00) operates in hospitality sector with major presence in Bangalore. Currently it manages eight properties including five star hotels, budget, resort, serviced apartments etc with a total room strength of around 655 rooms. Interestingly, company follows a unique “Asset light” business model of taking properties on lease or entering into a contract for managing & operating the existing hotel instead of owning them outright. For the June qtr its revenue shot up 40% to Rs 38 cr but due to high interest and depreciation cost NP was up only 10% to Rs 6.80 cr. To cash on the huge opportunity in this industry, company has chalked out some very aggressive expansion plans for developing/acquiring 5star, 4 star and budget hotels. Of late it bought 30 acre property in Tanzania and also formed a joint venture with Parsvanath to develop 10 hotels at an investment of Rs 500 cr. Couple of months back it acquired 50% stake in Galaxy Beach Resort (65 rooms) in Goa. For FY09, it may report a consolidated revenue of more than Rs 160 cr and NP of Rs 30 cr i.e. EPS of Rs 11 on equity of Rs 27.25 cr. In case company is able to successfully execute as per its plan, then it can give handsome return over long run. Besides, its an excellent dividend yield stock as well.
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