STOCK WATCH
International Combustion (340.00) is among the very few engineering companies which have been recording consistent and healthy growth in the last five years but still remains to be poorly discounted by the market players. Even for FY08 it registered 20% and 40% growth in sales and net profit respectively thereby posting an EPS of Rs 49. Currently its available at EV/EBIDTA of hardly 4x times which is grossly cheap by any standard for this debt free and dividend paying engineering company. It is engaged in manufacturing of heavy engineering equipment, geared motors and gear boxes, vibrating screens and feeders, bulk material handling equipment, rubber/polyurethane screen decks and liners, Raymond grinding mills, air classifiers and flash drying system etc. Hence it makes sophisticated plant and machinery for core sector industries such as mining, steel, cement, petrochemical, construction, sugar, power, textile, paper, rubber, pharma, chemicals etc. It reported satisfactory nos for the June’08 quarter and is poised to end FY09 with sales of Rs 110 cr and NP of Rs 13 cr i.e. EPS of Rs 54 on tiny equity of Rs 2.40 cr. Due to small equity, it also has an impressive ROCE of 40% and ROE of 25%. More importantly it has huge reserve of nearly Rs 45 cr which leads to a book value of Rs 192, making it a perfect bonus candidate. It’s a risk free bet which can give handsome return in the long run
In line with its earlier performance, Godawari Power (215.00) has once again announced excellent set of nos for the June’08 qtr. Sales increased by 90% to Rs 320 cr and PAT jumped up 80% to Rs 38 cr posting an EPS of Rs 13.50 for the quarter. Currently, compny is the 4th largest manufacturer of coal based sponge iron and also one of the leading manufacturers of mild steel in India. It completed its Phase-II expansion in Sept 2007 and boasts of having an installed capacity of 495,000 TPA for sponge iron, 400,000 TPA for steel billets, 120,000 TPA for HB wire rod alongwith 53 MW of captive power plant. Importantly, company has acquired mining license for iron ore and coal in Chhattisgarh. It has also made investments in two JV companies - Chhattisgarh Captive Coal Mining Ltd and Raipur Infrastructure Company Ltd. for development of coal mines and setting up railway sliding for captive use. Recently company has decided to venture into cement production along with executing backward integration plan which includes setting up of 0.6 mtpa iron ore Pelletization plant, 0.1 mtpa iron ore Beneficiation plant, 1.2mtpa iron ore Crushing plant etc. Considering its robust Q1FY09 performance it may clock a turnover of Rs 1350 cr and PAT of Rs 150 cr i.e. EPS of Rs 54 on current equity. Worth accumulating at declines.
For the latest June’08 quarter, Manugraph (90.00) has reported 40% growth in sales to Rs 135 cr and 30% increase in PAT to Rs 16.70 cr on a standalone basis. Last fiscal it worked at almost 100% capacity utilization and on the back of robust demand from national as well as international market, company is implementing a capex plan to enhance its installed capacity from 830 print units to 960 print units. Recently it participated in DRUPA 08 exhibition in Germany, where it got tremendous response. However in this fiscal as well, company won’t be able to turn around its US subsidiary Manugraph DGM, due to slowdown in US and as the effect of synergies will materialize in next fiscal. Meanwhile company’s agreement of business co-operation for marketing with MAN Germany ended mutually in July’08. But at the same time its selling agreement with MAN Ferrostaal continues. Considering its good order book position, company may clock a turnover of Rs 475 cr and net profit of Rs 55 cr i.e. EPS of Rs 18 on equity of Rs 6 cr having face value as Rs 2/- per share. Scrip has been consolidating at this level for quite some time now. Being India’s largest manufacturer of web offset and sheet fed offset presses this company deserves much better valuation.
Pioneer Distilleries (48.00) is a distillery manufacturing company engaged primarily in the manufacture of extra natural alcohol (ENA), rectified spirit (RS), denatured spirit (DS), and absolute alcohol (Ethanol). The fine grade of ENA manufactured by it is mostly used as raw material for many brands of renowned liquor manufacturing companies. Due to buoyant economic condition, company is planning to double the installed capacity to 200 KLPD for which statutory permission from the excise has been received. It is also contemplating to increase the capacity of ethanol plant from 30,000 to 130,000 ltrs per day. Besides, its 5 MW bio-gas based power project is expected to begin commercial production from October, 2008 which will also fetch carbon credits. Notably Tata Power has signed a 10 yr purchase agreement to purchase the entire power generated from this unit. Incidentally, company also owns around 300 Acres of land which is being used for agricultural purpose where treated effluent is used for cultivation. Company announced satisfactory result for the June qtr and may clock a revenue of Rs 75 cr and PAT of Rs 12 cr for FY09 i.e. EPS of Rs 10 on diluted equity of Rs 12.50 cr. Moreover at CMP the divd yeild works to more than 4%. A good bet in current sentiment.
In line with its earlier performance, Godawari Power (215.00) has once again announced excellent set of nos for the June’08 qtr. Sales increased by 90% to Rs 320 cr and PAT jumped up 80% to Rs 38 cr posting an EPS of Rs 13.50 for the quarter. Currently, compny is the 4th largest manufacturer of coal based sponge iron and also one of the leading manufacturers of mild steel in India. It completed its Phase-II expansion in Sept 2007 and boasts of having an installed capacity of 495,000 TPA for sponge iron, 400,000 TPA for steel billets, 120,000 TPA for HB wire rod alongwith 53 MW of captive power plant. Importantly, company has acquired mining license for iron ore and coal in Chhattisgarh. It has also made investments in two JV companies - Chhattisgarh Captive Coal Mining Ltd and Raipur Infrastructure Company Ltd. for development of coal mines and setting up railway sliding for captive use. Recently company has decided to venture into cement production along with executing backward integration plan which includes setting up of 0.6 mtpa iron ore Pelletization plant, 0.1 mtpa iron ore Beneficiation plant, 1.2mtpa iron ore Crushing plant etc. Considering its robust Q1FY09 performance it may clock a turnover of Rs 1350 cr and PAT of Rs 150 cr i.e. EPS of Rs 54 on current equity. Worth accumulating at declines.
For the latest June’08 quarter, Manugraph (90.00) has reported 40% growth in sales to Rs 135 cr and 30% increase in PAT to Rs 16.70 cr on a standalone basis. Last fiscal it worked at almost 100% capacity utilization and on the back of robust demand from national as well as international market, company is implementing a capex plan to enhance its installed capacity from 830 print units to 960 print units. Recently it participated in DRUPA 08 exhibition in Germany, where it got tremendous response. However in this fiscal as well, company won’t be able to turn around its US subsidiary Manugraph DGM, due to slowdown in US and as the effect of synergies will materialize in next fiscal. Meanwhile company’s agreement of business co-operation for marketing with MAN Germany ended mutually in July’08. But at the same time its selling agreement with MAN Ferrostaal continues. Considering its good order book position, company may clock a turnover of Rs 475 cr and net profit of Rs 55 cr i.e. EPS of Rs 18 on equity of Rs 6 cr having face value as Rs 2/- per share. Scrip has been consolidating at this level for quite some time now. Being India’s largest manufacturer of web offset and sheet fed offset presses this company deserves much better valuation.
Pioneer Distilleries (48.00) is a distillery manufacturing company engaged primarily in the manufacture of extra natural alcohol (ENA), rectified spirit (RS), denatured spirit (DS), and absolute alcohol (Ethanol). The fine grade of ENA manufactured by it is mostly used as raw material for many brands of renowned liquor manufacturing companies. Due to buoyant economic condition, company is planning to double the installed capacity to 200 KLPD for which statutory permission from the excise has been received. It is also contemplating to increase the capacity of ethanol plant from 30,000 to 130,000 ltrs per day. Besides, its 5 MW bio-gas based power project is expected to begin commercial production from October, 2008 which will also fetch carbon credits. Notably Tata Power has signed a 10 yr purchase agreement to purchase the entire power generated from this unit. Incidentally, company also owns around 300 Acres of land which is being used for agricultural purpose where treated effluent is used for cultivation. Company announced satisfactory result for the June qtr and may clock a revenue of Rs 75 cr and PAT of Rs 12 cr for FY09 i.e. EPS of Rs 10 on diluted equity of Rs 12.50 cr. Moreover at CMP the divd yeild works to more than 4%. A good bet in current sentiment.
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