STOCK WATCH
After ending FY08 on quite a buoyant note, Patels Airtemp (58.00) 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.
Although experts are skeptical about the future prospects of real estate sector due to low demand and high supply, still Kolte Patil (65.00) can be bought as a contrarian bet. It reported satisfactory nos for Q1FY09 as it earned a PAT of Rs 31.50 cr on total revenue of Rs 97 cr on consolidated basis. Company is in the midst of developing 28 projects (24 in Pune and 4 in Bangalore), with a total saleable area of around 18 million sq. ft. consisting of 10 residential complexes, 11 commercial development, 5 IT parks, 1 integrated township & 1 service apartment. In addition, it has entered into MOU or has acquired development rights for another 22 million sq. ft. of saleable area in and around Pune and Bangalore. Although the actual land bank owned by the company is less than 15 acre but the development right is equivalent to whopping 755 acres of land. With this company has a total developable space of massive 40 million sq. ft. Ironically it has chalked out a project cost of roughly about Rs 3650 cr to be spent in coming 7~9 yrs. For funding the projects KPDL has entered into a joint venture agreement with ICICI Venture Funds, K2 Properties etc. Despite the anticipated fall in real estate prices, company is estimated to maintain round about same bottomline for FY09. At current market cap of Rs 500 risk reward favors bull.
Last week Liberty Phosphate (20.00) 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. In the last one and half years promoters have increased their stake to 45% from 35% by preferential allotment @ Rs 25. Recently to fund their working capital requirement company is again making preferential allotment of 28 lac warrants to promoter/non promoter group which will be converted @ Rs 18 per share. 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 50% within a year. Royal Orchid (80.00) 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.
Although experts are skeptical about the future prospects of real estate sector due to low demand and high supply, still Kolte Patil (65.00) can be bought as a contrarian bet. It reported satisfactory nos for Q1FY09 as it earned a PAT of Rs 31.50 cr on total revenue of Rs 97 cr on consolidated basis. Company is in the midst of developing 28 projects (24 in Pune and 4 in Bangalore), with a total saleable area of around 18 million sq. ft. consisting of 10 residential complexes, 11 commercial development, 5 IT parks, 1 integrated township & 1 service apartment. In addition, it has entered into MOU or has acquired development rights for another 22 million sq. ft. of saleable area in and around Pune and Bangalore. Although the actual land bank owned by the company is less than 15 acre but the development right is equivalent to whopping 755 acres of land. With this company has a total developable space of massive 40 million sq. ft. Ironically it has chalked out a project cost of roughly about Rs 3650 cr to be spent in coming 7~9 yrs. For funding the projects KPDL has entered into a joint venture agreement with ICICI Venture Funds, K2 Properties etc. Despite the anticipated fall in real estate prices, company is estimated to maintain round about same bottomline for FY09. At current market cap of Rs 500 risk reward favors bull.
Last week Liberty Phosphate (20.00) 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. In the last one and half years promoters have increased their stake to 45% from 35% by preferential allotment @ Rs 25. Recently to fund their working capital requirement company is again making preferential allotment of 28 lac warrants to promoter/non promoter group which will be converted @ Rs 18 per share. 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 50% within a year. Royal Orchid (80.00) 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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