STOCK WATCH

Last week Ind Swift lab (48.00) came out with encouraging set of nos for the March qtr. Although its sales declined marginally to Rs 123 cr but its net profit shot up 70% to Rs 11.25 cr on back of higher operating margin. Surprisingly it recorded highest OPM of 21% for March’08 qtr against an average of 18% for the preceeding three quarters. For the entire year it recorded 30% growth in sales to Rs 455 cr and 60% increase in PAT to Rs 31 cr threby posting an EPS of Rs 13 Rs on equity of Rs 24 cr. But company declared only 10% dividend which shows non investor freindly attitude of the pomoters and make the experts doubt over the genuinity about companys financials. However, last year company received the USFDA approval for its API manufacturing facility at Derabassi Punjab for Clarithromycin. As of now it has successfully filed over 72 DMFs with the US, Canadian, UK and European Drug Authorities. To fund its growth plan, company made a pref allotment of 28 lac warrants @ Rs 70 in March 2007 and lately allotted another 25 lac warrants @ 70 to promoter group. With a book value of whopping Rs 100 and CEPS of 20 Rs, scrip is trading reasonably cheap.

NCL Industries (40.00), the flagship company of the NCL group is engaged in four business segments namely cement, cement bonded particle boards, prefab and hydel power. Presently cement contributes 75% of revenue board and prefabs contribute 20% and balance comes from hydel power. On the back of agressive expansion company has doubled its cement manufacturing capacity to 630,000 TPA and is further looking to triple it to 20 million TPA within couple of years. It has also set up a new particle board manufacturing facility in Himachal thereby taking the total capacity to 80,000 TPA. On the other hand, its prefabricated structures division is witnessing good demand and has bagged huge order worth 50 cr couple of months back. Fundamentally, it recorded 30% growth in sales to Rs 193 cr whereas PBT grew by 45% to Rs 43 cr. Due to high tax provisioning its NP improved marginally by 7% to Rs 29.50 cr posating an EPS of Rs 9 on current equity of Rs 32.50 cr. With rising input cost and interfearance of govt on cement prices, company is estimated to report a topline of Rs 275 cr and maintain its profit of around Rs 30 i. e EPS of Rs 9 on fully diluted equity of Rs 34.90 cr.

For the latest March’08 quarter, Godawari power & Ispat (190.00) registered a growth of 140% for sales as well as profit to Rs 263 cr and Rs 28.80 cr respectively posting an EPS of Rs 10 for the quarter. For the full year its sales was up by 90% to Rs 829 cr and net profit increased by 80% to Rs 95 cr. This translates into EPS of Rs 34 on current equity of Rs 28 cr. Notably, company has completed its Phase-II expansion in Sept 2007 and presently it 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 been awarded two iron ore mines in Chattisgarh with estimated reserves of 15 million tonne and coal mines with its share of reserves of 63 million tones. Recently it has also been allotted prospective license for iron ore mines over 754 hectares. For future growth company is planning to build an iron ore crushing plant, a beneficiation plant and a pelletization plant at a cost of Rs 235 cr. For FY09 it is expected to clock a turnover of Rs 1200 cr and PAT of Rs 125 cr i.e. EPS of Rs 45 on current equity.

South India Paper Mills (65.00) announced disappointing nos for the March qtr as sales remained flat at Rs 29 cr and PAT fell by 25% to Rs 2.10 cr. Despite this, for entire FY08 it registered 10% growth its topline to Rs 122 cr and 15% rise in net profit to Rs 11.90 cr. Hence it posted an EPS of Rs 16 on equity of Rs 7.50 cr. It maintained the dividend at 30% which gives a yield of nearly 5% at CMP. Company is having strong presence in packing paper and paper boards apart from manufacturing writing and printing paper. On back of robust demand, company is implementing a brown field expansion with an investment of about 110 cr under which it will more than double its paper manufacturing capacity to 115,000 TPA from 55,000 TPA currently. It will also be augmenting its captive power generation capacity by 3.50 MW. Besides expansion, company is going for forward integration into high quality corrugated boards and intends to have at least one 100% owned facility and possibly one facility under joint venture near Chennai. With new paper capacity expected to be commissioned by early 2009 and corrugated boards facility to start within this calendar year the future prospect looks very promising. It can report an EPS of Rs 18 for current year. Buy with a price target of Rs 100 in 9~12 months

Smart Investments (Guj)

Quintegra Ltd

• Click here to download Gujarati version
• Click here to download English version

C&C Constructions Ltd

• Click here to download Gujarati version
• Click here to download English version

Small & Beautiful (Guj)

Prime Property (65.00) is a small real estate developer based in Mumbai which boasts of constructing landmark residential and commercial buildings for high end customers in Mumbai. Prime Avenue, Prime Centre, Prime Beach & Prime Plaza are few of its popular residential & commercial development at prime area like Santacruz(W) & Vile Parle(W) in Mumbai. Presently, company is focusing to complete its two ongoing projects in Mumbai namely “Prime Down Town Mall” - a 270,000 sq ft luxurious composite Mall with multiplexes and “Prime Tech Park” which is 90,000 sq ft commercial building. Besides these, company has started construction work for two more shopping malls called “Prime Square” - 70,000 sq ft mall in Goregaon Mumbai and “Prime Pune Mall” - gigantic 430,000 sq ft state-of-the-art mall with anchor shop, multiplex, food court, entertainment area and a hotel in Pune. For FY08 its topline stood at Rs 105 cr and bottomline at Rs 32.70 cr posting an EPS of Rs 16 on equity of Rs 10 cr having face value as Rs 5/- per share. It is expected to declare Rs 2.50 as dividend which gives a yield of nearly 4%. considering company’s current project in hand and that too at prime locations it may report total revenue of Rs 150 cr and net profit of Rs 40 cr for FY09 i.e. EPS of Rs 20 on current equity.

Associated Alcohols & Breweries (45.00) is one of the largest distilleries in India with presence in every aspect of the value chain from potable alcohol, country liquor, ENA, grain spirit (extra fine grade, triple distilled), rectified spirit, IMFL to bottling scotch whisky. Apart from marketing its own brands, company also manufactures and bottles IMFL and Scotch whisky for many Indian and international companies. For FY08 its sales increased by 50% to Rs 120 cr and PAT zoomed up 140% to Rs 5.60 cr posting an EPS of Rs 8 on current equity of Rs 6.80 cr. To increase its market share, company is the midst of expanding its capacity to 65 million litres from 42 million litres by setting up a multi-pressure ENA plant along with 2MW bio-gas fuelled cogeneration captive power plant. Hence it may clock a turnover of Rs 150 and profit of Rs 7 cr which translates into EPS of Rs 7 on fully diluted equity of Rs 10 cr. Despite promoter concern and risk of further equity dilution, scrip can bought be declines for reasonably return within a year.

Kolte Patil (80.00) 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. For FY08, its revenue jumped up 60% to Rs 369 cr and net profit shot up 55% to Rs 129 cr after paying tax to the tune of Rs 37 cr. Hence it reported an EPS of Rs 17 on equity of Rs 75.30 cr. Assuming the company to report lower operating margin of 30% for FY09 (against 43% in FY08), still it is estimated to clock a turnover of Rs 650 cr and PAT of Rs 150 cr i.e. EPS of Rs 20 cr on current equity. In short although the profit margin of company is too high to believe still scrip can give decent return in medium term.

Due to hardening of interest rate, rising CRR and recent hike in repo rate, banking sector has taken a huge beating on the bourses. Most of the banks are trading at 52W low levels and Allahabad Bank (65.00) is no exception. It is among the very few banks which are trading at huge discount against their book value. Moreover Allahabad bank is fundamentally a strong bank with Gross NPA at 2%, Net NPA at 0.80%, Capital Adequacy Ratio above 12%, Net interest margin at 2.80% and most importantly having a book value of Rs 117. For year ending March 2008, it registered 20% growth in total deposit and gross advance whereas its Net profit shot up by 30% to Rs 975 cr. This works out to an EPS of whopping Rs 22 on current equity of Rs 447 cr. Agianst this it declared 30% dividend. Hence scrip is current trading at a P/E ratio of less than 3x times and with a dividend yield of 5% at CMP. To maintain its growth momentum, bank has got the approval for opening 116 more branches and has additionally applied for authorization of 180 more branches during the current financial year. Besides bank is focusing to improve its fee based income and has made tie-ups with several organizations for marketing of mutual funds and insurance products. A safe bet.

Pondy Oxides & Chemicals Ltd - 20.00 Rs

Incorporated in 1995, Pondy Oxides & Chemicals Ltd (POCL) is one of the India's leading integrated metallic oxides and plastic additives producers. It basically manufactures zinc oxide, litharge (Lead monoxide), grey oxide (lead sub oxide) red lead and solid/liquid stabilizers of PVC. Metallic Oxides are largely used in the battery industries and the automobile sector whereas plastic additives are primarily used for the manufacture of PVC stabilizers. POCL has even promoted a subsidiary company by the name M/s Baschem Pharma Ltd to manufacture liquid stabilizers epoxy oil and paint driers. Besides, it also has a facility for manufacture of Lead acid batteries which manufactures stationery batteries, used for uninterrupted power supply (UPS), inverters, emergency lamps, photovoltaic batteries, and automobile batteries. But recently company has decided to dispose-off the same, so that it can concentrate on its core business. Importantly, POCL boasts of being an integrated producer with in-house production facility of Lead metal for captive consumption.

POCL’s has four manufacturing plants spread across Pondichery & Tamilnadu with an installed capacity of 4680 MT for lead sub oxide, 2880 MT for zinc oxide, 1800 Mt for litharge & 360 MT for red lead. To sum up, it has the capability to produce 9720 MT of metallic oxides and 4200 MT of PVC stabilizers. In addition it has a name plate capacity to manufacture 96,000 units of lead acid batteries at its Madurantagam plant which company is looking to sell it off. Incidentally, lead is the major raw material for production of metallic oxides followed by zinc. Hence in order to reduce its dependence on suppliers and ensure regular and economical supply, POCL, in late 2006 got itself backward integrated to manufacture lead and lead compounds. It has established a state-of-the-art manufacturing plant with a rated capacity of 14,4000 MT for lead and lead alloys and another 3600 MT for lead compounds. So, company is even engaged in the process of smelting, refining and alloying of lead metal and specializes in the process to manufacture lead alloys like, lead tin calcium, lead tin, lead selenium alloy, lead antimony selenium alloy and others, which find their use in the battery industry for grid casting for lead-acid batteries. Meanwhile, POCL is also looking to venture into manufacture of refined Zinc and the project is under consideration. Another significant step, recently finalized by the company is acquiring 51% stake in M/s. Lohia Metals Pvt Ltd with an investment of around Rs 2.25 cr and thereby making it a subsidiary of the company. Lohia Metals, managed by one of the Bansal family member is an associate company with a turnover of roughly around Rs 25~30 and is engaged in the process of refining and alloying of lead metal with an installed capacity of 12,000 MT.

In August 2006, to fund its backward integration project, POCL had raised Rs.7.35 cr through the right issue in the ratio of 2:3 @ Rs 4/- per share when the face value was Rs 2/- per share. Subsequently company also gave 1:10 bonus and the later on consolidated all the equity shares on 20.01.07 from the face value of Rs.2/- to Rs.10/-. Due to better capacity utilization of the lead smelter and higher price realization for metallic oxides, company’s sales shot up 60% to Rs 170 cr and NP jumped up 55% to Rs 4.50 cr for FY08. It is expected to announce 15% dividend which will give a yield of mind boggling 7.5% at CMP. With robust metallic oxide prices and being an integrated producer as far as lead is concerned, POCL is expected to lock a turnover of Rs 200 cr and PAT of Rs 5 cr for FY09 i.e. EPS of Rs 5 on equity of Rs 10 cr. So despite low profit margin & low promoter holding, investors can buy at current levels as it can give 50% return in 12~15 months.

Click here to download Report (PDF)

Prime Property Development Corporation Ltd - 68.00 Rs

Incorporated in 1992, Prime Property Development Corporation Ltd (PPDCL) is small real estate developer based in Mumbai. It made a late entry and started its real estate activity only in the year 2002. PPDCL is led by Shri Padamshil L Soni who has a rich experience of nearly two decade in construction. Apart from his two sons company has eminent personalities on its board including Shri Y. C. Pawar, Shri K. Nalinakshan, Dr. B. Samal to name a few. Under their leadership the company has now positioned itself as a unique company catering to the niche segment of the property market. Within a short span of time, company boasts of constructing landmark residential and commercial buildings for high end customers in Mumbai. Prime Beach & Prime Centre in the Santracruz constructed by the company are among the most luxurious apartments and also well known for its modern and elegant architecture. On the other hand its Prime Plaza a 100% commercial project with ultra modern facilities in Santacruz was a huge success. Incidentally, Prime Avenue – a 100,000 sq ft residential cum commercial project in Vile Parle was the flagship project of the company consisting of residential flats and large commercial units like show rooms, shops and offices

Currently, PPDCL is developing two projects which are near completion. Out of that “Prime Down Town Mall” project is much bigger being a 270,000 sq ft luxurious composite Mall with multiplexes. The mall is at the prime location of Hughes Road, Mumbai and is being constructed in partnership with others. Once operational it will be among the largest malls in Mumbai with hi-tech elevation and international feel. “Prime Tech Park” the other projects is a 90,000 sq ft commercial building in Vile Parle mainly for IT /ITES companies. It is just next to Western Express highway and barely couple of kms away from domestic and international airport. Apart from these two projects, company has undertaken two more projects last fiscal. Incidentally, both are shopping mall – one in Mumbai and other one in Pune. The Mumbai mall namely “Prime Square” is a four storey 70,000 sq ft mall located on the S.V. Road, Goregaon – a flourishing suburb of Mumbai. Whereas the Pune mall called “Prime Pune Mall” will be a gigantic 430,000 sq ft state-of-the-art mall with anchor shop, multiplex, food court, entertainment area and a hotel. In short company is estimated to generate more than Rs 500 cr of revenue in next 2~3 years.

Moreover for future, PPDCL has finalized the location in Vile Parle (W) to construct a 60,000 sq ft shopping mall and has even created a blue print for the same. Secondly, it is also contemplating to develop a residential project in Pimpri Pune. The plan is still on paper and yet to be finalized. Financially, due to sale of units in Prime down Town Mall and Prime Tech Park, PPDCL has ended FY08 on quite a buoyant note. It recorded a topline of Rs 105 cr and bottomline of Rs 32.70 cr. Importantly it has made highest tax provisioning of Rs 17.50 cr which ensures the integrity of its real profit. This translates into an EPS of Rs 16 on equity of Rs 10 cr having face value as Rs 5/- per share. It is expected to declare Rs 2.50 as dividend which gives a yield of nearly 4%. To conclude, considering company’s current project in hand and that too at prime locations it may report total revenue of Rs 150 cr and net profit of Rs 40 cr for FY09 i.e. EPS of Rs 20 on current equity. So the scrip is available fairly cheap at a current P/E ratio of merely 4x times. At the same time adverse profiling of the sector, coupled with higher input prices, imposition of service tax on rentals of commercial property & hardening interest rates are bound to dampen sentiments & affect demand for certain categories of properties. But still, company is largely insulated from the downturn and hence investors can buy at current levels with a price target of Rs 100 in 9~12 months.

Click here to Download Report (PDF)