STOCK WATCH
For the latest Dec’08 quarter, Tilaknagar Industries (75.00) registered 50% growth in sales to Rs 63 cr and 30% increase in profit to Rs 6 cr. Even for nine months ending Dec’08 its sales is up by 45% to Rs 152 cr and PAT has increased by 30% to Rs 14 cr posting an EPS of Rs 25 for the first three quarters. Company is basically engaged in manufacturing, marketing and selling of Indian Made Foreign Liquor (IMFL) encompassing the brandy, whisky, gin, vodka and rum segments. It derives more than 60% revenue from whisky and nearly 35% from brandy. As a part of its growth strategy, company is in the midst of doubling its capacity in Shrirampur, Maharashtra from 50,000 liters of alcohol per day to 1,00,000 liters of alcohol per day, together with investments in cost saving equipments. The entire project is expected to be financed by a capital outlay of Rs. 70 cr. Notably, company is present in 15 states with 19 operating units. Last year it took over Surya Organic Chemicals in Karnataka and Prag Distillery in Andhra Pradesh. Besides this, it has 4 lease arrangements and 12 tie-up arrangements across for carrying out manufacturing and bottling activities, ensuring proximity to large markets. Company had issued 45 lac warrants to promoter group @ Rs 157 which may simply lapse by May 2009 considering the CMP. It may end current year with sales of Rs 210 cr and PAT of Rs 18 cr i.e. EPS of Rs 31 on current equity.
Last week Indag Rubber (20.00) came out Dec qtr nos as per expectation. Its sales were marginally down to Rs 20 cr but NP fell by 50% to Rs 1.30 cr posting an EPS of Rs 2.50 for the quarter. Its operating margin stood at 10% against 15% last year. Accordingly for nine months ending Dec’08 it has earned a net profit of Rs 4.50 cr on sales of Rs 57.50 cr. Thus it has already clocked an EPS of Rs 9 till date. Company is one of the reputed players in tyre retreading business. Company’s margin has been affected due to unprecedented rise in prices of basic raw materials particularly poly butadiene rubber, natural rubber, carbon black and rubber chemicals. Due to high prices of tyres, retreading of tyres has become all the more necessary as tyres retreaded with quality material and retread process give about the same mileage as new as new tyres, at a much lower cost per mile and are environmentally friendly. Of late the raw material prices have come down and once the company start reporting healthy margin its share price will shoot up sharply. Meanwhile for FY09 on a conservative basis it may register sales of Rs 75 cr and profit after tax of Rs 4.50 cr only i.e. EPS of Rs 9 on equity of Rs 5.25 cr. A good bet for medium to long term.
In contrast to industry estimates, JK Lakshmi (40.00) has posted encouraging result for the Dec qtr. Sales grew marginally by 5% to Rs 297 cr and NP declined by 8% to Rs 56 cr. However it posted a healthy OPM of 26% for the quarter and the average margin for first three quarters works out to 23%. Notably it has already earned an EPS of Rs 20 for nine months ending Dec 2008. Company has recently expanded its production capacity to 3.65 million TPA and is in the midst of taking it further to 4.75 million tonne by end of this fiscal. The recent fall in coal and pet coke prices augurs well for company as it has fully stabilized the working of the 36MW captive thermal power plant. To maintain its margin, company has increased the sale of blended cement which now constitutes more than 75% of total sales. Secondly it is also constantly expanding its RMC business and currently has a total of 9 RMC plants in operation with an overall production capacity of 5.58 lacs cu.mtr. For FY09, now it is estimated to report a turnover of Rs 1125 cr and profit of Rs 135 cr which leads to an EPS of Rs 22 on current equity. Although experts are still apprehensive about the demand supply scenario going forward, investors can buy it as a contrarian’s bet for medium term. At the same time, a huge of debt of Rs 700 cr on its books is a cause of concern.
Yuken India (60.00) is one of the reputed manufacturers of power saving hydraulic pumps & valves which are very popular in heavy engineering industry as effective means of automation and hence find extensive use in various key sectors like machine tools, material handling equipment, construction machinery, drill rigs, automobiles, defence, steel, power & cement plants, plastic machinery etc. Besides it also manufactures complete hydraulic power units as per customer specifications, cylinders, parison controllers, actuators, accumulators and power packs. Due to phenomenal demand, company has doubled its hydraulic casting products capacity to 2400 TPA and is further augmenting it to 6000 TPA within next couple of year. Besides it made a tie up with Hydrocontrols SPA Italy to produce and market state-of-the-art mobile control valves especially for agriculture, construction, earth moving and lifting machineries. Fundamentally, from the last two quarters company’s margin came under pressure due to increase in input/raw material cost and sharp depreciation in rupee. But with the recent fall in metal prices across the board, its margin will improve in coming quarters. So despite dismissal performance for H1FY09, it may end FY09 with topline of Rs 100 cr and bottomline of Rs 2.75 cr. This translates into EPS of Rs 9 on a tiny equity of Rs 3 cr. If things get better it can report an EPS of 15~20 for FY10. Share price of this MNC Associate can easily appreciate 50% within a year.
Last week Indag Rubber (20.00) came out Dec qtr nos as per expectation. Its sales were marginally down to Rs 20 cr but NP fell by 50% to Rs 1.30 cr posting an EPS of Rs 2.50 for the quarter. Its operating margin stood at 10% against 15% last year. Accordingly for nine months ending Dec’08 it has earned a net profit of Rs 4.50 cr on sales of Rs 57.50 cr. Thus it has already clocked an EPS of Rs 9 till date. Company is one of the reputed players in tyre retreading business. Company’s margin has been affected due to unprecedented rise in prices of basic raw materials particularly poly butadiene rubber, natural rubber, carbon black and rubber chemicals. Due to high prices of tyres, retreading of tyres has become all the more necessary as tyres retreaded with quality material and retread process give about the same mileage as new as new tyres, at a much lower cost per mile and are environmentally friendly. Of late the raw material prices have come down and once the company start reporting healthy margin its share price will shoot up sharply. Meanwhile for FY09 on a conservative basis it may register sales of Rs 75 cr and profit after tax of Rs 4.50 cr only i.e. EPS of Rs 9 on equity of Rs 5.25 cr. A good bet for medium to long term.
In contrast to industry estimates, JK Lakshmi (40.00) has posted encouraging result for the Dec qtr. Sales grew marginally by 5% to Rs 297 cr and NP declined by 8% to Rs 56 cr. However it posted a healthy OPM of 26% for the quarter and the average margin for first three quarters works out to 23%. Notably it has already earned an EPS of Rs 20 for nine months ending Dec 2008. Company has recently expanded its production capacity to 3.65 million TPA and is in the midst of taking it further to 4.75 million tonne by end of this fiscal. The recent fall in coal and pet coke prices augurs well for company as it has fully stabilized the working of the 36MW captive thermal power plant. To maintain its margin, company has increased the sale of blended cement which now constitutes more than 75% of total sales. Secondly it is also constantly expanding its RMC business and currently has a total of 9 RMC plants in operation with an overall production capacity of 5.58 lacs cu.mtr. For FY09, now it is estimated to report a turnover of Rs 1125 cr and profit of Rs 135 cr which leads to an EPS of Rs 22 on current equity. Although experts are still apprehensive about the demand supply scenario going forward, investors can buy it as a contrarian’s bet for medium term. At the same time, a huge of debt of Rs 700 cr on its books is a cause of concern.
Yuken India (60.00) is one of the reputed manufacturers of power saving hydraulic pumps & valves which are very popular in heavy engineering industry as effective means of automation and hence find extensive use in various key sectors like machine tools, material handling equipment, construction machinery, drill rigs, automobiles, defence, steel, power & cement plants, plastic machinery etc. Besides it also manufactures complete hydraulic power units as per customer specifications, cylinders, parison controllers, actuators, accumulators and power packs. Due to phenomenal demand, company has doubled its hydraulic casting products capacity to 2400 TPA and is further augmenting it to 6000 TPA within next couple of year. Besides it made a tie up with Hydrocontrols SPA Italy to produce and market state-of-the-art mobile control valves especially for agriculture, construction, earth moving and lifting machineries. Fundamentally, from the last two quarters company’s margin came under pressure due to increase in input/raw material cost and sharp depreciation in rupee. But with the recent fall in metal prices across the board, its margin will improve in coming quarters. So despite dismissal performance for H1FY09, it may end FY09 with topline of Rs 100 cr and bottomline of Rs 2.75 cr. This translates into EPS of Rs 9 on a tiny equity of Rs 3 cr. If things get better it can report an EPS of 15~20 for FY10. Share price of this MNC Associate can easily appreciate 50% within a year.
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