STOCK WATCH

Despite challenging times, Aditya Birla Chemicals (50.00) has reported encouraging result for the March’09 quarter. Sales grew by 15% to Rs 55 cr and profit increased by 20% to Rs 14 cr posting an EPS of Rs 6 for the single quarter. However for entire FY09 its topline was up by 15% to Rs 204 cr but bottomline declined marginally to Rs 46 cr due to sharp fall in operating margin to 35% against 44% last fiscal. Still it posted an EPS of Rs 20 for the full year and declared 15% dividend. Company, earlier known as Bihar Caustic is among the leading caustic soda producer in the northern and eastern region of the country having an installed capacity of 265 TPD of caustic soda, 200 TPD of liquid chlorine, 130 TPD of hydrochloric acid, 150,000 Nm3/day of compressed hydrogen and 3 TPD of sodium hypo chlorite. It has also set up a 25 TPD stable bleaching powder plant and 12000 TPA of aluminum chloride unit. To maintain its future growth, company is in the process of further augmenting the capacity of its caustic soda from 265 TPD to 300 TPD at a capital investment of Rs 30 cr. Despite belonging to such a reputed group and having strong fundamentals like high profit margin, low debt equity ratio, huge reserves, good dividend yield, consistent growth etc, scrip is poorly discounted at P/E multiple of less than 3x times and EV/ EBIDTA of less than 4x times. Although company is vulnerable to caustic soda price movement, but with Hindalco being its parent company & biggest customer this is relatively a safer bet.

Retail investors are disappointed to see a fall in net profit for the March quarter of Supreme Infrastructure (50.00). But infact company has reported good set of nos. Its revenue zoomed up 180% to Rs 145 cr, whereas operating profit jumped up 85% to Rs 19.50 cr. However due to high interest cost and major tax provisioning in the last quarter, its report a decline of 15% in PAT to Rs 4.80 cr. Despite this, for the full fiscal its bottomline has increased by impressive 40% to Rs 27 cr on 145% higher sales of Rs 383 cr. Thus company has posted an EPS of Rs 19.50 for the FY09 which means scrip is currently trading at a P/E ratio of less than 3x times. Company’s core competency lies in construction/widening of roads & highways, but it also undertakes other infrastructure projects like integrated nallah development, drainage work, laying of railway tracks, construction of minor bridges, development of IT Park, residential tower, RCC building, strengthening of sea wall and laying of tetra pods etc. Its area of operation is mainly concentrated in Mumbai region and few parts of Maharashtra & Bangalore. Lately company has bagged new orders to the tune of Rs 225 cr which include construction of flyover in Jaipur, widening of road and construction of bridge across the creek in Thane district, which is first of its kind for the company. Importantly, company has its own captive ready mix concrete plant, asphalt mix plant, quarrying and crushing unit & paver block manufacturing unit. With massive order in hand of more than Rs 600 cr and capex plan to double its RMC capacity to 300 cum. per hour, the future looks promising.

For the latest March’09 quarter, Tilaknagar Industries (130.00) doubled its sales to Rs 86 cr whereas net profit increased by 35% to Rs 7 cr leading to an EPS of Rs 12 for the single quarter. Accordingly for full fiscal, it recorded 65% increase its sales to Rs 240 cr and 30% rise in profit to Rs 21 cr i.e. EPS of Rs 37 on current equity. It declared 25% dividend for FY09. 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 this month considering the CMP. Recently, company raised Rs 8 cr thru issue of convertible preference shares @ Rs 94 per share. Sell now and buy later below Rs 100.

Mazda Ltd (58.00) has reported very encouraging result for the March’09 quarter as its sales shot up 45% to Rs 24 cr whereas NP jumped up 55% to Rs 2.70 cr. For the full year ending March 2009, it recorded 30% growth in net sales to Rs 80 cr & 40% rise in PAT to Rs 9.25 cr thereby posting an EPS of Rs 22 on tiny equity of Rs 4.25 cr. Company is among the few engineering companies in the world, manufacturing very specialized, high technology and critical equipments for various industries like power, refineries, fertilizers, chemicals, nuclear, sugar, paper, food, pharma etc. Broadly its product profile is segmented into vacuum system, valve division, air pollution control equipment, crystallizers and evaporators. Notably, it has a technical collaboration with world renowned Croll-Reynolds Inc. USA, who holds 12% stake in the company. Besides engineering, it also has a Biotechnology division dealing in carbohydrates, rare sugars and miscellaneous bio-chemicals. Lately, it has diversified into business of manufacturing and exporting soft drink drink concentrates, essence, jams etc in a small scale. Fundamentally, company is on a strong footing with very low debt equity ratio and good reserves. At an Enterprise value of Rs 30 cr scrip and at a P/E multiple of less than 3x times, scrip is trading fairly cheap. Keep accumulating at sharp declines.