STOCK WATCH
Although Mazda Ltd (60.00) is not expected to record spectacular growth in coming year, still it’s a value buy at current levels. For FY09 it reported 35% rise in sales to Rs 80 cr and 40% increase in PAT to Rs 9.25 cr thereby posting an EPS of Rs 22 for FY09. 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. However for Q1FY10 it recorded 15% fall in sales and profit to Rs 15 cr and 1.70 cr respectively. Accordingly it may end FY10 with sales of Rs 80 cr and profit of Rs 8.75 cr i.e. EPS of Rs 20 on tiny equity of 4.26 cr. 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 3x times, scrip is trading fairly cheap. Considering the market sentiment, one can even buy for good short term gains as well.
Accurate Transformers (80.00) is engaged in manufacturing of power as well as distribution transformers ranging from 1 MVA to 40 MVA - in up to 220 KV class. It is looking to venture into manufacturing of higher capacity power Transformers of 160 MVA in near future. It has expertise to carry out rural electrification project which involves the complete setting up of electricity in remote areas including the laying of lines, poles and substations. As per management company is working at very low capacity utilization due to high working capital requirement and shortage of funds. On a gross block of Rs 11 cr company claims of having 5 manufacturing plants with an installed transformer production capacity of 8000 MVA, of which 3000 MVA in Dehradun and Haridwar are relatively new and enjoy income tax and excise exemptions. For FY09 its sales improved by 10% to Rs 195 cr whereas net profit remained flat at Rs 7 cr thus posting an EPS of Rs 24 on a very tiny equity of Rs 3 cr. For Q1FY10 also it posted 10% improvement in sales as well NP to Rs 27 cr and 1.10 cr respectively. Sarcastically, company seems to have borrowed the funds at high interest rate resulting into substantial interest cost which eats up more than 50% of operating profit. Accordingly it may clock a turnover of Rs 210 and NP of Rs 8.50 for FY10 i.e. EPs of Rs 29 on current equity. Buy for short term gains.
Continuously for the last three quarters, SEAMEC (180.00) has been reporting terrific performance. For Q2FY09 i.e. June’09 quarter its revenue shot up 65% to Rs 100 cr whereas net profit increased 8 fold to Rs 60 cr from Rs 7.50 cr in the corresponding period last year. For H1FY09 company has already clocked an EPS of Rs 36 till now. Despite such powerful performance, marketmen are skeptical of its future profit margin, as to at what rate company will hire out its vessels. But considering the current trend and improvement in demand for such vessels, it seems that company will be able to clock some long term deals at healthy charter rates. As of now, company’s all four vessels are deployed and none of its vessel is expected to go for dry dock in the current fiscal. Even for next fiscal, chances of dry dock of any vessel are quite negligible. Fundamentally, its not only a debt free MNC but also a cash rich company having potential to generate Rs 60 ~ 70 cr cash thru core business operation. Although H2FY09 may not be as good as H1FY09 still it may clock a turnover of Rs 350 cr and PAT of Rs 170 cr for FY09 ending Dec’09. This translates into EPS of Rs 50 on equity of Rs 33.90 cr. Investors can accumulate this scrip at sharp declines for a price target of Rs 280 within 15 months
Cosmo Films (100.00) is one of the dominant players in the Bi-axially Oriented Polypropylene Films (BOPP) market in India with a 23% market share and also one of the lowest cost producers of BOPP films in the world. It currently boast of having an installed capacity of 56000 MTPA of BOPP films, 21000 MTPA of thermal lamination films & 3000 MTPA of metallized films. Importantly, company is the only Indian player to manufacture thermal laminated films which is a high margin business. Despite demand supply mismatch, company is working at 100% capacity and is further expanding its BOPP capacity to 136000 MTPA & metalized films to 10500 in phases. It has even started a coating film with a capacity of 12000 MTPA last year. Recently company acquired GBC, a USA based company for Rs 80 cr. This company provides thermal lamination films and equipment in Europe, North America, Japan and the Pacific region and has sales of nearly Rs 500 cr. Post this acquisition, Cosmo Films has emerged as the global leader in thermal lamination segment. However considering its not so encouraging performance for Q1FY10 and fall in BOPP prices, it may end FY10 with sales of Rs 650 cr and profit of Rs 35 cr i.e. EPS of Rs 18 on current equity of Rs 19.40 cr. Meanwhile, the promoter group didn’t opt to convert the 31 lac convertible warrants which were allotted to them @ Rs 107 in Feb’08.
Accurate Transformers (80.00) is engaged in manufacturing of power as well as distribution transformers ranging from 1 MVA to 40 MVA - in up to 220 KV class. It is looking to venture into manufacturing of higher capacity power Transformers of 160 MVA in near future. It has expertise to carry out rural electrification project which involves the complete setting up of electricity in remote areas including the laying of lines, poles and substations. As per management company is working at very low capacity utilization due to high working capital requirement and shortage of funds. On a gross block of Rs 11 cr company claims of having 5 manufacturing plants with an installed transformer production capacity of 8000 MVA, of which 3000 MVA in Dehradun and Haridwar are relatively new and enjoy income tax and excise exemptions. For FY09 its sales improved by 10% to Rs 195 cr whereas net profit remained flat at Rs 7 cr thus posting an EPS of Rs 24 on a very tiny equity of Rs 3 cr. For Q1FY10 also it posted 10% improvement in sales as well NP to Rs 27 cr and 1.10 cr respectively. Sarcastically, company seems to have borrowed the funds at high interest rate resulting into substantial interest cost which eats up more than 50% of operating profit. Accordingly it may clock a turnover of Rs 210 and NP of Rs 8.50 for FY10 i.e. EPs of Rs 29 on current equity. Buy for short term gains.
Continuously for the last three quarters, SEAMEC (180.00) has been reporting terrific performance. For Q2FY09 i.e. June’09 quarter its revenue shot up 65% to Rs 100 cr whereas net profit increased 8 fold to Rs 60 cr from Rs 7.50 cr in the corresponding period last year. For H1FY09 company has already clocked an EPS of Rs 36 till now. Despite such powerful performance, marketmen are skeptical of its future profit margin, as to at what rate company will hire out its vessels. But considering the current trend and improvement in demand for such vessels, it seems that company will be able to clock some long term deals at healthy charter rates. As of now, company’s all four vessels are deployed and none of its vessel is expected to go for dry dock in the current fiscal. Even for next fiscal, chances of dry dock of any vessel are quite negligible. Fundamentally, its not only a debt free MNC but also a cash rich company having potential to generate Rs 60 ~ 70 cr cash thru core business operation. Although H2FY09 may not be as good as H1FY09 still it may clock a turnover of Rs 350 cr and PAT of Rs 170 cr for FY09 ending Dec’09. This translates into EPS of Rs 50 on equity of Rs 33.90 cr. Investors can accumulate this scrip at sharp declines for a price target of Rs 280 within 15 months
Cosmo Films (100.00) is one of the dominant players in the Bi-axially Oriented Polypropylene Films (BOPP) market in India with a 23% market share and also one of the lowest cost producers of BOPP films in the world. It currently boast of having an installed capacity of 56000 MTPA of BOPP films, 21000 MTPA of thermal lamination films & 3000 MTPA of metallized films. Importantly, company is the only Indian player to manufacture thermal laminated films which is a high margin business. Despite demand supply mismatch, company is working at 100% capacity and is further expanding its BOPP capacity to 136000 MTPA & metalized films to 10500 in phases. It has even started a coating film with a capacity of 12000 MTPA last year. Recently company acquired GBC, a USA based company for Rs 80 cr. This company provides thermal lamination films and equipment in Europe, North America, Japan and the Pacific region and has sales of nearly Rs 500 cr. Post this acquisition, Cosmo Films has emerged as the global leader in thermal lamination segment. However considering its not so encouraging performance for Q1FY10 and fall in BOPP prices, it may end FY10 with sales of Rs 650 cr and profit of Rs 35 cr i.e. EPS of Rs 18 on current equity of Rs 19.40 cr. Meanwhile, the promoter group didn’t opt to convert the 31 lac convertible warrants which were allotted to them @ Rs 107 in Feb’08.
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