I had recommended to buy stocks of Noida Toll Bridge Company earlier this year as well as in year 2009 from long term perspectives. It is definitely a stock to buy now looking at the valuations it is available at.
Business: Noida Toll Bridge company was promoted by Infrastructure Leasing and Financial Services Ltd. (IL&FS) as a special purpose vehicle (SPV) to construct, operate and maintain the Delhi - Noida Bridge on a Build Own Operate Transfer (BOOT) basis. The Delhi Noida Bridge is a tolled facility connecting Noida to South Delhi across the Yamuna river. The Company's principal source of revenue is from the levy of tolls on commuters on this facility.
Outlook: It should be prudent to note that the company's operating income comprises revenues from the toll it collects and hoardings/advertisements on the routes it has developed.The outlook for growth in traffic on the Delhi Noida Bridge is very positive. Traffic levels on the Delhi Noida Bridge are expected to increase as Noida and Greater Noida experience development and population growth. In their review, Halcrow Consulting estimate that by 2021 the population of Noida and Greater Noida areas will increase by 2 million and the daily vehicle trips on the Delhi Noida Bridge will increase to 200,504.
The company has set up a 100% subsidiary, DND Flyway, for the implementation of development rights. Part of the surplus land on the Noida side has been transferred to the subsidiary. These projects have thrown up fresh opportunities for NTBCL.
All this development could fetch huge returns for company and shareholders. Company's current valuation stands at Rs. 11 Billions. This calculates per share cost as on today at Rs. 55-60 and qualifies it as a stock to buy now.
Company has contract with NOIDA to recover the original total cost of project PLUS 20% returns on total cost of project. If in certain financial year, company can not achieve 20% returns due to lower traffic, the shortfall amount would be added to total cost of project which would form the new total cost of project as base cost for next years calculations. NTBCL’s annual report says this amount is Rs. 17 Billions. That comes at Rs. 91 per share. Although NOIDA would not pay it in cash to company, there is a provision in agreement that company has rights to operate the bridge and collect toll till company does not recovers this shortfall. Company management has estimated that it would take 70 years to recover all the shortfall of past and future!
The longevity of business is more than lifetime of a human being and that too assured one. Intrinsic value is very good which makes it a stock to buy. The assurance of income in the form of toll fees is there to remain. Company has all rights to increase toll rates in accordance with inflation rate with approval from NOIDA. Toll rate hike was not approved by NODIA due to recession in 2009, which is going to be reviewed soon by approximately 20% in near future.
Company has paid dividend of 0.50 paisa/share in 2010 which makes dividend yield at 1.5%. This should increase in future.
All in all, NOIDA Toll Bridge Company is a stock to buy now for long term. I would advice you to buy stocks of this company for at least 5 - 10 years.
P.S. I have used this bridge many times and it is truly a world class construction. I have seen the land around it and I consider it personally as one of the most prime land in Delhi and NOIDA area.
Disclaimer: I am buying stocks of NTBCL at CMP.
Showing posts with label Best Stocks To Buy In 2010. Show all posts
Showing posts with label Best Stocks To Buy In 2010. Show all posts
Mid Cap Stock To Buy : Onmobile Global
I am a technology guy and I am always in search of future technology opportunities where I should invest in stocks of those companies and achieve best investment returns. Onmobile global is one mid cap stock to buy from such space, which has excellent chances to grow at very good pace.
OnMobile Global Limited (OnMobile) is a global value added services (MVAS) Company. OnMobile is engaged in providing value added services in telecom business globally. OnMobile offers a range of products like application based voice portals, network products, data products, speech products, messaging and m-commerce.
The products introduced by the Company during the fiscal year ended March 31, 2010 were ringback tone, subscription manager, voice portal, social address book, my social home, messaging platform, telephone, pollenStudio 2.0 and business intelligence.
OnMobile Global is the market leader in the non-SMS VAS (Value Added Services) segment in India. VAS is doing better than voice. Company enjoys a 33% market share in India. Company has managed to grow at the rate of 12-13% in a year compared to other telecom VAS providers.
In FY10, it won two major contracts from Telefonica in 13 Latin American countries and Vodafone in three countries. The upfront costs in building up operations for these projects took a toll on earnings before interest, tax, depreciation and amortisation (Ebitda) margins, which plummeted to around 18 per cent in FY10 from 32 per cent in the previous year.
Telefonica and Vodafone operations are expected to come onstream by the end of the current financial year, and should start showing results in FY12. Ebitda margins are also expected to improve by that time, but not to the earlier 30 per cent plus levels.
As stated above, project costs for Telefonica and vodafone are factored in and bad times are over in terms of profitability. These expenses had affected in terms of return ratios and right now ratios are at the bottom. If you look at the historical P/E ratio band, this company used to command very high P/E multiple in past and currently it is trading at the lower end of the band.
Market Cap 2138.82
EPS (TTM) 9.56
P/E 38.16
P/C 21.11
Book Value 123.37
Price/Book 2.96
Div(%) 0.00%
Div Yield(%) -
Market Lot 1.00
Face Value 10.00
Industry P/E 17.78
Stock price level around Rs. 320 - 340 is good to buy stocks of Onmobile. Overall, Onmobile global is a good mid cap stock to buy and one may invest in it for long term for excellent returns.
OnMobile Global Limited (OnMobile) is a global value added services (MVAS) Company. OnMobile is engaged in providing value added services in telecom business globally. OnMobile offers a range of products like application based voice portals, network products, data products, speech products, messaging and m-commerce.
The products introduced by the Company during the fiscal year ended March 31, 2010 were ringback tone, subscription manager, voice portal, social address book, my social home, messaging platform, telephone, pollenStudio 2.0 and business intelligence.
OnMobile Global is the market leader in the non-SMS VAS (Value Added Services) segment in India. VAS is doing better than voice. Company enjoys a 33% market share in India. Company has managed to grow at the rate of 12-13% in a year compared to other telecom VAS providers.
In FY10, it won two major contracts from Telefonica in 13 Latin American countries and Vodafone in three countries. The upfront costs in building up operations for these projects took a toll on earnings before interest, tax, depreciation and amortisation (Ebitda) margins, which plummeted to around 18 per cent in FY10 from 32 per cent in the previous year.
Telefonica and Vodafone operations are expected to come onstream by the end of the current financial year, and should start showing results in FY12. Ebitda margins are also expected to improve by that time, but not to the earlier 30 per cent plus levels.
As stated above, project costs for Telefonica and vodafone are factored in and bad times are over in terms of profitability. These expenses had affected in terms of return ratios and right now ratios are at the bottom. If you look at the historical P/E ratio band, this company used to command very high P/E multiple in past and currently it is trading at the lower end of the band.
Market Cap 2138.82
EPS (TTM) 9.56
P/E 38.16
P/C 21.11
Book Value 123.37
Price/Book 2.96
Div(%) 0.00%
Div Yield(%) -
Market Lot 1.00
Face Value 10.00
Industry P/E 17.78
Stock price level around Rs. 320 - 340 is good to buy stocks of Onmobile. Overall, Onmobile global is a good mid cap stock to buy and one may invest in it for long term for excellent returns.
Stock to buy : Wockhardt
Here is a stock to buy as long term investment. This is a turnaround story which appears to be a value stock and this stock investment has a potential to give you good returns.
Wockhardt Limited (WL) is a subsidiary of Khorakwala Holdings and Investments Private Limited. The geographical segments of the Company are India, the United States/Western Europe and Rest of the World. The Company’s subsidiaries includes Wockhardt Biopharm Limited, Vinton Healthcare Limited, Wockhardt Infrastructure Development Limited, Wockhardt UK Holdings Limited, CP Pharmaceuticals Limited, Wallis Group Limited, The Wallis Laboratory Limited, Wallis Licensing Limited, Wockhardt UK Limited, Wockhardt France (Holdings) S.A.S., Girex S.A.S., Niverpharma S.A.S., Laboratoires Negma S.A.S., DMH S.A.S., Phytex S.A.S., Scomedia S.A.S. and Mazal Pharmaceutique S.A.R.L.
This company had faced big financial distress in year 2008-2009 due to it's big forex losses. The company is still not out of this problem yet. But it is going through the restructuring process under which company recently sold off it's land in Mumbai fir Rs. 200 crores. Company is also selling it's non strategic assets to meet financial needs.
Wockhardt is a pioneer in Insulin business. After restructuring of business, it is expected to carry a debt of Rs. 3500 crores. It's enterprise value is expected to be around Rs. 8500 crores. At current stock price of Rs. 238 market caps is approx. 2600 crores. This clearly shows the discount at which Wockhardt stock trades in stock market. Compared to other pharma stocks like Ranbaxy, this is a stock trading at 50 - 60 % discount.
If the restructuring goes as per company's plans, EPS for FY 11 would be around Rs. 11. Two - three years from today, company could be posting EPS at least Rs. 20. Wockhardt was a consistent dividend paying stock till it got in trouble in 2008 due to overseas acquisitions and forex losses.
The stock has recently run up a lot. If it corrects and goes below 200 levels, on can buy stocks at those levels.
The only worry is, restructuring could take some time. With valuations and all facts discussed, it is visible that stock is a turnaround story and carries potential to at least double in 2 - 3 years. It is definitely a stock to buy for long term.
Wockhardt Limited (WL) is a subsidiary of Khorakwala Holdings and Investments Private Limited. The geographical segments of the Company are India, the United States/Western Europe and Rest of the World. The Company’s subsidiaries includes Wockhardt Biopharm Limited, Vinton Healthcare Limited, Wockhardt Infrastructure Development Limited, Wockhardt UK Holdings Limited, CP Pharmaceuticals Limited, Wallis Group Limited, The Wallis Laboratory Limited, Wallis Licensing Limited, Wockhardt UK Limited, Wockhardt France (Holdings) S.A.S., Girex S.A.S., Niverpharma S.A.S., Laboratoires Negma S.A.S., DMH S.A.S., Phytex S.A.S., Scomedia S.A.S. and Mazal Pharmaceutique S.A.R.L.This company had faced big financial distress in year 2008-2009 due to it's big forex losses. The company is still not out of this problem yet. But it is going through the restructuring process under which company recently sold off it's land in Mumbai fir Rs. 200 crores. Company is also selling it's non strategic assets to meet financial needs.
Wockhardt is a pioneer in Insulin business. After restructuring of business, it is expected to carry a debt of Rs. 3500 crores. It's enterprise value is expected to be around Rs. 8500 crores. At current stock price of Rs. 238 market caps is approx. 2600 crores. This clearly shows the discount at which Wockhardt stock trades in stock market. Compared to other pharma stocks like Ranbaxy, this is a stock trading at 50 - 60 % discount.
If the restructuring goes as per company's plans, EPS for FY 11 would be around Rs. 11. Two - three years from today, company could be posting EPS at least Rs. 20. Wockhardt was a consistent dividend paying stock till it got in trouble in 2008 due to overseas acquisitions and forex losses.
The stock has recently run up a lot. If it corrects and goes below 200 levels, on can buy stocks at those levels.
The only worry is, restructuring could take some time. With valuations and all facts discussed, it is visible that stock is a turnaround story and carries potential to at least double in 2 - 3 years. It is definitely a stock to buy for long term.
Stock Report : Mahindra Lifespace Development Ltd (MLDL)
Checkout stock report and stock price target for Mahindra Lifespace, earlier known as Mahindra Gesco Developers Ltd.This is the real estate development arm of $6 billion Mahindra Group and is a subsidiary of Mahindra & Mahindra Limited.
Mahindra Lifespace Development Ltd has been in the forefront of Urban Development in the country.
This stock report discusses the current developments in the company and looks for the guidance for stock price target for next one year.
Being part of $6.3 billion Mahindra Group, MLDL a reputation of being a pioneer in the development of integrated business cities & delivering quality living spaces. The company has developed premium residential & commercial properties in Mumbai, Pune, Delhi, Chennai & the Mahindra World Cities at Chennai & Jaipur.
The company’s current project list includes Mahindra Eminente at Goregaon-Mumbai, Mahindra Splendour at Bhandup-Mumbai Mahindra Royale at Pune,& Mahindra Chloris at Faridabad and these are progressing as per schedule. Sylvan Country at Mahindra World City-Chennai has been completed during the year while approvals have been received for starting construction on Mahindra Aura at Gurgaon NCR. Mahindra Lifespace Development Ltd (MLDL) has completed 10 residential & 8 commercial projects in Mumbai/Pune/Chennai/Banglore/Delhi/Gurgaon.
Upcoming projects are Mahindra Aura Phase II in Gurgaon & a project in MIHAN SEZ Nagpur.
The demand for commercial & residential premises in metros is likely to see an uptick with revival in the economy in both domestic & global, more and more foreign firms setting up offices and improving demand for residential property for expats.
The near term concern could be surplus in commercial & residential premises, but this could be short term negative as the projects of MLDL are at location where there is land shortfall for development.
Market Cap 1977.8
* EPS (TTM) 19.44
* P/E 24.92
* Book Value 232.26
* Price/Book 2.09
Div(%) 35.00%
* Div Yield(%) 0.72
Market Lot 1.00
Face Value 10.00
Industry P/E 20.76
Mahindra Lifespace Development Ltd (MLDL) has reported 225% growth in income from operations in Q4 F-2010,PAT was up 65%.The company has also given a dividend of 35%.
MLDL has observed net profit margins of almost 25% which is very health percentile. If company achieves the 25% growth in sales, which has been their historical growth avarage and say even 25% growth in net profits (company has observed more growth in past few years), expected forward EPS in one year could be RS. 24.31. At current stock price of MLDL, Rs. 484, P/E Ratio stands at 24.92. The forward EPS leads to forward P/E of 19.90 at current stock price.
With above calculations in mind, one year stock price target for MLDL could be around Rs.600
Mahindra Lifespace Development Ltd has been in the forefront of Urban Development in the country.
This stock report discusses the current developments in the company and looks for the guidance for stock price target for next one year.
Being part of $6.3 billion Mahindra Group, MLDL a reputation of being a pioneer in the development of integrated business cities & delivering quality living spaces. The company has developed premium residential & commercial properties in Mumbai, Pune, Delhi, Chennai & the Mahindra World Cities at Chennai & Jaipur.
The company’s current project list includes Mahindra Eminente at Goregaon-Mumbai, Mahindra Splendour at Bhandup-Mumbai Mahindra Royale at Pune,& Mahindra Chloris at Faridabad and these are progressing as per schedule. Sylvan Country at Mahindra World City-Chennai has been completed during the year while approvals have been received for starting construction on Mahindra Aura at Gurgaon NCR. Mahindra Lifespace Development Ltd (MLDL) has completed 10 residential & 8 commercial projects in Mumbai/Pune/Chennai/Banglore/Delhi/Gurgaon.
Upcoming projects are Mahindra Aura Phase II in Gurgaon & a project in MIHAN SEZ Nagpur.
The demand for commercial & residential premises in metros is likely to see an uptick with revival in the economy in both domestic & global, more and more foreign firms setting up offices and improving demand for residential property for expats.
The near term concern could be surplus in commercial & residential premises, but this could be short term negative as the projects of MLDL are at location where there is land shortfall for development.
Market Cap 1977.8
* EPS (TTM) 19.44
* P/E 24.92
* Book Value 232.26
* Price/Book 2.09
Div(%) 35.00%
* Div Yield(%) 0.72
Market Lot 1.00
Face Value 10.00
Industry P/E 20.76
Mahindra Lifespace Development Ltd (MLDL) has reported 225% growth in income from operations in Q4 F-2010,PAT was up 65%.The company has also given a dividend of 35%.
MLDL has observed net profit margins of almost 25% which is very health percentile. If company achieves the 25% growth in sales, which has been their historical growth avarage and say even 25% growth in net profits (company has observed more growth in past few years), expected forward EPS in one year could be RS. 24.31. At current stock price of MLDL, Rs. 484, P/E Ratio stands at 24.92. The forward EPS leads to forward P/E of 19.90 at current stock price.
With above calculations in mind, one year stock price target for MLDL could be around Rs.600
Telecom Sector Stock To Buy - Reliance Communications
A steeper fall compared to its peers has made the valuations of Reliance Communications highly attractive, where a further weakness appears unlikely.
RCom lost over 50% since last October as a sharp drop in telecom fares lowered its profitability. The future, however, appears bright.
The company has domestic and global assets in the form of telecom infrastructure in India and under-sea fibre optic network overseas. Its telecom towers are fast gaining tenancy from other operators, which is likely to support its revenue in future. It’s 3G licences win in 13 circles including Mumbai and Delhi gives a better balance between the initial capex fees and revenue prospects. Given its low valuations and asset base, the stock looks attractive at the current levels.
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RCom lost over 50% since last October as a sharp drop in telecom fares lowered its profitability. The future, however, appears bright.
The company has domestic and global assets in the form of telecom infrastructure in India and under-sea fibre optic network overseas. Its telecom towers are fast gaining tenancy from other operators, which is likely to support its revenue in future. It’s 3G licences win in 13 circles including Mumbai and Delhi gives a better balance between the initial capex fees and revenue prospects. Given its low valuations and asset base, the stock looks attractive at the current levels.
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Best Stocks To Buy Now In 2010
Here are a few handful of companies whose stocks may not sink further if stock market correction goes on some more time. But these are the stocks to bounce back if stability returns in markets. And so these could be the best stocks to buy now.
This is a list of stocks recently published by ET Investor's guide.
The logic remains true if European financial crisis gets resolves in near future. If it grows comparable to the levels of financial crisis in 2008, stock markets could sank further negating the possibilities.
The reasoning and stock analysis/sector analysis of each company mentioned here is available in each of the links below.
=> FMCG & Pharma Stocks To Buy Now
=> Asian Paints - Monopolistic Business Stock To Buy
=> Gail - Natural Gas Monopolistic Stock To Buy
=> Crisil - Zero Debt & High Dividend Stock To Buy
=> Mahindra Lifespaces - Real Estate Sector Stock To Buy
=> Bosch - Auto Sector Stock To Buy
=> Energy Sector Stock To Buy - JSW Energy
=> Anant Raj Industries - Good Real Estate Play
=> Shoppers Stop - Aggressively Transforming Retailer
=> Alok Industries - Textile Stock With Retail Touch
=> Telecom Sector Stock To Buy Reliance Communications
This is a list of stocks recently published by ET Investor's guide.
The logic remains true if European financial crisis gets resolves in near future. If it grows comparable to the levels of financial crisis in 2008, stock markets could sank further negating the possibilities.
The reasoning and stock analysis/sector analysis of each company mentioned here is available in each of the links below.
=> FMCG & Pharma Stocks To Buy Now
=> Asian Paints - Monopolistic Business Stock To Buy
=> Gail - Natural Gas Monopolistic Stock To Buy
=> Crisil - Zero Debt & High Dividend Stock To Buy
=> Mahindra Lifespaces - Real Estate Sector Stock To Buy
=> Bosch - Auto Sector Stock To Buy
=> Energy Sector Stock To Buy - JSW Energy
=> Anant Raj Industries - Good Real Estate Play
=> Shoppers Stop - Aggressively Transforming Retailer
=> Alok Industries - Textile Stock With Retail Touch
=> Telecom Sector Stock To Buy Reliance Communications
Crisil - Zero Debt & High Dividend Stock To Buy
Crisil enjoys a dominating position in a highly-competitive industry. Its business of providing rating, research and advisory services is far more insulated than other businesses in financial services domain.
Firstly, this is not a fund-based business like lending. Since the asset base is low, return on capital employed is much higher. Secondly, even in a case of stock market downturn, the demand remains for research and advisory services making it a sustainable business model.
Crisil has always been a zero-debt company with strong dividend paying record. Its current price-to-earning multiple (P/E) of 28 is lower compared to what it commanded in 2005, 2006 and 2007. This shows that the stock has scope to move up further from here.
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Firstly, this is not a fund-based business like lending. Since the asset base is low, return on capital employed is much higher. Secondly, even in a case of stock market downturn, the demand remains for research and advisory services making it a sustainable business model.
Crisil has always been a zero-debt company with strong dividend paying record. Its current price-to-earning multiple (P/E) of 28 is lower compared to what it commanded in 2005, 2006 and 2007. This shows that the stock has scope to move up further from here.
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FMCG & Pharma Stocks To Buy Now
FMCG and pharma industries have always been well regarded as recession-busters. So much so that in market rallies, when these sectors start picking pace, market observers start predicting a correction.
Most of these stocks are slow gainers, but they hold the capacity to make a new all-time high in every bull-run. One main problem, however, is that owing to their market credibility and a long-history of superior performance, they don’t come in cheap.
Despite rising food inflation pressuring the profit margins of the company, Nestle India remains one of the priciest FMCG company on the Dalal Street with a price-to-earning (P/E) multiple of 42. Its market leadership in the niche product category of ready-to-eat food and dairy product has enabled its revenues and profits to grow at a strong pace. Despite the stretched valuations, it remains a classic defensive stock.
The diversified nature of ITC makes its business model de-risked. A stronger growth in its non-cigarette businesses is reducing its dependence on tobacco business for forging its future growth. Valued at little over six times its annual revenues and a (P/E) ratio of 26, the scrip appears reasonably valued with limited downside risk. Its ability to raise dividends year-after-year adds to its attractiveness.
Similarly, Dabur India’s non-cyclical product-mix in consumer care, healthcare, food and retail with strong brand recall and international presence makes it an attractive consumer business. The company has outperformed its peers in the past several quarters justifying its premium valuations at P/E of 32.
GSK Consumer Healthcare (GSKCH) is a market leader in niche category of malt based health drinks with a portfolio of OTC drugs. Although its margins were affected by rising food prices, it has successfully kept competition at bay. Despite trading at high valuations, this company has limited downside risk given its niche product category and non-cyclical nature of its business.
GlaxoSmithKline Pharma is the third largest player in the domestic pharma market. Its established international lineage, consistent growth, market leadership in many therapeutic areas and strong brand equity work in its favour. The company is aggressively increasing its presence in various therapeutic areas and expanding its field force. Its stock is trading at a P/E of 33. While these are relatively high valuations, the company is a promising long-term buy - offering limited down side.
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Most of these stocks are slow gainers, but they hold the capacity to make a new all-time high in every bull-run. One main problem, however, is that owing to their market credibility and a long-history of superior performance, they don’t come in cheap.
Despite rising food inflation pressuring the profit margins of the company, Nestle India remains one of the priciest FMCG company on the Dalal Street with a price-to-earning (P/E) multiple of 42. Its market leadership in the niche product category of ready-to-eat food and dairy product has enabled its revenues and profits to grow at a strong pace. Despite the stretched valuations, it remains a classic defensive stock.
The diversified nature of ITC makes its business model de-risked. A stronger growth in its non-cigarette businesses is reducing its dependence on tobacco business for forging its future growth. Valued at little over six times its annual revenues and a (P/E) ratio of 26, the scrip appears reasonably valued with limited downside risk. Its ability to raise dividends year-after-year adds to its attractiveness.
Similarly, Dabur India’s non-cyclical product-mix in consumer care, healthcare, food and retail with strong brand recall and international presence makes it an attractive consumer business. The company has outperformed its peers in the past several quarters justifying its premium valuations at P/E of 32.
GSK Consumer Healthcare (GSKCH) is a market leader in niche category of malt based health drinks with a portfolio of OTC drugs. Although its margins were affected by rising food prices, it has successfully kept competition at bay. Despite trading at high valuations, this company has limited downside risk given its niche product category and non-cyclical nature of its business.
GlaxoSmithKline Pharma is the third largest player in the domestic pharma market. Its established international lineage, consistent growth, market leadership in many therapeutic areas and strong brand equity work in its favour. The company is aggressively increasing its presence in various therapeutic areas and expanding its field force. Its stock is trading at a P/E of 33. While these are relatively high valuations, the company is a promising long-term buy - offering limited down side.
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Stocks To Buy Now - Hidden Gems By Ashish Chugh
Ashish Chugh, Author of Hidden Gems, has recommended to buy stocks of two below mentioned companies which he feels are relatively unknown and unexplored in stock markets and have potential to fetch good returns on medium term stock investments.
Anik Industries - A Hidden Gem By Ashish Chugh
Anik Industries is a part of Ruchi Soya Group. This company manufactures Anik brand of ghee and dairy whitener. The company has got primarily two business segments. One is the dairy business and the second is the trading business. Besides that the company also has a small wind power generation capacity, which accounts for marginal revenues for the company.
Stocks To Buy Now - Siyaram Silk Mills
Siyaram Silk Mills is a part of Siyaram Poddar group. This is a vertically integrated textile company. This company has got in-house facilities for spinning, dyeing, weaving, finishing and also garmenting. The brand Siyaram is available at over 40,000 retail outlets all across the country. Besides that the company is also opening its own exclusive stores where it will sell Siyaram besides other brands, which the company has. Beside Siyaram the company also has Oxemberg and J Hamstead as the other brands under which their garments are sold.
Anik Industries - A Hidden Gem By Ashish Chugh
Anik Industries is a part of Ruchi Soya Group. This company manufactures Anik brand of ghee and dairy whitener. The company has got primarily two business segments. One is the dairy business and the second is the trading business. Besides that the company also has a small wind power generation capacity, which accounts for marginal revenues for the company.
Stocks To Buy Now - Siyaram Silk Mills
Siyaram Silk Mills is a part of Siyaram Poddar group. This is a vertically integrated textile company. This company has got in-house facilities for spinning, dyeing, weaving, finishing and also garmenting. The brand Siyaram is available at over 40,000 retail outlets all across the country. Besides that the company is also opening its own exclusive stores where it will sell Siyaram besides other brands, which the company has. Beside Siyaram the company also has Oxemberg and J Hamstead as the other brands under which their garments are sold.
Anik Industries - A Hidden Gem By Ashish Chugh
Ashish Chugh, Author of Hidden Gems, has recommended to buy stocks of this dairy business pick for medium term stock investment. Checkout the analysis.
Anik Industries is a part of Ruchi Soya Group. This company manufactures Anik brand of ghee and dairy whitener. The company has got primarily two business segments. One is the dairy business and the second is the trading business. Besides that the company also has a small wind power generation capacity, which accounts for marginal revenues for the company. In dairy business, this company has got infrastructure facilities at Uttar Pradesh (UP) and Madhya Pradesh (MP). Besides that company also has infrastructure of chilling units spread across these two states. The company is putting up a new plant, which will process about 4 lakh litres of milk every day and produce 30 tonne of milk powder.
Anik as a brand, whether it is ghee or skimmed milk powder, it is an established brand in the Indian market with a good brand recall. The company also derives revenues from trading of agricultural and non-agricultural commodities.
If you look at the financials of the company FY09 sales were close to Rs 1000 crore, profit after tax was about Rs 11 crore and for the first nine months sales are up by about 25% and profit after tax is down by about 12% to about Rs 10 crore.
If you look at the positives and negatives of the company—the company has got good brand recall. The potential for growth in this business is immense. Another important thing that has happened in the international markets is that Chicago Mercantile Exchange has recently allowed derivative trading in skimmed milk powder. Now that essentially is going to do is that there is going to be a speculative interest also in skimmed milk powder. This may lead to the prices of the skimmed milk powder going up in the international markets, which will be a big benefit to companies involved in the manufacture of skimmed milk powder especially Anik Industries. It has got a large capacity for the manufacture of skimmed milk powder.
On the lower side the concerns for the company are that the operating margins of the company are very small. The performance of the company is largely depended upon its ability to procure so much amount of milk at competitive prices. But given the capabilities of the promoter and the fact that the price is attractive the stock currently trades at about Rs 60 and market cap of about Rs 150-160 crore.
For a company with established brand doing a turnover close to Rs 1200 crore the valuation of the company looks very attractive. Skimmed milk powder prices if they go up can really lead to margin improvement for the company. I think from these levels downside the stock looks restricted and the potential upside could be good.
Go back to: Stocks To Buy Now - Hidden Gems By Ashish Chugh
Anik Industries is a part of Ruchi Soya Group. This company manufactures Anik brand of ghee and dairy whitener. The company has got primarily two business segments. One is the dairy business and the second is the trading business. Besides that the company also has a small wind power generation capacity, which accounts for marginal revenues for the company. In dairy business, this company has got infrastructure facilities at Uttar Pradesh (UP) and Madhya Pradesh (MP). Besides that company also has infrastructure of chilling units spread across these two states. The company is putting up a new plant, which will process about 4 lakh litres of milk every day and produce 30 tonne of milk powder.
Anik as a brand, whether it is ghee or skimmed milk powder, it is an established brand in the Indian market with a good brand recall. The company also derives revenues from trading of agricultural and non-agricultural commodities.
If you look at the financials of the company FY09 sales were close to Rs 1000 crore, profit after tax was about Rs 11 crore and for the first nine months sales are up by about 25% and profit after tax is down by about 12% to about Rs 10 crore.
If you look at the positives and negatives of the company—the company has got good brand recall. The potential for growth in this business is immense. Another important thing that has happened in the international markets is that Chicago Mercantile Exchange has recently allowed derivative trading in skimmed milk powder. Now that essentially is going to do is that there is going to be a speculative interest also in skimmed milk powder. This may lead to the prices of the skimmed milk powder going up in the international markets, which will be a big benefit to companies involved in the manufacture of skimmed milk powder especially Anik Industries. It has got a large capacity for the manufacture of skimmed milk powder.
On the lower side the concerns for the company are that the operating margins of the company are very small. The performance of the company is largely depended upon its ability to procure so much amount of milk at competitive prices. But given the capabilities of the promoter and the fact that the price is attractive the stock currently trades at about Rs 60 and market cap of about Rs 150-160 crore.
For a company with established brand doing a turnover close to Rs 1200 crore the valuation of the company looks very attractive. Skimmed milk powder prices if they go up can really lead to margin improvement for the company. I think from these levels downside the stock looks restricted and the potential upside could be good.
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Stocks To Buy Now - Siyaram Silk Mills
Ashish Chugh, Author of Hidden Gems, has recommended to buy stocks of this textile sector pick for medium term stock investment. Checkout the analysis.
Siyaram Silk Mills is a part of Siyaram Poddar group. This is a vertically integrated textile company. This company has got in-house facilities for spinning, dyeing, weaving, finishing and also garmenting. The brand Siyaram is available at over 40,000 retail outlets all across the country. Besides that the company is also opening its own exclusive stores where it will sell Siyaram besides other brands, which the company has. Beside Siyaram the company also has Oxemberg and J Hamstead as the other brands under which their garments are sold.
If you see the financials of the company, for FY09, the company did sales of about Rs 530 crore, profit after tax (PAT) was about Rs 11.5 crore. In the first nine months, sales are up by about 25% about Rs 472 crore. Profit after tax is up by more than 150% to about Rs 18.5 crore, which means an annualized EPS of Rs 25. The stock currently trading at about Rs 170-172 is available at a PE multiple of less than 7 and a market cap of about Rs 160 crore.
If you look at the valuation of the company—you have a company, which is doing sales of close to Rs 600-650 crore that too in the branded segment available at a market cap of about Rs 160 crore and a PE of less than 7.
The company has got a 20 year track record of uninterrupted dividends. Even for 2010 the company has already given an interim dividend of about 60%. The book value is about Rs 175 which means bonus is definitely a possibility. The best part is that past few years there has been no equity dilution by the company except for the bonus, which the company gave in 2006 and a small preferential issue, which was made to the promoter’s way back in 2001. Besides that there has not been any equity dilution and the equity is very small at about Rs 9.5 crore.
Given all those factors, the price to earning multiple of 7 is the company is currently discounting the PE multiple of a commodity textile play and not really of value added company with good brands. The stock is bound to get re-rated. I think it is a matter of time that the stock gets re-rated.
Source: Transcript of Ashish Chugh's interview on CNBC TV18.
Go back to: Stocks To Buy Now - Hidden Gems By Ashish Chugh
Siyaram Silk Mills is a part of Siyaram Poddar group. This is a vertically integrated textile company. This company has got in-house facilities for spinning, dyeing, weaving, finishing and also garmenting. The brand Siyaram is available at over 40,000 retail outlets all across the country. Besides that the company is also opening its own exclusive stores where it will sell Siyaram besides other brands, which the company has. Beside Siyaram the company also has Oxemberg and J Hamstead as the other brands under which their garments are sold.
If you see the financials of the company, for FY09, the company did sales of about Rs 530 crore, profit after tax (PAT) was about Rs 11.5 crore. In the first nine months, sales are up by about 25% about Rs 472 crore. Profit after tax is up by more than 150% to about Rs 18.5 crore, which means an annualized EPS of Rs 25. The stock currently trading at about Rs 170-172 is available at a PE multiple of less than 7 and a market cap of about Rs 160 crore.
If you look at the valuation of the company—you have a company, which is doing sales of close to Rs 600-650 crore that too in the branded segment available at a market cap of about Rs 160 crore and a PE of less than 7.
The company has got a 20 year track record of uninterrupted dividends. Even for 2010 the company has already given an interim dividend of about 60%. The book value is about Rs 175 which means bonus is definitely a possibility. The best part is that past few years there has been no equity dilution by the company except for the bonus, which the company gave in 2006 and a small preferential issue, which was made to the promoter’s way back in 2001. Besides that there has not been any equity dilution and the equity is very small at about Rs 9.5 crore.
Given all those factors, the price to earning multiple of 7 is the company is currently discounting the PE multiple of a commodity textile play and not really of value added company with good brands. The stock is bound to get re-rated. I think it is a matter of time that the stock gets re-rated.
Source: Transcript of Ashish Chugh's interview on CNBC TV18.
Go back to: Stocks To Buy Now - Hidden Gems By Ashish Chugh
Large Cap Stock To Buy - ITC
This is one of the 3 stocks for investment portfolio recommended by Rajen Shah, Angel stock broking. Checkout analysis on this FMCG, Hotel, Cigarette, Apparel and Food giant.
Here are excerpts of his discussion on one of the business news channels.
I am extremely bullish on ITC. In fact about a year-and-a-half back when it was quoting at about Rs 185-190, I had given Rs 1,000 target in the next five years and I think already one and a half year is completed so in another three and a half years, my target for ITC is about Rs 1,000 per share. It would sound absolutely irrational talking about Rs 1,000 for ITC but I have the strongest conviction that this stock will be a four-figure stock in the next three-and-a-half years.
Interesting things are happening in ITC. Let me talk about the core business currently, which is tobacco. If you see the segment wise result, tobacco business reported almost 16% kind of an improvement in the bottomline in the last quarter and it is growing in double-digits. If you see the bidi market in India, it is three-four times the cigarette market. With more income in the hands of rural India, anybody would like to upgrade from a bidi to cigarette. This prosperity of India which is going to take place because of the economic growth is going to lead to double digit volumes growth in case of the cigarette business. That is one thing.
The hotel business will be doing very good numbers next year because of what is happening with the economy and the Commonwealth Games. The paper business—if you see Ballarpur—the number one paper company, was not able to report the kind of margins ITC reported in last quarter. Profits improved 80% in the last quarter as far as the paper segment-wise numbers.
Then we are talking about FMCG business where the losses have come down significantly and it is going to happen even in the coming quarters but the most interesting thing which I am observing in case of ITC and I think ITC will not be called a tobacco company in the next three-and-a-half years, it could be called India’s play on the agriculture space. I think the e-choupal concept—I had gone to Ludhiana, from Ludhiana I was travelling to Delhi via road and I came across this e-choupal thing, which is currently catering to about 25,000 villages and maybe they have target to cater it to about 3 lakh villages over the next five-six years.
This is a very interesting concept where the farmer walks in with his produce. He can see the international price, the domestic price and then sell the produce to ITC. ITC on its part basically use it for its own captive consumption. Like if red mirchi sold off, ITC grinds it and markets it under its own Ashirwad brand. So this is a big business. Whatever money the farmer makes, he uses it for buying something and from the same retail outlet. So ITC is basically doing what Pantaloon and Reliance and Bharti are doing in the urban part of the country. It is basically setting up these retail outlets in the rural part of the country and it makes money both ways.
When the farmer sells the produce to ITC and with that money the farmer buys something so there also it makes the margin. So it is a very interesting concept and I think even it is getting into contract farming – so I think it is a fabulous story and if you see the agribusiness of ITC, it is growing at 100%. Last year it reported about Rs 200 crore profits. This year it should be more than Rs 450 crore from the agribusiness. So I think agri is one thing which ITC should be doing exceptionally well.
We have a nine-month target of Rs 350 for ITC because this year ie for 2011, we are expecting about Rs 14 kind of earnings for ITC. But yes I stand by my words that in next three-and-a-half years, ITC will touch Rs 1,000.
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Here are excerpts of his discussion on one of the business news channels.
I am extremely bullish on ITC. In fact about a year-and-a-half back when it was quoting at about Rs 185-190, I had given Rs 1,000 target in the next five years and I think already one and a half year is completed so in another three and a half years, my target for ITC is about Rs 1,000 per share. It would sound absolutely irrational talking about Rs 1,000 for ITC but I have the strongest conviction that this stock will be a four-figure stock in the next three-and-a-half years.
Interesting things are happening in ITC. Let me talk about the core business currently, which is tobacco. If you see the segment wise result, tobacco business reported almost 16% kind of an improvement in the bottomline in the last quarter and it is growing in double-digits. If you see the bidi market in India, it is three-four times the cigarette market. With more income in the hands of rural India, anybody would like to upgrade from a bidi to cigarette. This prosperity of India which is going to take place because of the economic growth is going to lead to double digit volumes growth in case of the cigarette business. That is one thing.
The hotel business will be doing very good numbers next year because of what is happening with the economy and the Commonwealth Games. The paper business—if you see Ballarpur—the number one paper company, was not able to report the kind of margins ITC reported in last quarter. Profits improved 80% in the last quarter as far as the paper segment-wise numbers.
Then we are talking about FMCG business where the losses have come down significantly and it is going to happen even in the coming quarters but the most interesting thing which I am observing in case of ITC and I think ITC will not be called a tobacco company in the next three-and-a-half years, it could be called India’s play on the agriculture space. I think the e-choupal concept—I had gone to Ludhiana, from Ludhiana I was travelling to Delhi via road and I came across this e-choupal thing, which is currently catering to about 25,000 villages and maybe they have target to cater it to about 3 lakh villages over the next five-six years.
This is a very interesting concept where the farmer walks in with his produce. He can see the international price, the domestic price and then sell the produce to ITC. ITC on its part basically use it for its own captive consumption. Like if red mirchi sold off, ITC grinds it and markets it under its own Ashirwad brand. So this is a big business. Whatever money the farmer makes, he uses it for buying something and from the same retail outlet. So ITC is basically doing what Pantaloon and Reliance and Bharti are doing in the urban part of the country. It is basically setting up these retail outlets in the rural part of the country and it makes money both ways.
When the farmer sells the produce to ITC and with that money the farmer buys something so there also it makes the margin. So it is a very interesting concept and I think even it is getting into contract farming – so I think it is a fabulous story and if you see the agribusiness of ITC, it is growing at 100%. Last year it reported about Rs 200 crore profits. This year it should be more than Rs 450 crore from the agribusiness. So I think agri is one thing which ITC should be doing exceptionally well.
We have a nine-month target of Rs 350 for ITC because this year ie for 2011, we are expecting about Rs 14 kind of earnings for ITC. But yes I stand by my words that in next three-and-a-half years, ITC will touch Rs 1,000.
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Best Stocks To Buy Now For 2010 Investment Portfolio
Indian stock markets have been volatile and in corrective mode since January 2010. 2009 downturn has squeezed profits of many companies in exports, IT/Software and commodities sectors. Stocks to buy in 2010 would be those who had expanded their businesses at accelerated speed in downturn last year. MoneyLife had published stock analysis of five such companies which recorded very good sales and profits.
The five stocks discussed here are enjoying a terrific tailwind. They are among the rare few that have proven themselves in a difficult environment of downturn and recession. The market knows this; two of the five are not cheap. But the market has started correcting quite sharply; so it would be prudent to wait for the stocks to hit the targeted purchase price mentioned for each stock.
1. Stock Analysis - Birla Corporation
Birla Corp has been consistently doing well from past two years. It is the most profitable but cheap cement stock.
2. Stock To Buy From Media Sector - Jagran Prakashan
It is not too late to profit from the explosive growth of Indian regional media and the way to do it is to buy Jagaran Prakashan
3. Stock Analysis - Garden Silk Mills
Garden Silk Mills (Garden) had pioneered the branded polyester sari and dress material business in India through its high impact and coveted advertising campaigns.
4. Stock Analysis - Pidilite Industries
Pidilite Industries Ltd is a classic all-weather stock to buy that must be bought on severe market declines.
5. Stock Analysis - Gujarat State Petronet GSPL is a pioneer in developing energy transportation infrastructure and connecting natural gas supply basins and LNG terminals to growing markets. Here is company stock analysis to help you make decision on for your stock investment portfolio.
You May Want To Checkout: Stocks To Buy For 2010 - Let's Share Ideas
The five stocks discussed here are enjoying a terrific tailwind. They are among the rare few that have proven themselves in a difficult environment of downturn and recession. The market knows this; two of the five are not cheap. But the market has started correcting quite sharply; so it would be prudent to wait for the stocks to hit the targeted purchase price mentioned for each stock.
1. Stock Analysis - Birla Corporation
Birla Corp has been consistently doing well from past two years. It is the most profitable but cheap cement stock.
2. Stock To Buy From Media Sector - Jagran Prakashan
It is not too late to profit from the explosive growth of Indian regional media and the way to do it is to buy Jagaran Prakashan
3. Stock Analysis - Garden Silk Mills
Garden Silk Mills (Garden) had pioneered the branded polyester sari and dress material business in India through its high impact and coveted advertising campaigns.
4. Stock Analysis - Pidilite Industries
Pidilite Industries Ltd is a classic all-weather stock to buy that must be bought on severe market declines.
5. Stock Analysis - Gujarat State Petronet GSPL is a pioneer in developing energy transportation infrastructure and connecting natural gas supply basins and LNG terminals to growing markets. Here is company stock analysis to help you make decision on for your stock investment portfolio.
You May Want To Checkout: Stocks To Buy For 2010 - Let's Share Ideas
Stock Analysis - Birla Corporation
Birla Corp has been consistently doing well from past two years. It is the most profitable but cheap cement stock.
Birla Corp’s businesses are mainly cement and jute. Cement contributes 85% of revenues, which have been growing 27% on an average, over the past three quarters; its operating profit was up a huge 70% over the same period. Margins too have improved dramatically and, currently, average an extraordinary 38%.
In the September quarter, the company’s cement segment generated revenues of Rs465.96 crore compared to Rs450.09 crore in the June 2009 quarter, a rise of 4% while the power segment generated revenues of Rs58.17 crore in the September 2009 quarter compared to Rs40.10 crore in the June 2009 quarter, a rise of 45%. In FY09, the company’s cement sales were 5.29 million tonnes and analysts expect these to rise by 2% in FY10. A significant addition to cement capacity is in the pipeline, its impact would be felt only in the second half of FY10. The company has a Rs2,000 crore investment plan which includes 1.2 million tonnes expansion at Chanderia, 0.6 million tonnes expansion at Durgapur and three million tonnes expansion at Satna.
The only problem with Birla Corp is that the September quarter was probably among the best ones for cement companies when they benefited from lower costs and strong growth in volumes and pricing. This sweet spot has now disappeared and the industry is headed for overcapacity; this is more pronounced in the south but all cement companies will be under some pressure.
A stock to buy only at around Rs. 250 - 275 levels for long term investment portfolio.
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Birla Corp’s businesses are mainly cement and jute. Cement contributes 85% of revenues, which have been growing 27% on an average, over the past three quarters; its operating profit was up a huge 70% over the same period. Margins too have improved dramatically and, currently, average an extraordinary 38%.
In the September quarter, the company’s cement segment generated revenues of Rs465.96 crore compared to Rs450.09 crore in the June 2009 quarter, a rise of 4% while the power segment generated revenues of Rs58.17 crore in the September 2009 quarter compared to Rs40.10 crore in the June 2009 quarter, a rise of 45%. In FY09, the company’s cement sales were 5.29 million tonnes and analysts expect these to rise by 2% in FY10. A significant addition to cement capacity is in the pipeline, its impact would be felt only in the second half of FY10. The company has a Rs2,000 crore investment plan which includes 1.2 million tonnes expansion at Chanderia, 0.6 million tonnes expansion at Durgapur and three million tonnes expansion at Satna.
The only problem with Birla Corp is that the September quarter was probably among the best ones for cement companies when they benefited from lower costs and strong growth in volumes and pricing. This sweet spot has now disappeared and the industry is headed for overcapacity; this is more pronounced in the south but all cement companies will be under some pressure.
A stock to buy only at around Rs. 250 - 275 levels for long term investment portfolio.
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Stock Analysis - Garden Silk Mills
Garden Silk Mills (Garden) had pioneered the branded polyester sari and dress material business in India through its high impact and coveted advertising campaigns.
It also makes polyethylene terephthalic acid (PET) chips, polyester filament yarn and fabrics like georgette, chiffon, faille, fabric, jacquard (dyed and printed) for blouses, skirts and dresses. Garden was once known for the quality of its fabrics and unique designs. But, in the past few years, the company has become more of a polyester manufacturer and shifted its focus quite substantially from being a branded fabric producer. This is clear from the contribution of the fabric business to sales, which is now just 8% (down from 36% in 2003), while the share of polyester chips in total sales increased to 43% (from 1% in the same period). In that sense, Garden is more of a company making intermediate products.
Polyester filament yarn (PFY) is produced from molten polymer or PET chips. This helps Garden to operate through the total value chain of the polyester textiles business. It has production facilities at Surat, which is one of the largest PFY markets. It also exports to UK, France, Spain, Portugal and other countries. Earlier, the polyester market was heavily taxed—almost 50% plus excise duty. This was later reduced to 8%. Last year’s fiscal stimulus package saw a further drop to 4% boosting consumption. Garden is expanding continuously. About six months ago, Garden started an additional 36,500 tonnes polymerisation capacity and announced that it will set up a 10,000tpa PET chips plant.
Globally, India and China are the two major producers of PFY. In the post-quota regime, major capacities have shifted to China and India as these two countries offer low-cost labour and production technology; Taiwan, Korea and Japan have become uncompetitive in the polyester market. Sales have grown through the downturn as has operating profit (up 106% in Q1FY10). For FY2009-10, Garden should achieve net sales of around Rs2,000 crore and net profit of Rs75 crore which will translate into an EPS of around Rs19.
The stock is trading at just four times the FY10E EPS. Buy stocks around Rs60.
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It also makes polyethylene terephthalic acid (PET) chips, polyester filament yarn and fabrics like georgette, chiffon, faille, fabric, jacquard (dyed and printed) for blouses, skirts and dresses. Garden was once known for the quality of its fabrics and unique designs. But, in the past few years, the company has become more of a polyester manufacturer and shifted its focus quite substantially from being a branded fabric producer. This is clear from the contribution of the fabric business to sales, which is now just 8% (down from 36% in 2003), while the share of polyester chips in total sales increased to 43% (from 1% in the same period). In that sense, Garden is more of a company making intermediate products.
Polyester filament yarn (PFY) is produced from molten polymer or PET chips. This helps Garden to operate through the total value chain of the polyester textiles business. It has production facilities at Surat, which is one of the largest PFY markets. It also exports to UK, France, Spain, Portugal and other countries. Earlier, the polyester market was heavily taxed—almost 50% plus excise duty. This was later reduced to 8%. Last year’s fiscal stimulus package saw a further drop to 4% boosting consumption. Garden is expanding continuously. About six months ago, Garden started an additional 36,500 tonnes polymerisation capacity and announced that it will set up a 10,000tpa PET chips plant.
Globally, India and China are the two major producers of PFY. In the post-quota regime, major capacities have shifted to China and India as these two countries offer low-cost labour and production technology; Taiwan, Korea and Japan have become uncompetitive in the polyester market. Sales have grown through the downturn as has operating profit (up 106% in Q1FY10). For FY2009-10, Garden should achieve net sales of around Rs2,000 crore and net profit of Rs75 crore which will translate into an EPS of around Rs19.
The stock is trading at just four times the FY10E EPS. Buy stocks around Rs60.
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Stock Analysis - Pidilite Industries
Pidilite Industries Ltd is a classic all-weather stock to buy that must be bought on severe market declines.
It reports excellent revenues and profits, year after year, has a suite of impregnable brands which it nurtures well, is a fine domestic consumption play, is run by smart promoters—and is usually expensive, which is why it should be bought when the market sells off crazily.
Pidilite is the leading manufacturer of crafts materials, adhesives and glues, DIY (do-it-yourself) products and industrial specialty chemicals in India. Its flagship brand, Fevicol, is the largest selling synthetic adhesives brand in India. Pidilite operates in two main segments—consumer/bazaar products and industrial products. The consumer and bazaar segment includes products like adhesives, sealants, art materials, construction chemicals and paint chemicals. This segment contributes more than 70% of its revenue. The industrial product segment includes industrial adhesives, synthetic resins, organic pigments, pigment preparations and surfactants. These are consumed by various industries including packaging, textiles, paints, printing inks, paper and leather.
The key driver to sales and earnings growth for Pidilite is the steady increase in the proportion of branded products with a clear edge in the marketplace. Pidilite has powerful brands like Fevicol, Steelgrip, Acron, Dr Fixit, Fevitite M-seal (acquired from Mahindras), Fevistik, Fevikwik, Fevibond, Piditint, Fevicryl, Prime, Ranipal (acquired from Mafatlals), etc, pushed through a marketing network of 40,000 dealers and over 400,000 retail outlets—an unmatched promotional and distribution reach. It is also known for a series of terrifically humorous TV commercials that lift the profile of its mundane, utilitarian products, especially adhesives.
While Pidilite has so far been focused on chemicals and, within that, different versions of adhesives, it did the unthinkable and launched a snack food called Chikkers. Chikkers were a kind of sweet crispies that were positioned as a health snack but sank without a trace. Its idea of creating a retail chain of Hobby Ideas to sell art materials and many of its own products under one roof in an attractive promotional environment has not worked either. The good thing is that the management is slow to commit funds to such experimental ideas and quick to pull the plug when they don’t work. Pidilite is uniquely placed due to its strong market position, product innovation, a wide distribution network, its ability to exploit brand loyalty and increased demand due to the construction boom. It also exports its products to over 50 countries including Brazil, South Africa, Egypt and USA and to countries of the Middle East and Europe. In FY09, exports accounted for about 26% of the total revenue.
A key issue with Pidilite is its susceptibility to swings in raw material prices. When raw material costs shoot up, margins are squeezed and the stock, which has low institutional ownership and following, stagnates or falls. The past two quarters have been great because raw material prices were low. In Q2FY10, net profit was up by 240%. Operating profit for the September quarter, at Rs119.59 crore, was the highest ever, even though margins will go down in the coming quarters as raw material prices have risen. On the other hand, topline growth will be higher, thanks to increased construction.
The Pidilite stock is never cheap and sports a P/E of around 14 on FY10 net profit. Buy stocks of Pidilite at around Rs 150 for long term investment portfolio.
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It reports excellent revenues and profits, year after year, has a suite of impregnable brands which it nurtures well, is a fine domestic consumption play, is run by smart promoters—and is usually expensive, which is why it should be bought when the market sells off crazily.
Pidilite is the leading manufacturer of crafts materials, adhesives and glues, DIY (do-it-yourself) products and industrial specialty chemicals in India. Its flagship brand, Fevicol, is the largest selling synthetic adhesives brand in India. Pidilite operates in two main segments—consumer/bazaar products and industrial products. The consumer and bazaar segment includes products like adhesives, sealants, art materials, construction chemicals and paint chemicals. This segment contributes more than 70% of its revenue. The industrial product segment includes industrial adhesives, synthetic resins, organic pigments, pigment preparations and surfactants. These are consumed by various industries including packaging, textiles, paints, printing inks, paper and leather.
The key driver to sales and earnings growth for Pidilite is the steady increase in the proportion of branded products with a clear edge in the marketplace. Pidilite has powerful brands like Fevicol, Steelgrip, Acron, Dr Fixit, Fevitite M-seal (acquired from Mahindras), Fevistik, Fevikwik, Fevibond, Piditint, Fevicryl, Prime, Ranipal (acquired from Mafatlals), etc, pushed through a marketing network of 40,000 dealers and over 400,000 retail outlets—an unmatched promotional and distribution reach. It is also known for a series of terrifically humorous TV commercials that lift the profile of its mundane, utilitarian products, especially adhesives.
While Pidilite has so far been focused on chemicals and, within that, different versions of adhesives, it did the unthinkable and launched a snack food called Chikkers. Chikkers were a kind of sweet crispies that were positioned as a health snack but sank without a trace. Its idea of creating a retail chain of Hobby Ideas to sell art materials and many of its own products under one roof in an attractive promotional environment has not worked either. The good thing is that the management is slow to commit funds to such experimental ideas and quick to pull the plug when they don’t work. Pidilite is uniquely placed due to its strong market position, product innovation, a wide distribution network, its ability to exploit brand loyalty and increased demand due to the construction boom. It also exports its products to over 50 countries including Brazil, South Africa, Egypt and USA and to countries of the Middle East and Europe. In FY09, exports accounted for about 26% of the total revenue.
A key issue with Pidilite is its susceptibility to swings in raw material prices. When raw material costs shoot up, margins are squeezed and the stock, which has low institutional ownership and following, stagnates or falls. The past two quarters have been great because raw material prices were low. In Q2FY10, net profit was up by 240%. Operating profit for the September quarter, at Rs119.59 crore, was the highest ever, even though margins will go down in the coming quarters as raw material prices have risen. On the other hand, topline growth will be higher, thanks to increased construction.
The Pidilite stock is never cheap and sports a P/E of around 14 on FY10 net profit. Buy stocks of Pidilite at around Rs 150 for long term investment portfolio.
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Small Cap Stocks To Buy For 2010 - 2011
Ashish Chugh, famous investment analyst for his "Hidden Gems" book, has recently recommended two small cap stocks to buy in 2010. He has advised to buy stocks of both these companies for next 1-2 years for best investment returns.
Tulsyan NEC - Small Cap Value Stock To Buy
This is a company, which is in two lines of business: Steel and woven sacks. The company manufactures TMT bars, MS alloys and billets in the steel division. They also manufacture HTP and PP woven sacks. Tulsyan NEC is not ideally one of those steel companies which you would want it to be in terms of backward linkages.
Small Cap Stock To Buy - Orient Ceramics
Orient Ceramics is a Delhi-based company manufacturing ceramic tiles. This company has got its manufacturing plant located in Secunderabad in Uttar Pradesh. Off late the company has been doing lot of initiatives to increase the market share. The company has introduced new ranges of tiles. These new ranges have got good response from the market.
Checkout: Stocks To Buy Below Rs.50 In 2010
Tulsyan NEC - Small Cap Value Stock To Buy
This is a company, which is in two lines of business: Steel and woven sacks. The company manufactures TMT bars, MS alloys and billets in the steel division. They also manufacture HTP and PP woven sacks. Tulsyan NEC is not ideally one of those steel companies which you would want it to be in terms of backward linkages.
Small Cap Stock To Buy - Orient Ceramics
Orient Ceramics is a Delhi-based company manufacturing ceramic tiles. This company has got its manufacturing plant located in Secunderabad in Uttar Pradesh. Off late the company has been doing lot of initiatives to increase the market share. The company has introduced new ranges of tiles. These new ranges have got good response from the market.
Checkout: Stocks To Buy Below Rs.50 In 2010
Small Cap Stock To Buy - Orient Ceramics
Here is one of the small cap stocks to buy in 2010 recommended by Ashish Chugh in his recent comments on CNBC-TV18 channel.
Orient Ceramics is a Delhi-based company manufacturing ceramic tiles. This company has got its manufacturing plant located in Secunderabad in Uttar Pradesh. Off late the company has been doing lot of initiatives to increase the market share. The company has introduced new ranges of tiles. These new ranges have got good response from the market.
The company is planning to open more retail stores and also have larger distribution network of distributors and retailers in various cities where they are currently not present. The third thing is that the company has also decided to start retailing of other construction related items, which makes it a one stop shop for all construction needs.
On the financial side:
For FY09 the company achieved sales of about Rs 225 crore and made Rs 6.4 crore in profit after tax (PAT), which results in an EPS of about Rs 6-6.5.For the first nine-months of the current financial year, sales are at Rs 175 crore. The PAT is up by 35% to about Rs 6 crore. For full year, expected sales are around Rs 250 crore with a PAT of Rs 8.5 crore, which results in an EPS of about Rs 8. At the current price of about Rs 45, the stock is trading at a price to earnings multiple of about Rs 5-6.
Market Cap 53.60
* EPS (TTM) 7.55
* P/E 6.74
* P/C 2.89
* Book Value 49.86
* Price/Book 1.02
Div(%) 15.00
Div Yield(%) 2.95
Market Lot 1.00
Face Value 10.00
Industry P/E 8.26
This is a full tax paying company. The company pays tax with no concessions. If you look at the market cap of the company this company has a market cap of about Rs 45 crore. Sales is Rs 250 crore and cash profit is Rs 20 crore, which means it is going at less than two-and-a-half year’s of its cash profit.
This company has a dividend history of the past 20 years. Only during 1993 it skipped dividend. Otherwise from 1990 to 2009, the company has been regularly paying dividend. Considering all these factors at the market cap of about Rs 45 crore the stock qualifies as a value stock to buy. It is a good investment from 1 - 2 years perspective.
Checkout more small cap stocks to buy in 2010
Orient Ceramics is a Delhi-based company manufacturing ceramic tiles. This company has got its manufacturing plant located in Secunderabad in Uttar Pradesh. Off late the company has been doing lot of initiatives to increase the market share. The company has introduced new ranges of tiles. These new ranges have got good response from the market.
The company is planning to open more retail stores and also have larger distribution network of distributors and retailers in various cities where they are currently not present. The third thing is that the company has also decided to start retailing of other construction related items, which makes it a one stop shop for all construction needs.
On the financial side:
For FY09 the company achieved sales of about Rs 225 crore and made Rs 6.4 crore in profit after tax (PAT), which results in an EPS of about Rs 6-6.5.For the first nine-months of the current financial year, sales are at Rs 175 crore. The PAT is up by 35% to about Rs 6 crore. For full year, expected sales are around Rs 250 crore with a PAT of Rs 8.5 crore, which results in an EPS of about Rs 8. At the current price of about Rs 45, the stock is trading at a price to earnings multiple of about Rs 5-6.
Market Cap 53.60
* EPS (TTM) 7.55
* P/E 6.74
* P/C 2.89
* Book Value 49.86
* Price/Book 1.02
Div(%) 15.00
Div Yield(%) 2.95
Market Lot 1.00
Face Value 10.00
Industry P/E 8.26
This is a full tax paying company. The company pays tax with no concessions. If you look at the market cap of the company this company has a market cap of about Rs 45 crore. Sales is Rs 250 crore and cash profit is Rs 20 crore, which means it is going at less than two-and-a-half year’s of its cash profit.
This company has a dividend history of the past 20 years. Only during 1993 it skipped dividend. Otherwise from 1990 to 2009, the company has been regularly paying dividend. Considering all these factors at the market cap of about Rs 45 crore the stock qualifies as a value stock to buy. It is a good investment from 1 - 2 years perspective.
Checkout more small cap stocks to buy in 2010
Small Cap Stock To Buy - Banswara Syntex
Banswara Syntex is a good stock to buy on dips given the company’s wide product portfolio and its focus to grow the niche textile products. I would like to include this stock in our series stocks to buy in 2010 - Let's Share Ideas.
A 33-year-old integrated textile manufacturer, Banswara Syntex has benefited the most during the recent run in stocks of some of the integrated textile manufacturers. The company experienced a jump in its operating margins in the current financial year due to improved exports while rising prices of yarns have also supported the margins in the latest quarter.
COMPANY:
Banswara Syntex is a Rajasthan-based blended yarn and fabric manufacturer. The company manufactures all types of blended yarns, namely polyester, viscose, woolen and acrylic other than cotton. It also manufactures fabrics and garments on made to order basis and supplies them to all top retail brands. Banswara has entered into a 50% joint venture with French textile company Carreman for a weaving plant of 60 looms. The company has started production of technical textiles while it also manufactures Lycra branded fabrics especially for women fashion clothing, women office clothing and school uniforms.
The fabric business is currently the larger contributor to the total revenue, with more than 60% of sales coming from the segment. The rest 40% to the topline is contributed by the yarn business, a major chunk of which comes from the sale of polyester yarn. The company exports its products to nearly 50 countries and exports accounted for nearly 60% of revenue in the current quarter. Banswara has coal-based and furnace oil thermal power-based power plant with a capacity of 18 MW (mega watt) and 9 MW respectively, both of which are used for captive consumption of power. The company has planned for an additional 15/18 MW thermal-based power plant, which is expected to commence operation at the end of ‘10.
FINANCIALS:
In the last five financial years, the company’s topline grew at a compounded annual growth rate (CAGR) of 21% while net profit increased with a CAGR of 40%. The revenue experienced a big push in FY10 thanks to a substantial demand recovery in the March ‘09 quarter. On a trailing year basis, while the improvement in profit margins continued during the latest four quarters, the interest cover has improved in the last two quarters. This is in line with a decline in the interest cost (from 5.9% to 5.1% of net sales) in the latest two quarters on a trailing year basis. While a high debt to equity ratio (4:1 for FY10) is a concern, the growth in debt is accompanied by a similar expansion in the gross block. The company has a capex plan of Rs 110 for the next financial year, about one-third of which is to be resourced through internal accruals, and the rest through term loans. The funds are to be used for construction of another power plant and modernisation of the current production facilities.
GROWTH DRIVERS:
The company expects to further bank on its fabric line of business by focussing on niche market products like Lycra and technical textiles. In recent months, it has received an initial order of 57,000 metres of three-layer waterproof breathable fabrics from ministry of defense and a third repeat order of 20,000 metres of technical fabric from a US-based customer. Banswara has planned for an additional 15/18 MW thermal based power plant which is expected to commence operation at the end of 2010. The power generated by this plant would primarily be used for internal consumption and surplus for sale.
Market Cap 141.68
* EPS (TTM) 24.72
* P/E 4.37
* P/C 2.29
* Book Value 68.16
* Price/Book 1.59
Div(%) 18.00
Div Yield(%) 1.67
Market Lot 1.00
Face Value 10.00
Industry P/E 158.25
STOCK VALUATIONS:
The stock has demonstrated an outstanding performance not only against the Sensex but also among all textile companies. Against a 75% gain in the Sensex, the market-cap of Banswara experienced a six-fold jump. At the current market price, the PE ratio stands at 4.5, lower than its average for the last five years and closer to the average of the last two years. The stock is a good stock to buy with intrinsic value on dips given the company’s focus to promote its niche textile products.
Source & Reference: ET Investor Guide
A 33-year-old integrated textile manufacturer, Banswara Syntex has benefited the most during the recent run in stocks of some of the integrated textile manufacturers. The company experienced a jump in its operating margins in the current financial year due to improved exports while rising prices of yarns have also supported the margins in the latest quarter.
COMPANY:
Banswara Syntex is a Rajasthan-based blended yarn and fabric manufacturer. The company manufactures all types of blended yarns, namely polyester, viscose, woolen and acrylic other than cotton. It also manufactures fabrics and garments on made to order basis and supplies them to all top retail brands. Banswara has entered into a 50% joint venture with French textile company Carreman for a weaving plant of 60 looms. The company has started production of technical textiles while it also manufactures Lycra branded fabrics especially for women fashion clothing, women office clothing and school uniforms.
The fabric business is currently the larger contributor to the total revenue, with more than 60% of sales coming from the segment. The rest 40% to the topline is contributed by the yarn business, a major chunk of which comes from the sale of polyester yarn. The company exports its products to nearly 50 countries and exports accounted for nearly 60% of revenue in the current quarter. Banswara has coal-based and furnace oil thermal power-based power plant with a capacity of 18 MW (mega watt) and 9 MW respectively, both of which are used for captive consumption of power. The company has planned for an additional 15/18 MW thermal-based power plant, which is expected to commence operation at the end of ‘10.
FINANCIALS:
In the last five financial years, the company’s topline grew at a compounded annual growth rate (CAGR) of 21% while net profit increased with a CAGR of 40%. The revenue experienced a big push in FY10 thanks to a substantial demand recovery in the March ‘09 quarter. On a trailing year basis, while the improvement in profit margins continued during the latest four quarters, the interest cover has improved in the last two quarters. This is in line with a decline in the interest cost (from 5.9% to 5.1% of net sales) in the latest two quarters on a trailing year basis. While a high debt to equity ratio (4:1 for FY10) is a concern, the growth in debt is accompanied by a similar expansion in the gross block. The company has a capex plan of Rs 110 for the next financial year, about one-third of which is to be resourced through internal accruals, and the rest through term loans. The funds are to be used for construction of another power plant and modernisation of the current production facilities.
GROWTH DRIVERS:
The company expects to further bank on its fabric line of business by focussing on niche market products like Lycra and technical textiles. In recent months, it has received an initial order of 57,000 metres of three-layer waterproof breathable fabrics from ministry of defense and a third repeat order of 20,000 metres of technical fabric from a US-based customer. Banswara has planned for an additional 15/18 MW thermal based power plant which is expected to commence operation at the end of 2010. The power generated by this plant would primarily be used for internal consumption and surplus for sale.
Market Cap 141.68
* EPS (TTM) 24.72
* P/E 4.37
* P/C 2.29
* Book Value 68.16
* Price/Book 1.59
Div(%) 18.00
Div Yield(%) 1.67
Market Lot 1.00
Face Value 10.00
Industry P/E 158.25
STOCK VALUATIONS:
The stock has demonstrated an outstanding performance not only against the Sensex but also among all textile companies. Against a 75% gain in the Sensex, the market-cap of Banswara experienced a six-fold jump. At the current market price, the PE ratio stands at 4.5, lower than its average for the last five years and closer to the average of the last two years. The stock is a good stock to buy with intrinsic value on dips given the company’s focus to promote its niche textile products.
Source & Reference: ET Investor Guide
Best Stocks To Buy Below Rs.50 In 2010
Here is a list of best stocks to buy below Rs.50 in 2010. These stocks are recommended by renowned stock analysis experts, SP Tulsian and Ashish Chugh.
Donear Industries - Stock Analysis For Mid-Term Investment
Donear Industries is into textile and they have a very strong brand Donear Suitings for which Yuvraj Singh is the brand ambassador. The company has set up a new textile plant in Surat with an investment outlay of about Rs 220 crore for which they have gone for a borrowing of about Rs 120 crore. Prior to that it was a debt-free company and it has been doing quite. It had given bonuses in last five-years with a very high promoter stake of 90%, which the stock exchanges has asked them to reduce to 75%. Click here to read complete stock analysis.
Tourism Finance - Public Sector Stock To Buy
Tourism Finance is promoted by – one can call it a semi public sector undertaking (PSU) with IFCI holding 32% and 25% held by State Bank of India (SBI), Life Insurance Company (LIC) and four other insurance companies.
The company is into providing finance to tourism related projects. It has been giving a consistent performance. In fact this has not been in the news. If you look at FY09, they had an EPS of about Rs 3.6 which is likely to be maintained for FY10 as well. Click here to read complete stock analysis.
Ugar Sugar - Small Cap Stock To Buy From Sugar Sector
Ugar Sugar has not participated in the run up for a simple reason that for September 2009, the company had posted a net loss. This has been scaring investors and keeping them away. The state with the most advantage in the sugar sector is Karnataka because there you have a recovery of 11.5-12% plus you are not seeing such a hue and cry for the sugarcane price as well. Click here to read complete stock analysis.
IFGL Refractories - Value Stock
IFGL Refractories is currently trading at a price of about Rs 48-49. This is a refractory company based in Orissa. Besides the plant in Orissa, this company has got two major subsidiaries called Monocon International and Hofmann Ceramics. In total this company has got manufacturing operations in seven countries. Now, 2008-2009 was a difficult year for this company mainly because of the fact that the steel industry saw a meltdown and the steel industry biggest customers. As a result of which the second half of the company was not that good. The company suffered losses in the second half of 2008-2009. Click here to read complete stock analysis.
SSPDL or Srinivasa Shipping and Property Development Limited
SSPDL is a very interesting real estate company where the current market cap of the company is very small compared to the kind of projects this company is doing. SSPDL is basically a play on the realty market in South India. This company is executing projects in Chennai, Bangalore, Kerala, Hyderabad and Vizag. The company has recently completed one project called Alpha City in Chennai, which is an IT park and also part rented that project. Click here to read complete stock analysis.
Andhra Cement - Safe Value Stock
We like Andhra Cement because of the capacity expansion, which is going in the company. This is a GP Goenka group company, which has got two cement plants with a total capacity of 1.4 million tonne per annum. In FY09, this company achieved a sales of close to Rs 370 crore, profit after tax (PAT) was about Rs 60 crore, which results in an EPS of about 4.5. At the current price of about Rs 28, stock is traded at a price to earning multiple of about 7. Click here to read complete stock analysis.
Donear Industries - Stock Analysis For Mid-Term Investment
Donear Industries is into textile and they have a very strong brand Donear Suitings for which Yuvraj Singh is the brand ambassador. The company has set up a new textile plant in Surat with an investment outlay of about Rs 220 crore for which they have gone for a borrowing of about Rs 120 crore. Prior to that it was a debt-free company and it has been doing quite. It had given bonuses in last five-years with a very high promoter stake of 90%, which the stock exchanges has asked them to reduce to 75%. Click here to read complete stock analysis.
Tourism Finance - Public Sector Stock To Buy
Tourism Finance is promoted by – one can call it a semi public sector undertaking (PSU) with IFCI holding 32% and 25% held by State Bank of India (SBI), Life Insurance Company (LIC) and four other insurance companies.
The company is into providing finance to tourism related projects. It has been giving a consistent performance. In fact this has not been in the news. If you look at FY09, they had an EPS of about Rs 3.6 which is likely to be maintained for FY10 as well. Click here to read complete stock analysis.
Ugar Sugar - Small Cap Stock To Buy From Sugar Sector
Ugar Sugar has not participated in the run up for a simple reason that for September 2009, the company had posted a net loss. This has been scaring investors and keeping them away. The state with the most advantage in the sugar sector is Karnataka because there you have a recovery of 11.5-12% plus you are not seeing such a hue and cry for the sugarcane price as well. Click here to read complete stock analysis.
IFGL Refractories - Value Stock
IFGL Refractories is currently trading at a price of about Rs 48-49. This is a refractory company based in Orissa. Besides the plant in Orissa, this company has got two major subsidiaries called Monocon International and Hofmann Ceramics. In total this company has got manufacturing operations in seven countries. Now, 2008-2009 was a difficult year for this company mainly because of the fact that the steel industry saw a meltdown and the steel industry biggest customers. As a result of which the second half of the company was not that good. The company suffered losses in the second half of 2008-2009. Click here to read complete stock analysis.
SSPDL or Srinivasa Shipping and Property Development Limited
SSPDL is a very interesting real estate company where the current market cap of the company is very small compared to the kind of projects this company is doing. SSPDL is basically a play on the realty market in South India. This company is executing projects in Chennai, Bangalore, Kerala, Hyderabad and Vizag. The company has recently completed one project called Alpha City in Chennai, which is an IT park and also part rented that project. Click here to read complete stock analysis.
Andhra Cement - Safe Value Stock
We like Andhra Cement because of the capacity expansion, which is going in the company. This is a GP Goenka group company, which has got two cement plants with a total capacity of 1.4 million tonne per annum. In FY09, this company achieved a sales of close to Rs 370 crore, profit after tax (PAT) was about Rs 60 crore, which results in an EPS of about 4.5. At the current price of about Rs 28, stock is traded at a price to earning multiple of about 7. Click here to read complete stock analysis.
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