MICRO FINANCE -PART 2

Other than SE Investment and Capital Trust , ARMAN FINANCIAL SERVICES is the third player from this space.This Ahmedabad based company having two divisions -Loans and Microfinance.This company is chaired by Mr . C R Shah (Former MD of Ahmedabad Electricity Co.) and managed by Mr.Jayendra B Patel.Last year  company decided to concentrate in Micro finance and planning to expand its operations.Company has posted a turnover of Rs.5.53 Cr and and an EPS of Rs.2/-in last financial year. For the last ten years company never posted any loss .Raising sufficient funds and proper analysis of the re-payment capacity of customer are the two key pillars of success in micro finance business.Promoters having reasonable experience in selling loan based product is a point to note.Only ,very  high risk takers can BUY in limited quantity ,till promoters prove themselves in new business.Currently it is trading at Rs.21/- with a P/E multiple around 10.

MICRO FINANCE - THE NEW THEME

Micro finance is developing in India and

in Indian stock market as a new theme.

In a country like India with huge rural

population ,significance and scope of

micro finance is vast. Unfortunately ,

the main microfinance companies are still

unlisted and no scope for retail investors.

But it is a fact that a number of

foreign funds and P/E players are already

invested in such unlisted entities. We have

also three listed players in this sector

even they are not big in size. One such known

name is SE Investment. This company was in

news recently that its 40 Mn GDR issue

subscribed in just 8 hours.This clearly shows

the appetite of foreign investors in companies

from this sector. SE investment already given

almost 1000% return in two years.So let us

check other two companies from this space ,

First is Capital trust and next will be

discussed later. 

Capital trust

Earlier I have recommended this scrip

through MMB when it was  @ RS.13/- and

recommend a profit booking around Rs.30/-.

At present it is quoting around Rs.70/-.

Since there is lot of happenings in the company

and this sector after that now it need re -looking

into it. Capital Trust is a Delhi based company

started its operations way back in 1985.

It was jointly promoted by Mr. K. R. Puri

(Former Governor, Reserve

Bank of India), Justice M. H. Beg

(Former Chief Justice of India), Mr. S. D. Varma

(Former Chairman, Allahabad Bank) and

Dr.A.M.Khusro (Former Member

Planning Commission). Its operations were

only as an NBFC till 2009.Now there was a

change in management after the promoter

holding bought out by IC Constructions 

Services Ltd.They also came out with

an open offer at a price of Rs.10/-, and now they

holds about 70% stake in this company.

After the take over by new management ,now company

ceased all other financing

operations and started Grameen based joint

liability based microfinance. Company is now

operating on the rural markets in UP, Rajasthan

and Madhya Pradesh and Chattisgarh.

It has 23 branches and 150 staffs as on date.

Now the new management seems to be taking serious

efforts to grow this company in microfinance sector.

As part of their efforts in this line, now they are

inducting experienced hands from banking sector in

their board. Recently company inducted Mr.J S Tomar

in the board who served Oriental Bank of Commerce

for 34 years and rose to the position of

General Manager, holding charge of the departments

of Rural Development and Priority Sector,

Planning & Development and Recovery Management.

He also  pioneered the first pilot in Grameen based

microfinance launched by any commercial bank

in India in 1995. He also headed the Microfinance

Department of the Reserve Bank of India as Officer

on Special Duty.(from company web site)

          Again, the company has taken lot of

steps to improve the business which

includes writing off of Rs.1.6 Cr NPA generated

in old business to clean the balance sheet,

fresh fund raising for business expansion..etc.

Now capital trust is expanding

into five more states  and targeting

a mini branch network of 1585 and loan

outstanding of Rs.13700 mn

by 2015.Company has recently appointed

New York based Cedar Street Capital, to raise

Rs 200 million foreign equity and Rs 360 million

debt for its expansion plans.

Considering the efforts and signals from

the new management Capital Trust is expected

to be a  money spinner even from this level.

Risk takers can buy in small lots.

Coverage on the other company in next two days

MULTIBASE INDIA - THE KID OF DOW CHEMICALS

Multibase India Ltd is originally started operations
as Synergy Poly in 1992. Company’s main product is
thermoplastic elastomeric compounds includes master
batches of synthetic resin, polypropylene, rubber
compounds, thermoplastic master batches, silicone
rubber ..etc.Company came through a two step change
in management control and now a part of Dow-Corning
(France)which is a subsidiary of
Dow Corning Corporation USA ,a joint venture of
American chemical giant Dow Chemicals and
Corning Inc ., a world leader in specialty glass
and ceramics.Company’s products are
used mainly in sectors like Automotive,
Personal Care, Personal hygiene,Stationery
,Telecommunications etc.
It is unfortunate to see that ,even if the
current promoters behind this company are world
leaders in their respective fields and the
products having good potential in a country
like India,they are not giving sufficient
priority to this company.As a result of their
negligence and overall recessionary
situation in past few years led the company
into a loss of Rs.2 crore in last year.But in
FY 2009-10 ,company posted a profit of Rs.2.69 Cr
and an EPS of Rs.2.13.If the promoters are really
interested in this company ,
the potential is huge for this MNC with the patronage
of conglomerates like DOW Chemicals and Corning Inc.
Keep an eye on the developments in this company
which may be a multi bagger ,only moot question
is the attitude of promoters. Currently it is quoting
around Rs.35, where even huge loss making MNC’s
are trading in three digits.

ENKEI CASTALLOY - CORRECTION IN RECO.

Due to my oversight one important factor omitted while recommending  this scrip .Hence I am withdrawing my earlier recommendation on this scrip.My sincere thanks to one of the reader(Mr.Mahesh Joshi) for pointing out the same.

FORTIS HEALTHCARE -BUY

Considering the huge potential of the Industry ,capable and experienced management with aggressive growth plans through inorganic route ,Fortis Health care id a decent BUY at CMP of Rs.138/-. Even if ,expansion in equity is a concern in short term ,groups efficiency to utilize the same very effectively is giving confidence in its long term prospects.

POLY MEDICURE - A DARK HORSE IN MAKING

Indian healthcare sector going through rapid changes
mainly due to increasing awareness of health , greater
thrust of government and penetration of health insurance
companies in rural areas. All these factors makes it a
sunrise sector in a country like India with huge
population. At present Indian healthcare a US$ 35 billion
industry and is expected to reach over US$ 75 billion
by 2012 and US$ 150 billion by 2017. Corporatisation of
hospitals is the new trend and big business groups are
all set to tap this huge opportunity. Apart from hospitals ,
medical disposables are another booming side of health care
industry.The Medical Device Industry in India is estimated
currently at about US$ 2.17 billion and according to
Industry experts, it is expected to reach a level of
around US$ 4.97 billion by 2012.
Poly medi-cure is one of the few listed players from
medical disposable space. This company manufacturers medical
devices and disposables under the brand name, Polymed.
Company’s products include different types of IV Cannulae,
IV infusion sets ,catheters and lot of other products
used for Anaesthesia, Urology, Gastroenterology,
blood management , dialysis ..etc. Poly medi cure is one
of the biggest exporter of these products from India.
Company is selling its products in almost 30 countries
at present. Most of its products are patented and
manufactured from US FDA approved plants. Recently company
won a patent litigation against German major
B Braun Melsungen AG in India and Germany.  Last year company
signed a supply agreement with Apollo group of hospitals.Company’s R&D
division is very active in inventing new products and
obtaining patents , which is very important for a
company like this. Now Company is planning to spend
Rs.250 mn each for the up gradation of its Faridabad plant
and also for starting a new plant in Jaipur which is mainly
meant for exporting. At present company having two
subsidiaries - US Safety Syringes Co., LLC, USA and
Poly Medicare (Laiyang) Co. Ltd, China .It also has a joint
venture in Egypt, Ultra for Medical Products, Egypt which
came to profit path last year.

Financials

Poly medicure has posted excellent results for the full year.
Company posted a sale of Rs.136 Cr v/s Rs.112 Cr and a net
profit of Rs.16.4 Cr v/s Rs.6 Cr last year . Company recently
rewarded the share holders with a bonus in 1:1 ratio and also
maintained the same dividend level (25%) even in expanded equity.
Company having a good history of setting targets and
achieving it. Now management targeting a sale of Rs.175 Cr
by 2011 and Rs. 350 Cr by 2013.

Conclusion

Considering the potential of the industry ,pace of growth
of company ,ability of the promoters and their attitude
towards share holders-it is expected to make POLYMEDICURE
a dark horse even from this  level. Currently it is
trading around Rs.130/-

JSW ENERGY

Earlier I have recommended a BUY on JSW energy @ Rs.115 on 29 March 2010 .After touching a high of Rs.131.50/- ,now it came back to the previous level due to overall negative sentiment in the Market.I reiterate a BUY on this at current level. Try to catch it in lots due to extreme volatility in the market.

old report is reproduced below:

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JSW ENERGY Ltd is originally promoted by Sajjan Jindal

Group and Belgium based Tractebel S.A in 1994.Later

in 2001 Tractebel sold its stake and exited from

the company.It started commercial production of

power in the year 2000 and now it has two thermal

power plants with a total capacity of 860 MW.

These two plants are in vijayanagar ,Karnataka and

one of these can run with dual fuel(gas and coal)

and the other one is coal based.

It also have another 1200 MW capacity plant under

construction at Rathnagiri which is expected to fully

operational by October 2010.Another 1080 MW capacity

Lignite based plant is also under construction

(Raj West Power) in Barmer ,Rajastan which is expected

to fully commissioned in the beginning of 2011.

Some of the other plants-RWPL Phase 2 (270MW by 2013,)

Kutehr Hydro power project(240 MW by 2015),

Chhattisgarh (1320 MW by 2014)Maharastra

(3020 MW Coal based), West Bengal(1600 MW coal based),

Jharkhand(1620 MW) are also under various phase of

implementation. For most of the projects which are

going to be commissioned in near future ,company

already signed power purchase agreements .

To part finance its various projects company came

out with an IPO in December

2009 and collected 2143 crore. To ensure the supply

of coal for its various project company already signed

agreements with various agencies mainly with Sungai

Belati Coal, Indonesia. Company also formed another

joint venture company with Toshiba Corporation in the

name of Toshiba JSW Turbine and Generator Private

Limited.This company is meant for the design,

engineering, manufacture, assembly and sale of

sub-critical and super-critical steam turbines

and generators which will

range in capacity from 500 MW to 1,000 MW.

Major risk of project execution

is applicable to JSWEL as in the case of any

large project. But considering the facts that,

it already implemented and started production from

some of its plants and the experience got from it

along with the strength of the group gives

sufficient confidence in this company. Also ,

the commissioning of its various projects

in near future gives revenue

visibility which is a major positive for the company.

Investors expecting low risk with steady return can

BUY JSW Energy at current market price of Rs.115/-

WINDSOR MACHINES LTD - Results Update.

I have recommended a BUY on Windsor Machines Ltd on 1 March 2010 ,when it was trading at Rs.35/-.Yesterday it closed in at Rs.56/-/- ,which means almost 70% return in 2.5 months .Recently company declared excellent results .For the full year ended March 2010 company posted a sale of Rs. 206 Cr v/s Rs.93 Cr and a net profit of Rs 13 Cr as against a loss of Rs 1.3 Cr posted in same period last year. Full year EPS is around 11/- .After this 70% return in short period one may book partial profit (30% of total holding) and keep the balance.


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old report is reproducing below:
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Monday, March 1, 2010
WINDSOR MACHINES - REVIVING HOPES
Windsor Machine (Formerly Klocknor Windsor) is a Thane based company engaged in the manufacturing of Plastic Processing machinery.It has three plants in India at Thane, Chhatral and Vatva.. Windsor Machines has grown to become the largest manufacturer of Plastic Processing Machinery in India .Its customers includes large companies like Nilkamal,Supreme,Milton,Cello ,VIP..etc..This company started in 1964 and after more than one hand overs now jointly owned by DGP Windsor of UK and Dilip G Piramal Group. Severe working capital crunch followed by labour problems led the company into deep trouble and it end as a BIFR case. In 2009 company initiated a massive restructuring exercise and the result of the same is started to visible now.After a gap of more than 10 years company posted healthy profit in this financial year so far.It already posted an EPS of Rs.5.54 for the nine month period .Considering the revival in the economy and management efforts to revive the company itself, it is a risk less buy @ Rs.35/-

KULKARNI POWER TOOLS Ltd - Powering Ahead

Kulkarni power tool is an established and well known brand in Electric

Power Tool Industry. This Kolhapur based company is established

in 1976.KPTL operating mainly in three

segments viz Power Tools,Blowers and control motors.

Its power tools are finding applications in Metal working,

wood working and general construction .Blowers are

used in Water, Effluent and Sewage treatment plants.

Its control motors are used in high voltage circuit breakers,

control panels etc.Earlier company was distributing

its products through third parties which severely affects

its margins .But from last year company itself started to

distribute its products which changes its fortunes.

Last financial year company posted a turnover

of Rs.61 Cr. and a net profit of just 2.7 Cr. .For the nine month

ended Dec qtr KPTL reports a sale of Rs.47 Cr

and a net profit of Rs.3.5 Cr and expected to end

this FY with a profit of Rs.5.5 Cr . On an equity base

of 1.7 Crore (Rs.5 FV shares) Company is

expected to post an EPS above Rs.15 /- .KPTL

is trading @ RS.83/- with

a P/E of 5.5 to the expected full year EPS. Considering

the prospects of the

industry KPTL is a decent BUY around Rs.75/-