UPDATES - GRANULES INDIA LTD,SABERO ORGANICS ,ALPHAGEO

GRANULES INDIA 

From a level of Rs.79,this stock recommended at least five times in the past .  Today ,Granules India hits its 52 week high @ Rs.192.( Initial Recommendation HERE) .Company scheduled an Extra ordinary General Meeting on 6th December to consider various matters related with the acquisition of Auctus Pharma .I believe, this Rs.100 Cr plus company ( Auctus Pharma)  with USFDA approved plant for an amount of Rs.100- 120 Cr is not a bad deal for Granules in the long term. Still recommending to HOLD this stock.

SABERO ORGANICS

As in the case of Granules India ,Sabero Organics Gujarat recommended more than once from a level of Rs.55 onwards. Today stock closed around Rs.140 .( Initial Recommendation HERE) . Company reporting steady growth both in Sales and margins and already reported an EPS of Rs.7.50 in the half year itself against Rs.2.30 in last full year.Recently ,company received an instruction from Gujarat Pollution Control Board to stop its production from a unit located at Sarigam , Gujarat. But now ,company clarified that the authorities revoked its earlier order after a re-inspection and permitted more time to fully comply with the norms. Today in an interview ,company management assured that they are confident in meeting all required standards within the allowed three months time period .

Interview Link HERE

Requesting to HOLD the stock for long term

ALPHAGEO INDIA

This stock recently recommended @ Rs.38 which is currently trading around Rs..42 . As expected and indicated in my previous posting ,after a long gap ,company started to receive  new orders from Indian oil exploration companies .Now company received two orders in last week ( Link 1 , Link 2) .Along with orders it received from overseas in recent times , these new orders giving more visibility for  company's business going forward ( Fore more details ,read HERE) . One can HOLD this stock and even consider a BUY if ready to take above average risk.

ASHAPURA MINECHEM - UPDATE

Ashapura Minechem is one stock repeatedly recommended around Rs.40 level.Today stock hits its 52 week high @ Rs.60 .It was mentioned in my previous postings that the two negative points regarding this company is its pending court cases between few shipping companies and with some banks. Due to this reason ,its stock price was languish around Rs.40 level for a long period, even it reported excellent results in past two quarters. As per the reports of ET NOW ,company is in the process of a settlement between these parties and the same is expected to conclude within two months.Claim with shipping companies are expected to  settle around Rs.75 Cr v/s original claim of Rs.800 Cr and dispute with banks on account of  derivative transaction loss with a hair cut of 50 % .If this happens ,I believe there is scope for substantial appreciation even from current level.Recommending to HOLD the stock.

See ET NOW video HERE

Old posting on Ashapura HERE

BALAJI AMINES LIMITED - WORKING HARD ,WINNING BIG ....

Balaji amines Limited ( BAL) is a chemical manufacturer   which introduced many  ‘ First of its kind’ import substitute products in India through indigenously developed technology using their R&D skills. BAL is specializing in amines and specialty chemicals  which find applications in the production of  wide variety of products in Pharmaceuticals,Agrochemicals,Packaging,Explosives,Dyestuff ..etc. What is special with this company is its thrust on R&D to develop indigenous product.BAL put an end to the monopoly of Global chemical giants like BASF and Ashland Inc in India at least in five products viz  NMP, NEP, Morpholine, 2-P, GBL, PVPK-30. Now ,company grown as the world’s largest producer of Di- Methyl Amine Hydrochloride and commanding close to 85 % market share of this product.BAL is the largest producer of methylamines and their derivatives in India with a market share of over 60%.Company’s manufacturing facilities are approved by many foreign countries which helping them to command an edge over Chinese producers in some products which  export to high margin markets like EU countries.

                                                                      What is making it an attractive bet at this point is both the positive developments happening in the industry as well as in  the company. After few sluggish years ,prices of its products are started to show firm trend in domestic and international market. Last year company earned an income of Rs.131 cr from export alone and rupee depreciation may give extra margins to a certain extent. Next is its increasing production capacities .Recently company commissioned  two new plants ,one for Di-Methyl Amine Hydrochloride and the other for Di Methyl Formamide .Production from both these plants are expected to scale up and stabilized in near months. Recently company received Certificate of Suitability from EU for their niche product PV P K 30 ( company is the only producer of this product in India) which will help BAL to export this product to regulated markets. As part of utilizing its idle land assets ,recently company started  the first five star hotel in Sholapur (Balaji Sarovar Premiere) . Promoters of BAL is not actively participating in the day to day operations of this hotel and its entire operations are handed over to Sarovar group. This ensures promoters concentration in core  businesses and it seems only part of an effort for asset creation.In addition to this already developed land ,company having another 300 ( Three Hundred)  acre surplus land in Solapur itself.

                                                     On the financial front ,company started to report improving performance . In last FY company reported a topline of Rs.512 Cr and a net profit of Rs.31 Cr .During the latest September quarter BAL reported a turnover of  Rs.161 Cr ( Rs.126 cr in same period last year) and a net profit of Rs.12 Cr ( Rs.9 Cr) .Company also distributed a dividend of 40 % .It is expected to close the full year with an EPS of Rs.14 or more.In a recent interview, promoters assures their plans to reduce the debt substantially in next two years from the current level. As an indication of their increasing confidence in the  company , they are continuously hiking their stake  through open market purchases in past three quarters.

Balaji Amines is a company offering many niche and monopoly or near monopolistic products and one of the few companies from the chemicals sector  paying higher attention for R&D to develop new products. Even this company started as a small unit, now it grown as a threat to multinational  chemical companies in many niche products.At CMP of Rs.41 ,it is trading at a one year forward P/E multiple of just 3 . Expecting decent upside from current level , hence recommending a BUY @ CMP Rs.42.Stock listed both in NSE and BSE.

Link to Corporate Video HERE

Link to Company Website :HERE

Link to Latest Annual Report  : HERE

Link to Hotel Project    : HERE 

SWAP 1/3 OF RHODIA SPECIALTY CHEMICALS WITH SUNSHIELD CHEMICALS.

I have recommended a BUY on Rhodia Specialty Chemicals ( Formerly Albright and Wilson) @ Rs.185 ( Recommendation Link HERE) .This stock yesterday hits its lifetime high @ Rs.711 and closed around Rs.680. Solvay SA ,the multinational Specialty Chemical giant is the  ultimate parent of Rhodia  which came out with a de-listing offer for Rhodia Specialty Chemicals.Floor price for the reverse book building is indicated as Rs.442.64. One should wait and see whether the company will accept a substantially higher discovered price  is if it happens. Recommending to sell one third of your holdings in Rhodia which will cover the entire cost price at Current market rate. Using that amount one can take exposure in the only other listed Solvay entity  in India ,ie, Sunshield Chemicals @ CMP Rs.62 even if this stock is also traded in Periodic Call Auction as in the case of Rhodia .
 

SUNSHIELD CHEMICALS LTD

   

                                                                  Sunshield - taken over by Solvay in 2012- , also operating in Specialty Chemical segment .Under the new management , company  reported turnaround numbers in latest September quarter.Turnover of the company also showing good progress even in this tough business environment.Company now upgrading all its systems,production facilities ..etc into Solvy's standard.About 50% of Sunshield's income coming from exports.With Solvay's vast marketing network all around the word and revival in Europe and US  ,Sunshield is expected to perform even better in coming years.In addition to a possible improvement in business ,there is every chance for a de-listing offer for Sunshield in future. Stock traded in BSE only with  code 530845 @ Rs.62

Link to Solvay HERE

Link to Sunshield HERE

Link to latest Annual Report HERE

SHAKTI PUMPS (INDIA) LTD - BUY

In last one year or so Investors preference clearly changed in favor of export oriented businesses due to sharp fall in the value of Rupee. Conventional forex earners like IT and Pharma out performed during this period.But unfortunately ,investors in general ignored forex earning companies from other sectors and hence such companies still quoting at lower multiples even if their business improved due to rupee depreciation. This week let us look into one such company – Shakti Pumps.Shakti Pumps is India’s largest stainless steel submersible pump maker located at Pithampur Madhya Pradesh . Company is the first  five star rated pump manufacturer in India. In addition to submersible pumps ,company also producing Vertical Multistage Centrifugal pumps,Pressure booster pumps,Open well pumps,End suction pumps..etc. Recently company introduced pumps working with solar power.This product is expected to get strong support from government for rural irrigation purpose .A major chunk of company’s income coming from exports to various countries and export showing good growth over past few years.Now company is planning to extent its presence in all BRIC countries and European Union countries.Company having a sizable business in Indian market too and it planning to increase its dealer network by 3 fold in next few years.

                                                                            It is one of the fastest growing companies from this sector .From Rs.41 Cr sales in 2006 it reached a top line of Rs.210 Cr in 2013. Its export thrust and improvement in India’s rural economy is expected to drive further growth .Company is targeting a turnover of Rs.600 Cr in next three years.In the latest September quarter Company reported a jump of 50 % in its turnover and profit compared with last year’s same quarter.Pledging of shares by promoters is the only reason for some concern.But ,since its financial performance is improving quarter over quarter ,I don’t expect much issues from this angle.Moreover pledge is not with any NBFC but with one of its bankers - Axis Bank.Company having a dividend paying track record of past 8 years and issued bonus shares in the ratio of 1:1 in 2011.

Shakti  is expected to report an EPS of Rs.15 in this full year.At current market price of Rs.58 ,it is trading at a P/E multiple of below 4 . Recently company appointed film star Amitabh Bachchan as its brand ambassador ( Link to new TVC. HERE) .Considering management’s aggressive expansion in production capacity and marketing network, I believe company can deliver good growth in coming years. Recommending Shakti Pumps @ Rs.58 for investors with some risk appetite for medium to long term.Stock listed both in NSE and BSE

To view corporate film * , Link HERE

Link to latest AR HERE  

Link to company websites Link 1 , Link 2

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* Corporate film created by company itself ,hence claims may be biased

Disc: I have vested interest in Shakti Pumps.