KIRLOSKAR PNEUMATIC - A STRONG BET

-->

Kirloskar Pneumatic is a Pune based company established in  1958. It has mainly three divisions  viz Air and Gas compressor, Air-conditioning and Refrigeration compressors  and hydraulic power transmission. It is one of India’s largest company in these related combined segments. It has four manufacturing units ,three in Maharastra and one in Haryana.Its products find applications in almost all core sectors like  Power,Refinery,Steel,Automobile ,Petrochemical ,thermal , Mining ..Etc.This clearly means company’s prospects are directly related with the overall revival in the world  economy which is happening now. Company is posting excellent growth even in tough times and expected to continue this trend going forward. Governments new thrust on renewable energy sector is also helping the company a lot ,since it is one of the largest producers of wind mill gearboxes in the range of 1 to 1.6 MW category. 

                                                                KPCL is expected to become a 1000 crore company by next year .Compared with the size of the company, its equity base is very small (12.8 crore ) and book value of above 125 make it a possible bonus candidate in future.Promoter are holding above 55% of the equity and company posted an EPS of Rs.32/- for the last full year and paid a dividend of 75%.

In nutshell it is a strong company which can be include even in a conservative portfolio.CMP Rs.402

MAKERS LAB

Makers Laboratories Ltd( Bse Code -506919) is a small pharma company promoted by the same promoters of IPCA Laboratories ltd.Company’s performance is improving after the disposal of its loss making unit at Palghar and efforts taken by improving the the sales of generic formulations. For a management like IPCA there is not much difficulty to revive this company, only their willingness is the moot point. Their recent efforts are positive indications towards this company .Makers Lab is expected to post an EPS of Rs.5/- for the full year .At current market price of Rs.35/- there is nothing to loose but IPCA fold and their new initiatives giving some confidence of better days ahead.

CHOLAMANDALAM DBS FINANCE-Returning to Past Glory

-->

Cholamandalam DBS ,the financial service arm of Murugappa Group is a well known name in South India . During last two years company was in trouble due to mounting NPA in its consumer finance business and  posted huge loss in 2009 which forced the company to skip even the dividend. In order to bring back the company into past glory, management decided to stop the consumer finance business and asset management business (where it was the sponsor).After streamlining the product line company is now focusing in vehicle finance,corporate mortgage finance and home loan segment with the strong support  of its foreign equity partner DBS Bank of Singapore. It also planning to develop factoring business in a big way.All of its  dedicated efforts are showing good signs. For the last nine months company’s disbursements up almost 80% over previous year and company back to black . Considering the history of  group ,good support from the foreign partner and lessons it learned from the past ,company’s performance is expected to improve significantly in future. Moreover ,management is very liberal in dividend payment – normally paying 40-45% (except last year) which ensures reasonable dividend yield too. Buy @ CMP Rs.82.

NILE LTD - Aftermath of Takeover Attempt.

NILE is a Hyderabad based multi division company.It is in the field of Glass lined equipments,Pressure vessels and lead and lead alloys. In glass lined equipments sector company is competing with GMM Pfaudler and recently escaped from a hostile takeover attempt by GMM. Major chemical and pharma companies including Cydus,Cipla,Aarti,Atul ..etc are company’s customers in this segment. Now company is paying much attention to lead and lead alloy segment and commissioned a new plant at Thirupathi in last qtr. NILE is making lead through recycling method and Amar Raja Battery is the major customer of NILE in this segment. Now company is going to start commercial production in its new lead plant in Republic of Georgia which is a joint venture with a local company.

                                                     It has an equity capital of just 3 crore and promoters are holding 46 %. Recently main promoter is actively buying from open market to increase his stake. Due to sharp crash in lead prices company has posted a loss of 2.2 crore in FY 08-09,where it posted 6.5 crore profit in 07-08.Now lead prices improved sharply and due to this company posted an EPS of Rs.10/- in December qtr. Adding the small loss posted in first qtr company posted 9 month EPS of 14.47 and expected to continue good performance in last qtr too .Considering the company’s recent capacity addition and improvement in the price of it products due to the recovery in global economy, it is expected to post excellent results ahead and post an EPS around Rs.25/- for the full year .
                                                          Recently, in a verdict to settle the legal dispute between GMM Pfaudler, Andra Pradesh high court directed GMM to sell all the acquired shares of NILE (as part of its takeover attempt) in open market within a period of 48 months. Watching the counter of NILE, it is evident that someone is trying to keep the share price at lower level. This may be an attempt by the management of NILE to buy the shares at lower level when GMM started selling in the market Keep an eye on the bulk deal data and quarterly share holding pattern to enter into the scrip at appropriate time.Currently it is quoting  around Rs.115/-

SUMEDHA FISCAL SERVICES -WORTH WATCHING

Recommending a  small stock from the financial service sector is always associated with high risk, because of the nature of this business.But Kolkata based Sumedha Fiscal Services deserves a close look.This small but growing company is in various financial services like Stock broking,Commodity Broking,Depository Services,Equity Placement,Financial re-structuring,Merchant Banking,Debt syndication, and Marketing of various financial products.This company has an equity base of 6.7 crore with almost 53% promoter holding and posted an EPS of Rs.5.25 for the 9 month Period of this fiscal.It also paid dividend for that last 3 years .Promoters buying from open market is giving more comfort. Now it is quoting at  just Rs.24/- No need to rush into it.But keep a close watch.

Yuken India Ltd - A Quality Pick

YIL a Bangalore based company from hydraulic space, promoted by   Yuken Kogyo Company Ltd  Japan in 1976. Its products are well known in the Industry mainly due to its quality standards. YIL’s product line includes various type of pumps,valves and controllers. Demand of hydraulic products are highly correlated with the over all industrial growth of the economy and it is highly sensitive. Due to sluggish growth in last year company could manage just 1 crore profit in March 2009 full year which converted into an EPS of Rs.3.3 on its small equity of  3 crore. But things changed rapidly with the growth of economy in this year and YIL posted an EPS of Rs.Rs.12/- for the nine month itself which is a four fold rise even  from last full year. Interesting fact is that the peek time of demand for the product of YIL is last quarter and traditionally company posting  major profit from fourth qtr  itself. Considering this fact , YIL is expected to post an EPS close to  Rs.20/- for the full year compared with RS.3/- last year. A clean and share holder friendly management  makes it a riskless buy even at Rs.140/-

ITL INDUSTRIES - A Small Wonder

ITL Industries (BSE CODE 522183) is a small but rapidly growing company from Industrial Machinery sector. Company started its operations in 1986. In 1996 company entered a technical collaboration agreement with KASTO Maschinenfabrik GmbH Germany for manufacturing state-of-the-art High Speed Power Hacksawing Machines in India, with a buy back arrangement. In addition to its sales points across India, it has representative sales offices in US and Germany. Its product list includes Band Saw Machine, Circular sawing Machine,Tube and Pipe making machine,Blades,special purpose machines ..etc.
In the year 2004, ITL introduced India’s first indigenously designed and developed CNC Carbide Tip Circular Sawing Machine and displayed the same in EMO Show at Hannover, Germany in September 2005 & 2007 with very good global response. Today ITL offers wide range of Circular Sawing Machine for cutting ferrous and non-ferrous Bars, Sections, Profiles and Tubes. In a growing economy like India, there is large scope for company`s products.
ITL is located at Plot of approx. 4 Acres having covered area of about 108,000 square feet and additional land available for shed expansion approx. 44,000 square feet. To cater overseas requirements ITL has acquired additional land in Special Economic Zone and expects to start production by end of 2009. Company`s Customers include Steel Plants, Forging Industries, Defense Establishments, Railways Workshops, Bharat Heavy Electrical Units, Steel Tube Plants, Research Organizations like BARC, NFC, DMRL, ISRO, MIDHANI and HINDALCO etc.
On a tiny equity base of just 3.25 crore ITL is expected to post an EPS of Rs15 + in the current fiscal. In the first nine month itself ITL posted an EPS of Rs10.12 which is almost three times than the last full year EPS of Rs.3.64.It also declared a dividend of 10%. Considering the growth of the company there is fair chances for good appreciation. ITL is trading at Rs.54 which is at a P/E multiple of less than 4 to the expected EPS of current year which is really a valuepick.

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/-

AVOID -COMPACT DISC

Some companies are paying much attention to their advertisement rather than their business. They are spending lot of money for multicolour advertisement in financial dailies and business channels .Various announcements regarding the commencement of projects and filing of it on a daily basis to stock exchanges are their hobby. But normally there is no announcement about the completion of such projects. They are ready to spend lot of money for this type of advertisement activities but do not pay even Rs.1/- for its share holders as dividend or do not spend anything for buyback of shares .Only motive is to attract the attention of investors and rig the share prices inorder to raise further fund or to exit from the company.They may even announce dividends but do not pay it.After the case of Satyam computer, investors are more vigilant about such companies and their share prices are normally in single digit P/E even they are showing EPS like Rs,30.40,or 50. Retail investors having low risk appetite should exit from such counters even if they are showing growth in financial front.Check the history of promoter group and the trend in their shareholding pattern before investing in over advertising companies.