ORCHID CHEMICALS - UPDATE

I have recommended a BUY on Orchid Chemicals @ Rs.161/-.Currently it is trading @Rs.232 .Long term investors can still HOLD and short-medium term investors may book partial profit at current level.
Old Reports can be accessed below:

ORCHID CHEM -1

ORCHID CHEM -2

UNIVERSAL STARCHCHEM ALLIED LTD -BUY

Starch Industry is expected to perform well going forward mainly because of the expected reduction in raw material cost and improved demand from user industries like FMCG.Poultry ..etc.Universal Starch chem Allied Ltd is a company from this sector which is started to showing encouraging financials.This Maharastra based company producing many starch related products like Maize Starch Powder,liquid Glucose,Destroxe Monohydrate and having good business relations with companies like Johnson and Johnson,Cadbury ,Hindustan Unilever..etc.For the latest June qtr ,company posted a turnover of Rs.27 Cr v/s Rs.21 Cr and a net profit of Rs.1.8 Cr v/s Rs.90 lac. EPS for June qtr is above Rs.3/- .Better performance is expected going forward,one can BUY @ Rs.36.5 for medium term.

DE - NORA (INDIA) LTD - WILL IT BE A MULTIBAGGER ?

MNC’s always enjoying premium valuations in Indian

Stock market ,especially companies operating from niche

space.De Nora India (DNI) is a niche company commanding a

market share of about 75% where it is operating , but

overlooked by the investor fraternity- may be because of  the

complex nature of business in which it involved .

This company is a 51.25% Subsidiary of Gruppo De Nora

of Italy ,the world leader in design,erection and

commissioning of electrochemical plants. DNI’s main business

includes coating of anode and Cathode using in Chlor Alkali

plants and corrosion systems used for preventing corrosion

in SAW pipes ..etc. Along with this ,company is also supplying

electro-chlorination equipments for purifying water  for

drinking and Industrial purpose. The erstwhile Mercury Cell

technology used in our country is now gradually converting

into Membrane Cell technology, which is opening huge

chance for company’s product. Even if the new cells need

not require coating in the initial few years of operation it

should be coated periodically thereafter which is a big

opportunity for the company. In last  year DNIL introduced

Platinized  Titanium Anodes  for  surface  finish application

in India .Company’s factory located at Goa is equipped with

most modern facilities and it is getting full support of its

parent company. Lying of large network of pipelines in oil

and gas sector,building of new bridges ,different type of

concrete protection requirements ..etc are expected to

bring good business for company’s Cathodic protection

division.On the negative side ,company’s business

have some cyclical nature,and is related with the fortunes

of Chlor Alkali industry which is now  started showing revival.

Secondly there was an order against the company  by the

Directorate General of Supplies and  Disposals, Ministry of

Commerce and Industry which restricts the company from

business with certain  government departments for a

period of five  years  .But, DNI  challenged this order and

in last month got an order stating that the time period

reduced to just one year starting from 22.02.2010.

Even if it may slightly affect the

performance in very near future,there is good scope

for its business in private sector and also in export front.  

FINANCIALS

DNI’ financial year ending is in the month of December.

Last financial year witnessed one of the worst performance

in recent past where company posted a turnover of Rs.13.45

Cr and a net loss of Rs.33 Lac(excluding other income).

But ,for the qtr ended June 2010 alone company posted a

sales of Rs.4.74 Cr v/s Rs.2.29 Cr and a net profit of

Rs 1.20 Cr v/s .58 Cr. Half year EPS is Rs.2.14 v/s Rs.1/- .

Company is very liberal in dividend payment which paid 50%

in 2004 ,70% in 2005 ,69% in 2006,58% in 2007,25% in 2008.In

2009, due to loss company skipped the dividend and it is

expected to give higher yield in this year due to better

prospects. Considering the support from the parent

company which is the world leader, revival in the user

industries ,chances of a turnaround performance ..etc

company may turn as a multibagger going forward.

CMP is Rs.79/-(Trading in both NSE and BSE)

KAVERI SEED COMPANY - REPEAT

I have recommended a Buy and Hold on KAVERI SEED COMPANY from Rs.272/- level.Currently it is quoting around Rs.305/- .With a strong R&D,aggressive business strategies and an able management who knows the pulse of the agriculture sector - this is a stock to watch in any correction .I believe , KSCL is a perfect fit for those who are considering equity as an asset class and willing to hold for long term with patience to reap bumper crops.

Old report can be accessed HERE

CONCURRENT INDIA INFRASTRUCTURE - CHEATING ALL THE WAY ?

Many times in the past, I  warned my readers about investing in companies with suspicious management .This is proved by the recent announcement of CONCURRENT INDIA INFRASTRUCTURE .Today the company in a filing to BSE declared that they have decided to withdraw from all major projects announced earlier. THIS IS A CLEAR CASE OF CHEATING POOR RETAIL INVESTORS AND THE AUTHORITIES SHOULD TAKE STRICT ACTION AGAINST THE PROMOTERS AND OPERATORS PLAYED BEHIND IT. 

Hope nobody trapped in this counter and once more urging everyone to make due diligence about the management before investing in any company especially small and mid caps .Companies with good management may move only based on their financial performance but chances are rare to loose your shirt in such counters.At current market price of Rs.21/-,just sell and run.

VIMAL OIL AND FOODS - UPDATES

I have received lot of queries regarding the open offer made by the existing promoters of Vimal oil and foods @ Rs.51/-. As per the prevailing law, promoters can hike their stake through creeping acquisition method upto 5% in each financial year .But in this case they have  pumped an amount more than  Rs.30 Cr by subscribing 60 lac equity shares at a price of Rs.50.16/- through preferential issue . This is  way above the limit of 15%(upto open offer not applicable).Hence as per the rule ,it is a mandatory open offer. Since the market price is above open offer price ,chances are low to get shares in this offer till market price ruling above the open offer price . This means ,open offer @ Rs.51/- is not a reason to come down the share price to this level in any way.On the other side ,this development is really a positive one.Promoters are bringing huge money to the company itself is a sign of their confidence .This amount is expected to partly used for reducing debt  and balance for further business development ,which is positive for the company in the long run
---------------------------------------------------------------------------

This is to clarify some doubts raised by some readers as comments and through e-mail.

DFM FOODS LTD (BSE CODE -519588) - BUY

In a country like India with huge population and increasing

disposable income , scope of companies from food processing

sector is very vast,especially those with good brands.But,

unfortunately many such brands are owned by unlisted

players or high priced MNC’s . Only very few companies

developed niche market and established their own brands

and growing handsomely. DFM Foods is one of such company

which is a dominant regional market player in snacks foods

sector. DFM is promoted by Delhi Flour Mills and had two

divisions till last year – Wheat storage Business and Snack

Foods Business. From last year onwards DFM discontinued

the low margin wheat storage business and now concentrating

only in snack foods division.Its brands  CRAX,NATKHAT,

WIZZ ..etc are popular in northern part of India.Last year

company expanded its capacity at a cost of Rs.13 Crore and

due to huge demand for its products now again planning to

expand the capacity further. Company is also taking steps to

make it a Pan India brand in few years from now.In last

financial year DFM’s snack foods division shows a growth

of 35% in turnover(Total turnover was less due to

discontinuation of wheat storage business).Net profit also

sharply improved from Rs.1.99 Cr to Rs.4.21 Cr backed by

better margins from snack foods division. In the first

qtr of this financial year(June qtr) company shows an increase

of 50% in its sales from Rs.13 Cr to Rs.20 Cr .With increasing

urbanization and changing life styles,demand for snacks

foods are expected to rise sharply and on the other side the

expected record production of wheat will reduce the pressure

of raw material cost which will help the company to record

better performance going forward. Earlier, company had an

image of a wheat trader and enjoyed only low valuation due

to the image of a trading company. But now it is a pure

FMCG/food processing like play and it should be re-rated

accordingly. There is good scope for appreciation from

current level of Rs.48/- 

* I have earlier mentioned DFM in MMB in Nov.2009

JAY U-SHIN LTD - IMPROVING BUSINESS

Jay Ushin is  jointly  promoted by  JPM Group

and Japanese company  USHIN Ltd in 1986.

Currently the foreign promoter holding 26% in

its equity.It is one of the  major  suppliers of

auto parts like Lock Sets, Latches,

Switches & Body parts to

major OEM’s in India.Company’s customer list

includes Mahindra and Mahindra,

Tata Motors, Maruti  ,GM,Honda ..etc.  Its  plants

are located at Gurgaon, Manesar and Chennai . Indian

automobile industry is cyclical in nature and closely

related with the trends in interest rate

and spending habits . Generally  rural spending is mainly

depends on good monsoon which is favorable in this year.

This is expected to keep  the current uptrend in auto

demand for some more time. Companies like Jay Ushin

are also a beneficiary of increased demand ,since they

are supplying products to well known OEM’s. For the last

financial year Company posted a turnover of Rs.357 Cr ,

net profit of Rs.6.6 Cr  and an EPS of Rs.17/ .For the three

months ended June qtr company’s turnover was Rs.101 Cr

v/s Rs.79 Cr , net profit was Rs.2.2 Cr v/s 1.29 Cr and EPS

was Rs.5.8 v/s Rs.3.3.Company also declared a dividend

of 25%. It is expected to post better results in few more

quarters. Don’t forget that the scrip and the industry as a

whole moved a lot in recent past and any significant upward

change in interest rate may de-rail the growth of this sector.

Considering other companies from the same sector ,it seems

to be relatively cheaply valued .Only high risk takers can

consider in limited quantity. CMP is Rs.159/-

SALONA COTSPIN

Due to the easing of recessionary pressure from
western economies ,Companies from textile
and related sectors are expected to perform
well in near future . Salona Cotspin
is a Tamilnadu  based company engaged in the
manufacturing of Cotton Yarn and Knitted fabrics.
Out of company's total sales, 41% income is
generated from Cotton yarn , 39% from
Knitted fabrics and balance from other
related products.Company is  planning to
expand its spindle capacity from 21744 to
24336 in near future and also planning to
increase the generation of wind energy to
reduce cost and ensure continuous supply
of power.For the financial year ended
March 2010 ,company posted a turnover
of Rs.55 Cr and a net profit of Rs.2.26 Cr
v/s a net profit of Rs.13 lac for
the last year. For the three months ended
June qtr of this FY ,sales is Rs.18 Cr  and
profit is Rs 1.25 Cr .On an
equity base of 5.32 Crore qtr EPS is
Rs.2.35.Company is expected to perform well
in near future .Even if company
is currently trading near its 52 week high ,
based on the expected full year performance
there is reasonable chance
for further upside.Movements in cotton
prices and power cut in TN are two factors
to watch.Currently it is trading around Rs.29/-

CONART ENGINEERS LTD -WATCH IT

Conart Engineers is a Mumbai based construction company

specializing in Industrial, Commercial, Residential  projects

and roads and bridges. Even if the company is performing

well for the past many years ,it is ignored by the stock market.

Companiy’s client list includes well known names like

Alstom Projects,ABB,Advani Oerlicon, ABS Industries,

Camlin,Glaxo,Apollo Tyres..etc. Company is managed by

well experienced Engineers from ‘Sura ‘ family. For the last

financial year ,company posted a turnover of Rs .27 Cr , a net

profit of Rs.1.6 Cr and an EPS of Rs.5.5. Its order book is

above Rs.50Cr currently. After a long interval ,company has

declared a dividend in this financial year.

Currently it is trading with a market cap of just  8 Cr.

Considering the potential of the sector and experience

of promoters ,true investors can Buy below Rs.25 for

reasonable return in long term.CMP is Rs.28/-

TIMEX GROUP INDIA - ACCUMULATE ON DECLINE

.

Timex Group is one of the largest watch makers in the world

Its Indian arm TIMEX GROUP INDIA started its operations

in 1992 in  association with TATA group ,but later part their

ways and now working  independently. For the past many

years company was struggling to exist ,but now it showing

some signs of recovery. Company  wiped off all accumulated

losses and coming back to growth path after changing its entire

strategy. Now company is selling its brands TIMEX,

MARK ECKO,NAUTICA, SALVATORE FERRAGAMO .

Etc through retailers and its own show rooms named ‘THE

TIME FACTORY’ .In the beginning of this year  , Mr Kapil

Kapoor from India has appointed as the COO of  Timex

Group’s worldwide operations . He is well experienced and

earlier with Nestle and Bausch & Lomb. After his appointment

as global COO, the Indian arm is enjoying more flexibility and

showing real improvement in all aspects. Now the company is

aggressively chalking out plans to capturing market share and

reducing costs. Currently company concentrating in price range

between Rs 500 and Rs 5,000 and claiming a market share of

21 % in this category. Company is now seriously thinking about

re-positioning its brands in other price category too. There is

also fair chance for brand extension to other lifestyle products

going forward. In first qtr  June 2010 ,sales grew 45 per cent,

while profits grew 107 per cent over the corresponding period.

Company posted a NP of Rs.5 Cr in this qtr where in last

FULL YEAR  it posted Rs.4.6 Cr only .Company having an

equity base close to 10 Cr  ,out of this almost 75% held by the

foreign entity. In order to clean up  the balance sheet ,company

reduced its FV to Rs.1/- and write off the balance earlier.

Considering the renewed interest of the management and

aggressive steps taken in recent past ,it is expected to perform

well going forward. But one should consider the fact that the

share price has run up sharply after the declaration of June

qtr result and now trading around its 52 week high .

One should keep watching and enter in a correction .

Currently it is trading around Rs.46/-

SUPERHOUSE LTD - BUY

Superhouse Ltd is the flagship company of

superhouse group which is one of the largest

exporters of finished leather from India.

Company is supplying products to major

global brands like Tuff Tusker,Heckle,
Bulwark,Stabilus ,Secura,

Schutz ,Hauf ,HKS ,Globex, and EWS .

Apart from this company is selling its  two

brands  in India ‘Allen Cooper ‘ and

‘Double Duty’ through company owned

Allen Cooper shops. Company have six

subsidiaries -  M/s Superhouse (UK) Limited, 

 M/s  Superhouse (USA) International Inc,

M/s  Superhouse  Middle East FZC,

M/s Superhouse R.O. S.R.L.,Super House

HK  Limited ,M/s Superhouse R.O. S.R.L.

and Super House Canada  Inc.Superhouse group

 having 15 manufacturing units across India and

an annual turnover of Rs. 4,000 million .

Historically companies from this industry

commanding low valuation in Indian Stock

Market. But recent changes in export incentives

are expected to boost the performance of

companies from this sector and trigger for
a re-rating in this sector.In the last financial

year company posted a turnover of Rs.358 Cr

and a net profit of  Rs.14 Cr .On an equity base

of 11.4 Cr EPS was Rs.13.25/- .For the june qtr

of this FY company posted NP of Rs.3.48 Cr v/s

Rs.2.54 Cr.It is currenly trading with  a P/E ratio

of 4.6 on last full year EPS . At CMP of just Rs.62/-

it is a real valuepick

STURDY INDUSTRIES - FOOLING INVESTORS ??

Earlier I have recommended an AVOID on Sturdy Industries mainly because of my Skepticism on the management of this company.Today they have informed BSE that the company dropped their plans to issue

preferential allotment of warrants to promoter and non promoter category. Just before this ,company announced an allotment of preferential warrants to some FII's and later cancelled this decision too. Hope the promoters and related parties offloaded maximum shares after announcing such positive development to poor retailers . These types of promoters are many in our market .SO BEWARE...