JAY SHREE TEA - BUY

Jay ShreeTea is a member of BK Birla group and one of the largest tea producers in Asia. In addition to 10000 hectare tea estates  at various parts of India ,company recently acquired some plantations in African countries.Currently company  having 22 tea estates in India and 3 abroad. Company also producing Single Super Phosphate , Sulphuric Acid and Sugar .Its sugar factory is located in Bihar with  a capacity of 5500 TCD. Company’s tea brands are Kanchenjunga, Classic Pure, Golden Caddy, Sadabahar, Shaandar, Kalline Gold and Jaandar. Due to lower tea prices and even lower sugar prices company posted very bad numbers in last quarter. It could not pass the effects of increased input costs and labour costs to its customers mainly because of the over supply situation in world tea markets. But this situation is expected to change in the upcoming season .Supply shortage is expected in India due to adverse weather conditions in next season which will begin in March.India’s tea consumption is increasing in an average rate of 3-4 % per year  but no significant addition in tea plantations.Entry of bigger brands like Starbucks to India  is expected to change the tea consumption culture of Indians going forward. Tea prices in world market is also expected to improve due to production shortage in Kenya .This big producer  has lost a significant part of its tea production this year due to severe frost in key growing areas.All these factors are expected to lead an increase  in Tea prices in the new season even in world tea markets.In the case of sugar , it already bottomed out and trading even below its  production cost .Some positive steps are expected from government side to save this industry in near future. After a short period of decline in Tea prices and a long period of fall in Sugar prices both these commodities are expected to rebound shortly .Jay Shree tea is one of the best choice available due to its presence in both these sectors .Medium to long term investors may consider it @ CMP of Rs.91/-

Will RBI Get a Chance to Reduce Rates ...?

After a long period of underperformance ,our market outperformed in the last two months mainly because of overseas fund flow. We all know based on the current fundamentals many stocks are over priced , but it is also a fact that -  movement of Stock market is always  based on expectation and not on reality. A major reason for the robust fund flow may be due to the reduction in inflation and a possible rate cut .But is a rate cut  possible in near term ?. If the recent price trend of many industrial commodities is any indication ,a decision may not be very easy. I really afraid ,  will RBI get at least one chance to reduce interest rates. Price of items like Cement,Steel..etc are showing signs of upward movement again and I feel many other items will follow this trend after the state elections are over. A really worrying factor is that the government is not planning or taking any steps  to control inflation on a long term basis and they are solely depending on  adjusting interest rates to control inflation. In our country , at a time of bumper crops we are wasting wheat in one part and the same time people buying the same item at a price of more than Rs.20/ Kg at the other end of the country .No sincere efforts to debottlenecking   the storage and transportation facilities , no efforts to increase productivity,no tax reforms ..etc.  All these issues are came to light only at the time of high inflation and everyone forgetting these issues when there is small dip in it.I don't think ,only vote bank based schemes will  save our country for a long time. Suppose there is a recovery in western economies earlier than we anticipated there is every chance for a spike in fuel prices again. Stock prices of many companies from interest rate sensitive sectors move even more than 100 % in past two month on expectation of a rate cut going forward. But I believe it is prudent to book at least partial profits in such stocks and shift the amount to agricultural commodity related stocks which will always perform better in an inflationary situation.

PRAKASH INDUSTRIES - BUY

Prakash Industries is a Haryana based multi division company. Company’s main operation is in steel sector and having presence in Coal mining,Power,Ferro Alloys,PVC Pipes..etc. Company ‘s  integrated steel plant is located in  Champa , Chhattisgarh. Company has been allotted three coal blocks at Chotia, Madanpur & Fatehpur and already started operations in Chotia.Using  Waste Heat Recovery Boilers Company currently operating a 100 MW captive power plant  and planning to expand the capacity to 725 MW.Prakash also got permission to start operations of  Iron Ore mines in Chattisgarh and Orissa.Company also producing Ferro Alloys which is a raw material used in Steel manufacturing .Spong iron manufacturing division showing good performance in recent times.Its integrated nature helping the company to ensure uninterrupted raw material  availability and high margin. Its strategy to use a major portion of its steel production for converting into high margin end products  like TMT and wire rods are paying off. For the quarter ended December 2011, Prakash posted a turnover of Rs.520 Cr and a  net profit of Rs.66 Cr . At CMP of Rs.61 it is trading at a P/E of just 3 on the expected FY 13 EPS of Rs.20+ which is cheapest among the integrated steel producers.The main risk factor is the allegation related with coal mining by the company in Chhattisgarh. Risk takers can BUY for medium to long term at CMP of Rs.61

MANAPPURAM FINANCE - NEIGHBOUR ' S ENVY OWNERS PRIDE ?

Listed businesses owned by first generation entrepreneurs prone to higher risk compared with businesses owned by families with decade experience. Many such examples happened even in our stock market in recent times and some of them even threatened the existence of such businesses .Story of the managing director of Orchid Chemicals Mr K Raghavendra Rao is one such example, but he escaped ( so far ) with the help of  the deep pockets of Cyrus Poonawalla. The recent one in this episode is the happenings in Manappuram Finance ,which is one of the biggest wealth creator from the mid cap space in the last five years.By now, all of you may be  aware about the happenings.I strongly feels some foul play and planned attack  by business rivals or vested interest parties in this whole episode .Being a person keenly watching the growth of this company  I don’t believe that the promoters of Manappuram will do anything to cheat the share holders or  its investors .( Let time proves whether I am true or false) .Actually they try to utilise a loophole available in the system  to raise funds  for another company of the same promoter which is entirely  a separate legal entity.Whenever RBI issued a notice ,promoter express his willingness to repay the amount with interest at any time. If our media and authorities like RBI , SEBI ..etc  are  vigilant like this ,where were they  at the  time of  big frauds in the past ? . We have many past experience with Sahara’s , Essar Group,Sterlite,Sterling Group..etc.. but none of them become an issue and not sensationalized like this .Authorities' silence in the past and media’s  and equity analyst’s aggressiveness  this time creating many doubts.For example ,when there is some rebound in its share price either business channel s ( mainly CNBC) or PINC  papers will come out with some day old negative news on it .Take today’s case where its share price moved up more than 5 % today ,ET online edition published a news

“ CARE DOWNGRADES RS.1550 CRORE NCD OF MANAPPURAM FINANCE” .But the fact is that this downgrade happened about two days back and the report is available in CARE website day before yesterday onwards. This is only a small example and when we read between lines I feels some strong vested interest parties  are playing to prevent the aggressive growth of this company with even the help of some Government Authorities . Time will tell who will win , but I feels the faith of Keralites ( where majority of its branches are functioning )in the promoter of Manappuram Group will help the company to recover from this setback  and grow without any  black spots going forward to reach its target of 3000 branches by the end of this financial year.

Latest INTERVIEW with the Chairman

THIS IS ONLY A PERSONAL  VIEW AND NOT A RECOMMENDATION TO BUY OR SELL THE SHARES OF THIS COMPANY.

WPIL - UPDATE

WPIL - is one of my old recommendations @ Rs.187 on 20 July 2011 ( For old posting Click HERE).Today it hits its lifetime high @ Rs.311/-. In the latest December  quarter company posted a turnover of Rs.75 Cr v/s Rs.40 Cr and a net profit of Rs.4.3 Cr v/s Rs.1.78 Cr .One may  book profit at CMP.

BRITANNIA INDUSTRIES - BUY

No explanation is needed for Indian's about Britannia .Company having about 35 % market share in organised biscuit market and about 15 % in overall market.They are also in Ghee,milk powder ,cake ..etc.
Its major brands include Marie, Arrowroot, Bourbon, Milk-bikis, Nice, Snax, Coconut Crunchies,Pure Magic, Snax, Cream Treat Good Day, Jim-Jam , Chekkers ,Tiger. ,Digestive,Thinlite and Cream Cracker.In addition to this company now aggressively promoting baked wheat snack called Time Pass which is free from trans fat, MSG and cholesterol.Strong brand and timely introduction of new products backed by good R & D helping the company to face competition from unorganized sector and other biggies.After a decade long fight for management control and uncertainty which affected company's performance earlier but now under the able leadership of India's one of the most respected woman CEO Vinita Bali company is now back to growth path.Higher production of wheat in India will help the company to reduce the  cost its main raw material.For the latest quarter ended December company posted a 15 % growth in sales and 45 % growth in its net profit.This is one stock to be included in your core portfolio with a long term view .CMP is Rs.493/-

COCHIN MINERALS AND RUTILES- RESULT UPDATE

I have recommended a BUY on COCHIN MINERALS AND RUTILES  @ Rs.78 on 28 October ,2011. ( Old Posting HERE) Yesterday company reported excellent result for the  quarter ended December  2011, where its turnover moved from Rs.47 Cr to Rs.72 Cr and net profit  vaulted to Rs.19 Cr from Rs.2 Cr . Nine  months EPS is Rs.38 v/s Rs.5. Since the price of Synthetic rutile (its main product) is expected to move even higher from current level , CMRL may report  good numbers in coming quarter too.Currently CMRL is trading at its lifetime high @ Rs.155/- .Considering the good performance and bright prospects in medium term  , recommending a HOLD at current market price.

ANJANI PORTLAND CEMENT - BUY

Many sectors are buzzing on expectation of a cut in interest rates  and some policy initiatives in near future.Infrastructure and Real estate are few among them.Any positive developments in this sector will surely help the Cement Industry going forward.Even in tough times this industry has shown good resilience mainly through production discipline and cost cutting efforts.Just few months back we have discussed India Cement @ Rs.68 which is now quoting around Rs.94/-.Anjani Portland cement is another company from this sector mostly ignored by the investor fraternity even after good performance for many years.This Hyderabad based company was originally incorporated as Shez Cement and later taken over by the estwhile promoters of Raasi Cement and then  renamed as Anjani Portland Cement.This promoters having vast experience in cement industry by running another well known cement company - Raasi Cement - successfully for many years.Raasi cement later taken over by India Cement in 1998 after a take over battle. Till recently Anjani was  selling its product( PPC ,43 & 53 grade cement) mainly in Andhra Pradesh  under the brand name' Anjani Super Gold' .After expanding the production  capacity in last year to 1.2 million tons per year,now company is expanding its marketing to new areas like  Tamilnadu, Kerala,Orissa, Karnataka and Maharashtra.To ensure the quality raw material for cement production Anjani having limestone mines in Nalgonda districtof AP.Company have two subsidiaries - Hitech Print Systems Limited and  Vennar Ceramics Limited.HPSL is a security printing unit certified by IBA.VCL having gas based power generating plant  with a capacity of 2.7 Megawatts which is sufficient to meet almost 55 % of the total power requirements of Anjani Portlant Cement . At a time of rising power tarriff and frequent power cuts ,this is a big advantage for the company. Company showing good performance for the past many quarters.In September it posted a turnover of Rs.71 Cr v/s Rs.30 Cr and a net profit of Rs.4 Cr v/s a loss of Rs.8 Cr.At current market price of Rs.37/- its market cap is just 68 Cr .Considering the recent expansion ,experience of promoters,dividend track record and chances of a re-rating in cement sector ,Anjani Portland Cement is a risk less bet @ CMP of Rs.37/-

EPC INDUSTRIE - RESULT UPDATE

The Mahindra & Mahindra Controlled EPC INDUSTRIE posted excellent result for the quarter ended December 2011 , after the closure of market hours. Company posted a turnover of Rs.40 Cr v/s Rs.24 Cr and a net profit of Rs.2 Cr v/s Rs.30 Lac ( Up 560 % from same period last year)  in this quarter. This is the first result from the company after the management control is taken over by M & M.

Recommending a HOLD at Current market Price.

For old postings on EPC  click HERE and HERE