SEQUENT SCIENTIFIC - UPDATES

1) After a long wait ,finally Sequent's Mangalore facility approved by the US FDA.( Read the announcement HERE).This is the first US FDA approval for the company and it  will be  a milestone for company's further growth .( Old posting on Sequent Scientific HERE)

2) Chayadeep Ventures LLP ,one of the promoters of Sequent is now acquiring the shares of Aanjaneya Lifecare  through open market purchases . ( Nse Bulk Deal  Data HERE)

GRANULES INDIA - RESULT UPDATE

On a consolidated basis Granules India reported a sales of Rs.204 Cr v/s Rs.188 Cr in March quarter.Company reported a net profit of Rs.12 Cr v/s Rs.16 Cr during this period.But in last year same quarter there was a forex gain of Rs.8 Cr out of Rs.16 Cr net profit .If we exclude this exceptional income,company's this quarter profit is almost 50% higher than that of last year same quarter.Company also declared a dividend of 20% for FY 2012-13 .Its full year EPS is Rs.16 .

CANFIN HOMES - BUY

Canfin Homes is the housing finance arm of Canara bank .Company’s major concentration is in south India especially Bangalore .Till 2012 company’s growth was very slow ,but from 2012 onwards management turned aggressive in expanding branch network.Company opened 17 new branches in 2012-13 FY alone and the total branches are 69 now.This number is very important when we consider the fact that ,for the past 25 years ( 1987 to 2012 ) company started just 52 branches only. Company concentrating in retail loan ,and  percentage of corporate loan is very low . About  95 per cent of the advances  given to  employed  people and the average loan size is  Rs. 15 lakh.This help the company to keep a very good asset quality where its Gross NPA is below 1 % and net NPA is Zero.Company is expected to report a CAGR of 40-45% in disbursements  for  FY12-14.Company’s net interest margin is one of the best in the industry. Since company reported a boring growth rate for past many years ,investors does not consider Canfin as a serious player in this sector and ignored this stock till now.But if the recent efforts by the management is any indication for their future plans ,there is very good chance for a sharp re- rating in coming years.Company’s stock is currently trading around Rs.145 where its book value will be close to Rs.185 by the year end .Company is an uninterrupted dividend payer which declared 30 % in last FY.Canfin Homes reported a profit of Rs.43 Cr and an EPS of Rs.21 in FY 2012. Company is expected to report an EPS of Rs.33 and Rs.40 each in FY 14 and FY 15 .At current market of Rs.145 even low risk investors can consider this stock with a long term view.

Link to company website HERE

CROMPTON GREAVES LTD - ACCUMULATE

Crompton Greaves is an India based multinational operating in power ,consumer electronics and lighting space. CG is part of Gautham Thaper led Avantha Group and operating many manufacturing facilities across the world which includes Pauwels (Belgium), Gans(Hungary, Microsol (Ireland), Sonomatra (France), MSE Power Systems (USA) , Power Technology Solutions (UK,  Emotron (Sweden), QEI Inc (USA) and ZIV Group (Spain) .In India Comapny have 22 manufacturing facilities for its various products.

Company’s operations are broadly classified into three divisions – Power Systems,Industrial Products and Consumer electronics.Under the power systems division company manufacturing  Transformers,Switchgear,T&D Systems,Protection Control products ..etc.CG is one of the 10 largest Transformer manufacturers in the world. Its industrial systems division producing Generators,Motors,Alternators..etc. Under the consumer products division company is a reputed manufacturer of Fans,Pumps,Lighting equipments,Home appliances..etc.During the last three years CG’s stock price crashed substantially mainly due to three  reasons.Company reported negative growth in many verticals due to  of overall de-growth  in major economies .Another reason is the cost involved in restructuring its Belgium operations which just concluded .In addition to this  an untimely aircraft purchase and share sale of its erstwhile managing director of the company, Mr SM Trehan dented the image of company and its share price now landed around its multi year low of Rs.90 from a high of Rs.458 ( stock prices adjusted to  split of FV) .I believe ,the protest raised by institutional investors on aircraft purchase issue will help the company to rethink about the importance of fair corporate governance and avoid such untimely decisions in future.In the business front company is expected to start improving from hereon  and report robust growth from FY 2013-14 onwards from a loss in this FY.This is the time to accumulate CG in a phased manner with long term view @ CMP of Rs.90 or in any dip.

Link to company website HERE

JAIN IRRIGATION - BUY

 

                  

 

While analysing EPC Industrie ,we have discussed about the potential and road blocks of micro irrigation industry in India in detail.Till now this industry is mainly driven by subsidy provided by governments and the delay in releasing subsidy by various states eroded the financial position  of companies operating in this sector.From last year onwards companies are taking efforts to change the business model  to reduce high receivable days and improve cash collection and now they are not  taking the responsibility of subsidy collection .This shift in business model partially affected the growth during this transformation phase.But ,on the other side ,potential is very vast in a water scarce country like India where a lion share of farm land  is still irrigated through flooded irrigation method.New farming techniques like precision farming also increasing the potential of MIS.Jain Irrigation is the second largest micro irrigation company in the world which is operating in other parts through various subsidiaries .Other than MIS ,Jain having presence in other sectors like plastic and food processing .Repeating drought like situation in India forcing governments to allocate more funds for irrigation and Jain is one of the major beneficiary .Recently Maharashtra Government decided  to make drip irrigation mandatory for sugarcane in next three to five years ( Read news HERE) . I believe many states and many crops will be forced to follow this in coming years .  In my opinion ,in another few years MIS will change to a necessity from a subsidy driven business due to changing climate and changing farming techniques.Revival in US economy is also positive for the company  where the company having larger presence.Company is now taking every efforts to clean its balance sheet .This management have enough experience and expertise in handling such situations and they proved the same even in the  past .They bring back the company from near collapse ( from first half of 1990's) to the position of world leader in 10 year.Promoters are one of the very few business houses showing higher level of business ethics in Indian Corporate world too. I believe , the worst will be over for Jain Irrigation in another few quarters and most of the negatives are already reflecting in its current market price.Recommending a buy in SIP mode for long term investors from CMP of Rs.57

Related Readings

1) Jain Irrigation Systems: Learning from mistakes

2) Strawberry fields: Bhavarlal Jain formulating strategies to sustain Jain Irrigation for 100 years

Link to Company Website HERE

Links to its Subsidiaries  

1)  NaanDan Jain Israel

2) Jain Irrigation Inc USA 

3) Jain Sulama Turkey

4) Sleaford Quality Foods USA

5) Nucedar Mills Inc USA

6) Cascade Specialties Inc USA

Disc: I have vested interest in JIS