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.

COCHIN MINERALS AND RUTILE LTD - BUY

As the name indicates, this company (CMRL) is based in Cochin,Kerala having manufacturing facilities to produce Synthetic Rutile (45000 TPA), Ferric Chloride (24000 TPA), Ferrous Chloride (72000 TPA) and Cemox18000 TPA.These products are made from Ilmenite using indigenous technology.These products are used in Welding electrodes,abrasives,paints,Effluent treatment,inks,pigments,bricks and tiles..etc.Raw material for these products - ilmenite-is mainly sourced from the beach sands of Kerala.Water desalination plants in Gulf countries are one of the major customers of company's products.Since the number of companies producing these products are very few in India , company is enjoying good margins.For the latest quarter ended September 2011,CMRL posted a turnover of Rs.47 Cr v/s Rs.31 Cr and a net profit of Rs .8.2 Cr v/s Rs.90 lac .Six month EPS is Rs.13.75/-Company is a consistent dividend payer too.Since company is earning major portion of income from exports ,favorable exchange rate situation also helped the company to post good results.Proximity of the source of raw material is one of the biggest advantage of CMRL .One of the major concern about the company is the frequent opposition of local people against sea sand mining.There is also some allegations about some transactions between a public sector unit and CMRL.Being a 20 year old company ,it is expected to handle these local issues effectively .Based on the robust performance there is reasonable chance for appreciation from its current market price of Rs.78/-