KENNAMETAL INDIA - REPEAT

This scrip was earlier recommended @ Rs.350/- which is

currently trading around Rs.457/- .Last qtr performance

was excellent for the company and the good growth

visible in auto industry is expected to help the

company to perform even better in near future.

One may consider a BUY at current level for medium term .

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Kennametal India (KIL), formerly WIDIA INDIA is a

part of Kennametal Inc, USA and this Indian unit

is located at Bangalore . Company is a machine tool

major caters to auto and auto related industries,

light and general engineering industries. Its product

portfolio includes Metal & Metalworking Solutions ,

Machine Tools and Engineered Products .Worldwide

recession severely affected the company’s performance

last year and due to lack of sufficient demand

company cuts its production level ,reduce wages and

even shut down its plants for few days in last FY.

Demand of its products are closely linked with the

overall growth of core sector. Company’s customers

include GM, TVS, TELCO ,Yamaha, BHEL,

Northern Railways, Ordinance and Armament factories,

Inter Drill Asia, Escorts, Gabriel, Sterling Tools

and SKF Bearings. Most of the customers are showing

revival in their operations now.Last year Kennametal

posted a turnover of Rs.305 cr. And a net profit

of 28 cr.Company’s year ending is June and for

the half year ended Dec.2009 company’s turnover is

166 cr,and NP is 24 cr.,Which is much higher than

the last year same period.Kennametal is expected

to come back to its previous golden days soon.

TIMEX GROUP INDIA - REPEAT

Timex Group India  recommended as a BUY ON  DECLINE ,when it was at Rs.46/-. Currently it is trading @ Rs.42/- ,a dip of 10% .One may BUY 1/3 of the required quantity at current level.

Old report is re produced below

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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/-

JENBURKT PHARMACEUTICALS LTD - BUY

Jenburkt  Pharma (BSE CODE -524731) is promoted by Mr. Hemendra N. Bhuta in 1985 and currently lead by Mr. Uttam N. Bhuta. Company’s  headquarters is in Mumbai and WHO approved  plant is located in Gujarat. Jenburkt is a manufacturer of various category of medicines includes Antibiotics,Anti-diabetics,Anti-inflammatory,Dermatology..etc.Along with this ,company is also making a sugar substitute with the brand name ‘NOCAL’ under the consumer division. Company is growing steadily for the past few years and it is planning to concentrate in high margin products going forward. It also planning to pay much attention to introduce more products under its consumer division. For the full year ended March 2010,company posted a turnover of Rs.52.6 Cr ( Rs.43.7 Cr) and a net profit of Rs.3.8 Cr( Rs.1.6 Cr) .On an equity base of 4.6 Cr  EPS was at Rs.8.13 . In the latest June qtr Company posted an EPS of Rs.2.85 v/s 0.86 .Company also having an uninterrupted dividend paying history for the  last five years .In FY 2010 company paid a dividend of  30 % for FV 10 shares.Promoters are aggressively hiking their stake through open market purchases is also a positive factor. Medium term investors can consider this Pharma company as a value BUY
@ CMP of Rs.85/-

AHLCON PARENTERALS - UPDATE

I have recommended a BUY on AHLCON PARENTERALS @ Rs.64/- ,on 10th June 2010.(Old Report can be Accessed HERE)Currently it is trading around Rs.115/- ,an appreciation of 90% in four months .Company's financial performance is expected to improve further going forward. HOLD it for reasonable gains even from current level in medium to long term.

KILPEST INDIA LTD - NEW RELATIONS ,NEW POSSIBILITIES.

Even if it is a 38 year old company ,its turnover is still below 20 Cr.But this Bhopal based Pesticides and Agrochemicals company-KILPEST INDIA LTD- is growing steadily over the past few years.Sales improved from last years  Rs.15 Cr to Rs.19 Cr in FY 2010.,NP also improved from Rs27 Lac to Rs.49 lac. In the small base,export also grew by 115% in last year .No doubt ,the sector in which it is operating having good potential but only time will tell whether the promoters are able to scale up the business to a respectable level.Kilpest is the producer of Pesticides
(CYPERCOT,KIDON,KILDOFAR,KILTHION..Etc) , fungicides (KILTAF,AJOMIL,BLAST..Etc) .
To align with  the latest  trend  in agri sector ,company also started to concentrate  in Biological products which include  Bio Pesticides ,Bio Fungicides ,Bio Fertilizers ,Plant growth stimulators ..etc Company is now seriously exploring opportunities in Medical Genomics using Biotechnology.For this purpose ,recently company signed an agreement with Spanish company BIOTOOLS to establish a joint venture in India with 51:49 participation.This facility is indented to carryout research and development of innovative products and technologies in the clinical, molecular biology and Agfood areas. Company’s plans are very big and chances in these fields are very vast , but the past history of the promoters not giving much confidence .Only high risk takers with long term view  can try with some amount with which you are ready to forget.CMP is Rs.15/-

EPC INDUSTRIE - UPDATE

EPC INDUSTRIE is one of our past  recommendation @ Rs.61/-.Today it touched its lifetime high @ Rs.84.30 and closed @ Rs.82.20 Investors with medium-long term view can HOLD this micro irrigation company  for decent gain .

Old Report can be accessed HERE

CENLUBE INDUSTRIES - BOOK PARTIAL PROFIT

Cenlube Industries recommended on 17 June 2010 @ Rs.20/-.Currently it is trading @ Rs.40.85 ,an appreciation of  100 % in less than four  months .May book profit in 50% to  recover entire cost and hold the balance cost free.

OLD REPORT HERE

NOT A RECOMMENDATION ,JUST AN INFORMATION

 

 

Reading the stories of companies came back to glory  from the brisk of collapse is always interesting ,encouraging and thrilling. Other investors can learn many lessons from such stories. But in many such cases ,promoters of such companies are unwilling to share their experience in bad days with media or even to the minority share holders. We can find many such companies in listed space like Jain Irrigation, Orchid Chemicals, Diamond power infrastructure..etc. Recently I came across an article about a company which is going through rough weather for past many years, in a financial journal. I am unable to predict whether this company will come back to black in near future or not,but I consider the willingness of the MD to face the media after a long gap is an indication of some favorable developments in the company. Don’t consider it is a recommendation to BUY the stock of this company ,but ,just take it only as a sharing of  information to those who could not read the article. I know ,many of you will stop  reading  this post ,just after hearing the name of the company .Anyway it is INDAGE RESTAURANT AND LEISURE LTD.

STORY IN NUTSHELL

Most of the investors are aware that the happenings in debt ridden  Indage Group – mainly Indage Vintners Ltd-which is now  fighting for survival. Indage Vintners  is managed by Renjith Chougule  sibling of  Vickrant Chougule the MD of Indage restaurant and Leisure Ltd . No doubt, both are running independently .Indage Restaurant and Leisure is running restaurants in five genre viz, Quick Service Restaurants(QSR),Casual dining, Wine Cafes and Bistros, Fine Dining and Pubs, and Resorts and Hotels.Under QRS it is operating Gracia’s Pizza Chain with 20 outlets (Remember ,the market leader Jubilant Foodworks having 300 +) .In casual dining ,it has a master franchise agreement with South African dining chain  NANDO’S  and running three  restaurants in this brand name. under ‘ Wine Cafes and Bistros’ it is running ‘IVY’- in  Seven different locations. Under ‘Fine Dining and Clubs’,company running  Japanese restaurant ‘Tetsuma’ and ‘Athena’ and ‘Prive’ clubs in Mumbai and ‘Zaha’in Pune.Under ‘Resorts and Hotel’ segment ,company running ‘Hotel Shalini Palace in Kolhapur(only palace resort in Maharastra) and ‘Tiger Hill’ resort in Nasik. Positioning in these different segments clearly indicating that the company operating in almost all levels of hospitality industry.

Then what is wrong with ?

In FY 2008 ,company posted a turnover of Rs.24.6 Cr and a net profit Rs.3.1 Cr. Thereafter company’s operations de railed , and it could not service its debt of close to  Rs.30 Cr. Reduction in  spending of people due to the fear of  recession in that period added fuel to the fire. Even if it is working as a separate entity ,the bad image of Group mainly due to the problems of Indage Vintners adversely affect companies business plans and further expansion. In FY 2009 ,company posted a turnover of Rs.25.3 Cr and a net loss of Rs.12.35 Cr.

Current Situation

As mentioned in the beginning ,there was no information about the company’s financial plans or results in public domain after the declaration of December 2009 results. In the above mentioned article ,the author indicates that the company posted a loss of Rs.8 Cr in March 2010 full year which is a reduction from the loss of Rs.12.35 Cr in FY 2009.Now company is trying for a  debt restructuring and induction of a strategic partner. It also changing its business model  and trying to expend through franchise route pan India. Company is also  going to start two Nando’s outlets one each in Bangalore and

Chandigarh  in November 2010. Management expecting a turnover of  Rs.40 Cr in this FY and back to black in FY 12 provided the debt restructuring is cleared .

My opinion

1)      Company have lot of problems and the opportunities are equally big

2)      MD of the company is young (38 years) and enough time to learn from the mistakes and prove himself.

3)      The Industry in which company is operating have huge potential in India and companies from such a sector may get premium valuations in stock market going forward.(After the publication of the mentioned report itself share price rallied from Rs.8/- to Rs.14/-)

4)      Managements willingness to share information with the public after a long gap  is really a positive sign

5)      The franchise model business development in food chain business have great potential in a country like India

6)      If the company is not able to restructure its debt in reasonable time ,its net worth may be in a pathetic situation going forward.

7)      It is not easy to find out a good partner before the image of the group improves(after emerging a clear picture about Indage Vintners)

8)      MD’s five is target is a sale of Rs.200 Cr and a net profit of Rs 55-60 Cr is really ambitious and no chance to materialize.

9)      At present management has  reached a stage where they can at least imagine and dream something about future -is really positive.

10)   Non filing of information like financial result  to stock exchange may invite penal action

Conclusion

I personally believe that , if setbacks in business happened even after the hard work of management and only because of some reasons beyond the control of  management ,god will give atleast one chance to come back, provided such a collapse is not  purposefully created by the management to cheat other investors or related parties.

ALL THE INFORMATIONS AND ASSUMPTIONS ARE BASED ON A REPORT WRITTEN BY Mr V KESHVDEV IN OUT LOOK PROFIT

COURTSY : OUTLOOK PROFIT

Once again  I would like to indicate that this is not a recommendation to BUY or NOT TO BUY ,Study yourself  and take a decision .CMP is Rs.14/-

                                  

TIMKEN INDIA - UPDATE

I have recommended a BUY on TIMKEN INDIA @ Rs.125/- ,on 3rd May 2010.Currently it is trading around Rs.154/- .Based on the expected good demand from the user industries for its products ,I reiterate a BUY at current level for reasonable return in medium term.

Old report can be accessed HERE