SRIKALAHASTHI PIPES LTD

Srikalahasthi Pipes Ltd:

Market Price: Rs.78

BSE Code: 513605

Equity Capital: Rs.39.76 cr

       Srikalahasthi Pipes Ltd (formerly known as Lanco Industries  Ltd) is now a part of  kolkota based Electro Steel  Castings Ltd. The company is located at kalahasthi at Thirupathi. The company is the largest D I pipe manufacturer in the South India. Srikalahasti's main product, i.e. D I pipes are  widely used in Water and sewage sectors. Public Water Boards and several water infrastructure projects are the major customers of the company.

        The company having mainly three units as Molten metal/pig Iron, D I pipes and a mini cement unit. It is also having a  12 MW waste heat recovery based captive power plant too. In 2003 the company's DI pipe capacity was 9000 TPA, which has been gradually increased.  After the ongoing Rs.100 crore capital expansion, the company's D I pipe manufacturing capacity would be increased to 50000 TPA,  along with this certain balancing facilities which includes enhancement of blowing capacity in MBF and additional furnace. In addition to this the company is going for an expansion for Rs.325 crore for smaller Dia Ductile Iron Pipes segment which is expected to completed by FY- 2016.

          Company's operational efficiency is astonishing. Energy conservation is a continuous activity of the company. Its captive power plant running over 100 % capacity. Its Sinter plant has been operational in the last fiscal replaced lump ore with Iron Ore, which reduced the manufacturing cost significantly.

The Union Minister for Water resource Sri. Uma Bharti last Friday said that  that irrigation facility in all agriculture land in India would be available within 10 years. The commitment of the New central Govt  in the area of water infrastructure project giving immense growth opportunity for the company.

            The company's financial performance is very impressive. Despite a capex of Rs. 100 crore under going, the company reduced its long term and short term borrowings by almost 5% in the first half year ended September 2014. Capacity expansion would help to improve the top line and bottom line of the company in the coming years. For the first HY ended September 2014, the company's turnover slightly slipped to Rs. 475 crore from Rs.485 crore. At the same time NP jumped to Rs.31.2 crore from Rs.13.2 crore. Half year EPS is Rs. 7.84. After the completion of the expansion we expect the company's turnover and net profit would increase significantly, especially the company having sufficient order backlog. We feel this stock carry low risk with decent capital appreciation chance in the medium term.

Disclaimer: I /my dependents have no investments in the above mentioned company.

RESULTS UPDATE - Nilkamal Ltd

               I have recommended Nilkamal  Ltd at Rs. 330/- on my "Diwali Recommendation" list.  Unfortunately this stock (perhaps the only stock from my investment list)  not performed well ( forgot about it touched over Rs.380/- after my recommendation). Due to a fall in crude oil prices and  a reduction in the company's debt, I expected it would register a better result for the  September quarter. Nilkamal has reported a sales income of Rs. 460 crore in September quarter against Rs. 423 crore registered in the same quarter of the previous year. Against my view, its raw material cost increased to Rs. 186 crore from Rs. 147 crore.  Mainly, high raw material cost  caused  a fall in its NP to Rs.6.9 crore from Rs.12.5 crore. However the result shows a marginal improvement from the June 2014 quarter. Still I suggest the investors to HOLD the stock for better return as the raw material cost benefit may get in the coming quarters and still Nilkamal capable to deliver an EPS over Rs. 20/- in the FY 2014-15. When we considering the valuation of plastic moulded products industry in the market it is better to stay invested in the stock at least  for the time-being.

SIMMONDS MARSHALL LTD : A safe bet

Simmonds Marshall Ltd: 

BSE CODE: 507998
Market Rpice: Rs.39.5
Market Cap: Rs. 44 Crore

       

     Globally, the Auto mobile industry and Capital goods sector showed sluggish growth since the past couple of years due to economic slow-down. In India, high interest rate too adversely affected these Industries. Now it seems that the interest rate peaked-out and economic activity showing early signs of recovery. So this is the right time to invest in the auto ancillary sector for a medium term perspective. Simmonds Marshall Ltd (SML) seems one of the best bet from this sector for a medium term investment perspective.

       Simmonds Marshall Ltd Started in 1960 with the technical and financial collaboration with Firth Cleveland Fastenings Ltd, UK to manufacture high-end fasteners in  India. In 1987 the company became a pure Indian company as the the Indian promoters bought back the entire holdings from the foreign partner.

     Simmonds Marshall manufacturers wide range of top quality specialized Nylon insert self locking nuts, special fasteners, U-nuts, Wheel nuts, Bolts & Studs, Weld Nuts and cooled forged sleevers etc for the  Auto Mobile and Industrial segment. SML is well known in the industry on its product quality.  95% of the company's revenue comes from the OEM (Original equipment manufacturers) segment. The company supplies its products to major  global and almost all Indian Auto mobile companies including GM, Caterpillar, Dana, Suzuki, Honda, Fiat, Ashokleyland, Tata Motors, Hero,Bajaj and New Holland etc.

     The company has been increasing its cold forming capacity and can produce over 50 crore nuts per annum in wide range from M4 to M48 diameter and equivalent imperil sizes. Growth in the Auto mobile sector directly helps the financials of the company as it is largely depends on the OEm segment. Though a tepid growth registered in the past few years, the expected growth in the Auto industry may boost the company's financial performance in the years to come.

         

         The company having a very small equity capital base of Rs. 2.24 crore and  a healthy reserve of around Rs. 35 crore as on March, 2014. Even though the FV of the stock is Rs.2/-, a small improvement in the margins would reflects a jump in the EPS as its low equity base. For the trailing twelve months period ended June 2014, the company reported a turnover of Rs. 110 crore and NP of rs. 4.4 crore. At the same time EPS reported at Rs.4/-. At the current market price of Rs. 39.5, the stock is trading with a TTM P/E of around 10xs. Considering the Industry's growth, we feel the company's performance should improve in the future and SML is a best medium term bet which carries very low downward risk.

Disclaimer: I/My dependants have no holdings in the above mentioned Stock.

   

CyberTech Systems and Software Limited : Ray of Hope

CyberTech Systems and Software Limited: 

BSE CODE: 532173
Market Price: Rs. 42
Market Cap Rs.108 Crore
FY 2014 Sales: 73 Crore

        It was in the early 2000s so  called IT bubble time, Cyber Tech Systems was one of the hot picks from the mid-cap IT space and touched a life time high of Rs. 1500.  Then, the IT spirits vapour, this stock too fell into the bear grip like other so many small IT companies. But, almost after one and a half decade, now the company introducing new product, entering new tie-ups for technology partners and sets up new facilities, We feel this company is going to write another success story. 

      CyberTech is a global information technology company specialises in next generation Geospatial, networking and enterprise solutions. Company's services span across all major industries including Govt, education,utilities, defence, telecom,retail and healthcare. 

    CyberTech having strong technology and business partnership with global IT leaders including Microsoft, ESRI, SAP and CISCO.  ESRI is the world leader in the Geospatial information and software segment. SAP is the third largest software development company in the world. Cybertech has now a major player in the area of mapping solutions and geospatial application were as the company is going to focus in the future. 

     On March 2014, CyberTech inaugurated new four-storied 25000 Sq.feet Geospatial center of excellence named "CyberTech House". This new facility is India's first private Geospatial technology centre  having a  seating capacity of 250 engineers.

     After a tough competition from  over 1000  national and international IT companies CyberTech receives the "Skotch Order of Merit" in the 37th skoch summit on "Minimum Government, Maximum Governance" held at the India habitat centre, New Delhi on 19-20th September 2014. CyberTech’s selection for this ‘Order of Merit’ speaks volumes for the customer acceptance and quality of its GeoCivic® solution. It is a reflection of the success that CyberTech has had at building market-driven solutions on leading Esri technologies.

       The company's financial performance also showing  steady improvement. For the trailing twelve month period ended June 2014, the company reported a sales income of Rs. 68 crore and EPS of Rs. 4.1. Going forward, financial performance  are expected to jump as the company introduce new products and services, technology tie-up and new recruitment. We feel the stock will have the potential to be a Multi-bagger in the medium term.

Disclaimer:  I/My dependants have no investment in the above mentioned stock.

Talbros Automotive Components Ltd - Go with this successful journey

Talbros Automotive Components Ltd : 


BSE  CODE: 505160
Market Price: Rs. 103
Market cap: Rs. 127 Crore
FY - 2014  Sales:  Rs. 365 Crore
NP: Rs. 19. 3 Crore
EPS: Rs. 15.3

           Talbros Automotive Components Ltd, an integrated player in the Auto Component manufacturer   is established in 1956 by Talwar family at Faridabad. The company manufactures Gaskets, steering & suspension components and stamping, rubber products and forgings. It has five solid tie-ups and three joint ventures with notable global players like Federal mogul - USA, Nippon leakless - Japan and Presswerk krefeld - Germany. 

      As the largest gasket manufacturer in India, the company's products are widely used in Two wheelers, Passenger vehicles, Farm equipments and commercial vehicles. All most all of the  auto companies and engine manufacturers including Ashok leyland, Bajaj Auto, Cummins, Eicher, Escorts, Hero Honda, Honda, John deere, Force motors, Maruti, Tata companies, Suzuki and Affinia Automotives are major clients of Talbros. The company now design develop and manufacture products as per clients requirements. Talbros got numerous awards from its vendors like M&M Tractors, Cummins, Honda and Eicher Motors. Some of these company's single source supplier too Talbros.

       With the growth of the domestic Auto mobile industry, the company also growing so quickly. While the company's overall growth in the last year almost muted, its forging division shows over 50% growth since the past four years. In the export front too the company is doing very well. Widely expected interest rate reduction in the coming quarter will boost the auto sales and helps further improvements in sales of the company.

               The company's R&D facility is very strong. Last year Talbros has developed and started commercial production of asbestos free gaskets.

      The company has a dividend paying track record of last 50 years, which tells the commitments to its equity share holders. 

      Since the past couple of months the promoters of the company is acquiring its shares from the open market which shows the confidence of the management about the future growth of the company.

             

    On the valuation front the company's stocks seems tinny and it is one of the major attraction for investment. Talbros sales to market cap stood at 0.33X only. For the trailing 12 months period the company reported a sales income of Rs. 366 crore and  net profit of Rs. 18.3 crore. On an equity capital of Rs. 12.4 crore, its TTM EPS stood at Rs. 14.75. We are giving a BUY call on this stock with a price target of Rs. 200 within a period of one year as we consider the company's solid track record, new products development, expected higher export contribution to revenue and moreover the hopped for Auto sales in the years to come.

Disclaimer: I/ My dependants have no investment in the above mentioned stock.

Rexnord Electronics & Controls Ltd - A Microcap Multi Bagger Stock

Rexnord Electronics & Controls Ltd: 

BSE Code: 531888
Market Price : Rs. 21
Market Cap: Rs. 13 crore
FY 2014 Sales : Rs. 40 cr
NP: Rs. 1.95 cr

       Rexnord Electronics and Controls Ltd is Mumbai based, BSE listed company since the past two decades. The company is engaged in the business of manufacturing and sales of Cooling Fans, DC brushless Fans, Cooling condensers, gear motors  and shaded pol motors all are for industrial use. These motors are widely used in computers, servers, refrigerators, freezers, inverters, injection moulding machines and photo copying machines etc. The company has a humble beginning and still it is a small company. But the interesting thing is since the past three years the company is growing more than 25% annually. In the export front too the company is doing very well. Last year export revenue increased by 18.5%.

      Rexnord holds ISO 9001:2008 quality certificate from TUV NORD CERT GmBH. Because of the outstanding quality of the company's products it got numerous quality awards from it vendors like Voltas, Carrier Aircon, Bluestar etc.The quality of the product protect the company from stiff competition from the local players. The company introduces more product in its portfolio to increase it revenue and for better margins. To meet the fund requirement for expansion, the company has allotted 3478800 convertible preference shares to its promoters in September 2014 at Rs. 13.4  per shares for Rs. 4.7 crore. With the conversion of the said warrents promoters holdings increase fro current 46.5% to 56.6%.

     Yet the company's sales income for the FY 2014 stood at Rs. 40 crore, its market capitalization stood at just 13 crore which seems the stock is highly undervalued. Considering the company's expansion, growth potential in the user industry and attractive valuation we feel the stock would be a multi-bagger in the medium term.

Disclaimer: I/My dependants have no investment in the above mentioned stock

Galaxy Entertainment Corporation - A Micro-Cap Multi Bagger

Galaxy Entertainment Corporation Ltd

Bse Code: 506186

Market Price: Rs. 32.85

    Galaxy Entertainment Corporation Ltd (Galaxy) is a part of Kishore Biyani's Future Group. Unlike other Future group companies, Galaxy has a negligible debt ( As on march 31, 2014, its Long-term borrowings stood at Rs. 4.75 crore) and not single  share pledged by its promoters.

      Incorporated in 1981 at Mumbai, Galaxy provides Leisure and Entertainment services such as Bowling, Sports Bar, Pool and Video games, Restaurant&bakery and Food courts etc. As on March 2014, the company operates 28 centres.

Food Stop is the company's new thrust are which are the food courts attached to the shopping malls.

     SBX, the sports bar is on of the major revenue source of the company. The company is continues to focus on this segment by increasing its outlet numbers in new regions with high potential.

     Shanghai Street is serves Chinese and Punjabi Adda provides North Indian dishes, which all are accepted by customers.

      Young population with rising disposable income and increasing number of nuclear families with high urbanization gives immense growth opportunities for the company.  Enhancing domestic tourism and expectation of high level living standards like Malls, Multiplexes too rise the leisure , entertainment and eating - out culture.

   But, Still the company's financial performance is not so encouraging. For the FY-2013-14 Galaxy reported a revenue of Rs.46 crore and net profit of Rs. 3 crore including an other income of Rs. 12 crore. The first quarter of the current FY sales  reported at Rs. 9.8 crore and posts net loss of 1 crore. The company's total market capitalization stood at around Rs. 50 crore only. Despite a dismal   financials, this stock gives huge hope when we considering the company's growth potential and promoters background. So I am unable to give a price  target for this stock but strongly feels that investors with patience can consider to BUY this stock for long - term view.

Disclaimer: I/My dependants have no investment in the above mentioned stock