IFB INDUSTRIES - Target Crossed

          I have recommended IFB INDUSTRIES LTD on 16 October, 2014 in my "Diwali Recommendation" list at Rs. 320/- with a target of Rs.500/- . After it touched a new high of Rs. 533/- it is hovering at around Rs. 480/-. Despite this stock seems good to stay  invested even in the current levels, all  are requested to Book partial Profit as it crossed the first target levels. 

(To read the report please see October 16th post -"Diwali Picks- Samvat 2071-72".

To - All Readers of this blog

Dear Friends,

        I got few mails from the readers of this blog, mostly with suggestions even some sarcasms. Let me extend to all of them a warm welcome. But, once again I would like to share my intention of this work.  

Kindly note that this blog is not a research analysts creation. It is not intent for making money.  Here I am just sharing my views to all readers about few stocks. All information are collected from publicly available sources.  I feel that Nifty @ 8600, almost all stocks are overvalued, still  cheap stocks are perhaps cheap in quality too. So there is a high risk of selection.

I can only write down my views, ( means) unable to jack up the stock price. That is why I am not giving a specific target to most of the stocks which I suggested. All  readers are requested to self study before investing any of the stocks I recommended here.

Please feel free to share your views regarding this blog, because it surely help a lot to improve the quality of my effort.

I can be reached at:

valueinvestmentviews@gmail.com

SANGHI INDUSTRIES LTD - Invest

Market Price : Rs. 48.5

BSE Code: 526521

NSE Code: SANHIIND

Equity Capital: Rs. 220 crore

FV: Rs. 10/-

Market Cap: Rs. 1070 crore

Book Value/sahres: Rs. 40.5

Web: www.sanghicement.com

Even though Cement is the largest consuming product in the world on per capita basis, Cement Industry's fortune is largely depends on GDP growth. On an average rule, Cement Industry is growing 1.2 to 1.5 times of the GDP growth of the country.

Mostly, India is a country with over supply of cement production. In the Indian scenario, a typical cement company needs 65% capacity utilization to be break even, 75% capacity utilization is comfort and of or above 85% capacity utilization is excellent. 

In India, about 65% of the cement had is consumed by Housing Sector, 15% in Infrastructure sector and the rest is consumed my Commercial & Industrial construction and a small portion goes to exports.

Fuel is accounts a major portion of the cement production cost whether it is Coal, Furnace oil, electricity and transportation cost of raw materials or end product. If a company can save in this area, its bottom line will be appealing. 

According to analysts estimate, Indian GDP is expected to grow over 6.5% in the next year and after that it will grow by 7.5%. Unexpected fall in the crude Oil prices is fortunates the Govt as it need not to spend large sum of Fuel Subsidy. In the November, 27th meeting of OPEC decided to not to cut Oil production is favour for India as the crude oil price expected to be at low level at least for the next few months. We feels that the savings from the subsidy, Govt will utilize in to their ambitious infrastructure projects. Interest rate in India seems to going to fall as the inflation reduced. It will also boost the Housing projects and other investments across the Economy, also boost the cement demand.

In such a scenario, Sanghi Industries Ltd, a well managed mid sized cement company with attractive valuation feels a good investment opportunity for medium term perspective. I am not going for a one-to one financial analysis, just giving a view about this company. 

Sanghi Industries Ltd (Sanghi), better known as "Sanghi Cement" is Gujarat based mid-sized cement company promoted by Sanghi brothers.  Having an installed capacity of over 3 MTPA capacity, Sanghi is the only Five star rating cement company in India. Now the company is utilizing almost 85% of its capacity.  The ongoing brown field expansion which is expected to complete by next year, the company's capacity will be at 4.1MTPA. For the better and cost effective transportation, the company have Jetty in Gujarat and Mumbai also it propose to sets up new jetties on long distance places at Kochi and Goa, where higher demand and margins. It also propose to add Six vessels to support the cost effective transportation by the Sea. 

Earlier, the promoters of the Sanghi brothers had some dispute over the company management, now it seems almost settled. Any way the promoters of the company acquiring shares through open market purchases. During the last two years they have acquired 10% stake through creeping acquisition route, which shows the confidence of the management in their company.

The company's September quarter financials was poor, thanks to a 38 days shut-down on its clinker plant. Sanghi has reported a turn over of Rs. 181 crore in the second quarter ended September 14 as against 210 crore reported in the same quarter of the previous year. However, Net profit reported at Rs. 1.8 crore from a loss of Rs. 18.5 crore reported in the previous year. The notable point is , as a result of the restructure and pay-off of some of its debts, company's  interest out go declined sharply by 40% to Rs. 3.6 crore in the September quarter. We feels Sanghi's margins will improve in the future on every aspects. At the current market price of Rs. 48.5, it seems a good medium term bet.

Please note that I have no vested interest in this company.

Gulf Oil Lubricant - Target achieved

     On 16 October 2014, we have recommended Gulf Oil Lubricant Ltd at Rs. 308/- ( as "Diwali recommendation") with a one year target of Rs. 450/-. After one and a half month it crossed the target. We suggesting to sell 50% of your holdings and keep the balance to avoid risk, cash on some profit and to get better return in the future. ( To read the report please see October 16th "Diwali recommendation")

Pioneer Embroideries Ltd - Repeat

    

   On November 16, we have recommended to invest in Pioneer Embroideries Ltd when it was Rs. 22/-. Presently the stock is trading at Rs. 19/-. We feel the stock will be a potential Multi -bagger in the medium term because the promoters of the company infused about Rs. 10 crore in to the company by way of preferential shares issue, it settled/restructured  most of  its dues with banks and Financial Institutions. The company is in final stage of settlement with other Banks to settle the balance dues. Once again we like to suggest to invest in this stock those who having some patience.

SIMMONDS MARSHALL LTD : Book Partial Profit

    

     On October 30, We have recommended to consider an Investment in Simmonds Marshall Ltd when it was trading at Rs. 39.5. Yesterday it closed at  Rs.72/- We advice those who all are having exposure in this counter to consider to reduce at least 50% of your holding as it surged over 80% within a very short span of time.  

SWISS GLASCOAT EQUIPMENTS LTD - Enjoying Double Benefits

Market Price: Rs.100/-
Listing : BSE
BSE Code: 522215
Market Cap: Rs. 50 crore
Equity Capital : Rs. 5 crore
FV: Rs. 10/-
Book Value: Rs. 45.3

        

         Swiss Glascoat Equipments Ltd (SGEL), a Gujarat based company is engaged in the manufacture and sales of Glass lined equipments and spares. SGEL is the third largest glass lined equipment manufacturer in India after US based - GMM pfaudler Ltd and French firm DeDeitrich. (Out of this two companies, GMM pfaudler is the only listed  company on the stock exchanges.) Earlier the second largest company in Glass lined equipment Industry in India was Hyderabad based NILE Ltd. In 2011, NILE sold its unit to De Deitrich. Swiss Glascoat Equipments Ltd enjoying a double benefit as competition reduced on account of one of the major competitor exited from the business and at the same time user industries including Pharma, Agrochemicals and Food processing industries are registering a hopeful double digit growth. 

         SGEL having over two decade experience in the industry. Its Glascoat product range comprises of both Ready made and custom built equipments.   The company's ability to deliver products in a timely manner to its customers as well as design and development of innovative products are excellent. Major pharmaseuticals and pesticides companies from domestic and international front including Bayer cropscience, Syngenta, Teva, Mylan, Glenmark, Divis lab, Aurobindo Pharma and Shasun are few of the customers of the company.  SGEL having regular dividend paying track record, which is slightly increasing YoY basis in line with the company's growth. Last financial year the company paid a dividend of 25% against 22% paid in the previous FY. 

         The company's major products, Glass lined reactors, lined  storage tanks and columns and blenders are widely using in pharma and pesticides  industries. Generic pharma sector, were as leading Indian Pharma companies have strong presence accounts about 25% share in globally with an expected 12-14% CAGR for the next couple of years. As per the reports, Indian Pesticides and Food processing Industry too  going to register an amazing 14 to 16% growth in the next five years, these all are expected to rise sales of the SGEL. 

          Due to the Global economic slowdown started in early 2007, almost all companies were deferred their Capex which adversely affected the capital goods industry. Even in this period SGEL reported a slow but steady growth in the domestic and export markets. Its sales increased from Rs. 35 crore in 2007 to Rs. 76 crore in 2014. At the same time NP increased from Rs. 1.5 crore to Rs. 3.8 crore. With a small equity capital base of Rs. 5 crore, TTM EPS stood at Rs. 8.65. At the prevailing market price ( which recently surged in a big way) of Rs. 100, TTM PE is 11.5Xs. The company reduced its debt to Rs. 13.5 crore in the FY ended March, 2014  from Rs. 19.9 crore in the previous year. 
                
           At a first look it seems that the company's promoter holding declined to 35.7% from 43.5% during the last year. But its is because of one of the promoter with 7.06% stake re-categorised as non- promoter. We expects the company going to register above its earlier growth rate in line with the user industry's growth. Reduction in interest rate on cut down debt, more over softening commodity prices would boost the bottom-line.  Despite a recent sharp rally in its stock price, we feel SGEL gives a good medium term investment opportunity.