We had discussed about Sunflag Iron and provided an update earlier. At that time the company had been posting substantial improvement in operating margins and hence much better net profits and it seemed that the improved was because of the backward integration the company had been doing over last 2-3 years. But since last 2 quarterly results, the margins have taken a hit and so have net profits.
As the whole midcap space has undergone a strong correction in last 3 months, there are several other interesting ideas available at good valuations. One may consider switching out from Sunflag Iron into new ideas.
Some new ideas on which we are researching are:
- Prathibha Industries – Infrastructure company growing consistently at a CAGR (Compounded Annual Growth rate) of 50%+ for last few years. Had recently placed shares to Chrys Capital at almost 60% premium to CMP.
- Astral Poly Technik – Astral is the first licensee of Lubrizol of USA to manufacture the most advanced CPVC plumbing system in India. CPVC is fast replacing the GI pipes market in the plumbing area. The company has strong CAGR growth and similarly bright future.
- Avanti Feeds – Avanti Feeds is the leading manufacturer of Prawn, Fish Feeds and Shrimp Processor and Exporter from India. India’s marine export market had undergone a slump during the last 5 years and now seems to be back to previous levels. The future is bright for the sector. This company could be well positioned to capitalize the same.
- Nitin Spinner – With the textile sector doing well, this company has good financials and is available at attractive valuations.
There was an interesting discussion on TATA Motor DVR by Prof. Bakshi ji at his blog. Tata Motor DVR have 1/10th the voting right of the common stock but they carry higher economic right by way of 5% higher dividend. So for a retail shareholder (most of us don’t vote) DVRs are better investment as they carry higher dividend. Yet, TATA Motor DVRs (CMP = 660) are trading at almost 45% discount to the price of TATA Motor shares (CMP = 1160). The discount is quite wide here and hence one should work on this idea.
Edit: The TATA Motor DVRs are also available in F&O (Future and Options) hence the instrument is highly liquid and so are related opportunities.
Above are new ideas at initial stage of research. It would be great to receive inputs from the readers.