Portfolio shuffling…

It is important to re-evaluate the portfolio and weed out non-performers, or the stocks in which the story is not developing as expected, or switch to new ideas which look cheaper or have more value than others. We have exited from couple of our ideas over last few days:

1. Jocil – Initially discussed @ 265, it is a good company with good fundamentals. The company has also rewarded with a bonus in the ratio of 1:1 and the stock is cum-bonus @ 285. Yet, we are switching out as we feel better ideas are available. Also a couple of negatives are – 1.) The company hasn’t been growing over last few quarters while the debt has increased. 2.) Company is import dependent and due to strong rupee weakness, they may get a hit.

2. Balaji Amines – Initially discussed @ 48, though the stock seems cheap at 4 times PE multiple @ 35, but the negatives are – 1.) The debt levels are too high to be comfortable with. 2.) Being in chemical sector, stock usually get low PE ratios due to lumpy earnings. At this time, there are several companies which are debt free, domestic business and showing growth, yet available at 4-6 times earnings. Eg: Indag Rubber, IFB Agro etc.

Some new ideas which we are studying and look good are – AMD Industries, Oriental Carbon & Chemicals and GIPCL. Continue reading Portfolio shuffling…

Apcotex Industries Ltd (NSE, BSE : 523694)

Apcotex Ltd was spun-off from the prestigious Asian Paints in 1991. Since then the co is part of the “APCO” group of companies headed by Mr. Atul Choksey (former MD – Asian Paints).

The company is one of the leading producer of polymer products namely Synthetic Latices & Synthetic Rubber. They have one of the broadest ranges of products based on Styrene – Butadiene chemistry. The company has developed the technology through in-house R&D and upgrades the same continuously.

Company has been doing very well for last 5 years and growing at a CAGR of 26% and did a turnover of 200 Cr in FY 11. It seems the management is much more aggressive now and aims to do a 500 Cr turnover by 2013!

Other scoring points are :

1. Promoter Quality – The promoters have more than 3 decades of experience in paints and chemical industry and are experts in the field of chemicals.

2. Good corporate governance – Company seems to have very good internal controls and systems. For last 5 years the company has been following the Japanese TPM method. The company has been regular in financial reporting and progressive dividend pay-outs. They even went for a buy-back during 2009.

Continue reading Apcotex Industries Ltd (NSE, BSE : 523694)

Quarterly Result Updates and new idea [Indag Rubber]

In these volatile times, I’m happy to see some of our companies doing quite well and the stocks getting the due re-ratings. It just re-enforces your faith in the fundamentals and markets.

We had discussed about Smruthi Organics on 4th April, 2011 at price of 135 and had provided an update recently. The company has posted good Q1 numbers and the stock has had an amazing run – the stock had appreciated from Rs 140 to 250 levels all in 15 days!

Smruthi

Similar, we had discussed about Avanti Feeds on 13th March, 2011 at Rs 33. The company has posted fantastic Q1 results:

Particulars June 11 June 10 % Variation FY 2011
Sales 109.43 46.92 133.2% 199.62
PBIDT 9.80 2.10 366.7% 12.38
Tax 2.39 1.24 92.7% 1.69
PAT 5.41 -0.68 LP 3.42
EPS 6.77 -.85 4.24

Continue reading Quarterly Result Updates and new idea [Indag Rubber]

Mangalore Chemical–CMP 32

crops in rows

We had discussed about Mangalore Chemicals at our blog about in December, 2010 @ 37. Our interest was due to good results in first half and expectation of better times ahead. After a weak quarter of March (due to annual closedown and higher depreciation on impairment), the company has posted good set of results for June Quarter:

Particulars June 11 June 10 % Variation FY 2011
Sales 583.45 489.29 19.2% 2520.11
PBIDT 43.73 26.85 62.9% 159.07
Tax 2.75 6.23 -55.9% 34.51
PAT 29.70 12.54 136.8% 77.54
EPS 2.51 1.06   6.54

If one looks at the whole fertilizer sector, there is a lot of interest in these stocks as major reforms are expected. Agri related sector is doing well and with upcoming reform, investments should increase and better results should be seen.

We feel that Mangalore Chemical is one of the cheapest stock in the sector and stock at CMP of 32 provides a very favorable risk reward ratio due to strong fundamentals:

  • Stock is trading at 5 times FY 2011 EPS of 6.5. For FY 2012, the company may do better than last year.
  • Company has a good Book Value of 33. Stock is trading at less than Book Value.
  • Co has raised dividend from 10% last year to 12% in FY 2011.
  • Mangalore Chemicals is part of the Vijaya Mallaya group and M Cap of the company is just about 380 Cr.

IFB Agro

Its results season again and an excellent time to tweak portfolios. For us its exciting times as we get several new ideas to work upon. One such new idea is – IFB Agro listed on both BSE (507438) & NSE and trading at about Rs 105. The co has posted excellent Q1 numbers:

Particulars June 11 June 10 % Variation FY 2011
Sales 136.07 96.78 40.6% 422.82
PBIDT 15.82 3.67 331.1% 36.27
Tax 4.57 0.17 2588.2% 8.4
PAT 9.05 0.93 873.1% 17.82
EPS 11.31 1.16 22.26

IFB Agro is part of the IFB group and it has two business divisions – IMFL & Agro Marine.

IFB Agro is one of the largest producer of alcohol in Eastern India, having 6 large captive bottling plants situated in Bengal, Orissa and North East. The company has a strong position and had made sale of 5.5 lac cases of IMFL products in 2011. The value of sales of Liquor division in 2011 was 327 Cr vs 241 Cr last year.

In the Agro Marine division, the company is into exporting of Prawns and selling of Feeds business. The agro marine industry was going through a tough time till 2009, but since mid 2010, the situation has improved and the future is bright. IFB has a 48% market share in the shrimp feed business in West Bengal. In FY 2011, the company achieved a turnover of about 122 Cr vs 52.59 Cr. “IFB Royal” is the brand name of the frozen marine product of this company

The liquor business is witnessing a strong demand and hence the company has set up a new bottling plant at Panagarh, West Bengal. Company is awaiting for a couple of approvals to start the operations.

Continue reading IFB Agro

Smruthi Organics – Update

We had discussed about Smruthi Organics Ltd (SOL) earlier and had highlighted about the consistent growth of 25%+ in this company and attractive valuations of just 6 times earnings. SOL has posted very good Q1 numbers and FY 2011 annual report also looks optimistic. The stock still looks attractive at CMP of 155.

Q1 results:

Particulars June 11 June 10 % Variation FY 2011
Sales 52.84 39.07 35.2% 157
PBIDT 7.09 5.23 35.6% 21.63
Tax 1.54 .74 108.1% 3.91
PAT 3.39 2.49 36.1% 9.71
EPS 8.89 6.51   25.50

Going by the strong Q1 results, it seems the company might be able to hit 200 Cr turnover for FY 2012 and post a NP of 12-13 Cr resulting into an EPS of 30-35.

Continue reading Smruthi Organics – Update

Balkrishna Ind–FY 2011 Annual Report

I’m sure you all must have realized my enthusiasm about the long term prospects of BKT by now. Post the management meet and latest annual report of the company, I think the company is on a very good wicket to deliver consistent growth for next 3-5 years and achieve its internal target of $ 1 Bln turnover & 10% Global Market share by 2015.

Few highlights from the latest annual report:

On Business:

Your company operates is predominantly known as “large variety-low volume” – a segment that restricts optimal capacity utilization. It is a capital intensive as well as labour intensive proposition, making it un-attractive for fresh investments by major players. Your Company is fully geared up to take advantage of the peculiarities of the said segment and has developed a large base of SKUs to meet the diverse needs and applications.

Company has already set up an all-steel OTR Radial tyre plant at its Chopanki location and thereby become the first company in India to set up such plant.

Continue reading Balkrishna Ind–FY 2011 Annual Report

Everest Industries

Everest Industries is a 78yrs old company offering building solutions to industrial, commercial, and residential sectors primarily in India.

image

In addition to the above, its products include asbestos and fiber cement, corrugated sheets, and steel and fiber cement doors.

Roofing: Out of the estimated 25 Cr buildings in India, 46% are considered to have pucca roofs and the rest 54% are made of thatch (kuchcha roofing). The company is into Fibre Cement Roofing which is used for pucca roofing and it costs 1/3rd the cost of an RCC ceiling slab. Everest has a good brand and 17% market share in this business.

Continue reading Everest Industries

Piccadily Agro

“Don’t judge a book by it’s Cover”

This seems to be an apt quote in the case of Piccadily Agro (PAL). I had a look at this stock idea about a year back and was stupid to give it a go thinking it to be just another Sugar company. Since then the stock has tripled and yet looks to be a very interesting stock idea with lot of potential.

Piccadily Agro Limited started off as an Sugar company in Haryana and the performance paralleled to the cycles of Sugar Sector. In 2008, the company ventured into Country Liquor business and the same seems to have done wonders for the company. Have a look at the financial performance till 2007 and then since 2007:

Financial Performance till 2007:

Piccadily_till_07

Continue reading Piccadily Agro

Company Results Update…

The results season is finally over and it has been a mixed bag. There haven’t been much instances of major outperformances but overall good topline growth is being witnessed while margins are under pressure. It’s a good time to buy into selected good companies as margins would come back over the long run.

Results & updates on some of our favorite stock ideas:

1. Astral Poly – The stock was recommended here and we had provided an update about the meeting with the management.

The company has posted stellar growth yet again. For this year their turnover has grown 42% from 291 Crores last year to 411 Crores this year. The margins were under pressure and Net Profit growth was 18%. As per notes to accounts, the company has expanded the capacity by 56% from last year. As per analyst meet held recently, during the current year the company will expand the capacity by another 45%. It remains one of the best stock idea with strong growth visibility @ 25-30% p.a. for next 2-3 years.

Continue reading Company Results Update…