Its results season again and a good time to monitor and shuffle your portfolio. Like we used to have exams earlier, similarly its result time for the stocks we invest into.
In the mid/small cap space hardly 10-15% of the companies have come out with their numbers. Till now the results have generally been on the softer side. The companies are growing but there is lot of pressure on the margin side due to inflation and other factors. Some of our companies which have come out with numbers are:
ABC Bearing – Company has posted very good numbers and it seems the expansion we had talked about in our initial post has finally kicked in. At current market price of Rs.150, the stock is trading at about 6 times FY 2011 earnings. Continue holding.
Balaji Amines – The numbers are below expectations. Though the topline and operating profits have grown inline with the expectation, but margins have gone down + interest cost have increased + company has provided for a lot of taxation. For the full year the turnover has increased from 262 Cr to 355 Cr and Net Profit has increased from 20.64 Cr to 25.40 Cr. At current market price of about Rs.41, stock is trading at 5 times FY 2011 earnings. We advice a hold at current levels.
Mangalore Chemical – The March quarter numbers are weak. As per notes to accounts, the turnover has been lower in this quarter due to – “lower availability of raw material and imported fertilizers and annual turnaround of urea plant in march 2011.” The company has also provided for an impairment loss of 7 Cr in this quarter. Despite the weak quarterly number, the annual turnover is higher by 20% than last year and Net Profit is higher by 35%. The EPS for the year 2011 is approximately Rs.6.5 and Book Value is 36.
Nitin Spinners – As per the March qtr results, the company has changed its accounting method for depreciation and higher depreciation rate will be applied going forward. Hence the company has provided excess depreciation of 21 Cr for the earlier years and 5.4 Cr for current year. If one looks at the operational level, the company has done well as per expectation. But given the policy change, one may reduce exposure.
Smruthi Organics – The company has posted very good numbers once again.The numbers are better than our expectations and we feel it’s a good pharma company available at attractive valuation. This company has been growing at a CAGR of 25%+ and yet available at a PE multiple of 6. One may consider accumulating the stock.
Among new ideas, we liked Indag Rubber and are studying the same.
Among our other stock ideas, we have been getting very positive response on Astral Polytechnic, Poly Medicure & Gujarat Reclaim.