Tag: nesco

Updates from the company visits & AGMs

During the past few weeks, we have been on the move to attend the Annual General Meetings (AGMs) and meet the companies we have been tracking. A lot of effort has been in re-understanding the companies and preparing proper questionnaires to get a bigger and longer term picture. We are in process of preparing detailed notes and will share them in coming weeks. Here are some quick updates:

1. Mayur Uniquoters: It was one of the most pleasant and well organized AGM. The company welcomed the shareholders with open arms and proved to be a great host. The management seems to be hands on the business and way ahead of the competition. The company has a fantastic track record (50% CAGR growth in net profits over last 5 years) and has one of the best financial ratios (ROCE of 55-60% with a good dividend pay-outs).

Mayur aims to be a 550 Cr. turnover company by 2015 (company did a 315 Cr. turnover in 2012). They have undertaken a backward integration project and the same is being carried out at their new plant. The company aims to bring down the rejection rate to be able to enter the highly lucrative US Auto OEM market. The company has been building relationships with some of the best names in the industry – Ford, Chrysler, BMW, Mercedes, GM etc. The orders from BMW & Mercedes have been slow and they expect the same to pick up in 1-2 years. The backward integration project should get completed by Sept-Oct, 12.

Continue reading Updates from the company visits & AGMs

Q3-FY12 Result Updates

Dalal-Street Updates

When the majority were bearish, the markets surprised them by giving a strong upwards swing. Most of the stocks prices have improved by about 20%+ in less than a month. This is why it is always advised not to time the markets. Rather than remaining on sidelines, one should target companies doing well and yet available at sane valuations. The Q3 results look good till now. Here is an update on some of our existing ideas:

1. Indag Rubber: The company has posted yet another good set of results. Top-line grows @ 55% and Net Profits @ 85%. Yet the stock is still available at less than 5 times earnings. It looks to have good potential ahead.

Particulars Dec 11 Dec 10 % Variation FY 2011
Sales 57.45 37.17 54.60% 149.47
PBIDT 7.77 4.44 75.00% 16.69
Tax 1.59 0.85 87.10% 2.89
PAT 5.31 2.88 84.40% 10.75
EPS 10.12 5.48 20.48

*All Financial figures are in crore rupees (except EPS).

2. IFB Agro: The company has posted steady results with strong improvement in margins from the liquor business. The stock seems cheap as it is trading at just 4.5 times the earnings. Technically too the stock seems to be heading for new highs.

Particulars Dec 11 Dec 10 % Variation FY 2011
Sales 120.97 106.80 13.30% 422.82
PBIDT 14.82 7.73 91.70% 36.27
Tax 4.14 1.86 122.60% 8.40
PAT 8.23 3.47 137.20% 17.82
EPS 10.28 4.33 22.26

*All Financial figures are in crore rupees (except EPS).

3. Gujarat Reclaim: The company remains to be our favorite with its repeated stellar performance. If one considers the superior business quality of the company, superior ratios, management quality etc., we feel this company deserves much higher valuations. Over next one year, the company is in process of expanding its capacity by about 40%+. This stock should get a high allocation in the portfolio.

Particulars Dec 11 Dec 10 % Variation FY 2011
Sales 62.68 46.20 35.70% 185.04
PBIDT 15.23 7.43 105.00% 33.19
Tax 3.96 1.56 153.80% 8.14
PAT 8.53 3.97 114.90% 17.62
EPS 63.98 58.12 132.16

*All Financial figures are in crore rupees (except EPS).

Continue reading Q3-FY12 Result Updates

Nesco Updates

Nesco - Bombay Convention and Exhibition Centre

BSE Code: 505355 | NSE Code: NESCO

We recommended Nesco recently after going through the wonderful analysis by Prof. Bakshiji. The stock has got good coverage by fellow value investors and business channels. Do go through the detailed post by Rohit along with links to posts by Neeraj & Ninad.

Our viewpoint and thoughts in brief:

The Bombay Exhibition Center covering area of about 4.5 Lac sq. ft., is a sort of monopoly in Mumbai with a lot of bargaining power. The growth in rentals can be observed from the table below:

Year Annual BEC Revenues (Million in Rs.) Space (sq. ft.) Monthly Rate (per sq. ft.)
2011 656.20 450000 122
2010 540.40 450000 100
2009 349.60 450000 65
2008 496.30 450000 92
2007 329.10 450000 61
2006 144.10 450000 27
2005 109.70 450000 20
2004 54.40 450000 10

Today most of the biggest trade events held in Mumbai are held here. Such kind of business is tough to find at reasonable valuations and I think most of us would agree that current valuations are reasonably cheap.

The trigger is: the company has already constructed IT Building – 3 which has a leasable area of close to 8 Lac sq ft. At a conservative rental of Rs.100 / sq ft, the company should be able to get a Net Profit of 70 Cr+ (post tax). This might happen over next 1 year.

Nesco made a Net Profit of about 68 Crores last year so if the profits are to double over next 1-2 years, the stock can also double out without any PE re-rating. Plus going forward, the company plans to build another IT Building and double the leasable at its Bombay Exhibition. Hence being a debt free company with about 180 Crore cash on Balance sheet, it seems to be a very safe pick at these levels.

Welcoming Samvat 2068…

Dear Friends,

Wish you and your family a very very Happy & Prosperous Deepawali!!! May Laxmi Ji shower her blessings and Ganesh Ji his happiness on all of us.

On this auspicious day, do participate in Samvat 2068 – Muhurat Trading session from 4:30 – 6 pm. Our Muhurat picks are:

  1. Nesco (560)
  2. Avanti Feeds (115) / IFB Agro (145)
  3. Balkrishna Ind (171)
  4. GIPCL (82)
  5. Indag Rubber (135)
  6. Gujarat Reclaim (1250)
  7. Atul Auto (107)

Look forward to your views. Have a happy and safe festive time!