ASAHI SONGWON COLORS LTD -BUY ON DECLINE

Asahi Songwon Colours Ltd is mid size Gujarat based 

company manufacturing different type of pigments .Company

having two manufacturing facilities one in Ahmedabad and

other in Baroda.Company’s product list includes Pigment Green-7 ,

CPC Beta Blue and Blue Crude.Recently company expanded its

capacity of all these products.Colouring

agents manufactured by company are used in industries like

printing inks,  paints,plastics, textiles,papers ,leather..etc.

Asahi also having a big presence in exports.Main raw material

of the company is crude derivative and a steady price trend

of the raw material is helping the company a lot in recentpast.

of the user industries are showing good growth and company’s

financial performance is also improving proportionately.

For the half year ended Sep 2010 ,Company posted a turnover

of Rs.88 Cr and a net profit of Rs.8.47 Cr .On an equity

base of Rs.12.2 Cr,half year EPS is about Rs.7/- Currently

it is trading at Rs.84/- with a P/E multiple of 5 on the expected full 

year EPS of Rs.16/.Benefits of the expansion plans will reflect from this FY 

onwards. One may BUY on decline for medium to long term.

Another group company's (Akasharchem) inconsistent performance is

the main reason for worry.