NITCO LTD - BUY

Company                     : NITCO LTD

BSE Code                   : 532722

Group/Index                  :B

CMP                             : Rs.62/-

FV                                 : 10

Recommendation      : BUY

  

NITCO is a  Mumbai based Tile and Marble manufacturer started its operations way back in 1953. Company's brand ' NITCO' is famous for its superior quality products.Company manufacturing Wall tiles, Floor Tiles and Marble which include Ceramic Tiles,Vitrified Tiles,Natural Marble,Engineered Marble.etc .Company having four manufacturing facilities and the main two  are located at Alibaug and Kanjur Marg both near Mumbai ,where the company having state of the art manufacturing facilities.Company  having a wide marketing network pan India consists of  18 depots, 750 direct dealers and over 5000 sub dealers.About 25% of company's income is coming from exports to various countries includes United States, Canada, Europe, Africa, Oman, and UAE .Nitco also have some presence in real estate development.Close to  50 % of company's income is coming from Vitrified tiles 25 % from ceramic tiles 20 % from Marbles and 5 % from other activities .Company was in  perfect shape till 2009 ,but its operations derailed in 2009 due to two reasons.The first reason was the sluggishness in construction/real estate development  industry which affected the entire companies in this sector.Another important factor was the arrest of its top officials by the Directorate of Revenue Intelligence for alleged customs duty evasion of Rs 1.47 crore.Both these incidents adversely affected the company and it turned to a loss of Rs.9 Cr in 2009 - 2010. Now situation is improving in the industry and particularly for the company. Management is now paying much attention in the business and taking various steps to revive the company.It recently started a 5.5   MW gas based power plant to save power cost which is a major component of total cost of production.It also planning to increase the number of exclusive selling points named 'Le Studio' from 50 to 200 nos.Nitco already developed 2 lakhs Sqft commercial property at thane and also having 7 properties to be developed around Mumbai.Company is planning to develop these properties ( about 15 lakhs sqft salable area) in various steps.For the nine months ended Dec 2010 NITCO posted a turnover of Rs.450 Cr and a net profit of Rs.15 Cr.It is expected to turnaround in this FY and improve its performance in next year onwards. The brand NITCO having a good brand recall in the industry and company can effectively utilize it when there is a revival in the industry. Investors with patience can BUY at current level with  long term view.NITCO is currently trading around Rs.62/-