AEGIS LOGISTICS - BUY

 

 

Aegis Logistics is one of the largest private sector chemical,gas and oil logistics company operating in India.Currently company having two liquid terminals in operation at Mumbai and one at Cochin and it is also starting  one more at Pipavav. Recently company started the civil works for its Pipavav facility and on completion of this the total liquid terminal capacity will reach close to 500000 KL.Under the Gas division ,company offering gas transportation for third parties,running Auto Gas retailing Stations and supplying  commercial LPG Cylinders.Aegis having a capacity to handle 750000 Mt of LPG per annum in its facilities. Presently company operating more than 90 auto gas filling stations ( Aegis Autogas)  across 7 states and planning to add another 30 in near future.Aegis already established direct pipeline connectivity with its major industrial customers and its year long experience in this field is very crucial and positive factor in an  industry like this where lot of procedures and formalities are required to get permission from government authorities to start with.In 2012 company started bunker fuels to ships and planning to introduce the same facility at more locations.For the past few quarters company’s financial performance negatively affected by hedging loss which is expected to end by the new financial year.Moreover , government's decision to restrict the supply of subsidised gas will boost the prospects of its various business divisions. Company having an uninterrupted dividend paying record for the past 10 years and reporting decent numbers. I believe .company’s decisions to expand its  capacity adding new offerings in its portfolio and changing government policies will auger well for Aegis once there is some improvement in the over all revival in our economy. Recommending a BUY on Aegis in a staggered manner with a long term view at  CMP or in any dip below CMP of Rs.125. 

Link to company website HERE

Link to latest AR HERE  

Disc : I have vested interest in A.L.L.

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MARKSANS PHARMA - ON THE COMEBACK TRAIL ?

 

Our economy and stock market is going through a rough patch  for the past many months ( not the indices) .Reasons may vary from weak government,policy paralysis,higher inflation,current account deficit ,crisis in power supply,mining ban ,additional supply of PSU shares ..etc.etc.In mid and small caps space a real carnage is going on where stock prices of many companies ruling around life time or multi year lows.In addition to the above mentioned reasons , I believe one of the major factors affecting the sentiment in small/mid caps is the uncertainty created by the latest SEBI decision to change the trading method for illiquid stock.( not the method but the criteria for fixing the eligibility is the real reason for concern).It seems all market participants including stock exchange authorities,brokers and investors are in full of dark and no clue about the impact of this method on volume and price .I think ,this uncertainty is a major reason for the sharp fall in small/mid caps in past few weeks .There is no takers and hence no market depth for midcaps .Many of the investors are in a wait and watch mood and not ready to take any new commitments before some clarity emerges even they know the fact that many good companies are trading at attractive valuations.This is the feeling many of my friends shared in recent weeks .Some investors even selling their holdings and shifting their positions to other stocks which may excluded from new method based on the declared criteria. I believe ,SEBI is actually ‘burning the house to kill a rat’ .Let us wait one more week and see its implications.

This week’s recommendation is a low priced scrip which is not an illiquid stock under  new criteria !! .Reason  is not this alone but some more  positive developments happening in this company after a long period.MARKSANS PHARMA  is owned by Mr Mark Saldhana , the younger brother of the MD of Glenmark Pharma .Actually the name GLENMARK derived from the name of two brothers GLEN Saldhana and MARK Saldhana.In 2003 Glenmark Pharma’s wholly-owned subsidiary Glenmark Laboratories de-merged from it and later in 2005 this division merged with another listed company  Tasc Pharma .Then its name changed to the present one MARKSANS PHARMA and Mark Saldhana took charge of this company.Company’s performance was satisfactory till 2008 and thereafter  derailed due to different reasons.It raised FCCB for overseas buyouts and  took over some foregin companies in UK and Australia which did not perform initially, as expected.FCCB holders not converted their bonds  due to lower stock price and the repayment of the same ends as a huge burden on the company. As in the case of many other company’s issed FCCB’s during that period ,Indian currency’s diminishing valuation added fuel to fire.

 When we analyse in detail,it is clear that the two major reasons for huge loss in past many years  and complete erosion of net worth of this company is FCCB obligation and loss of its API division. Last year company exited from API and sold out this loss making unit.In a surprising announcement ( Read it HERE) ,in this month , company informed BSE  that it  has entered into a Settlement Agreement with the holders of Foreign Currency Convertible Bonds.Even the nature and means of this settlement not explained,MD's open market purchase of shares in the past few days indicating they have reached in a favorable settlement terms for  the company and some clear ideas in mind.Last year promoters subscribed preferential issue and hiked their stake to 51% from 48% .

After selling out its API division, company  now concentrating in Formulations,CRAMS and Bio pharmaceuticals . Oncology, Gastroenterology, Antidiabetic, Cardiovascular, Pain Management, and Gynecology  are selected as key areas of interest.Of late company’s Australian Subsidiary( Link HERE) is also started to perform . Since company’s foreign operations are bigger than Indian business ,true picture is not reflecting in its stand alone result.Its consolidated Sales was Rs.357 Cr where sales from India was just Rs.156 Cr in FY 2012. In the just preceding  two quarters,both Indian and foreign operations are showing significant improvement.

                   

                                                                                           This low priced scrip selected mainly because of four  reasons – Pedigree of promoter,Fair chance for a Settlement of FCCB with favorable and practical terms and conditions , Improved financial performance,promoter’s effort to increase stake through preferential issue and open market purchase.We know last year’ fantastic turn around of another big pharma company started only after a similar settlement of FCCB obligation.Let us wait and see what will happen for this one.Those willing to take extreme risk and enough patience may try it around CMP Rs.4/- .Stock listed both in NSE and BSE.

Link to company's old website (new one is  under construction) - HERE 

Link to Company's UK Subsidiary HERE

Link to Company's Australian  Subsidiary HERE

Link to latest Annual Report HERE

 

Disc: I have vested interest in MPL

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NILE LTD - UPDATE

We discussed about this company and its special situation in March 2010.( Old Posting HERE) . As per the terms of settlement of  legal dispute between NILE LTD and GMM Pfaudler , Court allowed 48 months from March 2009  to dispose the shares of NILE  held by GMM in open market .( Details HERE) .Till the end of latest  December quarter GMM and its associates held 58000 shares in this company .Considering the volume traded post December and the expiry of permitted time period,let us assume that the completion of exit may happen at any time from now.After my last posting ,promoters increased their stake from 47.79 % to 49.01 % and also sold its Glass Lined Equipment Division.Now company is operating only in one segment ,ie, secondary manufacturing of Lead and Lead Alloys .NILE reported a turnover of Rs.62 Cr and a net profit of Rs.2.19 Cr in latest December quarter .On a small equity of Rs.3 Cr quarterly EPS was Rs.7 .It is a dividend paying company and  declared a dividend of 20 % in last year .Battery manufacturers are the major customers of company's product and NILE having an exclusive marketing relationship with Amara Raja Batteries.Due to lower sales of Automobiles ,offtake of batteries by OEM's may be slow but power shortage in southern states  offering another opportunity for battery makers  in the form of inverters and solar energy storage.Two main negative points are - being a commodity type business ,price of lead showing cyclical trends and the another one is the power shortage issue in AP where company's two plants are located.Even considering all these factors, I believe limited  exposure @ CMP of Rs.89  is suitable for long term investors with some risk appetite.

Link to Company website HERE 

Link to latest AR.HERE

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ENGINEERING / CAPITAL GOODS STOCKS - A GOOD OPPORTUNITY

Even if it is exhibiting the tendency of cyclical nature,Engineering and Capital goods industry is the back bone of any growing economy . In our country most of the companies operating in this sector is currently facing serious challenges due to lower order book position and delay in execution .Reasons are many like slowness in implementing government  policies,intervention of courts,shortage of power,higher interest rate ..etc ..etc.Even in the past, this industry faces these type hiccups many times and later came out of such bad situations.Most of the listed companies from this space  are long existing in the same industry and the management of such companies already experienced many such ups and downs.Share price of many companies are now ruling at attractive valuations for genuine long term investors.Negative sentiment is surrounding this industry and everyone is in a hurry to dispose even quality stocks from this sector at throw away price, thinking there is no tomorrow .Considering the volatility and panic gripped in the mid/small caps one can't say they will not go down further .But in practical it is very difficult to catch everything at bottom and no meaning in waiting for that .One strategy we can adopt in such a situation is - accumulating small lots of quality stocks in a phased manner and thus keep our average at reasonable level.Such a method will help us to reap the benefits when the industry starts its come back and at the same time avoid the possibility of sleeplessness during testing times.Waiting with patience may be longer but the reward will be equally big.
TRF @ Rs.167,TIL @ Rs.160,InternationalCombustion @ Rs.167 ,Tecpro Systems @ Rs.109 ,CMI FPE @ Rs.475,Eimco Elecon @ Rs.153 ,Ingersoll Rand @ Rs.400 ..etc are some stocks falling in this category. One thing is very important- no meaning in looking at the trading screen from the very next day onwards after the purchasing these stocks .I believe it is the time to become greedy in this sector and not fearful.

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ABBOTT INDIA - BUY

Abbot India - a 75 % subsidiary of Illinois based   Abbott Laboratories -operating in pharmaceutical, nutritional and diagnostic segments in India.Company is one of the best MNC pharma company currently available at attractive valuation. In past few years ,parent company is very aggressive in India to expand its business.As part of its global integration in 2012 Abbot India merged Solvay India with itself.Abbot group operating in India through three units viz  Abbott India, Abbott Healthcare and Abbott True Care.In these days , many MNC pharma companies are keen only to develop their unlisted arms and ignoring the listed units .But Abbot is an exception and the parent is taking equal efforts to grow all of its units .The listed  units concentrating in  pain management, gastroenterology, thyroid and anesthesiology and  Its main brands includes  Brufen, Digene , Forane..etc. For FY 2012 Company reported a turnover of Rs.1652 cr ( Rs.1477 Cr in previous year) and a net profit of Rs.145 Cr ( Rs.120 Cr) .EPS was Rs.68 and declared a dividend of Rs.17. A good stock for investment @ CMP Rs.1360 for long term investors. .

Link to Company website HERE

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