Click HERE for Result update.
Thursday, 26 July 2012
Friday, 20 July 2012
Premier Explosives is a 30 year old Secunderabad based manufacturer of Explosives & Accessories.Company having three plants in Andhra Pradesh one each in Maharastra and Madhya Pradesh.PEL is producing a wide range of explosives used in Mining and Defense.Over the past years company established as dominant player in this strictly controlled industry with indigenously developed technology and a well established marketing network.PEL producing various types of electric & non-electric detonators , detonating cord & pentolite boosters, Smoke markers and other bulk explosives.Company having more than 90 explosives storing facilities across the country approved by the authorities and also possessing close to 125 explosive vans for the timely delivery of its products.In defense segment PEL having business alliances with Satish Dhawan Space Centre (SHAR) Sriharikota, SFC,Jagdalpur and Armament Research & Development Establishment (ARDE )Pune for supplying missile fuel .Company also started export in recent times which shows a growth of 40% last year.A major portion of its revenue is generated from the mining sector .Even the mining activities are disrupted in many parts especially in Andra Pradesh ,company showing improvement in its operations.Now the restrictions on mining operations are expected to lift at least partially in next few months which will help the company going forward.To minimize the effect of such restrictions company is now eying more exports and increasing its operation in defense sector.Government’s new policy to permit more participation for private players in defense sector is another positive for the company.Being an established player in a highly regulated industry company enjoying an early mover advantage.Due to the nature of this industry the entry barrier of new players is also very high.For the last financial year PEL posted a turnover of Rs.108 Cr ,a net profit of Rs.12 Cr and an EPS of Rs.15/-. Company also declared a dividend of 25 %.At CMP of Rs.73 it is trading at a P/E of below 5.Considering the entry barrier in this industry,its strong relations with government owned defense companies and the chances of some relaxation in mining activities – recommending a BUY only for long term investors at CMP of Rs.73/-.
Wednesday, 18 July 2012
Now it is four months and almost 100% appreciation on Granules India from my first BUY recommendation @ Rs.79/- (For old posting click HERE ). Now I am receiving lot of e-mails and comments asking whether one should book profit at current level.In my opinion ,even the movement is very sharp it is not over valued while we comparing it with its peers and the full extent of future positives not reflecting even at current price level.Hence I recommending a HOLD at current price level and even a BUY for those with high risk appetite and patience to wait above one year.It is a point to note that , on a consolidated basis its last quarter includes a foreign exchange gain of about Rs.8 Cr and this may or may not repeat in the upcoming first quarter.So it is prudent not to build high expectation while we approaching the result on 26/07/2012.The real benefit of expansion is expected to start only from third quarter and those who are buying at this rate should show enough patience.
Monday, 16 July 2012
I have recommended a BUY on Sabero Organics about 6 months back @ Rs.55/-(For old report Click HERE) which is currently trading around Rs.130/-. For the quarter ended June 2012, company posted excellent result which clearly indicating the success of the strategy initiated by the new management. Company posted sales growth of almost 100% and reduced the loss substantially. Considering the strength and experience of Murugappa group in agriculture related business ,I feel the good days are just coming for this company and a long way to go.Even after about 130% rise from the initially recommended price ,recommending to HOLD for long term and any dip below Rs.115/- may take as an opportunity to add more.Stock will be shifted to 'T' group wef .20/07/2012
Friday, 13 July 2012
Everything with a name tag of Gelatine is buzzing in Dalal Street for the past few weeks.I have already recommended two of these companies ,Nitta Gelatine @ Rs.86 (now quoting around Rs.146) and Narmada Gelatin @ Rs.95 (CMP is Rs.138).Now it is the time of India gelatine (BSE - 531253) This 40 year old KVS group company is in the same line of business of the other two above mentioned companies –producing Pharma , Food Grade and industrial gelatine and Ossein .Japan based Nippi Inc. Having 10% equity stake and Konica Gelatin having technical collaboration with India Gelatine.Company’s main raw material is Crushed animal bone.Company selling its products both in export and domestic market.
It is foolishness to buy any stock only because of price movement and without a reason,especially at its 52 week high.So let us look into the major factors led to the turnaround of the fortunes of this industry.First of all,sharp improvement of demand from the pharma sector for manufacturing of capsules and at the same time lower capacity addition for gelatine due to stringent pollution control norms.The next and most important factor is, some developments in global level.In mid 2010,Paris based OIE (Office Internationale de Epizooties) which is the monitoring authority of animal health worldwide upgraded India’s status to category 1.At the same time this same authority downgraded some nations and these decisions are based on Mad Cow Disease occurred in these countries.In a later review they maintain the status quo.In such a situation foreign countries preferred Indian Products (being a product from animal bone). This special situation created shortage of quality gelatine in global market and results in sharp improvement of prices. On the other hand In India ,Capsule makers who were importing gelatine from overseas market turn to Indian product due to overseas price increase and sharp depreciation of Indian Currency.Over all this situation helps gelatine makers from India a lot and it is expecting to continue in medium term due to increasing demand from user industries,repeated report of Mad Cow Diseases from various foreign countries,low availability of raw material,absence of capacity addition due to pollution issues .etc.Even the price of raw material increased about 25% in last year, companies could easily pass on the same to its customers.
India Gelatine posted its best ever result in recent past in last quarter and this trend is expected to continue in next few too.For the full year ended March ,company posted a Sales of Rs.101 Cr,net profit of Rs.7 Cr and an EPS of Rs.7.5.It is an interesting point to note that out of the 9.4 Cr equity of the company about 95% shares are issued through bonus issues.Company declared bonus shares 5 times in the past after the public issue.For the past four years company is paying dividends without any interruption.India Gelatine currently having a book value of Rs.110/- and trading now @Rs.66/- which is almost half of its book value.Recommending this debt free company as a BUY at CMP of Rs.66 even if it is at its 52 week high.
It is foolishness to buy any stock only because of price movement and without a reason,especially at its 52 week high.So let us look into the major factors led to the turnaround of the fortunes of this industry.First of all,sharp improvement of demand from the pharma sector for manufacturing of capsules and at the same time lower capacity addition for gelatine due to stringent pollution control norms.The next and most important factor is, some developments in global level.In mid 2010,Paris based OIE (Office Internationale de Epizooties) which is the monitoring authority of animal health worldwide upgraded India’s status to category 1.At the same time this same authority downgraded some nations and these decisions are based on Mad Cow Disease occurred in these countries.In a later review they maintain the status quo.In such a situation foreign countries preferred Indian Products (being a product from animal bone). This special situation created shortage of quality gelatine in global market and results in sharp improvement of prices. On the other hand In India ,Capsule makers who were importing gelatine from overseas market turn to Indian product due to overseas price increase and sharp depreciation of Indian Currency.Over all this situation helps gelatine makers from India a lot and it is expecting to continue in medium term due to increasing demand from user industries,repeated report of Mad Cow Diseases from various foreign countries,low availability of raw material,absence of capacity addition due to pollution issues .etc.Even the price of raw material increased about 25% in last year, companies could easily pass on the same to its customers.
India Gelatine posted its best ever result in recent past in last quarter and this trend is expected to continue in next few too.For the full year ended March ,company posted a Sales of Rs.101 Cr,net profit of Rs.7 Cr and an EPS of Rs.7.5.It is an interesting point to note that out of the 9.4 Cr equity of the company about 95% shares are issued through bonus issues.Company declared bonus shares 5 times in the past after the public issue.For the past four years company is paying dividends without any interruption.India Gelatine currently having a book value of Rs.110/- and trading now @Rs.66/- which is almost half of its book value.Recommending this debt free company as a BUY at CMP of Rs.66 even if it is at its 52 week high.
Click HERE for old posting on Nitta Gelatine
Click HERE for old posting on Narmada Gelatine
Friday, 6 July 2012
Kale Consultants is a mid size IT company focusing in aviation ,Travel and Tourism Sector.What is important is the solid performance of the company even in a very tough environment in these sectors.It make possible by creating a niche in offerings. In 2011 ,Spain based AccelyaHolding World took over the control of the company.Accelya is a pioneer in airline software and BPO service for the travel industry for past 30 years.This company having operations in 104 countries across the world and handling the settlement of 40% total ticket sales through travel agents. With the support of Accelya ,KALE is offering comprehensive solution to the financial and decision support needs of an airline.Many of the renowned airlines like Gulf Air,Air India,Etihad,Jet Airways,Continental Airlines,Air France,Delta,Air New Zealand ,South African Airways..etc are the customers of Kale Consultants.Company’s offering in Passenger Revenue Accounting (PRA) Solutions includes – REVERA ,PRISM,APEX and AMBER.Kale’s other offerings for this industry is for Audit Services,Financial Management,Business Intelligence,Cargo Service..etc. Accelya made an open offer @ Rs.172 for 20 % stake and thereafter a buy back up to a maximum price of Rs.160/-..To align with the accounting period of parent company , Kale’s FY is from 1st July to 30th June.For the latest March quarter Company posted a turnover of Rs.54 Cr and a net profit of Rs.8.7 Cr .As I mentioned above , even in this tough situation in the user industry company could survive and grow and emerge as a leader. Now with the help of a well experienced patron with operations in almost all countries around the world KALE CONSULTANTS is expected to emerge as a winner going forward.At CMP of Rs.126/- ,buy it for medium to long term.
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