CUMMINS INDIA - BUY

This Pune based company  is a 51% subsidiary of  Cummins Inc of USA.It is one of the largest manufacturers of Diesel Engines in India .Company’s products are used in industries like Auto,Power Generation..etc.Company having manufacturing facilities to  produce Diesel Engines with a capacity of 18 HP to 3500 HP.In fact ,Cummins is one of the biggest beneficiary of India’s  power deficit  which may  continue for many years due to lack of proper policy decisions and uncertainties related with environmental clearance issues. Company currently commanding a 35 % market share of DG set business and they are now going  to start the production of  Low Horse Power Gensets in near future.This new facility is under implementation at Phaltan with a production capacity of  50,000 gen sets which will be commissioned in next one year.Honda Siel Power is currently dominating low HP genset market .With advanced technology and well accepted brand name , Cummins is expected to give tough competition to Honda going forward.Parent Company is paying maximum attention to develop business here and planning to make India as a production hub for their overseas demand too.Company is spending large amount for R&D and established a separate wing for this purpose only.Demand for other Industrial purpose engines are also expected to improve with a revival in over all economy. 

Even in this tough business environment company reported a 30% rise in its net profit for the latest March quarter.It is one good company to be included in the core portfolio of long term investors @ CMP of Rs.520/-

Link to company website HERE

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SEQUENT SCIENTIFIC - UPDATES

1) After a long wait ,finally Sequent's Mangalore facility approved by the US FDA.( Read the announcement HERE).This is the first US FDA approval for the company and it  will be  a milestone for company's further growth .( Old posting on Sequent Scientific HERE)

2) Chayadeep Ventures LLP ,one of the promoters of Sequent is now acquiring the shares of Aanjaneya Lifecare  through open market purchases . ( Nse Bulk Deal  Data HERE)

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ZICOM ELECTRONIC SECURITY SYSTEMS - WATCHING WITH AN EAGLE EYE ?

 

 



















By the above caption I am not referring just the business of this company, but something more.Zicom once recommended here  @ Rs.38 in 2011 ( old posting HERE) which is currently trading around Rs.85.As you are aware this is one of the largest player in electronic security devices market in India with a turnover of Rs.485 Cr and a net profit of Rs.16 Cr in last FY. Company's products includes  fire alarm systems, videophones, electronic burglar alarm systems, access control systems, infra-red sensing and CCTV surveillance..etc.With a sharp rise in crime rates all over India this industry is expected to show robust growth in coming years.Even if there is lot of cheap unbranded  products are importing from China ,quality and servicing is a real problem for such products and because of this reason Indian customers are now preferring the products offered by Indian Companies with large sales and service network.Godrej and Boyce Manufacturing Company,Zicom and Security vision are the three major organised players in this industry.Zicom having many overseas subsidiaries outside India especially in Middle East and company showing very good growth rate for the past many years.Even the industry having bright future and the company showing robust growth rate ,stock market is giving only lower valuation for the stock of Zicom.With an EPS of Rs.15 ( Consolidated) it is still available at a P/E close to just 5. Currently promoters are holding just 22 % stake in this company and this lower promoter stake may be a reason for markets dislike .But if the recent activities of Godrej Group is any indication they are taking this lower promoter stake as an opportunity.Ensemble Holdings & Finance Ltd a Godrej Group company is slowly buying the shares of Zicom from open market in past few quarters.Godrej bought 2.26 % stake in last two quarters .Another investor  one Mr.Venu Raman Kumar holding close to 20% stake in Zicom personally and through his investment arm Aark Singapore.There is even an interesting link between Godrej Group and V R Kumar.As a private investor and  venture capitalist he started his operations in 2000 with an initial funding support of Godrej Group itself.
                                                                        
                                                                                     Godrej group is very successful in spotting opportunities and expanding their business through mergers and acquisitions.They executed many such M&A's for Godrej Consumer Products in past many years in international level.If we trace back the history of Godrej Group they are not taking passive investment's in outside companies otherwise they have some real business interests.Here, Godrej is  the main competitor of Zicom  and they know the business very well .
Now Raman Kumar and Godrej together holding close to 23 % stake and another 10% is held by institutions including General Insurance Corporation. Considering all the factors mainly the history of Godrej Group , I strongly believe - Bird is already in the Cage and the door will shut at appropriate time .

CMP of Zicom is Rs.85/- ,traded both in NSE and BSE.


Link to company website HERE

Disc: I have Vested interest in Zicom

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GRANULES INDIA - RESULT UPDATE

On a consolidated basis Granules India reported a sales of Rs.204 Cr v/s Rs.188 Cr in March quarter.Company reported a net profit of Rs.12 Cr v/s Rs.16 Cr during this period.But in last year same quarter there was a forex gain of Rs.8 Cr out of Rs.16 Cr net profit .If we exclude this exceptional income,company's this quarter profit is almost 50% higher than that of last year same quarter.Company also declared a dividend of 20% for FY 2012-13 .Its full year EPS is Rs.16 .

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CANFIN HOMES - BUY

Canfin Homes is the housing finance arm of Canara bank .Company’s major concentration is in south India especially Bangalore .Till 2012 company’s growth was very slow ,but from 2012 onwards management turned aggressive in expanding branch network.Company opened 17 new branches in 2012-13 FY alone and the total branches are 69 now.This number is very important when we consider the fact that ,for the past 25 years ( 1987 to 2012 ) company started just 52 branches only. Company concentrating in retail loan ,and  percentage of corporate loan is very low . About  95 per cent of the advances  given to  employed  people and the average loan size is  Rs. 15 lakh.This help the company to keep a very good asset quality where its Gross NPA is below 1 % and net NPA is Zero.Company is expected to report a CAGR of 40-45% in disbursements  for  FY12-14.Company’s net interest margin is one of the best in the industry. Since company reported a boring growth rate for past many years ,investors does not consider Canfin as a serious player in this sector and ignored this stock till now.But if the recent efforts by the management is any indication for their future plans ,there is very good chance for a sharp re- rating in coming years.Company’s stock is currently trading around Rs.145 where its book value will be close to Rs.185 by the year end .Company is an uninterrupted dividend payer which declared 30 % in last FY.Canfin Homes reported a profit of Rs.43 Cr and an EPS of Rs.21 in FY 2012. Company is expected to report an EPS of Rs.33 and Rs.40 each in FY 14 and FY 15 .At current market of Rs.145 even low risk investors can consider this stock with a long term view.

Link to company website HERE

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CROMPTON GREAVES LTD - ACCUMULATE

Crompton Greaves is an India based multinational operating in power ,consumer electronics and lighting space. CG is part of Gautham Thaper led Avantha Group and operating many manufacturing facilities across the world which includes Pauwels (Belgium), Gans(Hungary, Microsol (Ireland), Sonomatra (France), MSE Power Systems (USA) , Power Technology Solutions (UK,  Emotron (Sweden), QEI Inc (USA) and ZIV Group (Spain) .In India Comapny have 22 manufacturing facilities for its various products.

Company’s operations are broadly classified into three divisions – Power Systems,Industrial Products and Consumer electronics.Under the power systems division company manufacturing  Transformers,Switchgear,T&D Systems,Protection Control products ..etc.CG is one of the 10 largest Transformer manufacturers in the world. Its industrial systems division producing Generators,Motors,Alternators..etc. Under the consumer products division company is a reputed manufacturer of Fans,Pumps,Lighting equipments,Home appliances..etc.During the last three years CG’s stock price crashed substantially mainly due to three  reasons.Company reported negative growth in many verticals due to  of overall de-growth  in major economies .Another reason is the cost involved in restructuring its Belgium operations which just concluded .In addition to this  an untimely aircraft purchase and share sale of its erstwhile managing director of the company, Mr SM Trehan dented the image of company and its share price now landed around its multi year low of Rs.90 from a high of Rs.458 ( stock prices adjusted to  split of FV) .I believe ,the protest raised by institutional investors on aircraft purchase issue will help the company to rethink about the importance of fair corporate governance and avoid such untimely decisions in future.In the business front company is expected to start improving from hereon  and report robust growth from FY 2013-14 onwards from a loss in this FY.This is the time to accumulate CG in a phased manner with long term view @ CMP of Rs.90 or in any dip.

Link to company website HERE

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JAIN IRRIGATION - BUY

 

                  

 

While analysing EPC Industrie ,we have discussed about the potential and road blocks of micro irrigation industry in India in detail.Till now this industry is mainly driven by subsidy provided by governments and the delay in releasing subsidy by various states eroded the financial position  of companies operating in this sector.From last year onwards companies are taking efforts to change the business model  to reduce high receivable days and improve cash collection and now they are not  taking the responsibility of subsidy collection .This shift in business model partially affected the growth during this transformation phase.But ,on the other side ,potential is very vast in a water scarce country like India where a lion share of farm land  is still irrigated through flooded irrigation method.New farming techniques like precision farming also increasing the potential of MIS.Jain Irrigation is the second largest micro irrigation company in the world which is operating in other parts through various subsidiaries .Other than MIS ,Jain having presence in other sectors like plastic and food processing .Repeating drought like situation in India forcing governments to allocate more funds for irrigation and Jain is one of the major beneficiary .Recently Maharashtra Government decided  to make drip irrigation mandatory for sugarcane in next three to five years ( Read news HERE) . I believe many states and many crops will be forced to follow this in coming years .  In my opinion ,in another few years MIS will change to a necessity from a subsidy driven business due to changing climate and changing farming techniques.Revival in US economy is also positive for the company  where the company having larger presence.Company is now taking every efforts to clean its balance sheet .This management have enough experience and expertise in handling such situations and they proved the same even in the  past .They bring back the company from near collapse ( from first half of 1990's) to the position of world leader in 10 year.Promoters are one of the very few business houses showing higher level of business ethics in Indian Corporate world too. I believe , the worst will be over for Jain Irrigation in another few quarters and most of the negatives are already reflecting in its current market price.Recommending a buy in SIP mode for long term investors from CMP of Rs.57

Related Readings

1) Jain Irrigation Systems: Learning from mistakes

2) Strawberry fields: Bhavarlal Jain formulating strategies to sustain Jain Irrigation for 100 years

Link to Company Website HERE

Links to its Subsidiaries  

1)  NaanDan Jain Israel

2) Jain Irrigation Inc USA 

3) Jain Sulama Turkey

4) Sleaford Quality Foods USA

5) Nucedar Mills Inc USA

6) Cascade Specialties Inc USA

Disc: I have vested interest in JIS

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