LA-OPALA RG,BRITANNIA INDUSTRIES - RESULT UPDATES

LaOpala RG  initially recommended @ Rs.66 ( Old posting HERE)  which is currently trading  @ Rs.561.Company reported a  turnoverof  Rs.40 Cr v/s Rs.37 Cr and net profit of Rs.5.89 Cr to Rs.4.47 Cr in.September  quarter  .EPS is Rs.5.56 v/s Rs.4.42 .

Recommending to HOLD the stock

Britannia Industries earlier  recommended @ Rs.493 ( old posting  HERE )  ,which is currently trading around Rs.875 .Today company reported  good numbers for the quarter ended September where turnover is Rs.1740 Cr v/s Rs.1542 Cr and net profit is Rs.98 Cr v/s Rs.59 cr .
 Recommending to HOLD the stock

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AMARA RAJA BATTERIES LTD - BUY ON CORRECTION

   

                                     

Amara Raja Battery is a company which need no explanation for investors .It is one of the star performer in  Indian stock market  for the past many years. Company is the second largest battery maker in India next to Exide  and the leader in Industrial battery segment.Company having a 26% equity participation and technical collaboration with US conglomerate JohnsonControls.ARB introduced VRLA technology in India and with this ARB emerged  as a strong  competitor to then undisputed leader - Exide.From an Industrial battery maker ,now ARB grown as a known player in automotive segment and currently the share in auto-industrial batteries stand as 60:40 .In auto sector itself ,company’s major sales coming from replacement market where the margins are almost double compared with OEM supply.To mitigate the impact of slow growth in auto sector ,company is now looking into home UPS segment where potential is immense due to power shortage issues.

                                                    Since company is running near to 100% capacity utilisation in all segments ,it is now expanding its production capacities across segments.Part of this expanded capacity will be commercialised in the second half of this FY and and the rest in next FY.It is increasing its Medium Valve Regulated Lead Acid (MVRLA) battery capacity from 1.8 million unit per annum to 3.60 million units per annum (production to start from Q3 FY 2013-14) , Large Valve Regulated Lead Acid (LVRLA) battery capacity from 760  million Ah per annum to 1 billion Ah per annum (production to start from Q4 FY 2013-14), Four-wheeler battery capacity from 5.6 million unit per annum to 8.2 million units per annum (production to start from Q2 FY 2014-15), Two-wheeler battery capacity from 4.8 million unit per annum to 8.4 million units per annum (production to start from Q3 FY 2013-14). As per company estimates its revenue will increase by Rs.1675 Cr due to this capacity expansion.I believe .company’s brands AMARON,QUANTA,POWER STACK,POWER SLEEK,POWER ZONE ..etc will eat the market share of the main competitor in a big way once the capacity expansion completed.

Led by a team of rural youth ,Amara Raja always paying much attention to practical wisdom and hard work in managing and   growing their company rather than copy book style theoretical approach.In last five years its profit grown from Rs.80 Cr to Rs.286 Cr and the ongoing capacity expansion may take it to a new level. Company is going to declare its second quarter result on 14^thNovember.Due to capacity constraints and unfavourable currency movements during this quarter ,possibility for a temporary blip in performance can’t be ruled out .If it happens and there is any knee jerk reaction on account of this ,an entry around Rs.280 is an excellent opportunity for long term investors.

Link to Websites 

Link 1

Link 2

Disc: I have vested interest in ARB

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GRANULES INDIA - UPDATE

Granules India to buy Auctus Pharma for Rs 120 crore

 

Hyderabad, Nov 4:  

Tablet maker Granules India has entered into an agreement to acquire Auctus Pharma, a manufacturer of Active Pharmaceutical Ingredients (APIs), for Rs 120 crore."The acquisition of Auctus fits into our strategy of being a fully integrated manufacturer, while diversifying our product portfolio by adding high-value products with significant market demand. Auctus provides Granules with a meaningful API platform with a US FDA approved site to strengthen our finished dosage division,’ Krishna Prasad, Managing Director of Granules India, said in a release issued on Monday.

Auctus manufacturing units

Hyderabad-based Auctus has two manufacturing facilities, an API facility at Pharmacity in Visakhapatnam and an Intermediate facility in Hyderabad. The API facility has approvals from leading regulatory agencies, including the US FDA.Auctus’ product portfolio includes 12 APIs as well as key intermediates of those APIs.

Auctus product portfolio

The portfolio includes APIs in several therapeutic categories such as Antihistaminic, Antihypertensive, Antithrombotic and Anticonvulsant as well as other therapeutic categories.Auctus currently sells its APIs and intermediates to customers in 50 countries. The team and assets from the acquisition will initially operate as a separate division with Granules.The acquisition process would be completed in the next three to six months, the Hyderabad-based company said in the release.

R&D unit in Hyderabad

Granules also announced the opening of a 10,000 sq. ft. R&D facility in Hyderabad.

The new R&D unit will focus on full-scale generic API development and will supplement the company’s existing R&D facility in Pune which currently focuses on sustainable technology development.

 Link to Auctus Pharma HERE

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Courtesy : The Hindu Business Line.

 

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DIWALI WISHES ......

Recommending few stocks below for your consideration on this special event :

·      IDFC  (CMP Rs.112) 

# Showing good resilience even in tough business environment.

# Expecting improvement in target sectors

# Good balance sheet

# Potential candidate for banking License, which may help (at least sentimentally) for a re-rating .
 Link to company website HERE

 DEWAN HOUSING FINANCE (CMP- Rs.160)

# India’s third largest housing finance company .

# Good presence in low and middle  income segments of Tier II and III cities ,where the real potential lies in.    

# Cheaply valued stock from this sector with a P/E of less   than 5 which is 1/3^rd of the average P/E of other companies in the same sector.

# showing steady growth in business for the past many years.

Link to company website HERE

   TATA STEEL (CMP- Rs 336)

# Expecting improvement in target sectors

# Effect of recent and ongoing capacity expansion

# Better realisation from overseas operations 

 Link to company website HERE

·      WOCKHARDT (CMP – Rs.445)

# Distressed valuation due to regulatory overhang

# Possibility of clearance by next Diwali or near to it.

 Link to company website HERE

 

Recently discussed the current situation of Wockhardt in detail .Due to pending USFDA decision, better to avoid buying this stock in single lot.Buy only 30% of the desired qty now and wait with patience .If USFDA decision is negative ,one may get better  opportunity to buy more either at the time of announcement or at the time of declaration of the quarterly result post implementation of decision

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GRANULES INDIA -RESULT UPDATE

Granules India reported a 52 % rise in top line and an 87 % jump in net profit for the quarter ended September compared with same period of last year. Half year EPS is close to Rs.15 which is almost equal to last full year EPS .Management expressed their confidence in attaining more customer approvals in the second half which will help the company to scale up the business further.

Company closed down its Singapore subsidiary which is a dormant one and not  commenced any activity so far with a  Share Capital of the just  Rs.5 lakhs. No negative impact on that account.

In addition to this ,today India Government imposed an anti dumping duty of Rs.50000 ( approx) per ton on the imported paracetamol from China , which will indirectly help the company . ( Read the news HERE )



In addition to the ongoing capacity expansions for existing products ,Company's new joint venture with Belgium based  Ajinomoto Omnichem for producing high margin niche API's are expected to start functioning at the end of next financial year.  

At the time of June quarter result  I recommended a BUY around Rs.140 level for those having some risk appetite  .( Originally recommended @ Rs.79 HERE ) .Now raising the buy price to Rs.160 and recommending a HOLD at CMP for long term for further gain.


Disc: I have vested interest in GIL

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COX AND KINGS LTD - ACCUMULATE

 

The brand ‘COX and KINGS’  ( C&K) need no explanation not only in India but in many countries around the world.Founded in 1758 in UK ,C&K is the oldest travel  company in the world.After changing many hands ,now this company owned by UK born Mr.ABM Good and India based Mr .Ajit Kerkar.Company came out with an IPO in India in 2009 and listed its stocks both in BSE and NSE .

                                       C&K is one of the largest travel companies in the world with a network in more than 20 countries including India ,Australia,  United Kingdom,USA ,Japan, ,Newzealand ,Sri Lanka , United Arab Emirates..etc. Company offering a wide array of travel related services in the field of Domestic Tourism,Business travel,Outbound tourism,Travel Insurance,currency exchange,Destination management,Visa processing services...etc.Like many other companies,it is not mere an arranger of tours but owns valuable assets like hotels,Mobile homes ..etc.Its hotel chain - Meininger  - runs 16 hotels across 10 cities in Europe with 7340 beds capacity .Recently company started its  720 bed hotel in Brussels, the capital of Belgium . In addition to this ,Company having 1300 permanent  homes and 7000 mobile homes which is using for its Camping business .Added to  own hotels ,C& K having strong tie-up with large hotel chains across the globe .Company is the leader in packaged tours in India with its brands like ‘Duniya Dekho’ ,’Bharat Dekho’..etc.Its European subsidiary is leading  Education and Camping business with well known brands like PGL,NST,Eurocamp,Keycamp..etc.

                                         I know , I could not convey the mammoth picture of this company and its size of operations into your mind through this brief note.Don’t think ,this is a small travel company arranging tour operations  but  it is a true Indian multinational .To get a better insight into company’s business and offerings ,I request you to go through the links of websites of C&K and its subsidiaries listed below.

1)      Cox and Kings

2)      Holidaybreak

3)      Meininger

4)      Eurocamp

5)      Keycamp

Investment rationale

Cox and Kings came out with an IPO in 2009 @ Rs.330  which oversubscribed 6 times.Thereafter  it divided its FV to Rs.5 and currently trading at its all time low price of Rs.87.This sharp price erosion happened mainly  due to the fear of  increasing  debt level which the company raised for acquiring ‘Holidaybreaks’ of UK for an amount of Rs.2250 Cr in an all cash deal. In many cases we have seen the failure of many companies due to high debt acquisitions .It happened  mainly due to lack of synergies in business and  failure to  integrate the business of acquired companies.Here the case is different,the acquired company having wonderful assets and a market leader in many of the segments it is operating and a perfect fit for C&K Almost 90% of its total capacity for education and camping business for 2014 is already booked and this point alone indicating its dominant position in UK market .Its integration with C&K  happened smoothly and the latest financial results giving a clear indication for that.C&K is now planning to introduce many new concepts of acquired companies in India too in near future.In the last FY ,company reported a consolidated turnover of Rs.1808 Cr and a net profit of Rs.248 Cr. In the recent June quarter alone company reported a Sale of Rs.586 Cr and a net profit of Rs.135 Cr. The past few years were not so good for travel and tourism sector due to various reasons.The severe recessionary pressure in western countries affected both tourism and business travels. But now the situation is changing  slowly in favor.The sharp depreciation of Indian currency making India as a preferred destination for many western travelers.On the other side, touring outside the country is becoming a passion even for middle class families in recent times even after rupee depreciation. Malaysia ,Singapore,Hong-Kong,Middle East ,USA ..etc are turning as hot destinations for Indian tourists.With revival in western economies , Business tours are expected to improve in future .With vast network in all these countries   Cox and kings will be one of the biggest beneficiary  of this changing trends.

Some more positive indications

Higher level of debt is considered as the major dampener for C&K .But company already initiated various steps to reduce its debt.In recent past City Venture Capital purchased a 30 % stake in one of C&K’s UK arm (Prometheon Holdings UK) for Rs.765 Cr. In last FY itself  Company re-paid Rs.200 Cr from its free cash flow. Management recently indicated that, their first priority will be the reduction of debt. As an indication of promoters increasing confidence in their company ,they recently hiked their stake through open market purchases. Even one of the most conservative investor in Indian Market - Life Insurance Corporation of India- declared their faith in the company  by acquiring  a 2 %   stake in the latest September  quarter.

                                                                                I believe ,this is a great Indian MNC ( now ) available at an attractive valuation at a time many positives are started to kick in.With robust cash flow and well experienced promoters ,company can manage the debt and move to new heights.Recommending to accumulate the stock . CMP Rs.87


Link to latest Annual Report HERE

 Disc: I have vested interest in C&K

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ACRYSIL INDIA - UPDATE

Acrysil India recommended around Rs.128 CB ( Old posting HERE) . Company distributed bonus shares thereafter in the ratio of 1:2  in 2012.Today stock hits its life time high @ Rs.150.Yesterday HDFC securities recommended a BUY on Acrysil with a target of Rs.191.They projected an EPS of Rs.25.5 in FY 2014-15 .But I believe, company will achieve this projections in this FY itself .For those interested to know more about this company and its unique products ,I am giving the link to HDFC Report below.


HDFC Securities' Report Link HERE

 Still recommending to HOLD the stock for long term

Disc: I have vested interest in Acrysil

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