Wednesday, October 30, 2013

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

Saturday, October 26, 2013

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

Wednesday, October 23, 2013

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

Saturday, October 19, 2013

SECTOR FOCUS - OIL EXPLORATION AND ALLIED SERVICES CONT...

2) SELAN EXPLORATION

Selan Exploration is another company from this sector one can look into.I have already recommended this stock in November 2010 even at a higher price( Use the search option for details) .Due to the bleak picture of the  industry ,share price came down thereafter. As I mentioned last week ,I hope a reversal in the fortunes of this industry in future . During  this week itself stock price gained by  Rs.20 .Requesting to Buy in a correction around Rs.280 level and HOLD for long term.

Friday, October 18, 2013

SABERO ORGANICS GUJARAT - RESULT UPDATE

Sabero Organics Gujarat initially recommend @ Rs.55  ( For old posting ,click HERE ) which is currently trading around Rs.137 .For the latest September quarter,company reported a turnover of Rs.214 Cr v/s Rs.136 Cr  and a net profit of Rs.16 Vr v/s Rs.4 Cr .In the the first half itself  ,company reported a consolidated EPS of Rs.7.63 v/s Rs.0.63 . It is expected to perform well going forward due to hike in its product price ,higher demand due to good monsoon,better realisation due to rupee depreciation..etc..Recommending to HOLD the stock for long term.

Thursday, October 17, 2013

FAIRFIELD ATLAS LTD - EXIT

Fairfield Atlas recommended @ Rs.69 ( Recommendation Link HERE ) and currently trading @ Rs.239 ,which is an appreciation of more than 300% .Recently company came out with a reverse book buiding process as part of de-listing offer and they accepted the discovered  price of Rs.245 .Stock will be traded through stock exchanges  till 21/09/2013 only Requesting either sell the stocks through exchange or accept the de-listing offer

Saturday, October 12, 2013

SECTOR FOCUS - OIL EXPLORATION AND ALLIED SERVICES ...



Generally price movement of most of the commodities in global markets are  closely linked with growth of economies.Some commodities  like oil are very sensitive and aggressively moving in tandem with global growth indicators.We have seen a sharp crash in Crude oil prices few years back when US  and European economies  were  in a fragile shape and a sharp recovery later even with very early signs of relief in US economy alone. If this is any indication,there is every chance for a spike in oil prices once there  is further improvement in US and some better feeling in EU.Since India is a large importer of  crude oil ,such a  situation may not be good for  Indian economy .But some sectors will benefit immensely from a situation like this. One of the major beneficiary  will be the firms providing services for oil exploration companies. I believe ,this is the time to look into such opportunities with a long term view.As many of you are aware, companies from such sectors under performed for the past 4 or 5 years.Due to this long period of recessionary situation in this industry , a good consolidation happened during this period and only the fittest are surviving now.Since existing players even find it difficult to keep their business afloat ,no major capacity addition happened during this period .Moreover ,adding additional capacity on short notice  is not possible in many cases in this industry.So , capacity constraints will help the remaining players to reap rich benefits once the industry turned around .Let us look into two such companies ,one in this week and another next week.



     1)    ALPHAGEO INDIA






Alphageo was a star during the last boom time of oil exploration Industry .Its stock price hits a high of Rs.1075 in 2008. Ace investors like Rakesh Jhunjunwala,Bharat Jayanthilal Patel,Ashish Kacholia ..etc were the share holders of this small company.( RJ and BJ still holding stake in it) .From the high of Rs.1000 + its share price crashed to sub Rs.20 level during June 2013 ,thanks to the  pathetic business performance during 2012-13 where it reported its worst ever sales during the last ten years.Due to sharp fall in crude prices and policy inaction of Indian Government ,activities in oil exploration sector were standstill  in our country and company could not clinch any major orders for it seismic data services.Man and machine kept idle for long period and promoters forced to bring additional capital by subscribing shares and warrants at a price of Rs.60 during August 2012, to keep the company afloat . As the proverb ‘Necessity is the mother of Invention’  company forced to look beyond India for opportunities which now seems clicked and giving a new lease of life for this company.

With the experience and credibility of India’s  largest inland integrated seismic services provider from the private sector ,for the first time ,Alphageo awarded Rs.75 Cr order from Myanmar ( Myanmar is a hot destination for OE now) by out bidding Chinese companies.Out of these, almost Rs.45 Cr orders will be executed in this FY itself. This is a big victory for the company and successful execution of these orders are expected to bring further business outside India .In the past ,Alphageo reported very good performance in timely execution and company having very good experience in working with tough terrains like Assam.Manipur,Meghalaya ..etc.In addition to this , with revival in major economies and thus increase in crude prices ,oil exploration activities are heating  up all around the world. Recently company awarded an order for Rs.17 Cr from Oil India for 3D Seismic data acquisition.


 In another  important development ,India Government is planning to launch the 10th round of auction of oil and gas blocks in next January. Government is expected to auction as much as 68 blocks this time.Since there is good improvement in oil prices over the past few months  NELP 10 is expected to attract more investors this time. Oil minister recently mentioned as  “Having learnt some lesson from 1 to 9 rounds (of NELP), 10th round will be a perfect round,” the Minister said adding hindrances faced in the previous rounds would be removed.  Any effort to remove delay in decisions and avoid red tape will attract more investors and more activity in this sector ultimately create more business opportunities  for companies like Alphageo.

  
I hope ,this is the time of revival in this industry both in India and all over the world and also the beginning of a new cycle. Promoters are taking every steps to improve the business and even during this tough business environment they recently spend Rs.13 Crore for technology up gradation to keep the company accessible for most modern technology in Seismic Data acquisition and analysis. This is a high margin niche business and the effect of available orders will be visible in its bottom line from here on .With revival in US and some signs of revival in EU ,oil exploration is a sector to keep in your radar and Alphageo may emerge as a winner from this space.Company offering good chance for appreciation in medium to long term.Stock listed both in NSE and BSE and trading around Rs.38


Link to Company website HERE


Link to  Latest annual Report HERE


Disc : Holding shares of Alphageo

Wednesday, October 9, 2013

KAVERI SEED COMPANY - UPDATE








Kaveri Seed Company initially recommended @ Rs.272 ,which is currently trading around Rs.1550 ( For old posting Click HERE) .Today Economic Times reported that , Bayer Cropscience - the Indian subsidiary of  German Chemical Major Bayer AG - is planning to take a  stake in Kaveri seed .( Read the news HERE ).If it materialize ,it will help the company to bring latest technology in its core business .Recommending to HOLD the stock for long term.

Saturday, October 5, 2013

BRITANNIA INDUSTRIES / PERSISTENT SYSTEMS - UPDATE

Recently received lot of e-mails from readers  requesting to suggest current stand on two old recommendations , which hit their life time high  during this week - BRITANNIA INDUSTRIES and PERSISTENT SYSTEMS.


1) BRITANNIA INDUTSRIES LTD.





This stock recommended last year @ Rs.493 ,which recently recorded its life time high @ Rs 864 ( For old posting ,Click HERE ). Now  company is going through a transition phase from a low margin biscuit maker  to a high margin food company under the new leadership .Promoters are also taking more attention in these days to bring this company into forefront of their group businesses.Good monsoon is expected to keep  major raw material prices at reasonable level in next year.If the company can report similar performance which it reported in last two quarters ,share price may touch even four digit mark .Requesting to HOLD Britannia now and take a final decision post declaration of second quarter result.

2) PERSISTENT SYSTEMS LTD





This stock recommended @ Rs.430 which recorded its life time high yesterday @ Rs.677 .( For old posting ,Click HERE ). Considering its strong balance sheet ,good management ,operations in high potential areas ..etc making it one of the most promising software company from small / mid cap space.Recommending to HOLD the stock for long term.

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