Link to Corporate Video HERE
Saturday, November 30, 2013
Balaji amines Limited ( BAL) is a chemical manufacturer which introduced many ‘ First of its kind’ import substitute products in India through indigenously developed technology using their R&D skills. BAL is specializing in amines and specialty chemicals which find applications in the production of wide variety of products in Pharmaceuticals,Agrochemicals,Packaging,Explosives,Dyestuff ..etc. What is special with this company is its thrust on R&D to develop indigenous product.BAL put an end to the monopoly of Global chemical giants like BASF and Ashland Inc in India at least in five products viz NMP, NEP, Morpholine, 2-P, GBL, PVPK-30. Now ,company grown as the world’s largest producer of Di- Methyl Amine Hydrochloride and commanding close to 85 % market share of this product.BAL is the largest producer of methylamines and their derivatives in India with a market share of over 60%.Company’s manufacturing facilities are approved by many foreign countries which helping them to command an edge over Chinese producers in some products which export to high margin markets like EU countries.
What is making it an attractive bet at this point is both the positive developments happening in the industry as well as in the company. After few sluggish years ,prices of its products are started to show firm trend in domestic and international market. Last year company earned an income of Rs.131 cr from export alone and rupee depreciation may give extra margins to a certain extent. Next is its increasing production capacities .Recently company commissioned two new plants ,one for Di-Methyl Amine Hydrochloride and the other for Di Methyl Formamide .Production from both these plants are expected to scale up and stabilized in near months. Recently company received Certificate of Suitability from EU for their niche product PV P K 30 ( company is the only producer of this product in India) which will help BAL to export this product to regulated markets. As part of utilizing its idle land assets ,recently company started the first five star hotel in Sholapur (Balaji Sarovar Premiere) . Promoters of BAL is not actively participating in the day to day operations of this hotel and its entire operations are handed over to Sarovar group. This ensures promoters concentration in core businesses and it seems only part of an effort for asset creation.In addition to this already developed land ,company having another 300 ( Three Hundred) acre surplus land in Solapur itself.
On the financial front ,company started to report improving performance . In last FY company reported a topline of Rs.512 Cr and a net profit of Rs.31 Cr .During the latest September quarter BAL reported a turnover of Rs.161 Cr ( Rs.126 cr in same period last year) and a net profit of Rs.12 Cr ( Rs.9 Cr) .Company also distributed a dividend of 40 % .It is expected to close the full year with an EPS of Rs.14 or more.In a recent interview, promoters assures their plans to reduce the debt substantially in next two years from the current level. As an indication of their increasing confidence in the company , they are continuously hiking their stake through open market purchases in past three quarters.
Balaji Amines is a company offering many niche and monopoly or near monopolistic products and one of the few companies from the chemicals sector paying higher attention for R&D to develop new products. Even this company started as a small unit, now it grown as a threat to multinational chemical companies in many niche products.At CMP of Rs.41 ,it is trading at a one year forward P/E multiple of just 3 . Expecting decent upside from current level , hence recommending a BUY @ CMP Rs.42.Stock listed both in NSE and BSE.
Link to Corporate Video HERE
Link to Corporate Video HERE
Link to Company Website :HERE
Link to Latest Annual Report : HERE
Link to Hotel Project : HERE
Wednesday, November 27, 2013
I have recommended a BUY on Rhodia Specialty Chemicals ( Formerly Albright and Wilson) @ Rs.185 ( Recommendation Link HERE) .This stock yesterday hits its lifetime high @ Rs.711 and closed around Rs.680. Solvay SA ,the multinational Specialty Chemical giant is the ultimate parent of Rhodia which came out with a de-listing offer for Rhodia Specialty Chemicals.Floor price for the reverse book building is indicated as Rs.442.64. One should wait and see whether the company will accept a substantially higher discovered price is if it happens. Recommending to sell one third of your holdings in Rhodia which will cover the entire cost price at Current market rate. Using that amount one can take exposure in the only other listed Solvay entity in India ,ie, Sunshield Chemicals @ CMP Rs.62 even if this stock is also traded in Periodic Call Auction as in the case of Rhodia .
SUNSHIELD CHEMICALS LTD
Sunshield - taken over by Solvay in 2012- , also operating in Specialty Chemical segment .Under the new management , company reported turnaround numbers in latest September quarter.Turnover of the company also showing good progress even in this tough business environment.Company now upgrading all its systems,production facilities ..etc into Solvy's standard.About 50% of Sunshield's income coming from exports.With Solvay's vast marketing network all around the word and revival in Europe and US ,Sunshield is expected to perform even better in coming years.In addition to a possible improvement in business ,there is every chance for a de-listing offer for Sunshield in future. Stock traded in BSE only with code 530845 @ Rs.62
Link to Solvay HERE
Link to Sunshield HERE
Link to latest Annual Report HERE
Posted by VALUEPICK at 5:23 AM
Saturday, November 23, 2013
In last one year or so Investors preference clearly changed in favor of export oriented businesses due to sharp fall in the value of Rupee. Conventional forex earners like IT and Pharma out performed during this period.But unfortunately ,investors in general ignored forex earning companies from other sectors and hence such companies still quoting at lower multiples even if their business improved due to rupee depreciation. This week let us look into one such company – Shakti Pumps.Shakti Pumps is India’s largest stainless steel submersible pump maker located at Pithampur Madhya Pradesh . Company is the first five star rated pump manufacturer in India. In addition to submersible pumps ,company also producing Vertical Multistage Centrifugal pumps,Pressure booster pumps,Open well pumps,End suction pumps..etc. Recently company introduced pumps working with solar power.This product is expected to get strong support from government for rural irrigation purpose .A major chunk of company’s income coming from exports to various countries and export showing good growth over past few years.Now company is planning to extent its presence in all BRIC countries and European Union countries.Company having a sizable business in Indian market too and it planning to increase its dealer network by 3 fold in next few years.
It is one of the fastest growing companies from this sector .From Rs.41 Cr sales in 2006 it reached a top line of Rs.210 Cr in 2013. Its export thrust and improvement in India’s rural economy is expected to drive further growth .Company is targeting a turnover of Rs.600 Cr in next three years.In the latest September quarter Company reported a jump of 50 % in its turnover and profit compared with last year’s same quarter.Pledging of shares by promoters is the only reason for some concern.But ,since its financial performance is improving quarter over quarter ,I don’t expect much issues from this angle.Moreover pledge is not with any NBFC but with one of its bankers - Axis Bank.Company having a dividend paying track record of past 8 years and issued bonus shares in the ratio of 1:1 in 2011.
Shakti is expected to report an EPS of Rs.15 in this full year.At current market price of Rs.58 ,it is trading at a P/E multiple of below 4 . Recently company appointed film star Amitabh Bachchan as its brand ambassador ( Link to new TVC. HERE) .Considering management’s aggressive expansion in production capacity and marketing network, I believe company can deliver good growth in coming years. Recommending Shakti Pumps @ Rs.58 for investors with some risk appetite for medium to long term.Stock listed both in NSE and BSE
To view corporate film * , Link HERE
Link to latest AR HERE
* Corporate film created by company itself ,hence claims may be biased
Disc: I have vested interest in Shakti Pumps.
Posted by VALUEPICK at 8:13 AM
Tuesday, November 19, 2013
Arrow Coated Products recommended about three months back @ Rs.12.40 ( Old Recommendation Link HERE) which hits its 52 week high today @ Rs.22 .For the latest September quarter Company reported more than 300 % increase in net profit.Recommending to HOLD the stock.
Monday, November 18, 2013
This stock recommended on May 18, 2013 @ Rs.340 ( Recommendation Link HERE) which hits its 52 week high today @ Rs.627 .For the quarter ended September, Company reported a turnover of Rs.152 Cr and a net profit of Rs.18 Cr .It is expected to report good performance in second half too.Still recommending to HOLD this stock.
Posted by VALUEPICK at 3:42 PM
Friday, November 15, 2013
At a time ,one of my old recommendations -Vesuvius India (Recommendation Link HERE) - recorded its 52 week high price ,recommending another stock from the same sector. IFGL refractories is the flagship company of SK Bajoria group.Company manufacturing Continuous Casting Refractories and Special grade Refractories which find applications in steel industry. Refractory ,in general ,means a class of materials which are produced from nonmetallic minerals and possess capability to withstand heat and pressure .Now IFGL has grown as an Indian multinational with manufacturing facilities located in Brazil, China, Czech Republic, Germany, India, UK and USA. Krosaki HarimaCorporation Japan ,a subsidiary of world’s second largest steel maker NipponSteel Corporation holding about 15 % stake in IFGL.Growing through acquisitions is the strategy of IFGL and it reached the current stage through many acquisitions in the past.In 2005 ,IFGL acquired Monocon group of UK with factories in Brazil,China,USA and UK.In 2006, Goricon Group came to the fold of IFGL .In 2008 ,IFGL acquired Hofmann Ceramic GMBH of Germany with manufacturing facilities in Germany ,USA and Czech Republic.In 2010 ,Ohio ( USA) based EL Ceramics LLC added with it .With all these acquisitions company grown as one of the worlds largest manufacturer of refractories.These acquisitions broadened company’s product portfolio which now consist of Isostatic Refractories,Tube Changer Systems,Cast Products and Monolithics,Slide Gate refractories,Slide gate systems and Foundry Ceramics.In addition to these products for steel industry ,IFGL manufacturing Bio Ceramics for dental,orthopedic and ophthalmic applications.
Fate of refractory companies closely related with the growth of steel industry.Now steel industry world around showing some earlier signs of revival.As a global player ,IFGL is expected to get immense benefit from this revival.Its technical collaboration and equity participation with one of the world leaders also helping the company to adopt latest technology in manufacturing process. A major portion of company’s income is from exports and the currency valuation of currency is also positive for it.
IFGL having a good balance sheet too.Even after these series of acquisitions ,company ‘s debt equity ratio is just 0.55 .For the latest September quarter,on a consolidated basis company reported a Sales of Rs.201 Cr v/s Rs.181 Cr .Net profit improved sharply from Rs.4 Cr to Rs.19 Cr. Half year EPS is Rs.9.70 which is more than the full year figure of last year.Company having an uninterrupted dividend paying record for the past four years.Promoters holding more than 70 % stake( NIL pledged) in the company and another 7 % is held by large investors.At a time the steel industry is showing revival ,I expect IFGL will report its best ever performance in this full year.Even after improvement in its stock price in recent times ,@ CMP Rs.49 ,IFGL is currently trading @ one year forward P/E of just 3 .Considering industry’s improving prospects,stabilization of production from its newly built plant at Kandla SEZ and out performance of company in its financials, I don’t expect any scope for deep correction,hence recommending a BUY @ CMP Rs.49 .Stock listed both in NSE and BSE.
Link to Company website HERE
Disc: I have vested interest in IFGL
Posted by VALUEPICK at 8:33 AM