Friday, October 31, 2014

EXCEL INDUSTRIES , APCOTEX INDUSTRIES - RESULT UPDATES

Excel Industries recommended @ Rs. @ Rs.127  ,  currently trading around Rs.320 .Today company reported good September quarter numbers as follows .



Company also declared an interim dividend of Rs.3  per share

Still Recommending to HOLD

Link to Report HERE
--------------------------------------------------------------------------------------------

Apcotex Industries   recommended @ Rs. @ Rs.56 ( adjusted to  2:1 FV split, post recommendation)   ,  currently trading around Rs.355 .Today company reported good September quarter numbers as follows .



Still Recommending to HOLD

Link to Report HERE

Thursday, October 30, 2014

MOLD-TEK PACKAGING - RESULT UPDATE

This stock recommended three months back @ Rs.73 ,  which is currently trading around Rs.230 .Today company reported good September quarter numbers as follows .



Still Recommending to HOLD

Link to Report HERE

Wednesday, October 29, 2014

PANASONIC ENERGY INDIA COMPANY LTD- RESULT UPDATE

PANASONIC ENERGY INDIA COMPANY LTD was the answer for our GTS-5 .  .Today company reported its September quarter numbers where sales increased from Rs.59 Cr to Rs.66 Cr and net profit jumped from Rs.1.79 Cr to Rs.5.33 Cr .

Report on this company posted when this stock was @ Rs.73 ( Link HERE) .Today stock hits its life time high @ Rs.308 and closed in upper circuit.

Tuesday, October 28, 2014

ALPHAGEO INDIA - UPDATE

Alphageo India recommended @ Rs.38  hits its 52 week high today @ Rs.580 .Stock already turned as a multibagger in just  one year  with a whopping 1500 % return during this period .  Those with  low to average  risk appetite may sell 50 % of remaining holding ( earlier suggested to book 25 % ) and keep the balance.

Recommendation Link HERE

Monday, October 27, 2014

INGERSOLL-RAND (INDIA) LTD - UPDATE

INGERSOLL-RAND (INDIA) LTD  - Recommended @ Rs.425  today hits its 52 week high @ Rs.954.Those with  below average risk appetite may sell 50 % of original holdings and keep the remaining as cost free .

Recommendation Link HERE

Thursday, October 23, 2014

GTS -7 ANSWER ----- SKM EGG PRODUCTS EXPORT (INDIA) LTD

---------------------------------------------------------------------------------------------------------------------
Dear Friends 

My Sincere thanks for your overwhelming response to this learning experience.I strongly believe , those who failed to find out the answer even after spending many hours learned more lessons than  those find out the answer through short cuts like social media sharing...etc.Such experience will be an added advantage in your wealth creation journey going forward.Once again urging my readers to avoid taking investment decisions based only on the name tag of companies I am posting here but only after detailed study and homework 

Wishing a Happy Diwali to all my readers and your families ...........

-----------------------------------------------------------------------------------------------------------------------




  




If we strictly track the history of any stock which turned as a multi-bagger, there will be at least one niche element in it. Sometimes it may be the product/service itself, and in some other cases it may be its brand ,technology , market or something like that  .If the number of listed stocks from a particular industry is very limited and there is a boom period for that  business , normally the listed market leader  will turn as a multi-bagger, if it is backed by a management which is able to utilise the emerging business opportunities.One very good example for this fact is the recent appreciation in Avanti Feeds Ltd. ,the stock  I  recommended  about three years back @ just Rs.68 and  currently trading above Rs.1525 ( Recommendation Link HERE , Just pointed as an example and not a guarantee for similar performance in all other cases). This week let us look into another really interesting unknown niche stock – SKM Egg Products Exports Ltd.


SKM EGG PRODUCTS EXPORTS  - A CLOSE LOOK


This company is jointly promoted by well known SKM group and Tamil Nadu Industrial Development Corporation Limited(TIDCO) .Out of the Rs.26 Crore equity , TIDCO holding about 7.58 % and Individuals from promoter group holding another  46 % stake.( This data is based on June quarter share holding and promoters made lot of market purchases in June-September period) .Belgium based Belovo Engineering holding another  5 % stake in SKM .Belovo Engineering is part of BNLfood Group which supplying  Egg Science & Technology ,producing and marketing eggs, egg derived nutraceutical ingredients and food ingredients. Plant of SKM itself established with the technical support and collaboration of BOLOVO.Company’s manufacturing facility is located at Cholangapalayam  , about 20 Km from Erode in Tamilnadu .This is one of the largest Egg processing facility in Asia and this state-of the art facility is located in a 35 Acre plot. Under stringent quality conditions , company processing around 18 lakhs eggs per day and manufacturing Whole egg powder, Albumen powder ( Powder form of Egg White), Yolk Powder(Yellow) and recently introduced liquid Eggs.These products are supplied mainly to Japanese and European companies for manufacturing products like cakes, biscuits , cookies, Confectionery products, Health foods, Soup mixes, Ice creams , dairy products ..etc. SKM established direct Subsidiary/marketing points in its major markets viz- Netherlands,Japan and Russia.Selling to other markets channelized through  third party distributors.Since the number of producers are less and India’s cost effective and competitive advantages ,company is getting repeat orders from its customers. SKM’s  products are ultimately used by large food product manufacturing MNC’s  like Kraft foods .Heinz..etc. for manufacturing bakery , health care and food items.

                                                                           SKM  is the only listed producer of Egg Powder and other value added products from Eggs .Even from the unlisted space , only very few companies are manufacturing similar products in India which includes an unlisted private company named Venkateswara Food Products Pvt Ltd owned by the same promoters of Venky’s India and another Bangalore based  company which listed in BSE but suspended from trading for more than 13 years.Among these few players ,SKM is the market leader in Egg powder exports and contributing more than 50% of India’s total egg powder export.As of now, company processing about 18 lakhs eggs per day and utilising close to  90 % capacity to manufacture its major products Viz- Egg Powder ,Bakery Mix and Liquid Egg.These products are exporting to overseas markets mainly  Japan and EU countries.Out of 18 lakhs eggs , about 5 lakhs produced from  company owned farms and the remaining is sourcing through contract farming model( Mainly through an associate company  named SKM Universal Marketing Ltd) . In order to ensure the quality of Eggs , company itself supplying feeds manufactured by company controlled (leased)  feed mill  to the farmers and company appointed veterinary doctors and supervisors periodically visiting farms running under contract farming agreements.Earlier, during its tough times company's share holders approved the sale of feed mill and farm , but only the selling of feed mill executed ( now working on lease)  .This business model ensuring sourcing of quality eggs without interruption which is otherwise a herculean task to source close to 20 lakhs quality eggs per day.Promoter’s experience in poultry field is one important point to note. This company was originally promoted by Mr. SKM Maeilanandhan who is the doyen of poultry industry in India who also  honoured with the Padma Shri award for his outstanding contribution in the field of social work in 2013.



Having said , being a food product , export of these type products  to developed countries is not an easy task.Stringent quality standards and periodic quality  checking are usual in an industry like this before getting final approval for exports and usually these formalities take many years to complete.In the beginning, company faced many challenges in this front and it affected SKM’s past performance. From past troubled times company emerged as a winner under the able leadership of Mr. SKM Shree Shivkumar who is the MD of the company and son of Mr. SKM Maeilanandhan. 


FINANCIALS 


During the peak of recessionary period , it reported losses in FY 2011 and 2012 due to various reasons like lower demand, poor realization and most importantly some quality related issues due to its dependency on  outside quality testing laboratories. But with early signs of revival , company’s new products introduction and tapping new markets  ,SKM made a remarkable turnaround in FY 2013 and further improvement in latest FY 2014.(See the below table for details) . 


To avoid any quality related  issues in future , company  established own quality testing lab  and R&D facilities.
   

As per the thoughts shared during recent AGM , company is now paying top priority to become a debt free company ( excluding working capital debt) in near future. As part of this effort , company already reduced its debt from Rs.51 Cr to Rs.34 Cr in last FY  and further reduced it in  first six months of ongoing FY .( Half of the loans are taken from promoters itself which they pumped into the company to keep it afloat at the time of extremely difficult periods few years back.) It is targeting a debt free status in next two years . After achieving this target ,SKM is planning to hike its capacity to reach a Rs.500 Cr company by 2017-18.


Major Negatives


Company is an export oriented unit and any  recession severe than the previous one  may negatively impact the demand scenario of its products.

Company’s earnings is in Dollar and Euro and its movements against Indian Rupee may impact its margins.


Though company sourcing part of its Egg requirements from own farms , any adverse change in the price of feed ingredients may affect its raw material cost.


Un-expected diseases affecting birds may create problems.



Major Positives.


As I mentioned in many of my previous  postings ,while investing in small cap stocks , promoter quality is the first point to note.The most important positive point about this company is its promoters and management , not only because of their experience in this field but due to their highly ethical business practices and ‘Nothing to Hide’ mentality even towards its minority retail share holders.I believe ,In these matters , it is difficult to find many companies with this standard from the small caps space .


Potential of company's product is very high and, there is only very few companies in this field. SKM is the market leader handling more than 50% of India’s total egg powder exports.


India is one of the low cost producer of Eggs and this giving added  competitive advantages to the company . SKM captured Japanese market by competing even with American companies which indicating its high quality standards.


Entry barrier - As mentioned earlier , procuring 18 lakhs Eggs per day is not easy to replicate by any new entrant in this field. Company established own farms to source part of this requirement and planning to expand the capacity of farm when it add more production capacity in its factory.Contact farming is also designed in a systematic way where company ensuring the quality of feed and arranging periodic visit of veterinary  doctors to ensure the health of birds and provide awareness to farmers in order to ensure the quality of Eggs to be processed.Since the end consumers are large MNC food companies they ,always need large quantity at stringent quality standards . To ensure this quality standards ,it should be careful right from the beginning.Any available  egg can’t be processed but it can use only the eggs laid by birds fed with specially prepared diets , so special arrangements should be there to ensure this quality and any available eggs in the market or at the gate can’t be accepted.Sourcing close to 20 lakhs such eggs per day continuously is an extremely  difficult task.Situation is more tough in the selling side . By competing with foreign firms ,company took years to established the label of a reliable and quality supplier in overseas markets. Being a food ingredient ,import permission to developed countries is not easy and even in the case of Russian market ,SKM succeeded only recently after four years continuous efforts.Because of these reasons , still there is hardly four or five successful egg product processors existing in India. Full traceability of end product is an important factor in export oriented food stuff business. To ensure this ,SKM introduced a system named “TRACKKER” which helping the company  to trace from feed ingredients level to final product level.




   

Scope of company’s products is very vast and so far it not touched the biggest market –USA. Such opportunities may be tapped  once the production capacity hiked to double in next few years and company’s financial health improve further .


Using its own R&D , company introducing new products and its recently introduced liquid Eggs receiving  overwhelming response from customers. Considering the increasing cholesterol related health issues , liquid white egg may turned as a money spinner for SKM in the years to come. Company also succeeded in increasing the shelf life of products and this will help to penetrate more overseas markets.


During the time of  last recession its business badly affected mainly because of its higher concentration in few markets .To avoid such a situation in future SKM is now expanding its geographical presence .Company’s years long efforts to get an entry in Russian market succeeded recently and they got approval from Russia now. Company started trial shipment  and it is expected to become a priority market for SKM in future. Company also  entered in Nigeria and South African Markets recently.



Promoters efforts to become a debt free company is not a gimmick and they are working sincerely for that ,which is evident from the reduction in debt levels in recent times. Targeted debt free status by next few years will give direct positive impact in its bottom line and make this already attractive company as a compelling buy.

Once, majority of the shares of promoters were pledged with banks to avail loan facility ,but now  only 24 % is pledged and balance released on repayment of loan.Remaining is  expected to become pledge free  in next 2-3 years.


Another most important factor is the multi angle benefit to the company due to global recovery. From  last few year’s financial performance , it is evident that even a small  positive change in global economy augers well for SKM .It is helping the company in three different ways



·         * Increased Demand from foreign markets


·         * Being an Export Oriented Unit , appreciation of Dollar and Euro against Indian Rupee is positive for the company 


·         * Strengthening  of Dollar will reduce the competitiveness of US manufactures in foreign markets especially in Japan  where SKM’s major competitors are US manufactures.



There is no big local market for processed egg as of now. But history says , In case of India ,  imitating the trends of food habits from developed markets is an eventuality . This will happen in future for sure. In such a situation , the peer company with years experience will benefit a lot and it will help the company  to de-risk  its business model by reducing over dependence on export – if necessary – in future.


Cost control efforts taken by management and their attention even in minute factors is another important point if we look through the eyes of  a minority share holder. Usage of recycled waste water to irrigate the garden and lawn in front of the factory is an example for this zero wastage strategy. They are even selling egg shells and earning few thousands in each year.


Conclusion  



I believe SKM Egg Products Export is a company operating in an Industry with huge potential in future and at the same time with high entry barrier.Most important point is the management’s  high ethical standards they exhibited even during their tough times. I strongly believe , god will always with such people and lead them into more success . This is one rare company from the micro cap space I can assure one thing – if there is any  failure for this company in future ,it will be only because of a reason beyond the control of promoters and its management.That much is the efforts they are taking to bring back the company into the right direction and further growth.For FY 2013-14 , on a consolidated basis company reported a Sales of Rs.264 Cr , a net profit of 7.20 Cr and an EPS of Rs.2.76. Stock of SKM appreciated post declaration of full year result and currently trading around Rs.60 .Prima-facie on a P/E based valuation method , this is neither cheap nor expensive.But to get a fair picture about last year profit ,we should dig deep. This 7 .20 Crore profit arrived after providing an Exchange fluctuation loss  of Rs.7.36 Crore and another one time expense of Rs.4.15 Cr. Considering the chance for stability in Rupee value ( compared with last year)  less forex loss is a possibility in current year .In the case of the mentioned one time expense incurred in last year , there is no chance to repeat it again. If we consider these two important hidden factors,valuation picture will change positively. In addition to this , company’s debt reduction will directly impact its bottom line and EPS figures going forward.Along with this quantitative figures, SKM’s market leading position, robust business plans with introduction of new products and penetrating new markets supported by a highly ethical management which is taking every effort to reach a debt free   Rs.500 Cr company in next few years  makes its an attractive pick for long term investors even at current level.


 Listing

During its worse time in 2011-12 ,company sought share holders approval to de-list its stock from BSE and remain listed only in one exchange. In the 17th AGM of the company, share holders approved a special resolution for this purpose and hence at present SKM Egg Product Exports is trading only in NSE( De-listing procedures from BSE yet to completed and theoretically still it is listed in BSE but suspended from trading )  and currently trading around Rs.60


Link to Company Website HERE


Disc: It is safe to assume that, I have vested interest in it as a share holder.


 
 




 




Wednesday, October 22, 2014

DIWALI WISHES

WISHING ALL MY READERS , A VERY HAPPY DIWALI AND  A  PROSPEROUS YEAR AHEAD

PREMIER EXPLOSIVES LTD - UPDATE

Premier Explosives Ltd recommended as a BUY @ Rs.76 .Yesterday Stock hits its life time @ Rs.227 and closed in upper circuit . Those with above average risk appetite may still hold it  and others can book partial profit at current rate.

Recommendation Link HERE

Tuesday, October 21, 2014

TCPL PACKAGING - BOOK PROFIT

TCPL Packaging   recommended @ Rs.55, is currently trading around Rs.300.Those with only average risk appetite may book partial  profit and  keep the remaining quantity  as cost free.

Recommendation Link HERE

Saturday, October 18, 2014

CAPITAL TRUST LTD - RESULT UPDATE





 
Capital Trust Ltd recommended few years back at a higher price compared with  Current Market Price.This micro finance company's performance badly affected in past few years- as in the case of peer company SKS Micro Finance  - due to uncertainty in micro finance sector  and lack of clarity in laws .Now, in recent times company seems coming back to growth path  and reported improved numbers in last two quarters. Company already reported more than Rs.5 EPS for  six months itself in this FY.When I recommended this stock earlier , It had 23 branches and now the same increased to 60 +

September Result as follows



Stock is currently trading around Rs.50 and listed only in BSE

Link to Company Website HERE

Link to Latest Annual Report HERE

Link to Old Recommendation HERE

_______________________________________________________________________ 

  Answer for GTS - 7 will be disclosed on Muhurat Trading Day
________________________________________________________________________

Monday, October 13, 2014

SUPERHOUSE LTD - UPDATE

This stock recommended twice,initially @ Rs.62 and later @ Rs.100 . Stock is currently trading around Rs.275 .Those with some risk appetite can still HOLD it for long term.

Old recommendation links HERE and HERE



Saturday, October 11, 2014

DIWALI SPECIAL - GUESS THIS STOCK - 7








TRY TO IDENTIFY ONE STOCK WITH FOLLOWING CHARACTERISTICS

1) NO OTHER COMPANY TRADING IN BSE OR NSE  MANUFACTURING THE SAME PRODUCT MANUFACTURED BY THIS COMPANY .

2) OPERATING IN AN INDUSTRY WITH HUGE UN TAPPED POTENTIAL (THE ENTIRE INDIAN MARKET ITSELF IS ALMOST UNTOUCHED)

3) MARKET LEADER IN THIS INDUSTRY ( LARGEST PRODUCER FROM INDIA)

4) REASONABLY HIGH ENTRY BARRIER

5) TRANSPARENT BOOKS

6) DECLINING DEBT LEVEL FFROM  MORE THAN TWO YEARS

7) CURRENT MARKET CAP( FULL)  IS  LESS THAN HALF OF ITS LAST YEAR  SALES

8) PROMOTER STAKE IS ABOVE 50 %

9) IT IS  NOT FROM SERVICE SECTOR .

10) IT IS NOT AN ALREADY RECOMMENDED STOCK

11) IT IS NOT A LOSS MAKING COMPANY

===============================================================
Friends ,

Try to find out the company from the above  clues and send the answer to my mail id (valuepick100@gmail.com) with subject line ' GTS-7 ' ,till 20th of this month  .Correct answer with detailed report will be posted on Muhurat Trading  Day morning. Please don't ask for more clues or expect any confirmation mails ( Only because of practical  difficulty to reply for thousands of mails) .

Plese send the answers only to my mail id and do not post in blog itself as messages.





Friday, October 10, 2014

SAKSOFT LTD- UPDATE

This stock recommended about  six months back @ Rs.85, hits its 52 week high Yesterday @ Rs.175 . Stock already appreciated more than 100 % .Those with high  risk appetite can still hold it and others can book profit .

Recommendation Link HERE

Thursday, October 9, 2014

JENBURKT PHARMACEUTICALS LTD - BOOK PROFIT


JENBURKT PHARMACEUTICALS LTD - Recommended @ Rs.85 currently trading around Rs.320 .Stock already appreciated more than 250% .Suggesting to Book Profit at current level .


Link to old Posting HERE










Tuesday, October 7, 2014

POLY MEDICURE - UPDATE

This stock recommended @ Rs.65 ( Adjusted to 1:1 bonus post recommendation) in 2010  .Now patience is paying for all long term holders and  today stock hits its life time high @ Rs.911 .Those with low risk appetite may SELL 10 % of original holdings to recover cost and  still hold the remaining as cost free .

Old posting HERE

Saturday, October 4, 2014

PATELS AIRTEMP (INDIA) LTD - REPEAT



 


Quality of promoter is very important while selecting stocks for long term hold.Possibility of frauds and fabricated results are very high when the mood in the street is bullish with higher retail participation.Generally , in a bull market , promoters tend to show good results in few quarters to boost share price either for their own exit or to raise fund at higher price .So ,selecting a stock during bull phase need extreme care and we should look beyond the published results and frequent announcements. Considering all these factors ,re-looking into a company which I recommended earlier and still believe there is lot of steam left in long term.

                                   Patels Airtemp (PAT)  is an Ahmedabad based company manufacturing Heat exchangers,Pressure Vessels,Refrigeration and Air Conditioning equipments.Their products are mainly used in industries like Chemical, Power,Refinery,Cement,Fertilizer and Petro Chemicals..etc.For the past many years lot of projects from these sectors were stuck due to various reasons like environment clearance ..etc which is expected to move on in near future. Strict pollution control norms implementing in developed countries helping Indian chemicals manufactures to boost their export by adding additional capacities here.India is expected to grow as a global hub of chemicals and pharmaceuticals in the years to come. Stable price of crude and crude derivatives will help the growth of petrochemical industry . All such developments will indirectly help companies like Patels Airtemp to grow business. Last year company  entered into a long term supply arrangements with a leading global manufacturer of heat exchangers for supply of this product with stringent quality standards.

                                    Revival in user industries and effect of foreign supply agreement is already started to reflect in its order book position. As on 31 March 2014 , company have confirmed orders worth Rs.136 Cr ( Rs.40 Cr order book in previous year) which is highest ever in its history . This order book giving comfortable visibility for next few years. Aggressive purchasing of shares by promoters from open market is another factor which  increasing the confidence level .For the past one years promoters are hiking their stake through open market purchases and same is still continuing  even @ Rs.129 .( Check purchase disclosures   HERE and HERE) .Last year company paid back its entire long term debt and there is no long term borrowings in its books as on 31 March 2014.We know , the past 2-3 years were very difficult for any company operating in capital goods sector . But company paid back all its long term loans and secured the highest ever order book during this period, which is very important point to note. I believe ,company is at the tip of an inflection point and the future will be far better than the past . Since I have already posted about this company just six months back , not explaining further.

                                             Company reported a top-line of Rs.70 Cr , net profit of Rs.4.67 Cr and an EPS of Rs. 9.20 in last FY .PAT is an uninterrupted dividend payer for the past seven years and paid 20 % in FY 2013-14. This is one of my preferred stocks from this sector which is currently trading around Rs.123 and listed only in BSE.

Link to Company Website HERE 

Disc: Holding PAT.

Followers

Tweet TopOfBlogs