Few Updates
Refer to our earlier posts, we were quite optimistic on selected pharma sector stocks.
Albert David: Has risen from 70 levels to 130.
Fresenius Kabi: Has risen from 70 levels to 113.
Shilpa Medicare: Mentioned at our blog @ 90, is trading at 190 now.
I hope our readers had acted on the calls and made good profits. We would advice booking partial profits at current and higher levels.
Some updates:
Shilpa Medicare has got listed on NSE also.
Jaihind Projects is convening a board meeting to appoint Delloite as their statutory auditor. This should be a very positive move for long term and provide comfort to investors.
Asian Hotels has uploaded few statutory details relating to the demerger. I would advice investors to go through the documents. The documents are available on BSE Website (announcements section)
Asian Hotels
About Asian Hotels:
· They operate three 5 star deluxe category hotels. Locations: Delhi, Mumbai & Kolkattta.
· They operate the Hyatt Regency brand on the above three locations.
The stock is still undervalued based on the following logics:
· The hotel sector is also recovering with the upturn in the economy. Going by the latest newspaper headlines, occupancies are back to 85% though ARRs are still 10-20% below normal peak levels. Hotels stocks are still down more than 50% below the crash levels.
· Usually the per room cost (excluding land cost) is considered to be 1 Cr for a good 5 star property. Asian Hotels has 1144 rooms in total and at CMP of 420, the per room M Cap works out to be around 80 lac only.
· The company is believed to have aggressive expansion plans post demerger
Demerger:
The most noticeable point based on the latest demerger scheme is – Promoters are going to infuse Rs. 341 Cr before the demerger by taking a preferential allotment @ 540…while CMP is 420.
Post demerger, the three hotels i.e. at Delhi, Mumbai & Kolkatta will get listed separately. So a shareholder holding 3 shares of Asian Hotels currently will get 1 share each of each of the separate entity.
Since long Asian Hotels hasn’t expanded its hotel base. It is said that there were conflicts between the promoters and hence the company wasn’t aggressive. With the demerger, the negative synergy should be removed.
The unlocking of the hidden value for the current shareholders can be expected with this demerger.
Manjushree Technopack (MT)
Top 10 Brand Values
This was the article in “Economic Times” which specially attracted Dad. At number one, in respect of brand value, it was none other than Coca-Cola, and on a bit of research, it was revealed that Manjushree Technopack (MT) was providing bottling services to them. Yeah, it became an instant favorite :D .
MT is a packaging solutions provider with an experience of two and a half decades in providing its customers with cutting edge plastic packaging solutions.
Few positives:
- MT has been growing at CAGR of almost 25% for last 5 years. This growth rate is expected to continue for next few years based on the aggressive expansions the company has been undertaking. The company has been tying up with the top MNCs
- MT has an impressive client profile : Cadbury, Nestle, Coca Cola, P&G, Bisleri etc
- MT has been able to maintain very good operating margins and able to expand the same with increase in turnover. The other good things are its strong balance sheet – reasonable debt equity ratio, control over debtors and inventory to get strong cash flow.
- As per the recent announcements, the company has tied up with Coca Cola & Bisleri and is putting up exclusive capacities to cater to their requirements. As per the arrangement, the offtake will increase 50% every year.
- MT is also targeting to cater to the liquor industry and has tied up with likes of UB Group, Radio etc.
Attractive Valuations:
- At CMP of Rs. 32.50, the stock is available less than 5 PE.
- It is trading at a discount to its BV of 44 by almost 25%.
- Co is a regular dividend paying company & had paid 10% dividend last year.
Expectations:
- We expect MT to continue to grow @ 20-25% for next 2-3 years.
- For FY 2010, MT may be able to deliver 130-140 Cr turnover resulting into a NP of 8-10 Cr. Hence an EPS of 6-7.5
Snapshot of past financials:
IST Ltd
IST Ltd is little known and highly undervalued real estate story.
The company has 28.41 acres of land at Dundehra (Udyog Vihar), Gurgaon, at a distance of 5 Kms from New Delhi International Airport.
The company had tied up with Unitech Developers & Projects Ltd (‘UDPL’) to develop an IT SEZ. The project is designed to have total leasable area of approx 3.75 million sq ft. As per the arrangement, UDPL will develop and market the property and incur all the costs while IST will get 28% of the total rentals.
The highlights of the project are:
- It is one of the first IT SEZ in Gurgaon
- The location is good and the early occupants are Amdocs, Bank of America etc.
- 12-15% of the project is already leased out and the next phase of construction has started.
- The funding is already in place, so execution is not an issue. IST is also a debt free company.
- As the project is a SEZ, the incomes are tax free.
- For details visit : http://www.unitechgroup.com/projects/commercial/gurgaon/infospaced/index.shtml
Project Progress and plan ahead:
Risks:
- The SEZ project is being executed through the co’s wholly owned subsidiary Gurgaon Infospace Ltd.
- The stock is highly illiquid.
Current Valuations:
As the company has already leased out 4.64 Lac sq ft, IST has been already receiving close to 10 Cr as annual rental income. Co is in process of constructing another 12 Lac sq ft by mid of next year. If things go as per plans, IST would be earning a rental income of 35-40 Cr in next 1-2 yr.
At CMP of 100, the company is available at an M Cap of less than 60 Cr. Even on conservative valuations, the company has potential to earn 60-75 Cr of Net Profit every year once the project is totally leased out. So if things play out as per plans, this company has all the potential to be a multibagger in 3-5 years.
Delivering on Q2 expectations
Most of the stocks we have discussed till now have done very well in Q2 nos. In reference to the post on the pre Q2 stock ideas : , both the companies have done well.
Ahlcon Parentals:
http://www.bseindia.com/xml-data/corpfiling/announcement/Ahlcon_Parenterals_India_Ltd_311009_RSt.pdf
The company seems to be back to decent profitability. The expected growth may come up by next qtr. Stock has potential to get better discounting.
Fresenius Kabi:
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The company has done much better than the expectations. The margins have exploded and are above 30% now. At this rate and based on the expansion plans of the company, the company may deliver excellent returns in long term.
The company also seems to have attracted the attention of few fund managers (track the mutual fund holding in this company).
Suprajit Engineering
“I am more confident today, than a year ago, that Suprajit is better prepared” - Managing Director , Suprajit Engineering Ltd.
Hi Friends,
Keep a tab on this company. This is a good company in a good sector with very good long term prospects.
The company is known for it’s leadership position in the automotive cable market – The company is now expanding into non-automotive cable market which is 20 times bigger in size than the automotive cable market. As per my reading – the promoters are honest, shareholder friendly and ambitious and after a lot of consolidation in last couple of year, the company seems set to be back on a steady growth path.
The past track record of the company is fantastic. They have grown from just 33 Cr turnover in 2002 to 206 Cr last year.
For this year, I expect the company to do a turnover of 190-200 Cr+ (on standalone basis) and a NP of 14 Cr+, resulting into an EPS of 12+, conservatively. With the new plants coming up, the company may be able to maintain these growth rates for coming years.
Read about the updates of the Company on BseIndia.
Rather than providing the details myself, I would like you all to go through the co’s website, annual report etc to get more details and take informed decision.
Majestic Auto
Hero Honda has once again come out with brilliant performance. I have been missing investing into this company for quite some time.
Another beneficiary of the stock price of Hero Honda is Majestic Auto. Majestic holds 16.25 lac shares of Hero Honda valued at 262 Cr, as of today, while it’s own M Cap is just 69 Cr. It also has other hidden assets like factory, land and other business interests. The company will also benefit by way of higher dividend – which Hero Honda should payout this year.
Excellent Q2 nos from Shilpa Medicare
Shilpa Medicare (reviewed on July 26) has posted fantastic Q2 nos. Few highlights are:
- Approx 54.00% rise in standalone turnover YoY & 24.20% rise QoQ.
- Approx 77.57% rise in standalone OPM YoY & 20.33% rise QoQ.
- NP = 12.62 Cr resulting into an EPS of 5.74.
- OPM very healthy around 31-32%.
- The loss in the subsidiary has narrowed down substantially.
- The interest cost has started reducing despite the company being in expansion mode.
I expect the company to continue posting such healthy nos and should better out in coming quarters. The stock has all the potential to move to the next orbit of Rs 250-300 levels.
Warm up to Q2 results
Quarter two results are are almost there, and we will keep our eyes on the stocks which are undergoing expansion and have come out with good Q1, yet available at cheap valuations. Focus sector is the pharma sector (as it is in the pink of health) and here are two stock ideas:
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Ahlcon Parentals: The company is back to decent profitability after having some troubles in the slowdown. One must go through their latest annual report and sense the optimism in the company. The company is in the process of scaling up the capacities and they could achieve 50-70% growth in next 1-2 years. Even if they don’t scale up majorly but be back to pre-crash sales levels of roughly 50 Cr, the company could well achieve an EPS of say 8-10. CMP is just 37.
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Fresenius Kabi: Better known as Dabur Pharma earlier, this company is having ambitious plans for the oncology segment. Oncology sector is witnessing high growth rates and we should continue to bet on serious players in this space. Go through their annual report and one can sense the major expansions and the possible returns one can generate. Their Q1 was excellent and a consistency or improvement over Q1 can zoom the stock price.Share your views
Siemens Healthcare
I came across this very interesting stock idea and I think we all should dig into it more and accumulate on declines.
Background:
The company was earlier known as Bayer Diagnostics. Siemens group took over this company last year.
Positives:
- Tiny Equity capital of just 1.57 Cr hence at CMP of 1100 – Mcap of 165-170 Cr is not much considering it to be part of the huge Siemens group.
- The company is into healthcare sector which is bound to grow rapidly over next few years. Cos like Siemens are market leaders in this sector and can exploit the maximum potential.
- The turnover has already started increasing. Co has reported 75% growth till June 09 (first 9 months) and 92% growth in March Qtr (45.38 Cr vs 23.61 Cr)
- The profitability part is not clear due to several adjustments and may be balance sheet clean up after the takeover. But I expect the OPMs to be easily 20%+ if the Siemens group is bringing it’s expertise in this co. We should get a clearer picture in next qtr nos and annual report.
The opportunity I’m seeing is – For a group like Siemens, current size of operations & Mcap are peanuts. They can definitely scale-up big time here and create multibagger returns for shareholders.
Please dig in more and contribute with your industry knowledge on this company.
