Stock research

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Spanco Ltd(Spanco Telesystems)

Spanco Ltd(Spanco Telesystems)


Story:Recently,Spanco Telesystems was in the news for submitting the lowest bid for BSNL''s Rs 7,500-crore telecom infrastructure contract. The contract consists of providing telecom towers, power plants, generator sets and other infrastructure.In the case of BSNL contracts, the lowest bidder typically gets 50% of the total contract work, while the remaining half is equally divided among the second and third lowest bidders. According to a source, Spanco is currently in the negotiation phase with BSNL and the final order size is likely to be Rs 3,750 crore. It is a build, own, operate, and transfer (BOOT) contract spanning over seven years.BSNL has also floated a tender for IT related work with an expected size of Rs 6,000 crore. Spanco has tied up with applications developer Amdocs and IBM and has jointly bid for the tender. BSNL is likely to announce the lowest bidder for this project in a few weeks.Spanco has grossed Rs 622 crore in revenue in the last four quarters.BSNL''s contract would help the topline increase at a rapid pace since the company expects to earn over Rs 1,000 crore in revenue in the first year of the contract with an operating margin of 14-15%. This may provide some stability to its current margin, which has been fluctuating between 6% and 17%. Spanco has been aggressively looking for opportunities in the telecom and BPO space. However, it has yet to achieve financial stability. Its cash flow from operations is negative, indicating that the company is still in the financing mode and will take some more time to generate a cash flow from operations. It also has to improve its receivables collection. The debtor days or days for which sales are outstanding has increased to 169 days in FY08 from 122 days in the previous year.While the future for Spanco looks promising, the company has to improve its financial parameters to run healthy operations.All said and done,investors can consider an exposure to the counter at dips.Can prove to be a great buy if all augurs well for the company.

 

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Confidence Petroleum India Ltd

Confidence Petroleum India Ltd


Business: Confidence Petroleum (CPL) is establishing itself as an all-service provider for the marketing and distribution needs of Indian oil marketing companies. The company has scaled up its traditional businesses of LPG cylinders and LPG bottling and is investing heavily in auto LPG and natural gas distribution related businesses.

CPL has emerged India''s largest bottler of liquefied petroleum gas (LPG) operating out of 51 locations. These dispersed facilities offer greater flexibility and cost advantage to petroleum retailers in supplying LPG to domestic users spread across the country.The company is also the largest LPG cylinder manufacturer with 6 facilities having an installed capacity of around 42 lakh cylinders per annum. Its 7.5 lakh unit per annum plant near Kandla in Gujarate is a 100% export oriented unit (EOU). The company has set up 50 auto LPG dispensing stations (ALDS) across various cities under the brand of GoGas.The company has also entered the natural gas related businesses and recently commissioned a 3-lakh unit per annum cylinder manufacturing facility for compressed natural gas (CNG). It has also launched auto meter reading solutions for piped natural gas (PNG) sold to households by the city gas distributors (CGD).Towards the end of year 2008, the company acquired two ethanol manufacturing units with a combined capacity of 1.5 lakh liters per day and one crude oil refining unit with 2 lakh liters per day capacity in Maharashtra. The company acquired these distressed assets for a low investment of around Rs 7.5 crore, which allows them the flexibility of operating only when profitable.

Growth Drivers: The company has recently commissioned CNG cylinder manufacturing plant in Vizag for exports market. It is currently setting up LPG and CNG cylinder manufacturing complex in Uttarakhand, which will commission operations by end of 2009.This new plant will enjoy 15-year exemption from sales and excise duties.

The company is carrying an order book of over 30 lakh LPG cylinders. It has significant growth plans in ALDS to scale up to 250 stations in next couple of years and has also won a turn-key contract for Indian Oil to set up 9 similar stations.The company has tied up with Israel''s Energetech to introduce an innovative technology for automotive natural gas called ''Adsorbed Natural Gas'' (ANG). This would enable it to store large quantity of natural gas under less pressure, enabling light-weight cylinders, which could be installed even on two-wheelers. This being a new concept in India needs government approval and the company has received permission from the Chief Controller of Explosives to conduct tests. This technology, when commercialised, would enable it to transport natural gas from the marginal fields. The company also has plans to augment its offering to the petroleum companies by adding fuel-dispensing units for petroleum retailing and also move into setting up auto CNG stations.

Financials: The current management has taken over the listed company with two LPG bottling plants, which was a sick unit, few years back and has turned it around. Hence, we do not have long financial history for the company. Last year the company raised over Rs 100 crore through a GDR issue and share warrants. The company''s debt-to-equity ratio has been steadily coming down to 0.1 for the year ended March 2008. Post completion of its Uttarakhand plant, CPL would be carrying around Rs 30 crore of debt.The company has approved a share buy-back of upto 5% of its equity from open market at a price less than Rs 20 per share. The company is currently in the process of amalgamating three of its subsidiaries with itself.

Valuations: At the current market price of Rs 8, the scrip is trading 9 times its earnings for the 12-month ended December 2008. We expect the company to end FY09 with a net profit of Rs 30 crore, which discounts the current price 7 times. During FY 2010, the company is expected to derive meaningful benefit of its investments in Vizag and Uttarakhand plants as well as the acquisitions.Confidence Petroleum has emerged a key vendor for marketing operations of oil and gas players. Focussing on its key clientele the company is expanding its bouquet of offerings and is adding capacities. Considering the interesting opportunities lying ahead for this little known company, it appears attractive for the long-term investors.

 

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Kesoram Industries Ltd

Kesoram Industries Ltd

Story:KESORAM Industries, the flagship company of the BK Birla Group, is a diversified player with a presence in cement and tyres. Octogenarian industrialist BK Birla had recently willed this company to his grandson, Kumar Mangalam Birla. Kesoram has benefited from the boom in the cement industry over the past three years, which helped the company offset the slump in profits of its tyre division. It is now set to emerge as one of country''s leading tyre makers.Kesoram Industries'' installed cement capacity at end of FY09 was 5.3 million tonnes, with plants in Karnataka and Andhra Pradesh. In addition, the company has recently brought on stream an additional 1.6 million tonne cement capacity. This additional capacity is expected to help the company''s net sales jump by Rs 500 crore in FY10. The tyre division''s capacity was at 37.1 lakh units at the end of FY09, with plants in Orissa and Uttarakhand. The company''s viscose filament rayon yarn capacity is at 6,500 tonne at the end of March 2009. The cement division contributed nearly 48% to the company''s topline in FY09, while tyres accounted for 45.5%. The company is currently setting up a tyre plant to cater to the two-wheeler sector at Uttarakhand with a capacity of 78 lakh tyres per annum and capex of nearly Rs 190 crore.The company is planning a further expansion plan of nearly Rs 1,550 crore, which would entail the addition of 1.65 million tonnes cement capacity in Karnataka, with a capex of nearly Rs 750 crore. Also, the company plans to invest Rs 800 crore for expansion of its tyre business. Post-expansion, Kesoram is set to emerge as one of the top three tyre makers in the country.This expansion plan will be financed by a mixture of internal accruals and debt. During FY09, Kesoram''s cash flow from operations was to the tune of Rs 370 crore. Against this, cash used for investment activities was a little over Rs 1,034 crore. The company''s debt-equity ratio had risen to 1.46 at the end of FY09, slightly higher than the previous year. However, with Kesoram''s comfortable cash flow and expected turnaround in the tyre business, the leverage ratio is expected to either remain stable or decline over the next two to three years. In the March 2009 quarter, the company''s net sales grew 26.1% to Rs 1,108 crore, but its operating profit margin declined due to higher operating costs, especially in the tyre business.At Rs 268.55 Kesoram trades at a discount to its book value and less than 4 times it''s FY 09 earning per share. This is lower than valuations enjoyed by diversified companies like Orient Paper, Century Textile and Birla Corp among others.The company is currently one of the cheapest stocks in its category and may be re-rated as the management control passes on to the Aditya Birla Group, India''s third largest business house. A great buy at dips.

 

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State Trading Corporation of India Ltd

State Trading Corporation of India Ltd

Story:State Trading Corporation of India is a premier international trading house owned by the Government of India. The company trades with almost all the countries of the world.Over the years it has continued to achieve significant growth in all the three segments of trade, namely, export, import and domestic trading thereby scaling yet higher peaks of performance in terms of turnover and profitability.Now these is one of the best company to trade during good times.Its a psu where over 90% to be precise 91% stake is held by the govt of India.The company is having huge amount of reserves,over 7 times more than its equity cap which makes it a prominent bonus candidate.Thers always a buzz about the govt looking to divest some stake in the company.If that materlizes, Stc may get a value of over 1500rs per share considering its experience in trading,presence,land banks,investments and fat reserves.These is the same company which last year atracted buyers even at price of over 1500rs.With signs of market improvement stc may just be the one to be back in the reckoning for traders.It would be prudent to note that its not a play on fundamentals or valuations but a bet on inherent and intrinsic value.The counter at 300 bucks looks promising and I feel some short term strong nothrward movements can be seen over the coming days.People having a fetish at high beta scrips may satiate their desires by parking some amount in these counter.In a nutshell, State Trading Corporation of India Ltd merits an investment at dips and at lower levels.Who knows may be you would be able to make a pot of money over the longer run.Go for it boys,A solid buy.

 

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JMC Projects India Ltd

JMC Projects India Ltd

Story:The changing face of organised retailing, rising income levels, changing lifestyles and benign interest rates have stoked a massive demand for commercial as well as residential property in the last couple of years. One sector that is naturally reaping the benefits of this surging property demand is construction. Companies from this sector have been very prominent on investors radar resulting in stock prices sometimes zooming to ridiculous levels. One such company that has turned up very high on our five-month rolling returns price screen is JMC Projects (India) Limited. Working in the industrial, power, institutional and infrastructure segments, JMC has executed many prestigious projects for companies like Bajaj Auto, East India Hotels, Hindustan Motors, Larsen & Toubro, Power Grid Corporation, Cognizant Technologies and many others.The company has been doing consistently well over the past few years. JMC, based in Ahmedabad, was run by a technocrat and was known for its high quality of construction of bridges and flyovers. In December 2004,leading construction group Kalpataru took a large stake in it. The Kalpataru group is a specialised player in the power transmission segment and is also a leading builder of residential properties in Mumbai. With JMC in its fold, Kalpataru will be able to offer a complete portfolio of services spread across infrastructure, commercial and residential properties.Jmc itself looks a solid buy at bit lower levels

 

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Cochin Minerals & Rutiles Ltd

Cochin Minerals & Rutiles Ltd

Story:There seems to be a lot of speculative current in synthetic rutile and ferric chloride manufacturer, Cochin Minerals and Rutile Limited (CMRL). What is the CMRL story? It manufactures and entirely exports value-added products using Ilmenite ore obtained from the beach sand of Kerala. Global demand for Synthetic Rutile has been rising, keeping CMRLs order book full for the last couple of years. This has translated into better pricing power and robust reported results.CMRL has a competitive edge in making synthetic rutile. One of the key raw materials for the company is mineral sand from which its products are extracted. Mineral sand is available in a stretch of about 3,180 km on the countrys western coast, of which 600 km are on Keralas coast line. Kerala alone accounts for as much as 75 million tonnes of Ilmenite deposits. CMRL has a strong hold in this region through its JV partners (Kerala Rare Earths and Minerals Ltd a joint venture between CMRL and Indian Rare Earths Ltd is a subsidiary). A big boost to profitability may come from its initiative to bring down costs. It has entered into an agreement with the Regional Research Laboratory in Thiruvanathpuram to adopt a modified version of their technology for making synthetic rutile using the metallisation process, which is a more environmentally friendly technology and would also go a long way in bringing down its overall cost.However, what we dislike is the low margin of safety in its operations.A risky bet overall.

 

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Ramco Industries

Ramco Industries

Story:Ramco Industries Ltd manufactures fiber cement sheets, pressure pipes and accessories and allied building materials and cotton yarn. The group operates in four segments namely building products, textile, windmill and other.Very recently it came out with robust set of numbers where its net profit jumped 89.2% to Rs 6.85 crore on 7% rise in net sales to Rs 116.34 crore in Q4 March 2009 over Q4 March 2008.The company has been a very consistent performer and with its business divisons looking up one can expect better numbers from the counter.The scrip has been holding strong even unfer the present downfall circumstances.The small-cap stock had outperformed the market over the past one month till 13 July 2009, falling 7.93% as compared to the Sensex's 12.06% fall. It had also outperformed the market in the past one quarter, gaining 53.97% as compared to the Sensex's return of 22.19%. Now chances of moving further northwards are bountiful as there has been a very strong buzz of the counter going in for a stock split and a liberal bonus.Ramco has a tiny equity cap of 4 odd crs and it faces liquidity problems in the bourses.Now with a stock split and a bonus in the offing am pretty sure with higher liquidity ramco may rewrite a new scripture for itself in the days to come.Promters are investor freindly and the company even last year rewarded its shareholders with a hefty dividend of 15rs.With higher realisations of its products on the cards and company on an expansion free certainly better days awaits the shareholders of the company.At present prices of 700rs theres hardly much to loose but it has the ability to become a money spinner for your portfolio.A great buy.

 

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Coromandel Fertilisers Ltd

Coromandel Fertilisers Ltd


Story:Coromandel Fertilisers (CFL) is India''s leading phosphatic fertiliser manufacturer producing di-ammonium phosphate (DAP), mono-ammonium phosphate (MAP) and complex fertilisers. The Murugappa group company''s nameplate capacity stands at 23.1 lakh tonne per annum (TPA) of complex fertilisers, 8.15 lakh TPA of DAP and 1.32 lakh TPA of single super phosphate.The company has also established itself in the agrochemicals industry, with 8 manufacturing / formulating units set up in North, West and Southern part of the country. It also produces water-soluble fertilisers and is planning to set up units manufacturing micronutrients. The government''s policy change in fertiliser subsidy calculations, which linked subsidies to import parity prices, benefited CFL during FY09 and will continue to do so. The fall in commodity prices over the past 9-10 months will reduce CFL''s need for working capital as well as its dependence on government subsidies, which will bring down its short-term borrowings and interest burden.CFL has been taking strategic steps to improve its dependence on non-subsidized sectors. It recently commissioned two plants in Kakinada to manufacture water-soluble fertilisers. CFL is foc using on brand building and will expand the retail network to 400 centres under its ''Mana Gromor Centres'' initiative during FY 09 from just 20 last year. These retail centres focus on rural marketing and offer agri as well as non-agri inputs.The company has set up a subsidiary in Brazil to market its agrochemical products. Similarly, it has tied up with a Chilean company SQM for setting up a micronutrients plant at Kakinada. It has also picked up 15% stake in a Tunisian joint venture TIFERT to produce phosphoric acid - a key input for phosphatic fertilisers - which is expected to commence operations by end 2010. The company invested Rs 62 crore in this venture during FY 09. The government''s decision to pay a part of subsidies by way of special bonds is a major concern. The company wrote off Rs 104.5 crore in the quarter ended March 2009 towards mark-to-market losses, thereby incurring net losses for the quarter. Over the past 5 years, from FY 05 to FY 09, the company''s revenues have risen at a cumulative annual growth rate (CAGR) of 49.9%, thanks to acquisition and subsequent amalgamation of Godavari Fertilisers with effect from 1st April 2007.The net profit during the same period has jumped at a CAGR of 63% and dividend paid by the company has increased at a CAGR of 53.3%.Valuation:The company ended FY09 with per share earnings of Rs 35.5. On the current market price of Rs 143, the scrip is trading at P/E of less than 5. Other comparable fertiliser companies such as RCF, Chambal Fertilisers and National Fertilisers are trading at P/E above 10, while Zuari Industries and Deepak Fertilisers are trading at a P/E between 4 and 6. CFL paid Rs 6per share as interim dividend and has proposed an additional Rs 4 as final dividend for FY 2009, which together translate in an attractive dividend yield of 6%.A solid buy at dips

 

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Andhra Pradesh Paper Mills Ltd

Andhra Pradesh Paper Mills Ltd

Story:Hyderabad-based Andhra Pradesh Paper Mills Limited (APPM) is a
part of the Kolkata-based LN Bangur group. Few institutional investors
buy the so-called commodity stocks like paper because they think
competition in the segment is too intense. Its a false belief. Paper
companies are doing very well. And they are cheap. APPM is currently
trading at Rs66, at which price its market-cap is just 0.2 times its
five-quarter sales (annualised) and 1.7 times its annualised operating
profits. While turnover has come down over the past four quarters,
operating profit at Rs44.03 crore for the March 2009 quarter was the
highest over the past four quarters. Over the past five quarters, its
sales have grown an average 12% and its operating profits have rocketed
an average 63% over the same period. Its operating margin averaged a
healthy 18% over the past five quarters. If paper is seen as a
low-margin business, it is not correct. The business is
capital-intensive. The retur
n on equity (RoE) of APPM is 5%. But this
is relevant only if you want to bet on the stock for the very long
term. Even then, high RoE does not lead to higher stock prices. A good
example is Hindustan Unilever. What is relevant is whether the stock is
cheap relative to its growth potential. APPM is. APPM was set up in
1964; in 2001, it took over the control of Rajahmundry-based Coastal
Papers Limited. The production of both the units put together is
181,000 tonnes per annum (TPA). The diversity and the range of its
products meets the need of Modi Xerox, Indo National and leading
publication houses like Macmillan and Navneet Publications. In October
2008, when the world was plunged in depression, the company had chalked
out an expansion project of Rs291 crore to add 70,000tpa capacity. This
is expected to be completed by March 2010. Of the Rs291 crore capital
outlay, around Rs50 crore would go in for cold-fired boiler that would
generate nearly 15MW of power, of which 5MW would be sold to Reliance
Power. The company has obtained a loan of $40 million for the expansion
from the International Finance Corporation (IFCW), which will also hold
around 9% equity. Paper consumption is directly proportional to
economic growth. At a demand growth of 8% pa, India is one of the
fastest growing markets for paper, globally.A great paper stock to buy
at dips.

 

[shane1234555]

tazzking Nice work.Please update the thread whenever possible.........
Lets wait and watch the stocks performance.....