Stocks to invest..... updated frequently....
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Empee Distilleries
Empee Distilleries is engaged in manufacturing IMFL (Indian Made Foreign Liquor) products with one Distillery located in Kanchipuram District at Tamil Nadu with capacity of 30.24 lakh cases per annum another and in Palakkad District of Kerala with an installed capacity of 30 lakh cases per annum.
The company is developing part of its 20.88 acres freehold property located at Sriperumbudur, Kanchipuram District, into 12.23 lakh sq. ft. of residential space and 3 lakh sq. ft. of basement. This project was approved by DTCP in March 2007 and hence eligible for deduction under Section 80-IB of the Income Tax Act. This would make the company eligible for 100% tax exemption on the profits to be earned from development of this property. The project has 840 flats and estimated selling price is around Rs.2,850 per sq. ft. in addition to realization of Rs.1,000 per sq. ft. for basement. Considering cost of construction and development of Rs.1,500 per sq.ft., this would translate into a profit of Rs.195 crores which would get realized in the next three years by September 2010. Remaining 2.38 acres of land would be used for setting up godown for storage of bottle and 1.53 acres for commercial use.
The company also owns 13 acres 10 cents land at Poonamalle Taluk in Tiruvallur Dist., 13 acres 3 cents in Gummidipundi Taluk in Tiruvallur District and 10,260 sq. ft. land in Kancheepuram Dist. as also 15 acres land at Kuthumbakkam near Chennai. These properties would get developed after about 12 months, over the next 4 -5 years, which would result in total area of above 25 lakh sq. ft.
The company, for the year ending 30th September 07, posted net sales of Rs.626.11 crores, other income of Rs.11.80 crores, with EBITDA of Rs.37.15 crores, PBT of Rs.29.86 crores and PAT of Rs.20.10 crores resulting into an EPS of Rs.14.15 on pre-issue equity of Rs.14.20 crores. On post issue equity of Rs.19.00 crores, EPS works out to Rs.10.60.
The company is now expanding capacity its Tamil Nadu Distillery from 20 KLPD to 70 KLPD with capacity to handle 5 lakh cases per month, from present 3.20 lakh cases per month. The company is also setting up 60 KLPD grain based Distillery with capacity of 8.40 lakh cases per annum at Nellore in A.P. and a distillery in Karnataka for 12 lakh cases per year. This would give presence to the company in all four Southern states.
All these are estimated to cost Rs.182 crores including Rs.31.07 crores for development of 2 lakh sq. ft. To finance this, the company issued 48 lakh equity shares at Rs.400 per share in November 07 and mobilized Rs.192 crores. All these expansions and new establishment would commence production from March 2008 to March 2009.
The company hopes to have a topline of about Rs.1,100 crores with PAT of atleast Rs.48 crores. Of this PAT, realty division would give Rs.12 crores, IMFL Business Rs.32 crores and Power Rs.4 crores. This would result into an EPS of Rs.25 for FY 08, ending 30th September.
For FY 09, ending 30th September, topline would be close to Rs.1,600 crores with PAT of Rs.148 crores of which Realty would give Rs.70 crores, IMFL Business Rs.72 crores and Power Rs.6 crores. This would result into an EPS of Rs.78.
Realty would give PAT of close to Rs.100 crores in FY 10, ending 30th September, which alone would translate into an EPS of Rs.53 with IMFL giving close to Rs.84 crores and Power Rs.6 crores, resulting into an EPS of Rs.48 from core business. Thus EPS would be in excess of Rs.100 in FY 10.
The present equity of the company is Rs.19.00 crores, of which, 75% is held by the promoters while 25% by Public. The selling pressure from QIB in recently concluded IPO seems to have completed with no selling pressure seen form last couple of days.
The company would have parallel and equal flow of bottomline from realty business, on regular basis, from FY 09, ending September, for the next 5 – 7 years. This would give huge cash flow and EPS jump, resulting in higher valuation to the company.
The company had issued shares at Rs.400 per share, which is now ruling at Rs.310, discounting FY 08 earning by about 13 times and FY 09 earning by about 4 times. Due to strong visibility of earnings for the next couple of years, the share has huge upside potential.
The market has not correctly assessed the earnings potentials of its core business and huge value unlocking from its realty business. The IMFL companies are having PE of over 30 while Realty companies have PE of close to 15 times. The share falls in both the categories with big IMFL capacity, present in two states to be expanded in four Southern states, with substantial developable area near Chennai.
The share qualifies an excellent buy at Rs.320 with potential to rise by 100 per cent in 9 – 12 months, with virtually no downward risk.
Empee Distilleries is engaged in manufacturing IMFL (Indian Made Foreign Liquor) products with one Distillery located in Kanchipuram District at Tamil Nadu with capacity of 30.24 lakh cases per annum another and in Palakkad District of Kerala with an installed capacity of 30 lakh cases per annum.
The company is developing part of its 20.88 acres freehold property located at Sriperumbudur, Kanchipuram District, into 12.23 lakh sq. ft. of residential space and 3 lakh sq. ft. of basement. This project was approved by DTCP in March 2007 and hence eligible for deduction under Section 80-IB of the Income Tax Act. This would make the company eligible for 100% tax exemption on the profits to be earned from development of this property. The project has 840 flats and estimated selling price is around Rs.2,850 per sq. ft. in addition to realization of Rs.1,000 per sq. ft. for basement. Considering cost of construction and development of Rs.1,500 per sq.ft., this would translate into a profit of Rs.195 crores which would get realized in the next three years by September 2010. Remaining 2.38 acres of land would be used for setting up godown for storage of bottle and 1.53 acres for commercial use.
The company also owns 13 acres 10 cents land at Poonamalle Taluk in Tiruvallur Dist., 13 acres 3 cents in Gummidipundi Taluk in Tiruvallur District and 10,260 sq. ft. land in Kancheepuram Dist. as also 15 acres land at Kuthumbakkam near Chennai. These properties would get developed after about 12 months, over the next 4 -5 years, which would result in total area of above 25 lakh sq. ft.
The company, for the year ending 30th September 07, posted net sales of Rs.626.11 crores, other income of Rs.11.80 crores, with EBITDA of Rs.37.15 crores, PBT of Rs.29.86 crores and PAT of Rs.20.10 crores resulting into an EPS of Rs.14.15 on pre-issue equity of Rs.14.20 crores. On post issue equity of Rs.19.00 crores, EPS works out to Rs.10.60.
The company is now expanding capacity its Tamil Nadu Distillery from 20 KLPD to 70 KLPD with capacity to handle 5 lakh cases per month, from present 3.20 lakh cases per month. The company is also setting up 60 KLPD grain based Distillery with capacity of 8.40 lakh cases per annum at Nellore in A.P. and a distillery in Karnataka for 12 lakh cases per year. This would give presence to the company in all four Southern states.
All these are estimated to cost Rs.182 crores including Rs.31.07 crores for development of 2 lakh sq. ft. To finance this, the company issued 48 lakh equity shares at Rs.400 per share in November 07 and mobilized Rs.192 crores. All these expansions and new establishment would commence production from March 2008 to March 2009.
The company hopes to have a topline of about Rs.1,100 crores with PAT of atleast Rs.48 crores. Of this PAT, realty division would give Rs.12 crores, IMFL Business Rs.32 crores and Power Rs.4 crores. This would result into an EPS of Rs.25 for FY 08, ending 30th September.
For FY 09, ending 30th September, topline would be close to Rs.1,600 crores with PAT of Rs.148 crores of which Realty would give Rs.70 crores, IMFL Business Rs.72 crores and Power Rs.6 crores. This would result into an EPS of Rs.78.
Realty would give PAT of close to Rs.100 crores in FY 10, ending 30th September, which alone would translate into an EPS of Rs.53 with IMFL giving close to Rs.84 crores and Power Rs.6 crores, resulting into an EPS of Rs.48 from core business. Thus EPS would be in excess of Rs.100 in FY 10.
The present equity of the company is Rs.19.00 crores, of which, 75% is held by the promoters while 25% by Public. The selling pressure from QIB in recently concluded IPO seems to have completed with no selling pressure seen form last couple of days.
The company would have parallel and equal flow of bottomline from realty business, on regular basis, from FY 09, ending September, for the next 5 – 7 years. This would give huge cash flow and EPS jump, resulting in higher valuation to the company.
The company had issued shares at Rs.400 per share, which is now ruling at Rs.310, discounting FY 08 earning by about 13 times and FY 09 earning by about 4 times. Due to strong visibility of earnings for the next couple of years, the share has huge upside potential.
The market has not correctly assessed the earnings potentials of its core business and huge value unlocking from its realty business. The IMFL companies are having PE of over 30 while Realty companies have PE of close to 15 times. The share falls in both the categories with big IMFL capacity, present in two states to be expanded in four Southern states, with substantial developable area near Chennai.
The share qualifies an excellent buy at Rs.320 with potential to rise by 100 per cent in 9 – 12 months, with virtually no downward risk.
marg construction
Marg Construction is a South based realty company, engaged in property development and infrastructure development like SEZ and Sea port.
The present equity of the company is Rs.20.63 crores, with face-value of Rs.10 per share. This is after a preferential allotment of 12.20 lakh shares to promoters, 2 lakh shares to Benett Coleman & Co. and 6.80 lakh shares to non-promoters. Of this, promoters stake is 51%, MF,Banks and FIIs at about 15%, while remaining 34% with the public.
The company is developing Karaikal Port near Pondicherry by its wholly owned subsidiary Karaikal Port Pvt. Ltd. This subsidiary has also entered into an MoU with Pembinaan Redzai Sah Bhd a Malaysian company, for development and management work of this port, as also has recently purchased a cutter suction Dredger which can work on draught of 5 meters to 25 meters depth. Karaikal is one of the four regions of Pondicherry and is 300 kms south of Chennai and about 135 kms. from Pondicherry. The port is being developed in three phases with total investments of Rs.1,000 crores. The first phase is of Rs.416 crores, and shall be operational by end 2008, 2nd phase would start in Jan. 2009 with outlay of Rs.250 crores and third phase thereafter with outlay of Rs.350 crores. The port is on 600 acres land with a concession period of 30 years.
The company has estimated total cost of development of 1st phase of the port at Rs.416 crores, for which, Rs.302 crore loan has been sanctioned by various banks and financial institutions. Work on development of the port has commenced.
The company has acquired 4.40 acres of land at Old Mahabalipuram Road, near Chennai for a residential project.
The company is developing an SEZ on 312 acres of land in Kancheepuram near Mahabalipuram through its wholly owned subsidiary New Chennai Township Pvt. Ltd.
Another SEZ on 300 acres of land, for service sector, is also being developed in Kancheepuram near Mahabalipuram.
Developing one more SEZ at Tirupati for which land acquisition process has been initiated.
Developing Serviced Airport at Kancheepuram through its wholly owned subsidiary Marg Business Park P. Ltd.
For FY 07, total income of the company was placed at Rs.142 crores with PAT of Rs.29.90 crores, resulting in an EPS of Rs.18.
For quarter ending September 07, topline was at Rs.49 crores with PAT of Rs.6.60 crores. Based on this performance, the company should be able to post a 30% growth in FY 08, over its FY 07 performance.
The present market capitalization of the company is about Rs.650 crores, which is very low. Post listing of Mundra Port, the company would get vastly re-rated because of its Karaikal Port, near Pondicherry.
The share is presently ruling at Rs.510 {upper circuit everyday} and can rise to Rs.1,000 levels in the next 12 months. Those who have long term view, can buy the stock, purely from investment angle.
Marg Construction is a South based realty company, engaged in property development and infrastructure development like SEZ and Sea port.
The present equity of the company is Rs.20.63 crores, with face-value of Rs.10 per share. This is after a preferential allotment of 12.20 lakh shares to promoters, 2 lakh shares to Benett Coleman & Co. and 6.80 lakh shares to non-promoters. Of this, promoters stake is 51%, MF,Banks and FIIs at about 15%, while remaining 34% with the public.
The company is developing Karaikal Port near Pondicherry by its wholly owned subsidiary Karaikal Port Pvt. Ltd. This subsidiary has also entered into an MoU with Pembinaan Redzai Sah Bhd a Malaysian company, for development and management work of this port, as also has recently purchased a cutter suction Dredger which can work on draught of 5 meters to 25 meters depth. Karaikal is one of the four regions of Pondicherry and is 300 kms south of Chennai and about 135 kms. from Pondicherry. The port is being developed in three phases with total investments of Rs.1,000 crores. The first phase is of Rs.416 crores, and shall be operational by end 2008, 2nd phase would start in Jan. 2009 with outlay of Rs.250 crores and third phase thereafter with outlay of Rs.350 crores. The port is on 600 acres land with a concession period of 30 years.
The company has estimated total cost of development of 1st phase of the port at Rs.416 crores, for which, Rs.302 crore loan has been sanctioned by various banks and financial institutions. Work on development of the port has commenced.
The company has acquired 4.40 acres of land at Old Mahabalipuram Road, near Chennai for a residential project.
The company is developing an SEZ on 312 acres of land in Kancheepuram near Mahabalipuram through its wholly owned subsidiary New Chennai Township Pvt. Ltd.
Another SEZ on 300 acres of land, for service sector, is also being developed in Kancheepuram near Mahabalipuram.
Developing one more SEZ at Tirupati for which land acquisition process has been initiated.
Developing Serviced Airport at Kancheepuram through its wholly owned subsidiary Marg Business Park P. Ltd.
For FY 07, total income of the company was placed at Rs.142 crores with PAT of Rs.29.90 crores, resulting in an EPS of Rs.18.
For quarter ending September 07, topline was at Rs.49 crores with PAT of Rs.6.60 crores. Based on this performance, the company should be able to post a 30% growth in FY 08, over its FY 07 performance.
The present market capitalization of the company is about Rs.650 crores, which is very low. Post listing of Mundra Port, the company would get vastly re-rated because of its Karaikal Port, near Pondicherry.
The share is presently ruling at Rs.510 {upper circuit everyday} and can rise to Rs.1,000 levels in the next 12 months. Those who have long term view, can buy the stock, purely from investment angle.
Amara Raja Batteries
AMARA RAJA BATTERIES............ An energized stock
Amara Raja Batteries is engaged in manufacturing of automotive and industrial battery with present capacity of 4 million pieces per annum.
The company is implementing Rs.265 crore expansion at Tirupati, to be completed in three years, for the manufacture of two wheeler, telecom and small VRLA batteries, with total capacity of about 6 million pieces.
Telecom battery market is showing a growth of 40% plus, annually, in view of huge addition of mobile subscribers. Also, due to average life of about 24 months of mobile telephone batteries, the telecom market has now been witnessing huge replacement demand of batteries for the handsets acquired about 23 years back. This demand would continue to rise in the coming time.
The company has now focused on two wheeler battery market also, which is quite huge in OEM and replacement segment.
Of the total raw-material costs, 70% is cost of lead. The price of lead now has softened to about US $ 2,400 PMT after having peaked to US $ 3,950 PMT about six months ago. Also, due to strengthening rupee, the landed cost of lead is also lower, which has been helping the company to post improved financial performance.
For FY 07, the total income of the company was Rs.606 crores, with operating profit of Rs.91.30 crores, profit before tax of Rs.71.20 crores and net profit of Rs.47.04 crores, resulting in an EPS of Rs.41.31 (face value Rs.10) for the year.
The company had posted CAGR of over 50% in topline and close to 220% in bottomline over the last three years.
The management of the company, are confident to post CAGR of atleast 35% in topline and bottomline for the next three years, upto FY 10.
For QI FY 08, the total income was at Rs.217 crores, operating profit of Rs.34.86 crores, PBT of Rs.27.46 crores and PAT of Rs.17.61 crores, resulting into an EPS of Rs.3.15 (face of Rs.2).
For Q2 of FY 08, the total income was at Rs.260 crores with operating profit of Rs.40.04 crores, PBT of Rs.31.46 crores and PAT of Rs.20.62 crores, giving an EPS of Rs.3.62 (face value Rs.2).
It may be seen from first two quarter results, that the company has been posting a quarterly growth of close to 15% on topline and bottomline, quarter on quarter.
FY 08 is likely to have a topline of close to Rs.1,100 crores, operating profit of Rs.170 crores, PBT of Rs.134 crores and PAT of Rs.90 crores, giving an EPS of close to Rs.15. This translates into a growth of over 80% in topline and about 115% in bottomline, thus maintaining the tempo of growth momentum.
The present paid-up equity of the company is very tiny, at Rs.11.39 crores (face value of Rs.2) of which, 52% is held by the promoters, 13.63% by Mutual Funds, Banks, Insurance Companies and FII, while balance 34.37% by the public. Of promoters equity, 26% is held by Indian promoters, Galla Family and 26% by the foreign promoter, Johnson Controls.
The present net worth of the company is close to Rs.250 crores, thus giving a respectable book value of Rs.43 per share, as on 31st March 07. The present debt of Rs.140 crores, is largely to finance net current assets, which are close to Rs.220 crores. This makes the company debt free. Future capex of Rs.260 crores are also not going to increase any sizeable debt burden, as major portion would get mobilized from internal accruals. A sound and stable financial planning and management.
On tiny equity of Rs.11.40 crores, turnover of over Rs.1,000 crores and cash profit of close to Rs.100 crores, reflects excellent financial ratios. In FY 09, the expansion would further improve these ratios and working. The part of increase in capacity has gone on stream, which would keep happening at an interval of every six months.
The share is presently ruling at Rs.215, which discounts FY 08, EPS by about 14 times and FY 09 earnings by less than 10 times. This enable the share to give an annualized return of close to 40%, over the next three years, from its present price.
A safe, sound and consistent stock, for medium to long term, at Rs.199.
AMARA RAJA BATTERIES............ An energized stock
Amara Raja Batteries is engaged in manufacturing of automotive and industrial battery with present capacity of 4 million pieces per annum.
The company is implementing Rs.265 crore expansion at Tirupati, to be completed in three years, for the manufacture of two wheeler, telecom and small VRLA batteries, with total capacity of about 6 million pieces.
Telecom battery market is showing a growth of 40% plus, annually, in view of huge addition of mobile subscribers. Also, due to average life of about 24 months of mobile telephone batteries, the telecom market has now been witnessing huge replacement demand of batteries for the handsets acquired about 23 years back. This demand would continue to rise in the coming time.
The company has now focused on two wheeler battery market also, which is quite huge in OEM and replacement segment.
Of the total raw-material costs, 70% is cost of lead. The price of lead now has softened to about US $ 2,400 PMT after having peaked to US $ 3,950 PMT about six months ago. Also, due to strengthening rupee, the landed cost of lead is also lower, which has been helping the company to post improved financial performance.
For FY 07, the total income of the company was Rs.606 crores, with operating profit of Rs.91.30 crores, profit before tax of Rs.71.20 crores and net profit of Rs.47.04 crores, resulting in an EPS of Rs.41.31 (face value Rs.10) for the year.
The company had posted CAGR of over 50% in topline and close to 220% in bottomline over the last three years.
The management of the company, are confident to post CAGR of atleast 35% in topline and bottomline for the next three years, upto FY 10.
For QI FY 08, the total income was at Rs.217 crores, operating profit of Rs.34.86 crores, PBT of Rs.27.46 crores and PAT of Rs.17.61 crores, resulting into an EPS of Rs.3.15 (face of Rs.2).
For Q2 of FY 08, the total income was at Rs.260 crores with operating profit of Rs.40.04 crores, PBT of Rs.31.46 crores and PAT of Rs.20.62 crores, giving an EPS of Rs.3.62 (face value Rs.2).
It may be seen from first two quarter results, that the company has been posting a quarterly growth of close to 15% on topline and bottomline, quarter on quarter.
FY 08 is likely to have a topline of close to Rs.1,100 crores, operating profit of Rs.170 crores, PBT of Rs.134 crores and PAT of Rs.90 crores, giving an EPS of close to Rs.15. This translates into a growth of over 80% in topline and about 115% in bottomline, thus maintaining the tempo of growth momentum.
The present paid-up equity of the company is very tiny, at Rs.11.39 crores (face value of Rs.2) of which, 52% is held by the promoters, 13.63% by Mutual Funds, Banks, Insurance Companies and FII, while balance 34.37% by the public. Of promoters equity, 26% is held by Indian promoters, Galla Family and 26% by the foreign promoter, Johnson Controls.
The present net worth of the company is close to Rs.250 crores, thus giving a respectable book value of Rs.43 per share, as on 31st March 07. The present debt of Rs.140 crores, is largely to finance net current assets, which are close to Rs.220 crores. This makes the company debt free. Future capex of Rs.260 crores are also not going to increase any sizeable debt burden, as major portion would get mobilized from internal accruals. A sound and stable financial planning and management.
On tiny equity of Rs.11.40 crores, turnover of over Rs.1,000 crores and cash profit of close to Rs.100 crores, reflects excellent financial ratios. In FY 09, the expansion would further improve these ratios and working. The part of increase in capacity has gone on stream, which would keep happening at an interval of every six months.
The share is presently ruling at Rs.215, which discounts FY 08, EPS by about 14 times and FY 09 earnings by less than 10 times. This enable the share to give an annualized return of close to 40%, over the next three years, from its present price.
A safe, sound and consistent stock, for medium to long term, at Rs.199.
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