Stock research
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Opto Circuits India Ltd
Story:OCL has a promising growth potential. It has shown fantastic results. It is expanding and increasing its acquisitions. It has seven subsidiaries in all and has a large client base. It is making efforts to expand more and increase its client base in the coming future. It has a strong distribution network. Acquisition of companies has made its distribution network stronger.With the improvement in lifestyle of people, expenditure in medical care is increasing, showing good prospects for the medical sector companies. The Company is also putting up their own manufacturing facility in SEZ near Mysore. It has recently received approval from US Food and Drug Administration (US FDA) to market two of the companys product in the country. The companys subsidiary, Mediaid Inc, has received approval from the US FDA for marketing its vital sign monitoring products in the US. OCL has shown a good financial performance for the FY08 and for the second quarter FY09. The mid cap stock is an attractive investment, taking into consideration the expansion, acquisition and growth of the company. It is expected to have an annualized EPS of around Rs 8.69 per share for FY09. At CMP of Rs 175, it trades at a P/E of just 19.46.
Story:OCL has a promising growth potential. It has shown fantastic results. It is expanding and increasing its acquisitions. It has seven subsidiaries in all and has a large client base. It is making efforts to expand more and increase its client base in the coming future. It has a strong distribution network. Acquisition of companies has made its distribution network stronger.With the improvement in lifestyle of people, expenditure in medical care is increasing, showing good prospects for the medical sector companies. The Company is also putting up their own manufacturing facility in SEZ near Mysore. It has recently received approval from US Food and Drug Administration (US FDA) to market two of the companys product in the country. The companys subsidiary, Mediaid Inc, has received approval from the US FDA for marketing its vital sign monitoring products in the US. OCL has shown a good financial performance for the FY08 and for the second quarter FY09. The mid cap stock is an attractive investment, taking into consideration the expansion, acquisition and growth of the company. It is expected to have an annualized EPS of around Rs 8.69 per share for FY09. At CMP of Rs 175, it trades at a P/E of just 19.46.
Ester Industries Ltd
Ester Industries Ltd
Story:Company produces PET films and Engineering plastic, forwhich domestic demand is growing at more than 15% p.a. Companys utilization levels are currently more than 100% for PET film and around 100% for engineering plastic. Thus tomeet growing demand, company is planning to expand capacity of PET film from 30,000 Mts to 57,000 Mts by the end of 2010 and also planning to raise Engineering plastic capacity from 3,600Mts to 11,000Mts. Expansion is mostly funded from internal accruals and debt.(No equity dilution is contemplated).Company also has more than matching capacity of PET chips,which is and intermediate product. Last year performancewas affected due to volatility and high prices of the raw materiallike PTA and MEG. But now the raw material prices have stabilized and better realizations are leading to healthy margins for the company. Better performance is expected tocontinue as the realizations are better and the input costs havecome down. Most of the sales are to the domestic markets[75%] catering to FMCG segment where demand is strong at 20-22% [and least affected by any slowdown], rest is exported [25%]. Outlook for the current year and the coming year looks promising with company expected to achieve sales close to 450 crores and profit after tax close to 50 crores for 2010. Current years earnings could be close to Rs 9 and thus discounting present stock price by around 2.7X and offers scope for appreciation looking to growth potential.A decent buy at lower levels.
Ester Industries Ltd
Story:Company produces PET films and Engineering plastic, forwhich domestic demand is growing at more than 15% p.a. Companys utilization levels are currently more than 100% for PET film and around 100% for engineering plastic. Thus tomeet growing demand, company is planning to expand capacity of PET film from 30,000 Mts to 57,000 Mts by the end of 2010 and also planning to raise Engineering plastic capacity from 3,600Mts to 11,000Mts. Expansion is mostly funded from internal accruals and debt.(No equity dilution is contemplated).Company also has more than matching capacity of PET chips,which is and intermediate product. Last year performancewas affected due to volatility and high prices of the raw materiallike PTA and MEG. But now the raw material prices have stabilized and better realizations are leading to healthy margins for the company. Better performance is expected tocontinue as the realizations are better and the input costs havecome down. Most of the sales are to the domestic markets[75%] catering to FMCG segment where demand is strong at 20-22% [and least affected by any slowdown], rest is exported [25%]. Outlook for the current year and the coming year looks promising with company expected to achieve sales close to 450 crores and profit after tax close to 50 crores for 2010. Current years earnings could be close to Rs 9 and thus discounting present stock price by around 2.7X and offers scope for appreciation looking to growth potential.A decent buy at lower levels.
Goodyear India Ltd
Goodyear India Ltd
Story:A 74% subsidiary of Goodyear Tire & Rubber Co. US, Goodyear India is among the best-known tyre brands. It has a very wide product portfolio including tyres for passenger cars, commercial vehicles, trucks, buses, tractors and earthmovers. The tyre sector has been doing extremely well for quite some time now with lower input costs fuelling bottomline. This, in turn, has helped the component manufacturers to improve their performance on the back of higher demand.One problem with Goodyear is its margin. Operating margin and net margin over the years has been extreamly low at sub single digit respectively. This leaves it vulnerable to even a slight fall in revenues or a rise in cost. It has been expanding years after years to cope with the higher demand. That apart, it also plans to set up hundreds of exclusive outlets in the next few years. Valuation looks attractive and with the tyre sector having a dream run on the bourses goodyear may just be one of the best sectorial performer in the days to come.A hot buy at dips.
Goodyear India Ltd
Story:A 74% subsidiary of Goodyear Tire & Rubber Co. US, Goodyear India is among the best-known tyre brands. It has a very wide product portfolio including tyres for passenger cars, commercial vehicles, trucks, buses, tractors and earthmovers. The tyre sector has been doing extremely well for quite some time now with lower input costs fuelling bottomline. This, in turn, has helped the component manufacturers to improve their performance on the back of higher demand.One problem with Goodyear is its margin. Operating margin and net margin over the years has been extreamly low at sub single digit respectively. This leaves it vulnerable to even a slight fall in revenues or a rise in cost. It has been expanding years after years to cope with the higher demand. That apart, it also plans to set up hundreds of exclusive outlets in the next few years. Valuation looks attractive and with the tyre sector having a dream run on the bourses goodyear may just be one of the best sectorial performer in the days to come.A hot buy at dips.
Maharashtra Seamless Ltd
Maharashtra Seamless Ltd
Story:Maharashtra Seamless is another stock that has popped up in our screen that detects strong recent price performance. It makes a range of high-class customisable and innovative seamless pipes and tubes. In addition, it also manufactures ERW pipes and has the distinction of being the first and only company in India with the capacity to manufacture ERW pipes of up to 21 inch in outer diameter.Its products are used in all core industries such as automotive, oil & gas, hydrocarbon processing, railways and general engineering. Demand from these sectors has been robust and will remain so as Indian and foreign companies roll out massive capital expenditure plans over the next two years. MSL has been riding this demand boom quite well, which is reflected in its operational performance.Maharashtra Seamless has a 50:50 JV with US-based Hydril LP for the manufacture of premium connection pipes which are used in high-pressure and deep water drilling activities in the oil & gas sector. Moreover, these are high-end products commanding a premium in the international oil & gas market. All this stacks up well for the future of Maharashtra Seamless. Keep an eye on this stock.Can be a hot buy for the long term perspective.
Maharashtra Seamless Ltd
Story:Maharashtra Seamless is another stock that has popped up in our screen that detects strong recent price performance. It makes a range of high-class customisable and innovative seamless pipes and tubes. In addition, it also manufactures ERW pipes and has the distinction of being the first and only company in India with the capacity to manufacture ERW pipes of up to 21 inch in outer diameter.Its products are used in all core industries such as automotive, oil & gas, hydrocarbon processing, railways and general engineering. Demand from these sectors has been robust and will remain so as Indian and foreign companies roll out massive capital expenditure plans over the next two years. MSL has been riding this demand boom quite well, which is reflected in its operational performance.Maharashtra Seamless has a 50:50 JV with US-based Hydril LP for the manufacture of premium connection pipes which are used in high-pressure and deep water drilling activities in the oil & gas sector. Moreover, these are high-end products commanding a premium in the international oil & gas market. All this stacks up well for the future of Maharashtra Seamless. Keep an eye on this stock.Can be a hot buy for the long term perspective.
Madras Cements Ltd
Madras Cements Ltd
Story:Construction is booming, infrastructure spending is on a high, demand for commercial and residential properties is escalating by the day and, as we have been repeating, if there is one sector that is likely to enjoy the benefits of these factors, it is cement. Cement manufacturers have reported great numbers in the June quarter despite it being a lean season for them and are expected to put up an even better show in the September quarter. On our stock screen that captures five-month rolling returns, Madras Cements has turned out a superb performance consistently for the last several fortnights. A flagship of the Ramco Group, this Chennai-based company is the third largest cement producer in South India. Its main interest is the manufacture of blended cement, ready-mix concrete and dry mortar mix. It also generates power through the use of windmills.Cement consumption in Southern India has been very healthy and the reduction of taxes in certain states has not been passed on by manufacturers to consumers, in turn adding to their bottom lines.Cement companies right now offer the best earnings visibility given the continuing strong demand over the next two years. MCL looks especially attractive being located in an area enjoying strong demand and short supply.A good cement bet for your core portfolio.Buy it at sub 90 levels.
Madras Cements Ltd
Story:Construction is booming, infrastructure spending is on a high, demand for commercial and residential properties is escalating by the day and, as we have been repeating, if there is one sector that is likely to enjoy the benefits of these factors, it is cement. Cement manufacturers have reported great numbers in the June quarter despite it being a lean season for them and are expected to put up an even better show in the September quarter. On our stock screen that captures five-month rolling returns, Madras Cements has turned out a superb performance consistently for the last several fortnights. A flagship of the Ramco Group, this Chennai-based company is the third largest cement producer in South India. Its main interest is the manufacture of blended cement, ready-mix concrete and dry mortar mix. It also generates power through the use of windmills.Cement consumption in Southern India has been very healthy and the reduction of taxes in certain states has not been passed on by manufacturers to consumers, in turn adding to their bottom lines.Cement companies right now offer the best earnings visibility given the continuing strong demand over the next two years. MCL looks especially attractive being located in an area enjoying strong demand and short supply.A good cement bet for your core portfolio.Buy it at sub 90 levels.
Electrosteel Castings Ltd
Electrosteel Castings Ltd
Story:In a recent inter-action with analysts, Electrosteel Castings clarified and specifically focused upon a few points. Electrosteel is a leading manufacturer of Ductile Iron pipes and additionally offers turnkey solutions in water transport and sewage management.The demand for ductile pipes comes from Government/Government sponsored projects for transportation of potable water and for cast iron pipes -from irrigation/sewage disposal projects.Demand for ductile pipes is very fast as there is a renewed focus from the GOI/State Governments and quasi-public bodies to provide potable drinking water not only in India but also across Asia and other developing countries.The Budget allocations for the JNURM, Accelerated Water Supply program and Pradhan Mantri Gramodaya Yojana-Rural Drinking water supplies, has been raised by atleast 30 per cent in FY2010. This will ensure growing demand for the corporate even in a mostly drought scenario that Summer 2009 is turning out to be.Electrosteel is fully integrated both backward and forward, with a pig iron plant, sinter plant, captive power and dedicated iron ore, thermal and metalurgical coal mines. The latter, which are already operational can be used to supply the mini blast furnaces of Electrosteel for another 2 years, till it's 2.2 mn tpa integrated steel plant comes up on stream in Jharkhand.The Q1 numbers were excellent, with Electrosteel reporting an EPS of Rs 1.90 for the quarter. In a very conservative accounting policy, forex losses provided in earlier years have not been reversed in Q1, as many entities like Ranbaxy have done. These will remain as losses till the contracts expiry in the books of Electrosteel.The stock is cum-dividend Rs 1.25 per share till August 7, 2009. On a projected EPS of Rs 7 for FY10, and a peak mutliple of 9.Electrosteel could quote upto Rs 63 by December 2009 which alongwith the dividend will imply a sizeable return of 70 per cent over the next 5 months.
Electrosteel Castings Ltd
Story:In a recent inter-action with analysts, Electrosteel Castings clarified and specifically focused upon a few points. Electrosteel is a leading manufacturer of Ductile Iron pipes and additionally offers turnkey solutions in water transport and sewage management.The demand for ductile pipes comes from Government/Government sponsored projects for transportation of potable water and for cast iron pipes -from irrigation/sewage disposal projects.Demand for ductile pipes is very fast as there is a renewed focus from the GOI/State Governments and quasi-public bodies to provide potable drinking water not only in India but also across Asia and other developing countries.The Budget allocations for the JNURM, Accelerated Water Supply program and Pradhan Mantri Gramodaya Yojana-Rural Drinking water supplies, has been raised by atleast 30 per cent in FY2010. This will ensure growing demand for the corporate even in a mostly drought scenario that Summer 2009 is turning out to be.Electrosteel is fully integrated both backward and forward, with a pig iron plant, sinter plant, captive power and dedicated iron ore, thermal and metalurgical coal mines. The latter, which are already operational can be used to supply the mini blast furnaces of Electrosteel for another 2 years, till it's 2.2 mn tpa integrated steel plant comes up on stream in Jharkhand.The Q1 numbers were excellent, with Electrosteel reporting an EPS of Rs 1.90 for the quarter. In a very conservative accounting policy, forex losses provided in earlier years have not been reversed in Q1, as many entities like Ranbaxy have done. These will remain as losses till the contracts expiry in the books of Electrosteel.The stock is cum-dividend Rs 1.25 per share till August 7, 2009. On a projected EPS of Rs 7 for FY10, and a peak mutliple of 9.Electrosteel could quote upto Rs 63 by December 2009 which alongwith the dividend will imply a sizeable return of 70 per cent over the next 5 months.
Seamec ltd
SEAMEC LTD
Story:The companys valuation is particularly attractive given the companys strong return ratios and debt-free status. The Q1CY2009 results of SEAMEC were much ahead of estimates on account of a strong top line growth and further improvement in margins. The revenues for the quarter grew by 149% to Rs100.1 crore, as all four of its vessels were deployed during the quarter against just two in the same quarter of the last year.Currently, the contracts for all the vessels are in place and all its vessels would be operational for the first half of the fiscal.The company has recently received a one-year contract for Seamec II, though at lower rates, while it has also received a two-month contract for Seamec Princess, starting May 15, 2009.Going forward, in the wake of lowering global exploration and production (E&P) capital expenditure (capex), the deployment of assets would also be achallenge.There is no dry-docking expected for any of its vessels in CY2009, while dry-docking for Seamec I is due in CY2010.For CY2010, Seamec I is likely to go for dry-docking, while currently the company has contract only for Seamec II, which would expire in June 2010.On the valuation front, the stock appears to be trading at an extremely attractive valuations. The valuation is particularly attractive given the companys strong return ratios and debt-free status.Moreover, at the end of CY2008, the company had cash on books to the tune of Rs63.5 crore, which works out to Rs18.7 per share.Further, on the back of strong performance,I expect excellent cash inflows for the company,In a nutshell,seamec merits an investment at lower levels.
SEAMEC LTD
Story:The companys valuation is particularly attractive given the companys strong return ratios and debt-free status. The Q1CY2009 results of SEAMEC were much ahead of estimates on account of a strong top line growth and further improvement in margins. The revenues for the quarter grew by 149% to Rs100.1 crore, as all four of its vessels were deployed during the quarter against just two in the same quarter of the last year.Currently, the contracts for all the vessels are in place and all its vessels would be operational for the first half of the fiscal.The company has recently received a one-year contract for Seamec II, though at lower rates, while it has also received a two-month contract for Seamec Princess, starting May 15, 2009.Going forward, in the wake of lowering global exploration and production (E&P) capital expenditure (capex), the deployment of assets would also be achallenge.There is no dry-docking expected for any of its vessels in CY2009, while dry-docking for Seamec I is due in CY2010.For CY2010, Seamec I is likely to go for dry-docking, while currently the company has contract only for Seamec II, which would expire in June 2010.On the valuation front, the stock appears to be trading at an extremely attractive valuations. The valuation is particularly attractive given the companys strong return ratios and debt-free status.Moreover, at the end of CY2008, the company had cash on books to the tune of Rs63.5 crore, which works out to Rs18.7 per share.Further, on the back of strong performance,I expect excellent cash inflows for the company,In a nutshell,seamec merits an investment at lower levels.
Rico Auto Industries Ltd
Rico Auto Industries Ltd
Story:Rico Auto Industries is one of the leading Tier-I auto component vendors in the country. It's also one of the most attractive stocks in the sector, with one of the highest dividend payout ratios. It's expanding its non-Hero Honda business and aggressively investing into new segments like alloy-wheels and brakes & suspension systems.It's positioning itself as a vendor of choice through aggressive capex and investment in engineering product development capabilities.Considering the projected growth in the automobile production, the company is implementing a strategic plan to build global scale and capabilities to meet the requirements of its existing as well as its OEMs which are set to enter India. In the last five years, the company has invested nearly Rs 500 crore in capacity expansion.Its capex has been growing at twice the rate of growth in its revenues. Rico also entered into two new joint ventures - one with Continental AG of Germany for Hydraulic Brake Systems and the other with Jinfei of China for aluminium alloy wheels.The company holds a 50% stake in the first JV and 92.5% in the latter.Though the exact estimates are not available, these two JVs are expected to add nearly Rs 1,000 crore to Rico's consolidated topline during FY10 and around Rs 140 crore to its operating profit.In-house expansion is estimated to add nearly Rs 600 crore to its topline and Rs 90 crore to operating margin on a recurring basis. Its long-term plan is to emerge as a Rs 4,000 crore ($1 billion) enterprise by the end of FY11. A major part of the expansion is being funded through equity expansion, which has kept its interest cost in check though not entirely Meanwhile, two-wheeler sales appear to have bottomed-out and the next two quarters are expected to be better than the past two.Considering its growth plans and an expected better show by its two-wheeler clients in the remaining quarters of FY10, the stock offers a good growth opportunity in over the next 12-18 months.A great buy at dips.
Rico Auto Industries Ltd
Story:Rico Auto Industries is one of the leading Tier-I auto component vendors in the country. It's also one of the most attractive stocks in the sector, with one of the highest dividend payout ratios. It's expanding its non-Hero Honda business and aggressively investing into new segments like alloy-wheels and brakes & suspension systems.It's positioning itself as a vendor of choice through aggressive capex and investment in engineering product development capabilities.Considering the projected growth in the automobile production, the company is implementing a strategic plan to build global scale and capabilities to meet the requirements of its existing as well as its OEMs which are set to enter India. In the last five years, the company has invested nearly Rs 500 crore in capacity expansion.Its capex has been growing at twice the rate of growth in its revenues. Rico also entered into two new joint ventures - one with Continental AG of Germany for Hydraulic Brake Systems and the other with Jinfei of China for aluminium alloy wheels.The company holds a 50% stake in the first JV and 92.5% in the latter.Though the exact estimates are not available, these two JVs are expected to add nearly Rs 1,000 crore to Rico's consolidated topline during FY10 and around Rs 140 crore to its operating profit.In-house expansion is estimated to add nearly Rs 600 crore to its topline and Rs 90 crore to operating margin on a recurring basis. Its long-term plan is to emerge as a Rs 4,000 crore ($1 billion) enterprise by the end of FY11. A major part of the expansion is being funded through equity expansion, which has kept its interest cost in check though not entirely Meanwhile, two-wheeler sales appear to have bottomed-out and the next two quarters are expected to be better than the past two.Considering its growth plans and an expected better show by its two-wheeler clients in the remaining quarters of FY10, the stock offers a good growth opportunity in over the next 12-18 months.A great buy at dips.
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