Cheviot Co.Ltd

Myself not much versed with FA, hence request anybody who can to do it IF it is worth the trouble. I have copied from the NET!!!!

Cheviot Company Ltd, a recognised export house has emerged as one of the leading manufactures and exporters of fine jute yarn, h essian sacking and industrial fabrics. Exports constitute more than 70% of total turnover of the company. The Cheviot share at Rs 240 trades at 4.7 times FY'07 earnings(Rs 50.57) and offers an attractive investment opportunity for the medium-long term.

It was incorporated in 1897, in the name of Delta Jute Mills Company Limited(DJML). Subsequently, the name of DJML was changed Cheviot Company Limited(CCL). The Jute Mill of the Company is located at 19, Mehta Road, Budge Budge in District 24 Parganas of West Bengal. The unit has been focussing on continuous technological improvements, breakthrough, R&D and machinery development. It is equipped with the state of the art technology. The major concentration is on speciality fabrics and precision wound yarns meeting the most challenging technical parametres . CCL has been a producer of traditional jute products like sacking and hessian. It is to the credit of the Company that while in the 1980s many jute companies fared quite indifferently, the Company managed to retain a healthy growth and went ahead with the modernization of their manufacturing facilities. In 1996, the company set up a 100% EOU near its said jute unit at Budge Budge for the manufacture of jute specility fabrics. Again in March'03 the company set up another 100% EOU unit at Sector II, Falta Export Processing Zone, Falta, West Bengal, adding another feather to its cap, for its increasing focus on exports.

CCL continues to operate through two business segments: jute goods and captive power-generation. However, revenues/assets from captive power-generation is not more than 10% of the total segment results/assets. In the jute goods segment, the company manufactures and exports special-quality jute yarn and HDPE/PP woven sacks. CCL today has emerged as one of the leading manufactures and exporters of fine jute yarn. Besides being a Manufacturer of high value non-traditional diversified jute yarns and fabrics, CCL is an IS/ISO 9001:2000 Company and also a recognised EXPORT HOUSE. Exports constitute more than 70% of total turnover. Fine yarns are exported to Belgium , U.K. , Germany , U.S.A., Holland and other countries. Cheviot has now carved a niche for itself in the non-traditional and high value market segments.

Cheviot Company had declared bonus issue in the ratio of 1:2 in August 2006 after which the enhanced capital is Rs 4.5 cr.(promoter's stake- 73.13%). For FY 07, the company posted net profit of Rs 22.8 cr. on net sales of Rs 156.86 cr. The EPS stood at Rs 50.57 and the dividend declared is 80% on enhanced capital. The Cheviot scrip has escaped investor attention in the market, as the company is very low profile. At current valuations, the stock is trading at 4.7X FY07 earnings and at around 4 times expected FY08 earnings. The Cheviot scrip looks undervalued considering its steady financial performance. The dividend yield also works to 3.4%. and the dividend payout has been increasing steadily. Cheviot trades at price to book of just 0.74 based on its FY07 book value of Rs 315

Cheviot's current market-cap is around 108 cr whereas it holds investments worth around Rs 50 cr. parked in various liquid mutual funds. Besides it has investments in blue chip stocks valued at around Rs 45 cr. So total investments and cash comes to around Rs 100 cr. against the co.'s mcap of 108 cr. so, the co's business is valued at just Rs 8 cr. .In view of the above, the scrip holds potential for appreciation in the medium term. Investors can accumulate the Cheviot share at this level for decent returns over the medium-long term.

Financials
Year ended March 2007

Net Sales - Rs 156.86 cr.
Net profit - Rs 22.8 cr.

Equity - 4.5 cr..
Promoters' stake-73.13%
Public stake-22.75%
EPS - Rs 50.57
Dividend - 80% (Rs 8 per share

Hi,

This is a post in more than 4 months here ...

I looked at this company in April 2007. Here is what I wrote about this company back then ... http://pseudosocial.blogspot.com/200...mpany-ltd.html

See if this is of any help.

Regards,
SG

P.S.: Good to be back !

Hello SG, Thanks for your input :

saga364 had posted the following in Pseudosocial blog spot almost 4 months back.... I copy paste the same below :

Sunday, 29 April, 2007
Cheviot Company Ltd
Company Website: www.groupcheviot.net
Company Details: http://kotaksec.cmlinks.com/Equity/c...code=4773&id=2
Annual Report: http://sebiedifar.nic.in/documents/C...P/ar032006.pdf

I read about Cheviot on Rohit Chauhan's blog first. Then Prem Sagar talked about it. And since it was on their radar, I had to look at it.

Cheviot is a West Bengal based company into Jute products. It has 100+ years history. 100 years don't guarantee anything. Recently a 1400 year old business succumbed to excess debt.

Company is into two businesses - Jute goods and Captive power generation. Annual Report 2006 says that power generation contributes less than 10% of revenues and hence is not covered in the annual report. Jute goods include Jute Yarn, Sacking Bag and Canvas Bags.

Its products are used extensively in packaging. In India, GOI has made it mandatory to pack sugar and some other food items to be packed in jute bags. However more than 70% of revenues come from exports and even if these regulations are taken away by GOI, there would not be a major impact on earnings.

Since the entire jute industry has been facing losses, small competitors and most of the players in the unorganized sector have been forced to shut shops. Cheviot remains the lowest cost producer and one of the few companies left making money in the industry.

+ives

1.Company deploys excess cash in mutual funds and other companies. Subsequently company is sitting on Rs 212 cash per share (and this is at cost of investments – with market giving 46% return last year, the market value could be much much higher).

2.Current trading price is about 238. With 212 per share in cash, Cheviot can be effectively bought at Rs. 26 per share.

3.Promoter group holds about 73% of outstaying shares – may be a reason for their love of giving out generous dividends! It would have been interesting to know the dividend payout if promotes had only 27% holding in the company.


-ves
1.Jute industry has been given sops by GOI and in absence of these sops, profitability might come down. Most of the revenues come from exports and in case sops for packaging are taken away, Cheviot would still be unaffected.

2.There is no catalyst that might initiate the value unlock process. In case of Venkys, people just had to start eating chicken again. Here there is no such natural catalyst.

3.Labour issues in West Bengal are very sensitive. Strikes happen on whims and fancies of the union and might have some effect on operations of the company.


Inputs

1. Jute – prices and availability of raw jute.
2. Annual report mentions about petroleum prices being an input.


Dividend History
2007 - 80% interim
2006 - 100% final

Numbers as on April 27, 2007

Market Cap: 108 Crores
Current Market Price: 238
Face Value per share: 10

Numbers of shares outstanding: 3007500

52 week low: 214 on 02 April 2007
52 week high: 492 on 04 May 2006

All time low: 10 on 06 Dec 1996
All time high: 492 on 04 May 2006

EPS: 78 (as per 2006 annual report)
PE Ratio: 3 (as Rohit and Prem say ... market is pricing Cheviot for bankruptcy!!)


To be read more

1. Mention of bonus shares in 2006 report. What happened to it?

2. Read about Jute industry, mandatory packaging of food grains in Jute bags in India, products from Bangladesh and China etc.

3. Use of petroleum in manufacturing jute bags.

4. Operational cost margins to be considered. With 58 crores in bank, the real figures of ROE and ROI have to be better.

__________________________________________________ ___________

Further inputs required from senior members.

Thanks saga

Regards

R K Karnani