Sandesh Ltd - Result Update

Excellent number posted and this was expected

Quarter (YOY)

Sales up 8%
Net Profit up 90%

Half Yearly (YOY)

Sales up 15%
Net Profit up 50%

Hold for long term growth prospects

Rajoo Engineers Ltd - Result Update

Very good performance by Rajoo Engineers Ltd, even in bad times.

Quarter Numbers

Sales up 35% QoQ
Net Profit up 105% QoQ

Hold stock for long term, this is just the beginning for Capital Goods sector

RAJOO ENGINEERS LTD (BSE 522257 FV RS.1) RS. 17 – A Global player in Plastic Extrusion Machinery

RAJOO ENGINEERS LTD (BSE 522257 FV RS.1) RS. 17 – A Global player in Plastic Extrusion Machinery

Company : Rajoo Engineers Ltd (REL), founded in 1986 as a private limited entity engaged in a business of manufacturing Plastic Extrusion Machines. In the last 29 years, the company has  blossomed to become one of the most respected name in the Extrusion Machine Manufacuring industry. The company boasts of having commissioned over 2000 installations till date in india and across over 56 plus countries including Germany, Spain & UK which speaks for the acceptance of company’s products by the most stringent and developed markets of the world. Over 50% of company’s products are exported and Over 60% of the business of the company comes from repeat orders, which indicates the satisfaction levels of the existing customers.

Products : The company today is a Market Leader in Blow Film Lines, Sheet Lines and Thermoformers (in the Indian sub-continent as well as amongst its peers in Asian sub continent.)  Other products includes  PP Non woven fabric making machine, Foam Extrusion Systems (Chemical & Physical), Pipe Plants & Drip Irrigation.

Application : The machinery manufactured by the company, has applications across various Industries, such as : Flexible Packaging, Agriculture, Infrastructure, Automobiles, Food & Beverages, Pharmaceutical, White Goods, Stationery & Printing.

Technical Collaboration : For expanding its product line, company has technical collaboration with :

COMMODORE INC, U.S.A. for manufacture of XPS Sheet line and Thermoformer.

WONDERPACK, a leader in Thermoforming Industry, was merged with Rajoo Engineers Ltd

HOSOKAWA ALPINE AG, GERMANY one of the most reputed company in Blown Film Technology

A JV with BAUSANO & FIGLI S.P.A. of ITALY a global leader in Pipe manufacturing technology & Drip Irrigation Solutions.

A JV with MEAF Machines B.V, Netherlands for manufacturing world class Sheet Extrusion Equipments and Thermoforming Machinery to address growing demand for Semi-flexible packaging system.

The company carries many record for developing / bringing latest technology first time in the country and in the world, for which the company & its founders have received many Awards for business leadership, innovation in technology and contribution to plastic & polymer industry. Recently company launched a product which consumes 40% less Power.

Business Strategy : To mark its overseas presence and showcase the products, the company has participated in 10 exhibitions last year, out of which 6 were overseas, the company has got excellent exposure and good response, hence next target for the company is to participate in 15 such exhibitions related to plastic industry both local and overseas.

Outlook : With Increasing demand for plastic products due to Consumerism, Mall Culture and Improving Hygiene habits, plastic industry is having good times with increase in profitability due to fall in with weak Crude Oil Price, which is allowing it to invest more into capital goods for expansion & addition of new product lines, which in turn benefits Rajoo Engineers Ltd, as it is one of the leading suppliers of machinery to plastic industry. Plus company to get huge benefit due to its venture into Plastic Pipes and Drip Irrigation Solutions the demand for which is huge from within the country and overseas as water crisis is becoming a Global Phenomenon, Here in India Drip Irrigation is supported by central government’s “More Crop, Per Drop” policy. 

Valuation : An Award winning company for its Innovation & Advance Technology, which is truly a global player into niche segment of Plastic Extrusion Machinery, with technical collaboration with global leaders, and a Debt Free company is available at a P/E of just 17 times (Industry P/E 30) TTM Eps of Rs 0.96 per share. Recent released IIP data states huge increase in manufacturing of plastic extrusion machinery, which suggest better days for the company, and stock is yet to catch up with the current rally, hence investors should study this stock for long term investment purpose. Delivery data on BSE from Jul 2015 till date is above 85% which suggest good accumulation by Smart investors. 

SANDESH LTD (BSE : 526725) RS 650 (FV RS 10)

SANDESH LTD (BSE : 526725) RS 650 (FV RS 10)

Sandesh Group is over 90 years old, the journey of Sandesh as a newspaper started in 1923, and today Sandesh is Gujarat’s largest and most influential media house, having a strong foothold across media landscape, such as :

Newspaper : Sandesh, which is published from Gujarat & Maharashtra is the largest media Gujarati company with 7 editions across Gujarat & Mumbai.

Television : Sandesh News (Award winning channel) is the region’s fastest growing 24x7 Gujarati News Channel, which reaches out to the most affluent and powerful gujarati audience.

Digital : Harnessing the potential as a future of communication, Sandesh is among first to launch a Gujarati news Smart Phones App in India to provide information and news in real times as it happens, and continues to have an expanding digital presence of over 5 million followers across all platforms.

Magazine & Weekly Publications : Through “Agro Sandesh”  which provides relevant and enriching content to the farming, Dairy and co-operative sector, thus contributing the sector positively. “Stree” is popular women focused magazine which reaches out to women across all classes and addresses the issues related to them directly.

OOH (Out of Home) Media Solutions : “Spotlight” Brand Management focuses on every aspect of Brand Launching, upto Brand Building and enhancing the brand message by going beyond just grabbing eyeballs, but creating a lasting buzz around the brand. Company has its sites at all the major commercial areas in Ahmedabad. The company has procured various prestigious tenders like BRTS, Bus Shelters, AUDA & Ahmedabad Municipal Corporation.

Besides all of the above, the company also successfully operates its Real Estate (by the name of Applewoods Estates Pvt Ltd, by monetizing its land bank in Ahmedabad) and Finance business.

To cover the entire geography of Gujarat state, the company has its printing facilities at Baroda, Surat, Rajkot, Bhavnagar, Bhuj to cater Semi urban & rural areas. The regional offices are located at Mumbai, Delhi, Kolkata, Bangaluru, Chennai & Pune. Company enjoys a strong regional franchise, where it enjoys strong readership loyalty.

Future Outlook : According to FICCI-KPMG Report 2014, the print sector continued to buck the global slowdown trend and the sector grew at CAGR of 8.5% last year to touch Rs 243 Billion. The print industry is expected to grow at a CAGR of over 9% for 2013-18, as against estimated 8.7% expected in 2013. Vernacular market saw 10.8% growth in advertisement revenues, with English print reporting a sluggish growth of 5.2%. The increase in population, literacy rate and reach has led to increased circulation and readership of the newspapers in India. The company is steadily increasing its geographical presence, which helps improve its circulation and readership of its publications.

Sectors which spent heavily on print were FMCG (12.3%), Automobiles (11.7%), Education (9.7%), and Real Estate (8.7%). FMCG, Telecom and Automobile will continue to increase their ad-spent to push the sales due to slowdown, and majority will likely to come to Print media, due to its affordability, vast reach and direct impact.

According to FICCI-KPMG Report 2014,  among various media, Print and Television continued to be the primary media platforms, claiming nearly 82% of total revenue and could continue to be the most dominant media for the next 5 years.

Valuation : This closely held DEBT FREE, Cash Rich company, with a tiny equity of Rs 7.61 Cr & Reserve of 392 Cr (Book Value Rs 604 per Share), where promoters hold 74.81% (Zero Pledge), HNIs hold 12.12% and rest (~13%) is held by Public, is trading at a PE of only 7.5 times TTM EPS of Rs 85 per Share (Average Industry PE stands at 18 times). At CMP of 680, the share is available at a Price to Book value of close to 1.1 (Industry Price to Book value 4.5 times). Market Cap to Sales Ratio is 1.4 (Industry Average is 4.5 times).

June 15 Quarter company posted YOY sales growth of 10%, while Net Profit Jumped over 50% from 13.3 cr to 20.35 Cr, posting an EPS of 26.88 for June Quarter alone. The great news is that the company has posted a Super margins, OPM of 36.15% and NPM of 22%, which is the highest in the industry. ROE & ROCE stands at 12.01% and 35.95%.  

With blockbuster results of June quarter, one thing is clear that the company is now on a high growth path and that will continue going forward, the company can easily post an EPS of Rs 110 for FY 16, which makes this stock one of the cheapest among media company at only 6 times PE at CMP of 650. Investors can invest in this another “Force Motors” in the making stock for long term wealth creation.

IMP Powers Ltd (BSE 517571 / NSE INDLMETER) FV Rs 10 – CMP 84.00

IMP Powers Ltd (BSE 517571 / NSE INDLMETER) FV Rs 10 – CMP 84.00

IMP Powers Ltd (IMPPL) was incorporated in 1961, Growing from manufacturing Indistrial Meters, to India’s leading manufacturers of various types of Transformers, ranging from 1 MVA to 315 MVA, upto 400 kv Class with target of taking this production capacity upto 500 MVA., Today the company is amongst the Top 5 power transformer companies in India, in the 132 – 220 kv class.

IMPPL has well equipped Manufacturing Unit at Silvassa spread across 4 Acres, factory floor area for 1 Lakh Sq Ft Built up (Thus enjoying location advantage of close to National Highway and 3 Ports), for manufacturing the entire range of Transformers with an installed capacity of 12,000 MVA per annum, which is backed by in-house Design Center, R&D and own Impulse Testing facility upto 400 kva, which is accredited by NABL, (Department of Science & Technology, Government of India.)

The company is an approved Class ‘A’ supplier to all SEBs and other Government Agencies such as PGCIL, NTPC, NHPC & DVC. Non SEB customers include EPC companies, leading Consultants and other industrial players with whom IMPPL enjoys Preferred Vendors status.

IMPPL with a 5 decades of experience, has about 30,000 installations / Customer base which is spread across India and in about 26 countries across the world, catering the requirements of Utilities, SEB, PSUs and Private Industries. Some of the Clients are listed as below :

India : All SEBs (State Electrical Boards), State owned Transmission Companies, SAIL, PGCIL, ZESCO, Nepal Electricity Authority.

International : UK, African Continent, Asia and to the farthest corners and difficult terrains of Austrailia and New Zealand

EPCs : Godrej & Boyce Ltd, Jyoti Structures, KEC International, Larsen & Toubro, Kalpataru Power, UB Engg, IVRCL, Shreem

Corporates : Birla, Tata, Essar, Videocon, HPL Electric, Bajaj Electricals, Alstom, Crompton Greaves, ISOLUX, INABENSA, Siemens, Aditya Birla Group, Areva, Etc

Future Growth :

In India, the demand for equipment used in power sector is multiplying at a rapid rate because of social, economic and industrial development. The new government plans to fund up to 75% of the investment required to supply electricity through separate feeders for agricultural and rural domestic consumption, which will benefit the Power Sector Companies and ultimately boost the regional demand for power transformers. The government's commitment to provide 24x7 uninterrupted power supply to all homes and Deendayal Upadhyaya Gram Jyoti Yojana to augment power supply to rural areas, strengthen the sub-transmission and distribution systems will ultimately boost the demand for Power Transformers.



IMPPL now also focuses on growing export market sales especially in Africa, Asia & Middle East, tying up with several International EPC players, which will improve its profitability owing to higher gross margin ranging from 25% to 30%.



Order Book : as on June 2015 stands as : 291 Crores, for 4821 MVA. 44% orders are from SEBs, while 21% from EPC Contractors, 31% is Deemed Exports and 3% Exports Orders Received.

While the installed capacity increased from 7000 MVA to 12000 MVA in last 5 years, Production increased from 4000 MVA to 7883 MVA, capacity utilization increased from 25% to 40% during this period, keeping immense scope for order intake and production capacity, with no spending on Capex.

Industry Outlook :

The Transformer market revenues in India are expected to grow at the CAGR of 14 % till 2018. Under the 12th five year plan (2012-2017), the government plans to spend 200 billion on developing and strengthening power infrastructure in India. The Indian government expects to add another 85,000 MW of power capacity during the 12th Five-Year Plan (2012-2017) period. The demand for power Transformers is also expected to go up as a direct consequence. Government's attempt of attaining 100% electrification across the country by 2017 would contribute to the demand for power transformers. With the continuous support from the government to promote the power transformer industry through investments, tax benefits, subsidies, etc. will help the industry to grow over the coming years. With the upswing demand for reliable power in the country, the transformer market is witnessing a growth trend.



Triggers :

Company has idle plot of 20,000 Sq.Ft. at Kandivali west, the value of which should be not less than 60 Crores, if sold on outright basis, if develop & sold by the company, it can fetch a sale consideration anywhere between 80 to 100 Crore, depending on the project.

IMPPL is the only transformer company in India which is entitled for Sales Tax Exemption till 2017, such benefit will provide a significant price advantage to the company.

IMP Energy Ltd (IEL), a subsidiary company of IMPPL, incorporated in the year 2012, is acting as a Project Management Consultancy (PMC) to explore emerging opportunities in mini and small hydro power projects upto 25 MW. IEL received 13 small Hydro projects orders totaling 12.7 MW & amounting to Rs 137 Cr in Leh & Kargil, the progress of which is extremely encouraging. There may be value unlocking going forward, by listing this PMC subsidiary at rich valuations.

Falling in Input Prices of raw material such as Copper, Aluminium, Steel Stampings, Crude Oil (Transformer Oil), etc, will directly add to the bottom line of the company. Fall in interest rates will reduce the interest burden of the company.

The company has done CAPEX during tough times, the benefit of which will be seen going forward.

Valuations :

This Rs 10 paid up stock is trading at 0.8 times of book value of Rs 116.75 (Industry Price to Book Value 2.51), With FY 15 sales at 330 Cr and current Market Cap of only 70 Cr, its trading at Market Cap to Sales Ratio of ridiculously low of just 0.25 times. The company has turned around in last 3 quarters by making profit of Rs 6.43 Cr, giving EPS of Rs. 7.7 per share, making this stock so far the cheapest profit making company within the industry with a P/E of just 8.5 times (Industry PE of 68.63), if we add June 15 quarter EPS of 3, making this stock a great value pick among the high growth power sector with a modest target of 140 in the next 12 months.

Promoters recently allotted 500000 (5 Lakhs) shares to themselves at Rs 80 per share on Preferential basis, thus increase the stake in the company by a whopping 6% indirectly.

FCEL - CMP 16 - FMCG Powerhouse in the making, Catch it Young.!!!

FUTURE CONSUMER ENTERPRISES LTD (FCEL) RS. 16 (FV RS. 6)

This backward integrated company, which sells white label FMCG goods, offers cheapest and best groceries in the shops, under its own Brand, which allows it to offer the highest value proposition while protecting its Margins, FMCG will be becoming a huge revenue and profit generator, and the most crucial part of the companys strategy. In the next 5 years, the management plans to increase its FMCG business to 10,000 Cr from present 1500 Cr, by increasing the number of stores to 4000, from the present 1300. The company is first retailer in India who is looking at creating brands not just for its own stores, but is also planning to retail them outside of its stores.

This company’s biggest USP is Food Park  known as “India Food Park” spread across 110 acres, located at Tumkur, Karnataka (100 KM from Bangalore on the NH4, connecting Channai & Mumbai) became operational in September 2014. Tumkur, also known for its availability of abundant natural resources and close proximity to major transportation modes, has more than 100 rice mills and is known for its production of Ragi, Sunflower, Coconut, Gherkins, Groundnut, Maize, Jowar, Spices, Sugarcane and Milk.

It is a joint venture between India’s Ministry of Food Processing Industry and FCEL with an investment of more than 1000 Crores. Food Products produced at the facility will be sold in the market through Future Group’s retail formats, including Big Bazaar, Food Bazaar, Foodhall, KBs Fair Price, Big Apple, Easyday and Aadhaar.

This backward integration will not only help the company to source locally available products at cheaper rates, but also help the company to get higher margins on its sales as compared to its rivals, which are outsourcing their products from different vendors at lower margins.

Unlike other retailers, who have created private brands only for commodity based products such as Rice, Flour and Sugar, FCEL has been creating well accepted brands such as Tasty Treats range of ready to eat snacks, Biscuits & Cookies, Sauces, Ketchups to Sach personal care products and sells everything branded in between such as fruit juices (Sunkist Brand from Growers Inc USA), Clean Mate & Care Mate for Person Hygiene and House Cleaning Solutions. The company is planning to launch 25 types of branded Enriched Flours, Range of Personal Care Brand “Think Skin”, besides range of Bakery & Dairy products under Nilgiris. The company has set up an Oats factory in Sri Lanka and would be soon launching its own brand of Oats. All these and other FMCG products will be sold directly to the customers through 188 Big Bazaar stores, 19 Food Bazaar stores, 11 Foodhalls and 125 KBs Fairprice shops in addition to 150 Nilgiris stores, 188 Easyday hypermarkets.

The Promoters holds 44%, while non promoters includes Godrej Agrovet, Azim Premji, Mittals of Bhartis (holds 9%, which will be increased upto 15% after convertible debentures, which can be converted into equity in future) Porinju Velayath through his PMS Equity Intelligence and various others HNIs.

 Valuations : At CMP of 16 the stock is trading at Price to Book Value of just 3 times (Industry average 6) and with FY 15 sales at 1500 Cr, Market Cap to Sales Ratio is just 2 (Industry average of 7) leaving immense scope for further appreciation in the next 5 years, where company plans to increase sale from 1500 to 10000 cr by 2020. Hence investors can buy this debt free company with clean balance sheet for long term multiple returns.

GIC HOUSING FINANCE LTD : (FV RS 10) RS. 220

GIC HOUSING FINANCE LTD  : (FV RS 10) RS. 220

Background : 

GIC Housing Finance Limited, was incorporated as ‘GIC Grih Vitta Limited’ on 12th December 1989. The name was changed to its present name on 16th November 1993. The Company was promoted by General Insurance Corporation of India and its erstwhile subsidiaries namely, National Insurance Company Limited, The New India Assurance Company Limited, The Oriental Insurance Company Limited and United India Insurance Company Limited together with UTI, ICICI, IFCI, HDFC and SBI, all of them contributing to the initial share capital.

The primary business of GICHFL is granting housing loans to individuals and to persons/entities engaged in construction of houses/flats for residential purposes. GICHFL has presence in 56 branches across the country for business. It has got a strong marketing team, which is further assisted by Sales Associates (SAs). It has tie-ups with builders to provide finance to individual borrowers. It also has tie-ups with corporates for various housing finance needs.

Resource Mobilisation: 

The Company takes every effort to tap the appropriate source of funding to minimize the weighted average cost of funds. The Company has mobilized resources through the following sources:

A. Term Loans, B. Refinance from National Housing Bank (NHB), C. Short term Loan and Commercial Paper, D. Non Convertible Debentures.

Credit Rating : 

The Company had received below rating from CRISIL and ICRA for its various borrowing programmes

a.     For Commercial Paper/short term loan programmes  as CRISIL A1 plus & ICRA A1 plus (This rating is the highest credit quality rating assigned by ICRA for Short Term Debt Instruments.)

b.    For Fund Based Long Term Loan Programme  as CRISIL double A plus/Stable & ICRA double A plus. (This rating indicates the high credit quality rating assigned by ICRA to Long Term Debt Instruments)

c.     

For Non-Convertible Debentures Borrowing Programme as CRISIL double A Plus/Stable & Pronounced as ICRA double A Plus).

Insurance Coverage to Borrowers : 

The Company had taken “Special Contingency Insurance” with The New India Assurance Company Ltd., which covers the borrowers of the Company as under:

• Personal Accident Insurance: Personal accident (death only) risk cover, free of cost to the borrowers up to an amount of outstanding loan at any particular point of time during the term/ tenure of the housing loan.

• Mortgaged Property Insurance: The property acquired out of loan, for and up to and extent of the outstanding loan amount, covered free of cost against fire, earthquake and allied perils affecting the mortgaged property.

Capital Adequacy Ratio (CAR)

The Company has been maintaining the Capital Adequacy Ratio (CAR) above the minimum required level prescribed by National Housing Bank (NHB) from time to time. The CAR prescribed for the present is 12%. The Capital Adequacy Ratio of the Company as at 31st March, 2014 is 17.26% as against 14.04% as at 31st March, 2013.

Industry Outlook : 

Residential real estate remains the focal point of Indian real estate, regardless of market conditions. Given India’s rapid population growth, increasing urbanisation and raising affordability,the Housing Finance Market will continue to grow. However, considering the fast penetration by banks in Housing Finance Market, Housing Finance Companies, which are in a position to have access to low cost of funds, better credit control and customer focus will be in a position to sustain the growth. With the increase in urbanisation and improving affordability, the demand for housing loans will continue to grow at a healthy pace.

Year-on-year, the industry saw home loans grow 20% as of 30th June, 2013, over June last year. Banks recorded 17% growth, while housing finance companies and non-banking finance companies saw 26% growth.Presently access to formal credit is mostly available to the people in the formal sector who are salaried and have dominant incomes. There is a lot of potential in urban areas also for housing finance to penetrate. India will ride the wave of urban expansion. The potential rise in urban households will also be potential customer base for Housing Finance Companies.

Risk Management : 

Liquidity risks and interest rate risks arising out of maturity mismatch of assets and liabilities are managed by the Company by constant monitoring of the maturity profiles with a periodical review of the position. Company’s majority of housing loan advances are on variable rate of interest basis and normally any movement in rate of borrowings is hedged by the loans advanced at variable rates to a certain extent.

Company operates in the mid segment and large chunk of borrowers are in the salary group. Company is having CIBIL checks, field verification, stringent legal and technical due diligence etc. which have helped to reduce incremental delinquencies. Recovery mechanism is also robust supported by best use of SARFAESI Act.

The Company’s main thrust continues to be on Individual Loans. The Retail Loan portfolio as at 31st March, 2014 stood at 5299 crores, During the year 2013-14 , the Company has made provision to the extent of ` 24.76 crores as against ` 26.93 crores provided for in the year 2012-13. The Company is also carrying an additional provision of ` 58.62 crores in books, beyond what is prescribed under the guidelines, as a prudential measure.

Gross Non Performing Assets on retail loans as on 31st March, 2014 is 1.57% as against 1.86% for the previous year. Net non performing loans as on 31st March, 2014 is “NIL” as that of the previous year. The Company is also giving its thrust to improve the average yield on advances by selling more number of “mortgage loans” (i.e. “Loans against the property” - LAP); for which the margin is high compared to the loans for purchase of homes.

Asset Portfolio : Housing Loan As on 31.3.14 :

Individuals : 5046 cr & Non Individuals : 119.8 cr.  

Residential Mortgages : (Loans to Individuals Upto 15 Lakhs)  : 3302 Cr & Above 15 Lakhs : 1817 Cr

(Lending fully secured by mortgages on residential property that is or will be occupied by the borrower or that is rented)

Valuation : 

This Rs 10 FV stock at 215, is available at a P/E of 11.3 times TTM EPS of Rs 19.12 (Industry P/E is 28.5). Book Value is Rs 133, Price to Book Value is 1.64 times (Industry Price to BV 2.99). ROE is 16.80%, while 3 year ROCE is 12.16%. Company achieved Compounded Sales Growth of 17.25%, 23.56%, 14.95% & 19.60% in last 12 Months, 3 Yrs, 5 Yrs & 10 Yrs. Compounded Profit Growth of 5.55%, 62.53%, 11.58% & 21.07% in last 12 Months, 3 Yrs, 5 Yrs & 10 Yrs. In last 5 years total loan disbursement rose from 672 cr in 2009-10 to 1665 cr in 2013-14, while total income rose from 311 cr in to 625 cr and BV soared from 67 to 102 in the same period. Company maintains healthy payout ratio of over 28%.

Investors should buy this Low Profile HIDDEN GEM  NIL NPA Conservative slow and steady Company’s stock, which is backed by financially strong promoters, as it is available cheap as compared to its peers such as Repco & Gruh. With thrust on low cost housing and smart city plan, there will be huge demand for Housing loan going forward, coupled with falling inflation numbers and expectation of good monsoon, interest rates will going to reduce going forward, which will benefit HFCs as it will push demand for small ticket housing loans, which the company caters and plans to expand its reach. Stock can give 50% return in next 12 months time, with target price of Rs 325.

Result Update : International Combustion (India) Limited.

Very good result posted today by the company

Result UPDATE

http://www.bseindia.com/xml-data/corpfiling/AttachLive/C0719258_10DE_4E94_BD41_7A5E439C9AA2_154013.pdf

International Combustion announced standalone result for march 2015 quarter

Sales increased from 19.9 cr in Dec 2014 quarter to 28.4 cr in March 2015 quarter

NP increased from -0.78 cr in Dec 2014 quarter to  3.94 cr in March 2015 quarter, posting EPS of Rs 16.46 for the quarter

In Corresponding Quarter Ended March 2014, the Sales were 28.1 Cr and NP was 2.20 Cr EPS was 9.19

With such a good result, target price should be achieved soon

Board recommends Dividend		08 May 2015 16:00
International Combustion India Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 08, 2015, has recommended a dividend of Rs. 1.50 per equity share of Rs. 10/- each for the Financial Year 2014-15 subject to approval and declaration by members at the forthcoming AGM of the Company.

International Combustion - BSE 505737 - CMP 221 BUY

INTERNATIONAL COMBUSTION (INDIA) LTD : (FV RS 10) RS. 221

This company was founded in 1936 as a trading house representating the interests of International Combustion, UK. From a modest beginning with manufacture of mineral grinding mills, the Company today serves all the major core industries with a specialised range of products which include, Vibrating Screens and Feeders, Cone crushers, Bulk Material Handling Equipment, Mining haulages, Raymond Grinding Mills, Air Classifiers and Flash Drying systems and Geared Motors and Gear Boxes.

The company serves all the major core industries including mining, steel, cement, petrochemical, construction, sugar, power, textile, paper, rubber, pharma, chemicals etc. The company has served to an esteemed set of clientele that includes industry leaders such as Sail, Tisco, JSPL, Essar Steel, Amtek, Ashok Leyland, NMDC, Hindustan Zinc, ACC, Madras Cement, NTPC, Bayer, Dabur, Borosil, EID Parry, HUL, Marico, L&T, McNally Bharat, Thermax, Simplex, Alfa Laval, AP Paper Mills, MRF, Andhra Sugars, Cadbury India, Britannia, Nestle, HLL, Tata Chemicals, Reliance, Laxmi Machine Works, TNPL, Nevyeli Lignite, Nirma, P&G, etc. We believe, the diversified industries as its customers, not only provides ICL wider exposure, but also keeps the company isolated from the risks of slowdown in a particular sector/industry.

Fully equipped manufacturing facilities at Calcutta, Nagpur and Aurangabad ensure total control over production and product quality. IC’s products are characterized by high availability, low operating cost and energy consumption and protection of the environment. High quality products and continual search for peak technical performance, IC’s strong marketing and service organization spread over the country assures quick and direct contact with customer during all phases- Consultation. Contractual negotiation, followed by execution and after sales services. Company has offices at Bangalore, Chennai, Hyderabad, Mumbai, Delhi, Nagpur, Pune, Vadodara & Kolkata, with employee strength of 500.

Foreign technical collaborations and licensing agreements with world leaders in the respective product groups have ensured manufacture of premium quality equipment, alongwith core focus on :-

Technilogy Absorption & Research & Development –  The company has always been recognized as technology leader in the area of operations and this has helped the company to continually expand the business, both in India and abroad, this trend is expected to continue in future also. Several steps have been taken to improve the efficiency of the equipments presently manufactured by the company, which resulted in substantial increase in the productivity of the end users, in future also the company is planning for continued upgradation programme of their product range to match with international standard from time to time, which helps company to remain competitive against cheap products which are less adaptive to local requirements.

Company takes full advantage of complete absorption of latest technology received from the Globally renowned, leader of their industry Licensed Partners and implement the same commercially, which helps company to match the quality of their products with the international standard at competitive pricing.

The engineering division (MMPHE) has few products of huge significance such as screens, feeders and others which are being supplied to steel (including SAIL, TISCO) and cement industries. The company enjoys leadership position in the above products with nearly 70% market share. Further, the product offerings include Sugar Graders / Sizers which is said to have pioneered by the company and thus commands a dominating position in this industry

Licensing partners of International Combustion are GLOBAL LEADERS, and as below :

OMNI SCREEN & CRUSHERS, BRAZIL (FOR JAW CRUSHER, CONE CRUSHER, VERTICAL SHAFT IMPACTOR & ROLL CRUSHER)

BAUER GMBH, GERMANY (FOR GEAR MOTORS & GEAR BOX)

ALLGAIER, GERMANY (FOR ROTARY DRUM DRYERS)

MOGENSEN, GERMANY (FOR MULTIDECK SCREENING MACHINES)

ECUTEC, SL, SPAIN (FOR TURBINE CLASSIFIER & ULTRAFINE GRINDING PLANTS)

GUMMI KRUPER, GERMANY (FOR POLYMER PANELS FOR SCREENING MACHINES)

In 1961, the company started its manufacturing activities, and presently has three business divisions, viz

Heavy Engineering Division (Nagpur & Kolkata Factory)

Vibratory Equipment : Grizzly Screen Feeder, Linear & Circular Motion Screen, Mogensen Sizer (Sizers, Sizer 2000, Bar Sizers & Vibro Bar Sizers), Omni Screen, Flip Flop Screening Machines, Vibrating Feeders (Mechanical Feeders & Electromagnetic Feeders), Vibration Exciters, Polyurithine & Rubber Screen Decks & Liners & Monitoring Systems for Electronic Vibrating Machines

Grinding Mills Classifiers for Drying Systems : Raymond Roller Mills, Raymond Impax Pulverizers, UFG Vertical Mills, Turbine Air Classifiers, Mechanical Air Seperators

Bulk Material Handling : Spiralling Belt Conveyors, Scooping Belt Conveyors, Girdle Pocket Elevators, Apron Feeders, Haulages.

Crushers : Jaw Crushers, Cone Crushers, Vertical Shaft Impactor, Roll Crushers.

Rotary Drum Dryers / Coolers : Mozer Drum Dryer & Cooler, Allgaier Process Fluidised Bed Plants

Bauer Gear Motors Division (Aurangabad Factory)

B2000 Series : Shaft Mounted Geared Motors, Roller Tabled Geared Motors

G96 Series

Being a leading suppliers of high quality Bauer gear motors & gear boxes with extensive success in Mill Table, Rolling Mill, Bottling Plant, Conveying Packaging, Water & Waste Water Technology, Environmental Technologies & Textile Printing, Packaging, Crane Application, Etc.

Utilizing Bauer’s application and expertise customers can work with them to choose the correct gear motor manufacturing facilities that enable them to deliver a complete solution to fit all type of environment and demands. With in-house motor manufacturing facilities specialized motor characteristics can be designed and optimized to cater with precision exactly what the application demands. Fully crowned gear teeth provide the highest misalignment and torque ratings & smooth axial travel. 

Project Plant Systems

Crushing, Screening & Conveying Systems for Iron Ore, Aggregate, Coal and other Minerals.

Project Division is well equipped for Design, Engineering with Electrical and Automation of complete Crushing Systems and equipment., Company’s extensive experience in handling systems for Coal, Limestone, Iron Ore ,Aggregate and other minerals can give the customer the most effective solution. We can provide complete solution with supply of Structural and civil engineering, Erection & commissioning of the complete plant.

Tertiary Crushing  and Sand manufacturing

VSI Crusher ensures product quality and specification to meet the Industry standards for combined Flakiness and Elongation Index, its also an ideal machine to manufacture Sand, which can be washed and segregated by our Mechanical Air Separator / Ecutec Turbine Classifier to remove unwanted micro-fines. 

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 Grinding, Drying & Classification Systems

In Joint Venture with world leaders, ALLGAIER, company offer drying process based on Fluidized bed system and “MOZER system” rotating Drum Dryers. This includes complete solutions that represent combination of various drying processes as well as  granulating and screening system. IC offers complete grinding Mill systems designed  to pulverize and classify various kinds of materials including non- metallic  Minerals, fertilizers, chemicals, etc. Application covers stones , waste / recycling, chemicals, food , mining(Coal/Ore), metallurgy, Plastics ,Pharmaceuticals etc.

Manufacture and Supply of Specialized Bulk Material Handling Equipment

Specialized Bulk Material Handling for intelligent solutions to suit even difficult to handle materials. They are categorized in particular by high economy proven under harsh service conditions and are environment friendly. The range of equipment covers  Paddle Feeders(Slot Bin Extractors), Girdle Pocket Elevators, Spiralling  Belt Elevators, Scooping Belt  Conveyors, Belt and Pan Conveyors.

Product Portfolio : http://www.internationalcombustion.in/ic_corp_profile_updated.pdf

Business Outlook :

In last few years, there was steady increase in cost of raw materials and the increasingly unfavourable exchange rate, which used to be an issue of concern, the company has recognized this situation and has made efforts to minimize the impact of this on the business and performance for the future years. The company is now in comfortable position due to falling input prices, which are at multi year lows and stable exchange rate, thanks to the RBI.

In recent years to facilitate smooth recovery of sales proceeds, the company has adopted various recovery measures and th debtor management system have resulted in improvement in the liquidity position of the company.

The comfortable liquidity position arising out of retained earnings over the preceding few years has enabled the Company to meet all its capital expenditure out of internal generation. The surplus remaining after meeting the capital expenditure has been kept invested partly in Fixed Maturity Plans (F.M.P.) and partly in Fixed Deposit Schemes for short periods with various banks/finance Companies/ mutual funds.

The business environment has started showing certain improvement and company expects that the business environment will improve further during the current year. Joint Venture with Allgaier Werke GmbH, Germany for Mozer Type Rotary Dryers and Coolers has been formed during the year FY 14 and capital investment has been made by the Company for manufacture of these Dryers at Nagpur Plant and Company expect these hi-tech equipment and systems to make substantial contribution to the performance of the Company in the current and the future years.

The current average blended capacity utilization runs at around 50-55% and thus, the company can easily manage a turnover of Rs.200-230 crores with the existing capacities on a single shift basis. 

The market demand for the products of Gear Box and Geared Motor Division has been increasing steadily during the last few years and the capacity enhancement undertaken by the Company in the recent past is expected to support the business growth in this area.

Valuation : This BSE Listed DEBT FREE business (FV Rs 10 paid up) at CMP of Rs 221 (Book Value Of Rs 392 per Share) is getting at close to 50% discount to its Book Value, is available at market cap of just Rs 55 Cr, Mcap to Sales ratio of 0.5 (Sales of close to 100 Cr in FY 14), Even in bad economic conditions, the company has paid dividend of Rs 5 per share, which is now reduced to Rs 1.5 per share due to capex.

The financial position of the company is very strong. It has very low equity of Rs 2.5 crore, of which 53% is held by promoters. Its Reserve & Surplus is 91 Crore against market cap of 55 Crore. Company also has Land & Buildings (factory & offices) which was acquired decades back, the value of which should be several times at current price.Nett block is at 29 cr as on 31-3-2014. Investment in Mutual Funds is 22 cr, 4.85 cr in FDs and Bank Balance.

The company is DEBT FREE and its spare land at Kolkata is nearly worth Rs 50 Crore (Rs 200 Per Share, means we are getting this debt free capital goods business almost at NIL Valuation) if monetized by the company.

As government is serious to provide Power 24x7 with the help of Locally Mined Coal, this has lead to coal block re-allocation at a faster pace, coupled with turn around in capital goods sector cycle, Being a Licensed Partnership with Global Leaders, this company is fully equipped with its products to take full benefit of Mining orders inflow.

With “Make In India” initiative, International Combustion to remain preferred choice of its International Partners for out sourcing their manufacturing activities from India. 

Hence investors should buy this stock for the target of Rs 450 in the next 18 months. With big investors paying huge premiums for companies like Elecon, Eimco Elecon, which had good run up in last few months, this company cannot remain hidden for long time, as it caters to the entire range of high growth Infra Sector, Road Building, Mining Sector and Capital Goods Sector.

Annual Report 2014 : http://www.internationalcombustion.in/admin/uploadpdf/88142AR.pdf

FOODS AND INNS LTD (BSE Code 507552) CMP 1000 (FACE VALUE RS 10)

FOODS AND INNS LTD (BSE Code 507552) CMP 1000 (FACE VALUE RS 10)

The Company :

The Company, a public limited company established in 1971 is primarily engaged in the business of processing and marketing fruit pulps, concentrates and spray dried fruit and vegetable powders both into domestic and international markets. The Company exports its products to various geographies such as Europe, Middle East, USA and Japan catering to companies in the foods, beverage and dairy industry.

The Company through its various divisions viz. Aseptic, Canning, Spray Drying and Frozen Fruits, IQF Vegetables and Snacks products makes a diverse portfolio of processed food products.

The Company presently operates from seven (7) processing units strategically located near the fruit and vegetable growing areas at Chittoor (Andhra Pradesh), Valsad (Gujarat), Nasik (Maharashtra) and Mumbai.

Company is in final stages of installing two new lines i.e. spray drying & flavor compound / blending in the western region. This will add capacities and also give opportunity in the new value added products.

The Company’s units at Chittoor and Nasik are FSSC 22000-2010 accredited by DNV Business Assurance for food safety management of the Company. --- Valsad unit of the Company is ISO 22000 certifi ed. In addition to the above, the Company’s units are SGF accredited in recognition of the quality practices adopted by the Company over the years.These certifications enable the Company to sell its products in the regulated markets like Europe, USA and Japan.
The Company derives significant portion of its income from sale of range of mango products both in domestic as well as international markets. The domestic business of the Company is driven by its own sales and marketing network. The Company participates in leading international trade fairs and exhibitions such as Anuga (Germany), Sial (France), Gulf Food (Dubai) enabling the Company to procure customer orders.

Due to the availability of the entire process line in-house, the Company’s dependence on third parties for providing specific and customized processed products to its customers reduces to a large extent. We believe that this ability to provide customized products to its customers is the key strength for further growth of the Company.

During the year the Company made capital investments at its manufacturing facilities in Chittoor and Nashik for enhancing the capacities to take advantage of growing domestic demand of our products and automation in material handling. This will reduce operating expense and upgrading system on farmer’s certificate programme to comply with new EU guidelines on food safety and security. The Company has also upgraded its existing fruit concentration line to produce Tomato Paste as per International standard. The first season business
response has been encouraging hence the company is considering setting up second plant in the western region. Also Company is at a final stage of negotiating project cost for food service & institutional pack for Tomato paste for fast food chain.The new spray drying plant will also being planned for commissioning in September, 2014.Further the Company has successfully negotiated contract manufacturing of value added fruit compounds and blend with the equipment supplied by leading EU Company for exclusive production for their requirement to be sold in domestic and neighboring countries.

The Products :

Aseptic :
Concentrates – Totapuri Mango Concentrate, Red Papaya Concentrate, White Guava Concentrate & Neelam

Mango Concentrate Puree : Alphonso Mango, Kesar Mango, Totapuri Mango, Raspuri Mango, White Guava, Pink Guava, Red Papaya, Sindura Mango, Alphonso Totapuri Blend

Canning :
Puree : Alphonso Mango, Sweetened Alphonso, Kesar Mango, Sweetened Kesar Mango, Totapuri Mango, Raspuri Mango.

Spray Dried : Alphonso Mango powder, Ripe Banana Powder, Tomato Juice Powder, Orange Juice Powder, Beetroot Juice Powder, Pineapple Juice Powder, Lemon Juice Powder

Organic Puree : Alphonso Mango Puree

The Valuation :

The company having TTM sales of Rs 350 Cr, TTM EPS of Rs 167 per share, belonging to ambitious and high growth Food sector which is the flavor of the current bull market, is trading at a ridiculously cheap market cap of just 150 Cr, (Sales to Market Cap of just 0.35) that gives us PE ratio of Just over 6.5.

Company has ROE of 18% and ROCE of 12%, which will increase significantly going forward, as new production lines have commenced for high margin value added products.

(If we compare peers, Freshtrop Fruits with TTM sales of 125 crore and EPS of 7 is trading at Market cap of over 210 Crore and PE of close to 25. Another Tricom Fruits with TTM sales of less than 1 lakh rupee and negative EPS, Edelweiss bought 11% stake into it at an undisclosed amount.)

While Foods & Inns is a profit making high growth company, so why cant it trade atleast at 15 PE of FY15 estimate EPS of more than 175, that brings us to fair valuation of price close to Rs 2600 per share, while this hidden gem is available at just Rs 1000, giving scope of immense appreciation in medium to long term. Investors must buy and sit tightly on this stock to earn multibagger returns, before it comes into limelight of media and analyst.

Capital of the company is just 1.45 Cr (1.45 million shares), out of which management holds 46%, FII 1.45, 28.55% with HNI Investors, leaving only less than 3 lakhs shares with minority shareholders.

This sector has huge potential, especially when PM of India, Shri Narendra Modi himself has said many times, that to avoid wastage of fruits due to lack of warehousing and cold storage, fruit farmers should get ready market if producers of cola drinks adds 5% of fruit juice into their drinks. This will create huge demand for entire manufacturing line of fruit processing industry.

Triggers :

As per latest news of 20th Jan, EU has lifted ban on import of mangoes from India, this will give the company huge and lucrative high margin market of more than 28 country bloc, which follows EU guidelines, earlier on November 2014, during the visit of Shri Narendra Modi to Japan, Japanese authorities has expedited
procedural obligations to step up Mango import from India. Since new government is serious to help food processing industries, many such steps are expected in future also, this will only help the company going forward, which could be huge positive for the entire industry.

Company may sell off their Deonar unit and shift production to its Valsad or Nasik unit to reduce the debt, which can add atleast Rs 60 to 70 to its yearly EPS

In coming budget, this particular sector is likely to get huge sops to encourage domestic food processing industries, increase in export rebate, reducing of duties and taxes, discount in interest rates, all these can add another Rs 20 to 30 to its yearly EPS

Since company is loaded with high debt, falling interest rates will directly add to the bottomline from here on.

Falling food inflation, Bumper harvest, Direct Fertilizer subsidy Transfer to farmers, Removing of supply side bottlenecks, will only help company to source raw material from growers at a cheaper rates.

Likely to go for 10:1 Split or announce liberal bonus to widen investor base.

Stock has been in Trade to Trade since last many months, likely to come out soon, which will see huge price impact on the upside, once the shackles of “T” group is removed

Reduction in fuel price will help company reduce transportation cost substantially


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ALSTOM INDIA LTD - CMP 650 - "MAKE IN INDIA" THEME

ALSTOM India Ltd (CMP 650 Face Value Rs 10) :

Alstom, a global leader in energy generation, transmission and rail infrastructure, has gained an enviable reputation through the quality of its products and services. We are committed to customer satisfaction by continuously improving our products and setting the benchmark for innovative and environmentally conscious technologies. In India, Alstom offers full range of products and services for power generation, transport and transmission sector.

In the power sector, Alstom is a leader in clean technologies for all types of fuel including gas, coal, hydro, nuclear, solar, wind, etc. It offers a comprehensive range of power generation solutions - from integrated power plant to associated services including plant modernisation, maintenance and operational support.

A promoter of sustainable mobility, the Transport sector is the only multi specialist constructor in the railway sector covering everything from rolling stock and maintenance to signalling and infrastructures.

The Grid sector offers products, power electronics, automation and turnkey solutions, alongside a full range of services, to its customers across high, extra high and ultra-high voltages (66 kV to 765 kV/1200 kV). It designs and manufactures equipment and engineered turnkey solutions to manage power grids and transmit electricity from the power plant to the large end-user, be it a distribution utility or an industrial process or production facility.

At the heart of the development of Smart Grid, Alstom Grid in India offers fully localised products, services and integrated energy management solutions across the full energy value chain - from power generation, through transmission and distribution grids and to the large end user. It offers products and Services by Range, Market, Engineered Solutions and Smart Grid.

While quarterly sales have shown volatility between 450 cr to 700 cr for the last 10 quarters, operating profit has improved from 12 cr to 58 cr from Jun 12 to Sep 14. In the same period other income doubled from 19 to 38 crore, while EBIDT tripled from 32 cr to 97 cr., tax expenses rose from 6 cr to 41 cr.

Net profit rose from 13 cr to 86 crore, more than 7 times in last 10 quarters. Giving EPS of 12.8 in SEP 14 quarter, which was 1.92 in JUN 12.

The company has technology MOAT, which places it as a top notch player in Power Sector.

This debt free company has a good ROE of 25.94%, and ROCE of 22.11% for the last 3 years, which will only improve due to fall in input price and revival of power sector.

We expect company to post EPS of Rs 60 for FY16, which discounts CMP of Rs 650 at just 11 times 1 year forward earning, Going forward we expect stock price to touch 1200 in next 12 months discounting its current price to earning of 20 times at which all MNC companies trades at.

This is mainly due to Falling commodity prices along with cost control measures implemented by the company resulted in robust bottomline of the company, which can be seen in Sept quarter result.

Company maintains healthy dividend payout of 32.68%, which will double Dividend per share from current Rs 10 to Rs 20. Good performance to continue going forward, looking at manufacturing push by the government, plus good demand likely from power and energy sector added with demand from Railway Sector, as announced by PM Modi, as company is multi specialist constructor in Railway sector, covering everything from rolling stock and maintenance to signaling & infrastructure.

After GE takeover, AIL to become GE India, only listed GE company outside of USA. Company to get benefit of GE product portfolio & technology going forward.

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