First of all, I would like to make it clear that, all the stocks mentioned below are very very small companies with market capitalization of less than 50 Cr (except 3) and free float of less than 10 Cr approx.
Such stocks can swing very heavily in either direction. Hence, I am not suggesting anyone to buy/sell, but this post is just based on some research that I have done.
According to current scenario, I rate these stocks high and likely candidate for multibaggers in future. It may change later.
1) Dai-Ichi Karkaria Ltd:
Dai-Ichi Karkare Limited (DIKL) was set up in 1960 as a private limited company for the manufacture of speciality chemicals. The Company entered into technical collaboration with the internationally known speciality chemicals manufacturer Dai-Ichi Kogyo Seiyaku Co. Limited of Kyoto, Japan (DKS) and commenced commercial production in 1963. The Company's plant is located at Kasarwadi, Pune. Speciality chemicals belong to a class of products which are tailor made and function specific. These Chemicals find use in a wide range of industries.
Not one, but there are plenty of indicators that suggests this stock becoming a huge multibagger in the long run.
Promoters of the company are contantly buying shares from open market, and that is very well reflected through the consistent performance of the company in past few years. The growth rate is not great but its consistent.
Off-late, they have been able to post some good numbers, especially Sept'13. May be its an indication of sales picking up, as I could not find anything in press release which shows benefit from any other operations in this quarter. The company has healthy number of assets, due to which the book value stands at 90 Rs vs current market price of 54 Rs. The debt is also very low at 1.13 Cr. The company has always made good profits from their operations. Considering the FY13 EPS of 6, the company at current is trading at PE of 9 vs Industry PE of 27. EPS for Sept'13 quarter alone was 10.5. The company is regularly paying good dividend, and because of good performance, they paid a small special dividend also, this year.
All these factors makes it an interesting script to have a look at.
2) Paushak Ltd:
Paushak is part of the Alembic group of companies situated in Gujarat, India. Alembic Ltd is the oldest pharmaceutical company in India founded in 1907 and has celebrated a "hundred years of excellence". Over the years Paushak has established a multi-product capability in Phosgene & its derivatives manufacturing.
Strengths:
a) 35 years of safe Phosgene handling
b) 100 year history in chemical synthesis
c) In-house R&D and process development capability
d) Infrastructure for progressive scale-up 5L to 10KL
e) Robust quality and safety management systems
f) Continuous cost optimization program
Another low debt company, which has been consistently performing well, and the business seems to have picked up since last year. In FY13, they showed a sales growth of 51% and Net Profit growth of 125% approx vs FY12. After completion of H1 FY14, it seems they will again be able to post a sales growth of close to 40% and net profit growth of 75% approx for the full year. The company has strong promoter holding of close to 67% and they have regularly been paying good dividend. The debt stands at a meager 1.17 Cr, and the book value of 118 Rs is again, higher than the current market price of 104 Rs.
3) Superhouse Ltd:
Superhouse Group , is a multi- unit and multi- product conglomerate with brand leadership in the field of footwear manufacturing and exports. The Group is well equipped with the most modern machineries and a specialized workforce and produces all types of quality leather, leather goods and textile garments that are appreciated all over the world.
A US $75 million group, Superhouse Group has 15 units, with a workforce of over 5000 and a presence in more than 35 countries. Our commitment to quality is reaffirmed by our ISO 9002 certification. Stringent EN 345-norms make us one of the most respected manufacturers amongst importers from European countries. Being equipped with requisite infrastructure and strict adherence to high standards of quality, we are able meet CSA, ANZ & and SABS standards.
The stock was always in the eyes of investors, but I think there was a wait for a dramatic quarter, which could bring the interest back, and it did came in Sept'13 results. Since the day when results were out, the volumes have suddenly took off even when the stock is in PCA segment, with maximum amount of shares going into delivery. The stock price has jumped by 44% in 6 trading sessions after results. Promoters have time and again bought shares from open market in small quantities. The sales growth again is not huge but still consistent. The portability is good. Annual EPS is increasing by 2 Rs every year since FY11. This year, the expectations are much more with very good performance is first 2 quarter of this fiscal mainly because of good earnings from export due to Rs depriciation. The debt is slightly on the higher side in this counter, but still company sits at a strong book value of close to 150 Rs per share vs current price of 75 Rs. Based on FY13 numbers, the company has a PE of less than 4, even at current market price vs an industry PE of 28.
ALL OF THE ABOVE STOCKS ARE TRADING IN PCA SEGMENT.
Apart from these stocks, there is one more which is worth mentioning, thanks to Ipogenius, Arrow Coated Products.
The stock looks very strong fundamentally. I will post more details about it, when I have enough information. The good point is that, it is already suggested by many experts, and hence you will be able to find all the details over there. I will try my best to get something, which is not mentioned on other blogs so far.
Disclosure: I have not invested in any of the stocks mentioned above. Because of PCA segment, and low market capitalization, there is enough risk associated with such stocks. Hence, take your decisions wisely and according to your risk appetite. To an extent, I love taking risk with small amount of money, hence I will try to get into all of these stocks soon, with a small amount.
Dear Kunal,
ReplyDeleteWith respect to Arrow Coated Products, they manufacture water soluble films which has appliations in wide variety of industries. Just for example, check out "Tide Pods" by Proctor and Gamble in the US introduced since last year. Monosol is a company which supplies WSF films to P&G and is now building capacity and hiring more workers to keep up with demand.
Thanks for that update!!!!!
ReplyDeleteAlso share your views on other stocks mentioned above... a frank opinion, doesn't matter if it is against my views :-)
Dear Kunal,
ReplyDeleteI will try to look into the same as I look through the ARs.
I was busy researching into Arrow Coated Products and its competitors and found some very interesting info.
Kuraray, Japanese company which acquired Monosol valued its goodwill at 43% of its total acquisition cost taking into account the future excess earnings of the company. You will also find the same mentioned in the latest AR of Arrow Coated Products.
http://www.kuraray.co.jp/en/ir/library/pdf/account/130425_en.pdf (Please look up Page 9)
Sorry, I was a liitle busy for the past 2 days.....
ReplyDeleteThanks for this, I will definitely check out....
Infinite Computers seems to have achieved its correct valuations.... but that doesn't mean, I am asking anyone to sell, that is ones own decision...
ReplyDeleteThe stock seems to be in good uptrend since last week...
Don't know, how much more can be expected....
With their performance in past 2 quarters, I find the stock fairly priced at 130, unless there is a dramatic change in next quarter's numbers...
One change that will be seen is that EPS will go up slightly after the buyback is complete as it will reduce the number of outstanding shares....
If you observe the results carefully, in Jun qtr, i.e. before buyback, the equity was 42.56 Cr, which was reduced to 40.7 Cr in Sept qtr.
It will go down further with buyback process, and hence EPS will go up slightly...
Hi Kunal,
ReplyDeleteI must thank you for your posts.
1. Arrow coated products appears to have good prospect of business growth. Could not buy so far as price is moving up everyday.
2. At first glance, Paushak Ltd appears to be excellent. I am sure I am going spend good time on this.
3. Regarding Dai-Ichi Karkaria Ltd's results for Sept 13 :
The actual profit should have been 2.xx crore. However 6.01 Crore has been added up as 'Exceptional Items'. This has resulted in "one time high" EPS of 10.50 for Sept 13. This has also resulted in low PE of 3.59.
When PE is low, careful assessment of business growth prospect is essential. I think without growth prospects companies deserve low PE (even with clean balance sheet) as:
a. Any high dividend paid becomes return of investment rather return on investment.
b. No debt can sometime mean that company doesn't need debt as business is not scaling up, therefore, debt was never needed for expansion.
I will spend time on looking growth scenarios for this company and will post if I find something.
Warm regards,
Shekhar
Hi Shekhar,
ReplyDeleteFirst of all, I highly appreciate you for putting in your views on this post.
To start off, I would like to mention that these are just some of the interesting scripts (not used the word multibagger), that I found. It doesn't suggest any buy or sell calls, instead, it means that we need to do more research on it. Hence its very kind of you for sharing your views on it.. :-)
Talking about Dai-ichi, I just kept few data which looked good.
On your first point regarding EPS, I fully agree, but then, what is important over here is that the sales figure have improved sharply, from 20 Cr to 28 cr, which is a 40% jump. Even if we neglect the exceptional items, the profit has grown from 1.37 Cr to 3.09 Cr, which is also very good. My only point is that one cannot directly deny the growth prospect of the company.
Debt is something where each of us will have 2 opinions, one proving that debt is good, the other bad. There may be a case where company has started a better utilization of resources due to which the higher sales demand is satisfied, but no further debt required. Just a possibility.
Kindly keep on updating whatever you find.
Regards,
Kunal Banker
Granules India looks at further expansion:
ReplyDeleteHyderabad-based drug maker Granules India Limited, which recently acquired Auctus Pharma for Rs 120 crore, is looking towards further expansion of its business through both organic and inorganic routes.
“We strongly believe in growing our businesses and we are looking at organic growth. But if something comes up by the way that fits into our model, we may be looking at it (acquiring that company),” Granules managing director, C Krishna Prasad, told Business Standard.
Granules is looking at further expansions even though its executive director, Harsha Chigurupati, feels that the company will be able to “easily” achieve a turnover of Rs 2,000-3,000 crore with its existing products.
Granules expects to post a turnover of over Rs 1,000 crore this financial year as against Rs 764 crore in 2012-13. In the first half of the current fiscal, its turnover stood at Rs 490 crore.
According to Chigurupati, the company is not going to acquire to add more molecules. It will acquire to add more capacities. However, as the Granules business model is volume driven, there are very few companies in the market that can cater to its capacities. Hence, Granules is forced to go for greenfield investments.
“We are laying very strong foundations for the future and the results will be seen four years from today,” Prasad said. Meanwhile, the company would continue to maintain its annual growth rate of 20-25 per cent, he added.
He said the real benefit of Auctus acquisition would be realised 3-4 years down the line. During the same period, Granules Omnichem Pvt Ltd would be fully operational.
GOPL is a joint venture between Granules and Belgium-based fine chemicals maker Ajinomoto Omnichem. The new facility, being set up at a cost of Rs 185 crore in Visakhapatnam, will be operational next year. However, it had to secure USFDA approvals to realise its full potential. This is expected to take 3-4 years.
Granules will be entering the contract research and manufacturing services (CRAMS) space through the JV. It intends to manufacture high value active pharmaceutical ingredients (APIs) in therapeutic areas such as cardiovascular, CNS and oncology. Additionally, the JV will work on second generation manufacturing processes to increase manufacturing efficiencies.
“The advantage with Ajinomoto Omnichem is that it is all about quality and there is no price pressure. The second advantage is that this gives us access to the type of management and companies that we do not have traditionally. That access opens up a lot of doors for us,” Chigurupati said.
With regard to Auctus, he said the main advantage was that it had FDA approved products. With these products, backed by Granules marketing strength, “the customers we get are significantly different. So, margins and revenues will improve.”
Prasad is not worried about global pharmaceutical majors setting shop in India and their likelihood of competing with domestic companies in future in exporting products to the regulatory markets.
Source: Business Standard
Ricoh India wins Microsoft award:
ReplyDeleteRicoh India, one of the leading resellers of Microsoft, has announced it has won the award for 2013 Microsoft's Best Value Added Reseller-North & East of the Year in India. The award was achieved as a result of Ricoh India demonstrating exceptional business success by optimizing the use of Microsoft Licenses to deliver innovative solutions that exceed customer expectations and surpass business goals.
This recognition was presented at the Microsoft Annual Partner Meet at a Conference , the company's annual premier partner event, which took place this year in New Delhi. Microsoft honored 15 of its partners from around the country.
Microsoft awarded Ricoh India for achieving the highest revenue in more than 15 States along with their customer centric approach and excellent post sales support across all the customer segments and business verticals. Microsoft is key alliance for Ricoh India Limited and continues to be one of the strategic products in their portfolio. Ricoh India helps all customer segments in building and maintaining world class IT infrastructure more effectively and economically, ensuring highest level of certainty. Ricoh is associated to Microsoft in more than one ways as Ricoh is GOLD partner, Cloud accelerated partner and authorized academic reseller and have large pool of certified sales and technical resource for all Microsoft technologies.
"This is Ricoh India's second award, in as many years of our participation, from Microsoft in regards to strong sales performance and high customer satisfaction among Microsoft partner Networks," said Mr. Anil Saini, COO-Ricoh ITS, Ricoh India. "This award means so much to us because it means we were the top partner in the India for Microsoft's product lines. It's an amazing honor for our team and it's a credit to their hard work."
The award winners were selected for their dedication to delivering solutions that meet diverse customer needs. Several key criteria were considered in selecting Microsoft Partners for the special recognition, including outstanding sales performance, thorough technological expertise on Microsoft products and services, and feedback from Microsoft team members.
I feel very bad reading these success stories about Ricoh India as it may soon get delisted :( No doubt Management has done very hard work during the last three years and the fruit laden tree is ready to be plucked !!! But Ricoh Japan wants to buy out the Minority Shareholders at any cost. And why not a 1000 crores turnover company with a potential of atleast 10% NPM thus giving an EPS of Rs.25 !!!! Otherwise also, it's historic NPM is 6% which it used to earn on a pure hardware business. Now it's business product mix is altogether different and contains very high margin lines !!! In fact Ricoh India has hit the goldmines in recent years !!! Let us watch exciting developments over the next few weeks !!!
ReplyDeleteIts great to see that even after a sudden upper circuit that came on Friday, the stock is showing no signs of consolidation...
ReplyDeleteToday's low was higher than previous close on upper circuit which is great....
As pointed out by you on moneycontrol board, a total of 17.5 Lakh shares have already been delivered since the proposal, which is good to see...
Jewellery manufacturers to deploy IBM solutions:
ReplyDeleteIBM has announced that it is working with leading jewellery manufacturers and retailers across India to help transform their IT infrastructure involving hardware and software.
Thangamayil Jewellery (Madurai), Emerald Jewel Industries (Coimbatore), Dimexon Diamonds (Mumbai), Venus Jewels (Surat), and ACPL Exports (Agra), are embracing IBM Smarter Computing solutions to ensure better efficiencies in their production and manufacturing capabilities.
This will further ensure effective deployment of new, improved processes within their retail ventures, which in turn will help centralise their IT operations and reduce expenditure, the company said in a statement.
Tobby Kakkamthottil, Midmarket and Inside Sales Leader, IBM India/South Asia, said: “Jewellery sector is very process driven and IT is expected to enable them to grow, be highly productive and cost-effective.’
Source: Business Line
Lending to low- and mid-income groups pays off for Dewan Housing
ReplyDeleteLink: http://www.thehindubusinessline.com/industry-and-economy/banking/lending-to-low-and-midincome-groups-pays-off-for-dewan-housing/article5418509.ece
Cera Sanitaryware and Dewan Housing did put up a good show today, and that too, with increased volumes, which was good to see....
ReplyDeleteFirstCall Research is out with their analysis on Dewan Housing..
Link: http://www.indianotes.com/uploads/article_pdf/fce_DewanHousing_06Dec13.pdf
With respect to Cera, I found a research article on internet
Link: http://uk.finance.yahoo.com/news/research-markets-india-sanitary-ware-182900973.html
Granules India shareholders approve Auctus acquisition
ReplyDeleteGranules India, a city-based pharmaceutical manufacturer, said its shareholders have approved proposed acquisition of Auctus Pharma, a manufacturer of Active Pharmaceutical Ingredients (APIs).
The proposal was approved at the extraordinary general meeting on Friday, the drug maker said in a filing with BSE.
The shareholders also gave approval to increase the borrowing power limit of the Board of Directors to Rs 750 crore.
Though both the companies have not revealed financial details about the transaction, the filing with BSE indicated that the acquisition cost is Rs 102 crore.
The acquisition process is expected to be completed in the next three to six months, a release from Granules India has said.
Auctus has two manufacturing facilities, an API facility at the Pharmacity in Visakhapatnam and an intermediate facility in Hyderabad. The API facility has approvals from leading regulatory agencies including the US FDA, EDQM, Health Canada, KFDA and WHO-GMP, a Granules press release had said.
Source: Economic Times