Q1 FY'15 Result Updates - Cera Sanitaryware, Granules India, Dewan Housing And Can Fin Homes

1) Cera Sanitaryware:
Lesser competition, when compared with increasing demand of sanitarywares, enables a company like Cera Sanitaryware, who has been continuously improving their product mix with quality, to grow at a faster pace, when compared to its peers.
The sales growth of 28% in the first quarter itself, assures us, that 30% growth in FY'15, seems to be a cake walk for the company. The biggest challenge, the company faced last year was maintaining the margins, because of higher input cost. But this year, the company looks to address this issue with plenty of innovations and improving operating efficiency. The net profit in the first quarter showed a healthy 22% growth yoy, which is not a bad start.
In my opinion, this is one business, which is expected to grow at fast pace over next 10 years, as India will look to become more & more developed nation. Even at such high valuations, I expect the stock to perform well over next few years.
One can use (hold / buy on dips) strategy on the counter for long term.

Link For FY'14 Annual Report:
http://www.bseindia.com/bseplus/AnnualReport/532443/5324430314.pdf


2) Granules India:
The company declared FY'14 as the year, which proved to be the turnaround year for their company, as they successfully started production at expanded capacity. The utilization went on increasing as the company received client approvals. Hence for the full year FY'14, the company was able to grow at a very healthy pace of about 45% when compared with FY'13. As now, we are already one year after the utilization of expanded capacity,  we cannot expect the same pace of growth in sales. But as the company promised, we can at least expect a healthy growth as far as net profit is concerned, as the company is continuously improving the operational efficiency, which will eventually lead to better margins in future.
Among all these, we had acquisition of Auctus Pharma, which is also expected to grow at a strong pace, and deliever close to 120 Cr of topline for the full year.
With the help of that acqusition, the company was able to show a growth of 36% yoy, as far as sales is concerned. The net profit, as expect grew strongly at 54% yoy (in spite of 2 Cr loss from Auctus). The standalone sales grew by 21%, which was not bad either, considering the second year, after expansion.
In spite of a tremendously rally, in past quarter, the company is still trading cheap, and I think an EPS of 50 is easily achievable in FY'15. So, even considering a modest P/E of 20, we can look at a price of 1000 on the counter, if company is able to address the debt issues well, in long term.
Recommending a hold on the counter.

Result Discussion By Management Link (From Research Bytes):
http://www.datafilehost.com/d/2c7b652c


3) Dewan Housing Finance Ltd:
Good set of numbers posted by the company in times when other bigger housing finance companies have faced challenges to show growth of more than 20%. The company was able to grow at 27% in sales and 22% in net profit, which is very decent. The loan book of the company grew by 22%.
Seems like the company will continue to grow at 20% or so for next 2-3 years, as the demand in tier 2 and tier 3 cities will continue to rise.
The company is now trading around 5000 Cr market cap, which seems perfect as far as the company's valuations are concerned.
One can keep the stock in long term core portfolio. Not sure of its multibagger potential from these levels as it is already trading at 2.5 times its recommended price here:
http://fundamentalstockideas.blogspot.in/2013/06/few-more-multibaggers-for-long-term.html

Management Interview After Q1 Results:
http://www.moneycontrol.com/news/results-boardroom/see-dewan-housing-nim-steady-at-28-29-kapil-wadhawan_1136151.html


4) Can Fin Homes:
Sales growth on sequential had been tremendous over past 2 years, and once again, they haven't disappointed. But the difference this time, was that the reward for being so consistent was already given to that company in terms of high jump in stock price in past 6 months. The change however, this time, was that the company suffered in terms of net profit due to deferred tax liability of about 1.91 Cr, which was nil in FY'13. Otherwise, in terms of EBITDA, the performance was very good.
The company grew in sales by a staggering 39%, and a modest 15% or so, in terms of net profit due to above reason.
The company should continue to do well, but they might feel a bit of pressure due to higher expenses, on account of more new branch openings. Valuation wise, not sure, if there is more steam left, because, the recent jump has already put the stock closer to 1000 Cr of market cap. But, in terms of growth, I think there is plenty more to achieve for the company.
Recommending a minor profit booking if required, or else, one can hold it strongly, if ready to stay invested for long term.

Happy Investing!!!!

Steel Strips Wheels Ltd (SSWL) - Seems To Be Back On Track

SSWL designs and manufactures automotive steel wheels since 1991 and is among the leading supplier to Indian & Global Automobile Manufacturers. The product range comprises Steel wheels for Two and Three Wheelers, Passenger cars, Multi utility vehicles, Tractors, Trucks & OTR Vehicles.

SSWL have set up state-of-the-art facilities and deployed an optimized manufacturing process which ensures that the quality and reliability of the products are maintained for their lifetime.
With Technical Collaboration with Ring Techs Co Ltd. (a 100% subsidiary of Sumitomo Metals Ltd., Japan) , SSWL have achieved world class Technical excellence in Wheel manufacturing.
The State of Art facilities of SSWL caters to widest range of Domestic & Global Automobile customers demands with highest quality standards benchmarks.

Strategic Partners:
1) GS Global Corporation (GSGC), South Korea
2) Sumitomo Metal Industries Ltd (SMI), Japan
3) Tata Steel Ltd through Kalimati Investment Company Ltd (KICL), India  

Manufacturing Facilities:
1) Dappar, Punjab
2) Chennai, Tamil Nadu
3) Jamshedpur, Jharkhand (Under expansion)

Client List According To Segment:

1) Passenger Cars (Car wheel) : 
Maruti Suzuki, VW, Renault-Nissan, Mahindra & Mahindra, Tata Motors, Honda Motors and Hyundai Motors.  

2) Tractors (Tractor wheels) : 
New Holland, Mahindra & Mahindra, Tafe tractors, John Deere, Escorts, Sonalika Group 

3) Commercial Vehicles (Tube and Tubeless wheels) : 
Tata Motors, Daimler, Ashok Leyland, Ashok Leyland-Nissan and Swaraj Mazda. 

4) OTR (OTR Wheels) : 
JCB , Larsen & Toubro & BEML

5) Exports :
PSA Peugeot Citroen (France & Spain), BMW (UK, Germany & Netherland), VW/Audi (Germany & Argentina), Piaggio (Italy), Siam Kubota (Thailand and Japan), Kromag (Austria), Just (Germany) and SWTI (Slovakia), Renault Nissan Group, SSangyong Motors-Korea, CIR Merker-Italy.

Recent Updates (Past 2 Months):

1) SSWL Bags export order from ALCAR After-Market
http://www.bseindia.com/xml-data/corpfiling/AttachHis/Steel_Strips_Wheels_Ltd_070714.pdf

2) SSWL Bags export order from Russian After-Market 
http://www.bseindia.com/xml-data/corpfiling/AttachHis/Steel_Strips_Wheels_Ltd_230514.pdf

3) SSWL Bags Export Order of 1,50,000 wheels from Peugeot-France
http://www.bseindia.com/xml-data/corpfiling/AttachHis/Steel_Strips_Wheels_Ltd_080514.pdf

My Views:
The company faced 2 tough years off-late, after spectacular FY'11 and FY'12, but things seems to be back on track now, looking at the recent recognition and big orders, the company has received. The major risk company might face, as far as the stock price is concerned would be the very high debt, but that is because of nature of business, where they have to fulfill the orders received from the company. The Debt:Equity is close to 2.
I know many people today are considering high debt as a major factor for not investing in a particular company, but personally, I won't mind investing, if I like the company's prospectus, irrespective of their slightly higher debt, like we did with Granules India. If management is capable, they will repay it,  as the size of organization grows.
Nobody can guarantee this, but its about one's own belief in the company.
Another challenge the company might face could be on account of cancellation of orders, in testing times for the clients.

But still, with strong order book, I am expecting the company to grow at 20% CAGR in sales over next 3-4 years.
Economy, not just in India, but especially Europe, will be a decisive factor for their growth, as it has lots of major clients from Europe. If it does grow well over next few years, we could see a very strong re-rating on the counter.
Past year (FY'14), was absolutely flat for the company, with sales growing only 10% over FY13, and that too, because of superb performance in Q4, where they grew about 34% yoy.
Net profit has been flat to negative, in past 2 years. Current annual EPS is around 16, which makes the stock trading at a P/E ratio of 16, which is not too high, looking at the strong client-tele, the company is having.

Safe investors can avoid the stock, because of some negatives mentioned above, but investors having some risk apetite, may invest in the company, hoping for revival in economy.


Please understand the risk factors and other details, before investing in the company.

Updates On Ajanta Pharma, Granules India, Manjushree Technopack And Dynemic Products

1) Ajanta Pharma: 

The dream run in the counter continues, and since last 2 years, the stock has stopped surprising on the upside. It seems like we should stopped discussing any targets on the counter, and keep on enjoying the flow. The stock may seem expensive to few now, but that is because of positive speculations about the future of the company. Very less dependency on US markets, high margins for a growing company, very low debt, and promoters releasing pledged shares, are some of the reasons for its continuing upside journey in recent times. The company seems to be achieving the stability in net profit margins around 20%, in coming years, which would very good. With 2 new plants getting operation this year, we may further see similar sales growth going ahead also.
Long term investors can still continue to hold.

2) Granules India:

The stock is getting a severe re-rating on the upside, which was due anytime, since the initiation of their capacity expansion. The results for FY14 were spectacular, and we might continue to see their out-performance, in coming 2-3 years also. To add fuel to fire, as far as stock price is concerned, the company successfully completed the US FDA inspection for their paracetamol facility, recently. Also, there has been lots of shares getting released from pledge by promoters, and some buying from open market off-late.
The stock has now started trading around 13-14 P/E based on FY14 earnings, which is still less, compared to its peers. But as per management, they continue to expect good growth in net profit (even better than sales), because of better utilization, good operational efficiency and increasing focus on sales of finished dosages. That should further improve their margins.
Expecting company to end FY15, with an EPS of close to 50.
Recommending a hold / buy on dips strategy on the counter.

3) Manjushree Technopack:

The stock has achieved the recommended target of 300, given here:
http://fundamentalstockideas.blogspot.in/2014/03/manjushree-technopack-packing-fmcg-food.html
But the company has very good presence in its field, and it may continue to improve on sales front.
Their major clients are working on a model, where the client provides the required raw material, and Manjushree has to bear the manufacturing expense only, which will reduce the dependency on raw material. Hence margins will improve, and they should be able to post good profits, with increasing number of such clients.
Last week, promoters bought almost 50k shares from open market in a day or two.
Still recommending a hold on the counter.

4) Dynemic Products:

Some unexpected announcements made by the company, assisted the violent movements on the counter for few days, but that seems to have taken a halt now. From past few days, company has moved well in upward direction, which was led by some of the institutional buying in good quantities. The stock continues to look cheaper, with P/E ratio of 5.5, even after such move, but with companies having market cap below 100 Cr, you never know, when your reward will be coming.
The best approach is to hold keeping our eyes open on every news flow surrounding the company.
For now, it looks like a buy / hold stock, even after 75% appreciation from recommended price here:
http://fundamentalstockideas.blogspot.in/2014/03/dynemic-products-name-behind-colors-of.html

Note: 
The recommendations are based on looking at company's future, and their long term prospects. As I have repeatedly said, its never a bad idea, to keep booking profits when company is moving up, so as to keep our portfolio balanced.

Happy investing!!!!