• 1.00xBook Value as on 31st March 2010
• 3.41xFY11E eps
• 3.00xFY12E Eps

 

Grauer & Weil India Ltd (Rs 89/ Bse 505710)

 

 

GWIL is the oldest company in India manufacturing widest range of metal finishing chemicals. GWIL is producing more than 600 types of different chemicals for treatring all types of metals. Its metal finishing chemicals are used for Nickel, Copper , Brass, Aluminium, Cadmium etc. Its chemicals find application even in precious metals like Gold, Silver, GWIL also produces Pre-treatment chemicals including Cleaners, Pickling additives etc. In 2009, GWIL had set up a new factory in Jammu which started commercial production in June 2009. This plant is eligible for various fiscal benefits which has improved co's competitive edge.

 

Last year, group company named Bombay Painted had been merged with GWIL. Bombay Paints manufactures coatings based on Alkyds, Epoxys,PU,Vinyls etc which help to reduce corrosion on metal surfaces. Its product range is:

Major customers its products are:

GROWEL's 101:GWIL, on its surplus land in Mumbai had set up this shopping mall with approx 2 lac s f space. Out of same, approx 50% is used by company as its corporate office.  Balance 50% had been leased to Big Bazaar and Cinemax which fetches annual lease rent of approx 5 crores to GWIL. In Mumbai suburbs, it has become a famous landmark.

 

FINANCIAL PERFORMANCE:

 

                                    Q U A R T E R      E N D E D             YEAR ENDED

                                     30.06.2010         30.06.2009               31.03.2010

 

                                         Rs/Cr                Rs/Cr                      Rs.Cr

 

Total Income                       59.34                49.45                   230.06

 

PBT                                     6.22                  4.64                     21.68

 

PAT                                     5.74                   2.95                    16.07

 

Equity                                 22.67                 22.67                    22.67

 

Reserves                                                                                  102.17

 

Promoter Stake                    68.31%

 

For quarter ended June 2010, company has reported good results with income rising by approx 20% but PAT has almost doubled. Due to higher demand from user industry, GWIL is able achieve higher utilization of it Jammu factory.  Moreover, GWIL has become very bullish on its industrial paint/coating division (of Bombay Paints) and targetting to triple turnover of this division in next 2 years.

 

From its manufacturing operations and GROWEL's 101, GWIL is in a position to achieve EPS of Rs 10 in 2010-11 and Rs 13-14 in 2011-12. However, GWIL has decent surplus land bank and Commerical property and hence, the recommendation.

 

Its manufacturing plants are as under:

In Mumbai's Kandivali suburbs, GWIL has 10 acres land on which earlier Growel was built. Now, GWIL has already constructed another 3,00,000 s f area for Retail and Commercial use. Thus, total constructed retail/commercial space now stands at 5 lac sq. ft. In this area, prevailing rate of residential premises is around Rs 10,000/ per sq. ft.  And if this commercial space price is taken at Rs 15,000 per sq ft (although ground floor fetches even Rs 30,000 per sq ft), market value of already constructed property is around Rs 750 crores as against existing market cap of Rs 185 crores

 

Around 75% of newly constructed 3 lac sq ft property has already been leased out @ Rs 65-75 per sq ft. These lessee have already recently taken possession and lease rent to GWIL will start showing from Q2 onwards.  THIS PROPERTY, WHEN FULLY LEASED, SHOULD FETCH MORE THAN Rs 20-22 cr per annum as lease rent which will be fully reflected next year onwards.

 

In Kandivali, still surplus land is there.  GWIL may start construction on same only from 2012 onwards.  Company should be able to build another 5 lac sq ft (most probably an IT Park where double FSI is allowed). This property should be ready in 2014 . When ready, market value of entire 1 mn sq ft built up space should be more than Rs 1500 crores

 

Additional lease rent from recently constructed 3 lac sq ft should add at least Rs 3 to co's EPS in current year and Rs 6 next year onwards.

 

At its Chembur factory also, there is surplus land of approx 1.50 acres which should be worth more than Rs 75 cr

 

GWIL has also settled its dispute of erstwhile bottling plant in Pune and now company has more than 10 acre surplus land in Pune.

 

At CMP , GWIL is available at extremely low valuations considering that company is market leader in Chemical biz and its Industrial Paint biz is also growing now. Both biz are profit-making and its Real-estate segment have HUGE value. As company dont intend to sell surplus land or constructed space, GWIL is assured to get decent lease rent in future years to come, adding immensely to its bottomline. Current market cap is just 185 crores although market value of constructed space on Kandivali land alone  (subsequent to Phase-3 scheduled to start in 2012) can be more than 1500 crores) As and when company decides to utilize its surplus land in Chembur and Pune, that will topping on the icecream.

 

Investors may buy this scrip immediately. Scrip is lying low because so far, there is no official announcement from company about readiness of Phase-2 and its leasing out.     In stable market conditions, share price of GWIL can be Rs 175/ in less than 15 months. If investors continue to hold this scrip for 3 years, appreciation can be multibagger.  An extremely safe investment with great intrinsic value.

 

 

HIND INDUSTRIES Ltd  Rs 48/

 

Delhi based Hind Industries Ltd is engaged in manufacture and export of fresh, chilled and frozen meat and meat products. Products of the company are widely acceptable and consumed worldwide. Company, together with its subsidiary, is the largest exporter of the meat  and meat products from Northern india. Hind Industries has set up latest hi-tech machinery and inhouse R &D to provide highest quality HALAL , fresh and frozen, buffalo, sheep and goat meat and meat products from its modern abattoir-cum-meat processing plant . Its subsidiary Hind Agro in Aligarh is approved by APEDA, Ministry of Commerce, Govt of India for export of meat and meat products. Hind group has received 10 consecutive APEDA awards and 3 National productivity awards for export of excellent quality meat from GOI.

 

Hind Agro Industries Ltd is the only company in the country to have the unique facilities of slaughtering the animals which have been bred and reared on strict guidelines set by the O.I.E. Paris. Farmers are encouraged to rear male buffalo calves specially for supplying to the company under the contractual farming. Company has also intensive feed lot to raise male buffalo calves on organic farming with natural feeds. The source and traceability of the animals are documented from the farm to the finished product. In turn, company provides assistance to the farmers by supplying feed and veterinary services from the experts belonging to it. Qualified Veterinary Doctors conduct ante-mortem andpost-mortem and examinations on the animals procured from disease-free zones recognized by UP Govt.

 

FINANCIAL PERFORMANCE:

 

                                  S  T  A   N   D -   A  L  O  N   E                C  O  N  S  O  L  I  D  A  T  E  D

 

                               2009-10            2008-09                              2009-10               2008-09

                               Rs/Cr                Rs/Cr                                 Rs/Cr                    Rs/Cr

 

Net Sales                  122.45             117.96                               808.57                750.78

 

Depreciation                  2.65                2.66                                   9.30                    9.11

 

PAT                              2.48               1.54                                    7.68                  16.71

 

CASH Profit                 5.13                 4.20                                  16.98                  25.82

 

Equity                                                                                            8.64

 

EPS Rs                         2.87                 1.78                                   8.90                 19.34

 

Cash Eps Rs                  5.94                 4.86                                  19.65                29.88

 

BOOK VALUE                                                                               Rs 118/

 

Current market cap of Hind Industries Ltd is Rs 39 crores only.  Main/sole reason for such low market cap is the fact that almost entire investing community is aware only of standalone results fo the company having 2009-10 EPS of Rs 2.87. 

 

Hind Agro Industries Lts is subsidiary of Hind Industries ltd.  From above results, it is clear that turnover of its subsidiary in 09-10 was 686 crores with PAT of 5.20 crores. Thus its subsidiary is 560% bigger than the parent company.  HIND INDUSTRIES IS HOLDING 90% EQUITY OF HIND AGRO INDUSTRIES LTD. Current equity of Hind Agro is 33 cr which means Hind Industries hold arlound 2.97 cr shares at cost of approx Rs 29.70 crores. Thus current market cap of Hind Industries is 30% more than its investment-at-cost in its subsidiary.

 

Consolidated Valuations:

 

1. Book Value Rs 118/ , thus scrip is available at just 38% of its book value

2. Scrip is trading at just 5xFY10 Eps

3. Scrip is available at just 2.30xFY10 CASH Eps

 

Based upon above financials, scrip is definitely underpriced and has potential to double from current levels.  However, consider the following:

 

A. Its subsidiary Hind Agro has bagged DBOT  (design, build, operate, transfer) contract for construction of a Modern Slaughter House from Chennai Municipal corporation

B. Hind Agro is likely to bag another contract from Lucknow Municipal corporation for construction of Modern Slaughter House

C. Hind Industries has already set up a factory for manufacture of HIGH SECURITY REGISTRATION NUMBER PLATES in Baddi. Few years back, Govt had announced that all vehicles in India should have HSRNP so prevent tampering with number plates and/or theft of same. However, this factory has not yet started production as so far, no state Govt has invited any tenders for such high security plates. There is still uncertainty as to when Govts will launch/make mandatory such number plates.

D. Presently plant of Hind Industries is operating at just 30-35% of its installed capacity.

E. Plant of Hind Agro Industries is running at just 55-60% of its installed capacity

 

RATIONALE FOR RECOMMENDATION:  As per our extremely reliable information, since last 2 years, promoters have been trying to buy back balance 10% stake of Hind Agro Industries from outsiders (approx 7% with IFCI and balance with friends/relatives) at completely unrealistically low price. As per same sources, actual/real profits may be suppressed and must be much higher  . If promoters succeed in buying out balance 10% of Hind Agro, performance of parent as well as subsidiary company should witness HUGE improvement. Capacity utilization should  also take a sharp jump . However, if outside investors are unlikely to sell their stake at allegedly very low price being offered by promoters. Hence, ultimately promoters may be prompted to offer much higher and realistic price.

 

So far, Hind Industries has not rewarded its shareholders even reasonably well although it has potential to give huge rewards to its stakeholders. Fundamentally looking at its consolidated earnings, consolidated Book Value, Huge installed capacities, Hind Industries is available dirt cheap. However, nothing extra-ordinary may happen in near future. Vested interests may like the share price to remain low. We feel that fair value of Hind Industries is above Rs 100/.

 

Investors having patience with long-term view may buy big big quanity of Hind Industries for MULTIBAGGER gains. Dont be surprised if scrip is quoting above Rs 150/ in less than 2 years

 

 

HEMANT K GUPTA

212 Ravi Indl Estate

Andheri E

Mumbai-400093

 

• Less than its Book Value 
• 2.80xFY11E Eps

• 3.60xFY11E Eps and 1.86xFY11E Cash EPS
• 2.65XFY12 E Eps and 1.65xFY12 E Cash Eps

 

HEMANT K GUPTA

 

 

 

SAMTEX FASHIONS LTD Rs 28/ Bse code no 521206

 

                                        Quarter ended          Year ended

                                         30/06/2010                31/03/2010

 

   Net Sales                           171.00                        596.00

 

Depreciation                              1.82                            6.28

 

PAT                                          4.90                           13.23

 

Equity                                       9.90                             9.90

 

Reserves                                                                     58.90

 

Book value                                                                    Rs 70

 

EPS Rs                                     4.95                             13.37

 

This Delhi based company was originally incorporated for garment business. However, now garment business accounts for hardly 10% of total turnover. Company has set up 3 rice mills and export entire production .

 

Company should report EPS of 22 in current year. PE Ratio is just 1.30 and scrip available at less than half of its book value.

 

So far scrip has underperformed the market as it was Rs 40 in Jan 2010

 

It may give more than 100% appreciation in less than 6 months

 

HK Gupta

 Q u a r t e r  E n d ed         Year Ended

                                         30/06/2010     30/06/2009         31/03/2010

 

 

Net Sales                          297.00              270.00             1069.00

 

Depreciation                        27.00                27.00               116.00

 

PAT                                    40.00                  7.14               126.00

 

Equity                                 69.00                 69.00                 69.00

 

EPS Rs                                5.76                  1.03                 18.21

 

Cash Eps Rs                         9.70                  5.00                 35.00

 

TNPL is one of few companies in India which has been always reporting profits Main freatures are:

 

Thus TNPL is fully integrated Paper Mill.  Very strong brand. One of the most efficient mills which produced 245800 tonnes last year on installed capacity of 245000 tonnes

 

Financial Performance;

 

Moreover, TNPL is considered a green company as more than 50,000 acres of land under cultivation for growing trees.

NEW TRIGGERS:

 

WITH EXPANDED CAPACITY BECOMING OPERATIONAL IN OCT 2010,  TNPL WILL REPORT HUGELY IMPROVED FINANCIALS FROM JAN2011 ONWARDS.

 

BUY BIG BIG QUANTITY TODAY.  SCRIP CAN BE 250/ IN LESS THAN 1 YEAR AND RS 350/ IN 2012 EASILY. IF YOU REMEMBER OUR EARLIER  RECOMMENDATION NR AGARWAL HAS DOUBLED IN 2 MONTHS AND AP PAPER HAS APPRECIATED MORE THAN 50% IN 2 MONTHS