Poweryourtrade.com Multibaggers

20th-Jan-2006

Zensar Technologies Rajen Shah, Angel Broking


Zensar Technologies is into IT services and belongs to RPG Goenka group. It is a strong buy. Most of the mid size software companies are trading at a PE mutiple of 18-20, on the basis of that Zensar will trade at Rs 400. Even, a conservative PE Multiple of 15 is taken, Zensar's price will go to Rs 300, which is an upside of 15% from its current level of Rs 195. Having its presence across the world it has opened a world class development centre in Pune and a BPO centre in Hyderabad. The BPO centre will add to the company's topline and bottomline next year. Business is expected to grow by 30% plus in FY07. The company is expected to give a consolidated turnover of Rs 500 crore, profit of Rs 47 crore and EPS of Rs 20 in FY07.



Multibaggers 05th-Jan-2006


Upper Ganges Sugar

S.P.Tulsian, Investment Advisor

A cheapest sugar stock .
Introduction: - Upper Ganges Sugar Industries Ltd. is a KK Birla
Group company having two sugar units and one distellery. One sugar
mill is at Seohara in U P with 10,000 TCD and a Distellery of 55
KL/Day (capacity being enhanced to 100 KL/Day ) and second sugar
mill is at Sidhwalia in Bihar of 2,500 TCD (expandable to 5,000
TCD). The company is also setting up a Greenfield Sugar Mill at
Kushinagar in UP with capacity of 7,000 TCD, which will be
commissioned for sugar season 2006-07 (to be completed by Sept'06).
The company is also setting up 24 MW co-generation project to be
operational by Feb'07 with an outlay of Rs.100 crores. Total capex
plans of the company is in excess of Rs.350 crores which will
qualify the company for UP state subsidy scheme.
FY 05, Results: - The Company has recently extended its financial
year from June ending to December end and results for 18 months
ended 31.12.05 shall be presented very soon. However, during 15
months ending 30.9.05 (1.7.04 to 30.9.05) the total sales was Rs.422
crores while EBITDA was Rs.86.96 crores. Interest for the period was
Rs.20.29 crores while depreciation was Rs.9.69 crores. Profit before
exceptional items & tax was at Rs.56.98 crores. While all other
major sugar companies in UP have charged cane-arrear liability of
sugar seasons 96-97, 02-03 and 03-04 to Reserves and Surplus, this
company charged this liability of Rs.33.26 crores to the Profit &
Loss account.
Due to this, PBT for the period was placed at Rs.24.68 crores .
After providing tax liability of Rs.6.96 crores (including deferred
tax of Rs.3.03 crores) net profit was at Rs.17.72 crores translating
into an EPS of Rs.25.30 (annualised Rs.20.25).The company has
already declared and paid interim dividend of 40% for the year
04-05.
New Units in Bihar: - The Company has taken over a sugar mill in
Bihar from its group company New India Sugar Mill, with a capacity
of 2,500 TCD (expandable to 5,000 TCD) for which legal process has
been completed. With Mr.Nitish Kumar, assuming charge of Bihar as
CM, he is very keen to develop and revive sugar industry in Bihar.
At one time, Bihar and UP had almost equal sugar production , but
over a period (in last 25 years) Bihar now produces about 5% of
sugar produced in UP. So, an incentive package is assured by the CM
to Sugar Mills in Bihar to set up new units as also to improve the
productivity and increase sugar production. KK Birla Group is a
prominent player in Bihar with Oudh Sugar, another group company
also having its unit in Bihar. So, the earlier plan of Upper Ganges,
to shift unit from Bihar (of New India Sugar) to UP has been kept on
hold and the same is being made operational in Bihar. Even sugar
mills located in Eastern UP are keen to set up mills in Bihar, due
to its logistic advantage, as also access to Pakistan, which is a
big market in time to come.
Rights Issue: - To meet the finance requirement of capex plans of
Rs.350 crores, the Board of the company has in principle approved a
rights issue for which basis, price and terms have not yet been
approved. The net worth of the company as at 30.9.05 was about Rs.84
crores (equity of Rs.7 crores Free Reserves Rs.77 crores) while term
loan as at that date was about Rs.40 crores. Hence, the company may
meet its capex requirement by term loan and rights issue at a
premium, which will be investor friendly.
Sugar Season 04-05 working:-
Though the company has not yet released its accounts the summarised
working of the company for Sugar season 04-05 is assumed to be as
under :-
1) Opening Stock 1-07-04 11.28 lakh Qtl.@ Rs.11.95/kg
Rs.13484 lakhs
2) Production 04-05 16.07 lakh Qtl.@Rs.15/kg
Rs.24100 lakhs
27.35
lakh Qtl. Rs.37584 lakhs
3) Cost of goods sold in 04-05 23.60 lakh Qtl.
Rs.31800 lakhs
(upto 30.9.05 at selling price of approx
Rs.16.70/kg for Rs.394 crores)
4) Closing stock on 1.10.05 3.75 lakh Qtl. Valued @
Rs.15.40/kg Rs. 5784 lakhs


Season 05-06 working:-
Due to better crop availability and more crushing days available
Seohara is likely to produce 16 lakh Qtl. Sugar and Sidhwalia in
Bihar about 2.40 lakh Qtl. with aggregate sugar production of 18.40
lakh Qtl. in season 05-06. Due to reduction in the working capital,
interest burden is also likely to fall to about Rs.12 crores
annually. Interest burden has been falling quarter on quarter for
the last six quarters. Interest for 12 months ending 30.06.04 was
Rs.22.73 crores which fell to Rs.17.41 crores for 12 months ended
30.6.05. Interest for quarter ended 30.9.05 was Rs.2.89 crores.
Hence working for sugar season 05-06 is likely to improve vastly
because of reduction in interest, increased production and better
product realisation.
Financial Performance: - As stated, net profit for 15 months ending
30.9.05 was Rs.17.72 crores. If cane-arrear liability of Rs.33.26
crores is added back, this would have been Rs. 51 cores translating
in an EPS of Rs.72. However in next 12 months (1.10.05 to 30.9.06 )
the company is likely to have PBT of Rs.54 crores (excluding
interest of Rs.12 crores). After providing for tax of Rs.12 crores
PAT should be Rs.42 crores resulting in an EPS of Rs.60. However,
post expansion, post rights though equity will increase but
profitability will also improve.
Lowest Market cap per TCD:-
Upper Ganges probably has the lowest market Cap per MT crushing per
day, as revealed from the Table below: -
Sl. No Company Name Capacity TCD Equity Rs./Crores Share Price
Rs. Mkt Cap Rs./Crores Rs.Lakh Per TCD
1. Bajaj Hindustan54000 TCD 12.00 317 3800 7.04
2. Balrampur Chini48000 TCD 23.18 120 2780 5.80
3. Triveni Engg40000 TCD 25.80 81 2090 5.20
4. Dhampur Sugar 30000 TCD 34.85 213 750 2.50
5. Mawana Sugar18000 TCD 42.50 140 600 3.33
6. KCP Sugar 15000 TCD 11.34 595 675 5.87
7. Oudh Sugar 15000 TCD 18.18 119 216 1.44
8. Upper Ganges 12500 TCD 6.98 274 190 1.52

Conclusion: -
Since the company has not yet published its annual accounts as also
due to charging of cane arrears to P & L A/c. the results were not
understood correctly by the market . Also the company has
investments in listed stocks having market value of Rs.75 crores .
This translates into value per share at Rs. 107. Even giving
discount of 50 per cent to group company investment net value of
investment works out to above Rs.50. Current year EPS is likely to
be above Rs.60. Hence share at Rs. 275 is an excellent buy with a
potential to rise by 100 % in next 12 months.
Disclosure - Writer may deemed to be concerned or interested in this
investment.



Multibaggers 19th-Jan-2006


Reliance Industrial Infrastructure

S.P. Tulsian, Investment Advisor

Reliance Industrial Infrastructure - Rs.330.
An excellent Infrastructure Play.
Reliance Industrial Infrastructure Ltd. (RIIL) became Reliance
Industries Ltd.(RIL), (Mukesh Group) group company about a week
ago.
RIL holds 46.23 % stake while erstwhile promoters Mr.Satyapal Jain
(Brother of Mr.Anand Jain) holds 19.87% stake. Hence total
Promoters stake works out to 66.10%.
Total paid up equity capital of the company is Rs.15.10 crores and
book value as at 31.3.05 was Rs.62.10 per share (net off
Revaluation Reserve)
During FY05 the total income of the company was Rs.68.67 crores
while net profit was Rs.17.47 crores resulting in an EPS of
Rs.11.57 Dividend of 32% was declared for the year.
During H1 of FY 06 total income was Rs.38.05 crores while net
profit was Rs.8.88 crores resulting in an EPS of Rs.5.88 for the
period.
During FY 06 total income is expected to be Rs.80 crores and net
profit of Rs.20 crores giving an expected EPS of Rs.13.25.
Reliance Group is setting up Special Economic Zones (SEZ's) near
Navi Mumbai (Maharashtra) as also in Haryana and Andhra Pradesh on
land Area of approx. 25,000 Acres for each SEZ. This type of SEZ's
are also likely to come up in other states. All these SEZ's are
likely to be put up by this company which will improve the
business profile of the company.
Reliance Group is also foraying into Realty and Retail sector and
these business may also be taken up by this company.
After splitting up Telecom, Energy and Finance Business by Mukesh
Group to Anil Group, this remains the only company in Mukesh Group
after RIL (as IPCL is likely to be merged with RIL very soon)
which may take up infrastructure related projects.
KG Basin gas pipeline from east coast to west coast may also be
taken up by this company.
As RIL is holding entire Promoters stake, total funding for these
projects will come from RIL, which may also increase its stake in
the company beyond 51% to enable RIL to make the company as its
subsidiary. By this relationship, RIL shall be able to consolidate
the company's working in its financials.
FY07 EPS could be over Rs.20, and in view of huge discounting
enjoyed by peers (Mahindra Gesco P/E of above 100) the share can
touch four digit marks in next 12 months.
The Reliance Group's huge and massive plans in Infrastructure
Sector with Investments of over Rs.25,000 crores lined up in next
3 years, major flow of this will come to this company.
One can safely buy this share for over 100 % gain in next one
year. The share is presently available at forwarding earning
multiple of about 17 while peers command an average P/E of above
40 and Industry P/E of above 30.
S.P.TULSIAN
19.1.06.
Disclosure:- The writer may deemed to be concerned or interested in
this recommendation as he and his clients are invested in this
scrip.



Multibaggers 12th-Dec-2005


Crew B.O.S Products Ltd - In vogue

Nirmal Jain, India Infoline.

Crew B.O.S products is one of India's leading exporter of fashion
and home accessories. The company earns more than 95% of its
revenues from the US and the European market. Its clientele include
some of world's big retailers namely Next, GAP, Fossil, Chico,
Tesco, Laura Ashley and many others among its clientele.
The company has performed consistently in the past with revenue CAGR
of 46% and earnings CAGR of 44%over the last five years. Post its
recent GDR issue, the company is poised to expand its operations and
also enter the leather-finishing segment.
We expect the company to post revenue CAGR of 55% and earnings CAGR
of 60% during FY05-08. We initiate coverage on the company with a
buy rating with a 12-15 month horizon and a price target of Rs251.
This implies a potential upside of around 50% from the current
market price of Rs167


Courtesy : DP Visitor - Sarvar