9 stocks that can give good returns

Microsec has come out with its 9 stocks from small and mid cap space. According to the research firm, Amara Raja Batteries, Cera Sanitaryware, Dhanuka Agritech, La Opala R G, PI Industries, Somany Ceramics, Tide Water Oil, Wimplast and Zensar Technologies are having the potential to give good returns to investors. Microsec has come out with its 9 stocks from small and mid cap space. According to the research firm, Amara Raja Batteries, Cera Sanitaryware, Dhanuka Agritech, La Opala R G, PI Industries, Somany Ceramics, Tide Water Oil, Wimplast and Zensar Technologies are having the potential to give good returns to investors. Amara Raja Batteries Ltd Amara Raja Batteries reported 32% YoY growth in its top-line at Rs6940 million. On a QoQ basis, top-line improved by ~3%. On account of better product mix and robust topline, EBITDA grew by a massive 76% YoY at Rs1200 million. Led by robust operational performance and higher other income, PAT grew by 95% YoY to Rs 760 million. In the past, auto industry has registered an extraordinary sales growth of ~30% in Original Equipment Manufacturer. As per SIAM, the overall industry is expected to grow around 9%-11% for FY13E. OEM segment contributed around 26 % of the total turnover in 2011- 12 in the replacement market and is expected to register a growth of 11-13 % in 2012-13. Going forward we expect the demand coming from replacement market which will drive the volume and margin for the company. Cera Sanitaryware Ltd Cera’s Net Sales increased by 31% to INR 319 crore and Net profit jumped by 21% to INR32 crore in FY12. ROE of the company came at 25.6% with a D/E ratio of 0.24. In the last 5 years, Net sales and PAT have grown at an average growth of 25% and 29% respectively. Average ROE of the company came at 24%. At the CMP of INR350 the stock discounts its FY13E EPS of INR32.8 by 10.7x and its FY14E EPS of INR42.2 by 8.3x. With Strong Brand Value, Consistent financial growth, Strong ROE and under-penetrated organised industry, the prospect of the company looks bright. Dhanuka Agritech Ltd The company is in the business of pesticides, seeds and wind mill. It was incorporated in 1985. Dhanuka has 4 manufacturing facilities at Gurgaon and Sohna in Haryana, Sanand in Gujarat and Udhampur in J&K for formulation of various grades of pesticides. In addition to that, the company has 2 seed processing units at Mandideep in Madhya Pradesh and Turkapalli in Andhra Pradesh. The company has a research and development (R&D) unit, established in 1984 by the name of Dhanuka Agriculture Research Centre to carry out in-house field research and process development. The R&D unit received recognition from the Department of Science and Industrial Research and Ministry of Science and Technology. Dhanuka has technical collaboration with Du Pont, FMC Corporation, Chemtura Corporation, Sumitomo Chemical Co. and Mitsui Chemicals to introduce internationally proven products in the domestic market. Dhanuka traded at an average P/E of 10x in last 3 years. Currently, the stock trades at a P/E of 8.06x of FY2012 EPS. At the CMP of Rs 92.05, the stock discounts it’s FY2013E EPS of Rs 13.50 at 6.8x. Maintain Buy. La Opala R G Ltd We rate La Opala R G Ltd a BUY. La Opala, Promoted by Sushil Jhunjhunwala, is India's leading manufacturer of semi-vitreous tableware and kitchenware. It has a wide range of opalware and crystalware products selling under established brands like La Opala, Diva and Crystal. The company also exports its products to more than 30 countries. It has products spread across the value chain. It also channelises its products through modern retail stores. At the CMP of INR127 the stock discounts its FY13E EPS of INR14.4 by 8.8x and its FY14E EPS of INR19.8 by 6.4x. With Established Brand name, Completion of Expansion plan, and Consistent financial growth, the company is expected to perform better. PI Industries We rate PI Industries Ltd. a BUY. Our rating underpins the company’s robust business model complimented with strong marketing network and other organic factors. PI Industries Ltd. was incorporated in 1947 in Rajasthan specializes in providing solutions for plant protection and nutrient and Custom synthesis & Manufacturing (CSM) for contract research and production of agro chemicals. At the CMP of INR520.70, the stock is trading at 11.75x its FY13E EPS of INR44.33. The stock discounts in terms of historical 5yr average PE to its peers hence making the scrip an attractive buy. Somany Ceramics Ltd We rate Somany Ceramics Limited a BUY. The company was incorporated in 1969 by HL Somany as a Somany Pilkington’s, which later became Somany Ceramics. The company’s core business is to produce sanitary ware products. In the Indian tiles sector, Somany has achieved a clear leadership position by its innovative and futuristic approach. Somany Ceramics with the plants in Kadi (Gujarat) and Kassar (Haryana), with the production capacity of more than 19 million squares meters per annum is the producer of the highest quality of ceramic glazed tiles, vitrified tiles, sanitary ware or porcelain floor tiles. Currently, the company is planning to add thirteen new showrooms by the end of this year to increase the number to 100, including over 50 exclusive one. The contribution of higher strength and abrasion resistant quality of VC and Duragres tiles and the unique characteristic of digital tiles to the consolidated top-line increased to ~29% in Q1FY13 from ~17% in Q1FY12. We believe that despite rising cost of pressure there will be slight expansion in margin, backed by the expectation of contribution from the valueadded tiles to increase further. At the CMP of INR43.70, stock is trading at FY12 PE of 6x. The current valuation of 4.86x FY13E and 4.08x FY14E P/E look attractive. Hence, we recommend a BUY on the stock. Tide Water Oil (India) Ltd We rate Tide water oil Ltd (TIDEWATER) a BUY. Tide Water which is a part of the multi divisional Andrew Yule group has been a pioneer of Automotive and Industrial lubricants in India since 1928 and has five plants at Howrah, Oragadam, Turbhe, Silvassa and Faridabad. Its repertoire of automotive products includes engine oils for trucks, tractors, commercial vehicles, passenger cars and two/three wheelers. It has a popular Veedol range of products, widely accepted for their quality and excellence. The company also has technical collaboration with JX Nippon Oil & Energy Corporation, the No.1 petroleum conglomerate in Japan. Superior quality lubricants under the brand name Eneos are manufactured and marketed in India by Tide Water Oil. Its revenue & net profit grew at a CAGR of 13.61% & 21% respectively over FY09-12 At the CMP of INR 7822, the stock trades at a P/E and EV/EBIDTA of 11.87x and 6.59x, its FY12 earnings. Its relative inexpensive valuation & flexibility to withstand business cycles makes it an attractive pick. Wimp last Limited WIM Plast Ltd is one of the groups company of “Cello” Group, which has strong consumer base throughout the country and is one of the leading market players of Plastic Industry. With its rapid expansion, new product innovation, strong consumer base, increased plastic consumption and accelerated growth in plastic industry, the company is poised to grow in near future. At the CMP of INR328.15 per share, Wimplast is quoting at P/E of 7.26x its FY13E. On the basis of EV/EBITDA, the stock trades at 3.74x for FY13E. Zensar Technologies Ltd We rate Zensar Technologies Limited (Zensar) a BUY. Our rating underpins the company’s strong organic top line growth led by depreciation of INR against the USD, successful integration of Akibia, and initiatives to unlock value. However, a reversal in currency movements, which remained one of the key contributors for Zensar’s healthy performance, may impact the company’s performance. Zensar traded at an average PE of 5.66x in last five years. At CMP of INR253, the stock trades at a PE of 6.99X of FY2012 EPS. In addition, the CMP discounts Bloomberg consensus FY2013E and FY2014E earnings at 5.74x and 5.12x, respectively, which looks attractive from an investment point of view.