1. Sunidhi Securities & Finance has come out with a research report on Century Enka (CEL). The research firm has recommended buy rating on the stock with a target of Rs 320, in its report dated December 18, 2009.
"CEL is likely to post an EPS of Rs 54.8 in FY10, which would go up to Rs 61.5 in FY11. At CMP of Rs 260, the share is trading at a P/E of 4.7x on FY10E and 4.2x on FY11E. Century Enka in its weekly chart can be seen in a clear uptrend since early-2009. The index is expected to reach its primary peak at Rs 275. The ability of the stock to sustain above Rs 275 should take it to Rs 320. We recommend buy with a target of Rs 320", says Sunidhi Securities & Finance.
2. Century Enka makes polyester yarn (47% of revenues), nylon yarn (24%) and nylon tyre-cord (27%). Its presence across multiple segments insulates it partly from business cycles. But these products are commodities and Century is vulnerable to volatility of petrochemicals-based raw material prices, derived from crude oil. Raw material costs account for nearly 67% of net sales. While the market demand for polyester is steady, given the large Indian market, nylon tyre-cord is a raw material for the tyre industry which was adversely affected last year. Huge inventory and cheap imports further aggravated the problem.
However, thanks to anti-dumping duty on imports and a recovery in demand from the auto sector, this segment is expected to perform well. Decrease in the raw material price has helped Century generate higher profits in the past two quarters. Operating profit jumped 150% and 68%, respectively, over the same quarters last year. Operating margin has improved to 21% in the September quarter compared to 12% in the year-ago period. Its market-cap to sales and operating profit are 0.32 and 1.48, respectively. Increasing raw material prices over the past few months have reduced the margins a bit but the stock remains reasonably valued even after the recent run-up.
Wednesday, February 3, 2010
Buy Jain Irrigation!
"Jain Irrigation Systems Ltd (JISL) is a leading agri business company operating in diverse but integrated segments of agri value chain. It is the second largest manufacturer of micro irrigation systems (MIS) globally and largest in India. JISL is one of the largest manufacturers of the PE pipes and tissue culture banana plants in India. The company also has presence in hybrid and grafted plants, greenhouses, bio fertilizers and solar water heating systems."
Jain Irrigation Systems Ltd (JISL) is a unique company, pioneering micro-irrigation systems (MIS) in India and has diversified into farming. It is into drip irrigation systems, sprinkler irrigation systems, valves, water filters, green houses, bio-fertilisers, onion and vegetable dehydration, PVC pipes & fittings, PVC sheets, polycarbonate sheets and solar water-heating systems. Its foods division is the largest processor of fruits and vegetables in India. It has a huge client base which includes Indian and foreign companies like Aditya Birla, Bharti, Coca-Cola, Hindustan Unilever, Reliance, Heinz, Friesland Foods, Mitsui & Co, Taiyo, etc.
In December 2008, JISL bagged a single order worth Rs27 crore from one of its reputed European customers for dehydration of onions and vegetables. In May 2009, the company bagged an order for Balh Valley Medium Irrigation Project through global competitive bidding from the department of irrigation and public health, Himachal Pradesh. The project is a part of Bhakra Beas Management Board (BBMB), Mandi district (Himachal Pradesh). The total value of the project is Rs65.11 crore. Recently, the company bagged an order for a World Bank project worth Rs77.80 crore for supplying and installing drip and sprinkler irrigation systems in Tamil Nadu covering 22,345 hectares of land benefiting nearly 15,000 farmers. JISL also announced that it has won large orders€”worth Rs158 crore€”from various Coca-Cola bottlers in India and overseas for supply of mango pulp for the 2009-10 season.
In the business of irrigation as well as food processing, JISL faces global competition. It has invested $10 million to set up a new plant in Turkey to make irrigation systems and plastic pipes. It is looking to tap the Asian and Middle East markets for selling processed foods. The overseas ventures are strategic; it is the local market that is really rewarding.
In the September 2009 quarter, the company posted sales growth of 18% and operating profit growth of 70% over the corresponding period last year, due to lower raw material prices. Revenues from the PVC sheets and PVC pipes business declined 29.70% and 5.50%, respectively, while the farm and foods segment reported modest growth of 3.5%. However, the MIS division continued its strong performance by posting a 38% revenue growth. The pipes business grew 14.30% after witnessing a continuous decline in revenue for the past four quarters. The polycarbonate sheet division, which was facing headwinds in the US and EU markets, reported a growth of 11.3%, compared to a flat performance in the June 2009 quarter. Over the past five quarters, the company has maintained an average operating profit margin of 20%. Valuation looks expensive. At the current price of Rs843, its market-cap is 2.90 times its revenues and 13.05 times its operating profit for the September 2009 quarter. But JISL€™s unique business profile and steady growth have always commanded premium valuation.
Jain Irrigation Systems Ltd (JISL) is a unique company, pioneering micro-irrigation systems (MIS) in India and has diversified into farming. It is into drip irrigation systems, sprinkler irrigation systems, valves, water filters, green houses, bio-fertilisers, onion and vegetable dehydration, PVC pipes & fittings, PVC sheets, polycarbonate sheets and solar water-heating systems. Its foods division is the largest processor of fruits and vegetables in India. It has a huge client base which includes Indian and foreign companies like Aditya Birla, Bharti, Coca-Cola, Hindustan Unilever, Reliance, Heinz, Friesland Foods, Mitsui & Co, Taiyo, etc.
In December 2008, JISL bagged a single order worth Rs27 crore from one of its reputed European customers for dehydration of onions and vegetables. In May 2009, the company bagged an order for Balh Valley Medium Irrigation Project through global competitive bidding from the department of irrigation and public health, Himachal Pradesh. The project is a part of Bhakra Beas Management Board (BBMB), Mandi district (Himachal Pradesh). The total value of the project is Rs65.11 crore. Recently, the company bagged an order for a World Bank project worth Rs77.80 crore for supplying and installing drip and sprinkler irrigation systems in Tamil Nadu covering 22,345 hectares of land benefiting nearly 15,000 farmers. JISL also announced that it has won large orders€”worth Rs158 crore€”from various Coca-Cola bottlers in India and overseas for supply of mango pulp for the 2009-10 season.
In the business of irrigation as well as food processing, JISL faces global competition. It has invested $10 million to set up a new plant in Turkey to make irrigation systems and plastic pipes. It is looking to tap the Asian and Middle East markets for selling processed foods. The overseas ventures are strategic; it is the local market that is really rewarding.
In the September 2009 quarter, the company posted sales growth of 18% and operating profit growth of 70% over the corresponding period last year, due to lower raw material prices. Revenues from the PVC sheets and PVC pipes business declined 29.70% and 5.50%, respectively, while the farm and foods segment reported modest growth of 3.5%. However, the MIS division continued its strong performance by posting a 38% revenue growth. The pipes business grew 14.30% after witnessing a continuous decline in revenue for the past four quarters. The polycarbonate sheet division, which was facing headwinds in the US and EU markets, reported a growth of 11.3%, compared to a flat performance in the June 2009 quarter. Over the past five quarters, the company has maintained an average operating profit margin of 20%. Valuation looks expensive. At the current price of Rs843, its market-cap is 2.90 times its revenues and 13.05 times its operating profit for the September 2009 quarter. But JISL€™s unique business profile and steady growth have always commanded premium valuation.
Tuesday, February 2, 2010
Buy Bajaj Auto on declines!
Shahina Mukadam & Mitesh Thacker are bullish on Bajaj Auto for a medium to long term perspective. On the downside Rs 1,630-1,600 appears to be very good buying range, that is where the 89 day moving average for the stock is there, that is where the weekly supports are there. So Rs 1,630-1,600 could be a very good buying range.”
Deven Choksey is bullish on R Power!
"I see prospects of most of the power stocks going up from financial year 11-12 particularly and the kind of equations that has been set in case of Reliance Power is going to be positive thereafter. So from a prospective of a long term investment on can add into this stock at current levels and can stay invested for three years.”
Intraday tips for 3rd feb!
Buy Spicetele above 67 with a stop loss of 64.5 and a target of 71-75.
Buy NFL above 142 with a stop loss of 139 and a target of 146-154
Buy Renuka sugars for a target of 213-215
Buy NFL above 142 with a stop loss of 139 and a target of 146-154
Buy Renuka sugars for a target of 213-215
Monday, February 1, 2010
Stocks in focus!
GVK Power secures Rs2400 cr for punjab project.
Suzlon unit gets 295MW wind farm project.
Suzlon unit gets 295MW wind farm project.
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