Premier Explosives Ltd stock analysis

The BJP-led NDA Government seems to be serious about encouraging private investment in defence. Undoubtedly, the move to allow FDI in the defence is aimed at boosting self-reliance in defence production, encouraging more private sector manufacturers to enter the sector, cutting expensive imports, bringing more clarity on guidelines and curbing corruption.

Company story: 

Premier Explosives Limited [PEL] is manufacturer of the entire range of (1)commercial explosives for the mining and (2)Defence application and (3) Wind Power Generation.

1. Commercial Explosives:


PEL makes Cartridge Explosives, Bulk Explosives, Cast Booster, Detonators, Detonating fuse, Hygroscopic chemicals for Cloud harvesting flares which are mainly used for mining and civil applications.

Major Customers for Commercial Explosives
Coal India Limited
Singareni Collieries Limited
Neyveli Lignite Limited
NMDC Limited
Karnataka Emta Coal Mines Ltd
Cement companies

PEL also exports commercial explosives to S.E Asian countries,Middle East & Europe.


2. Defence Applications:

PEL is operating and maintaining a solid propellant production facility of Indian Space Research Organisation (ISRO) at Sriharikota and Solid Fuel Complex of Advanced Systems Laboratory at Jagdalpur.

PEL is also the first and only Indian private entity designing, developing and manufacturing solid propellants for country's prestigious missiles Akash, Astra and LRSAM.

Amongst many firsts, PEL is the first company in the world to produce safer and greener NHN (Nickel Hydrazine Nitrate) detonators on commercial scale replacing ASA (Lead Azide, Lead Styphnate and Aluminum Powder) detonators.

Premier is the only private entity producing oleoresin based tear gas grenades used for mob control by law enforcement departments. The company had developed this product in collaboration with Defence Research Development Establishment (DRDE), Gwalior.

Premier also produces Explosive Bolts, Pyro Actuators, Smoke Markers, Cable Cutters and many other products including Blazer Plates for the Indian defence services,providing import substitutes and saving foreign exchange.

Financial Analysis:
CMP:Rs 235
Market Cap: Rs 209 cr
Promoter Holding: 47.39%
Debt: Rs 10.24 cr
Cash Reserves: Rs 48 cr

Consistent Dividend Paying company.

Profits for last four years[2010 to 2014] is stagnant and the stock price has gained 300%(approx) from lows of 62 to 235 recently.

Now the price is fairly valued and can be added at dips if corrected.

Both, Dolly Khanna [Rajive Khanna] and Vijay Kishanlal Kedia, who are recognized for great stock picks like  Cera, Hawkins Cooker, RS Software, Atul Auto, Avanti Feeds etc are holding 116174 and 100000 shares respectively [as on Sep 14].


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Premco Global Ltd an Elastic Multibagger

As we know Govt. Policies will keep changing for companies that make big things like Airports, Mining, Spectrum, Coal etc., but least to undergarments manufacturers!! That is why we see stocks like Page Industries are least effected by govt policies. In the same lines, Premco Global Ltd [PGL] is a manufacturer of Woven and Knit Elastic and Non-Elastic Narrow Fabric, Tape and Webbing for use in the Apparel, Lingerie, Sports-related, Medical, Footwear, Luggage, Furnishing and Automotive industries.

Premco uses international standard machinery for all stages of production (including warping, covering, weaving and finishing), raw material testing and product testing.

Promoter Holding: 63.26%

Financials:

Market Capital Rs 60.52 cr

Market Price Rs 182.85 cr

Debt: Rs 5.27 cr

Dividend: Paying dividend consistently from 2006-07

                                                                                                                                     Sourch:icharts.in

For the year ending 2014 total top line(sales) is Rs 66 cr and bottom line(Profits) is Rs 8 cr, i.e., profit margin on 14%. With the same profit range stock should trade at Rs 540!! So, this can be a potential multibagger. But kindly note this is small cap company(low liquidity), and circuits may limit us to enter or exit in or out of stocks.

Disclaimer: Please note this is not investment advice and all this information in prepared by getting publicly available information.Readers using this information are solely responsible for their actions and are advised to satisfy themselves before investing.

Bharat Rasayan Ltd a Multibagger stock

Company: Bharat Rasayan Limited [BRL], is Bharat Group's flagship company which is one of the biggest manufacturers of technical grade pesticides in india. Its product portfolio consisting of insecticides, herbicides, fungicides, their formulations and intermediates which command a strong customer base.

Bharat Rasayan Limited [BRL] is a government recognized Star Export House. The company, with a dedicated team of scientists has more than 195 international registrations and has been exporting its products to more than 60 countries across the globe. BRL is a preferred supplier for several MNCs for their global demand of several molecules. The company has Government approved R&D Centre and a pilot plan focused on process excellence and supporting international registrations. 

In addition to the existing manufacturing facility with a capacity of 5000 tonnes p.a, BRL has invested over $30 MN in a state of art manufacturing plant at Dahej (Gujarat) on a 105,000 sq. meters plot with a capacity of 15000 MTs per annum. This would enable BRL to upgrade its manufacturing technology and add new molecules to its portfolio. 

Stock Price Analysis: 

CMP:Rs. 924

Market Cap:Rs.393Cr

                                                                                                                                   Source:icharts.in

Promoters are holding 74.76%

Last two quarter(jun 14 & sep 14) results indicate the improvement in both top line(sales) and bottom line(profits). If same is continued for next two quarters then profit will double compared to last year which was Rs 20Cr. With that stock price will also gain up to Rs.1800. So we can accumulate the stock on correction as it happens. Happy investing!!

Disclaimer: Please consider i have vested interest in the stock. This information is for educational purpose only, please do your own research before investing.

TVS Srichakra Ltd a growth stock

Company: TVS Srichakra Ltd (Part

of TVS group) is manufacturer of 2 & 3 wheeler tyres and leading manufacturer of industrial pneumatic tyres, flotation, motorgrader, farm & implement tyres, skid steer tyres, multipurpose tyres and vintage tyres. It is exporting off-road special tyres to more than 80 countries worldwide which includes USA, Europe, Australia, Africa and Canada.Leading choice of OEM across India, they supply tyres to major vehicle manufacturers across country. With strong network across country they also cater to domestic after-market sales.

Stock Analysis: 

           CMP:1538         Market Cap:Rs. 1178cr 

Latest quarterly results[Sep-2014] indicate a good growth in both top line(sales) and bottom line(profits). For a company with quarterly sales of Rs.490cr and quarterly net profit of Rs. 26cr, should have market cap of 2000cr plus. So currently this is undervalued stock with atleast 50% gain left(Minimum target of Rs.2300). For long term investors it will be a multibagger. 

Here's some further reading from a series of small cap multibagger stocks in india:

•  Indo Count Industries a Multibagger stock
•  Shilpi Cable Technologies Ltd a Multibagger stock
•  Arvind Remedies Ltd a Multibagger stock

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Caution: This is not investment advice, use above information for educational purpose only. 

Indo Count Industries [ICIL] a multibagger

ICIL is Home Textiles manufacturer equipped with the state-of-the-art machinery imported from Benninger (Switzerland), TSUDOKAMA (Japan) Monforts (Germany), Arioli (Italy), Osthoff (Germany) among others. The company is targeting to double its capacities by 2016. 

ICIL is one of the top 15 largest Home Textiles suppliers in USA.

ICIL has diversified itself to Electronics division, where the company undertakes contract manufacturing, (assembling) for large number of electronic brands like LG, Onida, Whirlpool, Haier, etc. 

In 2008, the company was hit as markets such as the US and Europe were facing a downturn and huge debt in its books led to an impact on its balance sheet. The company went for Corporate Debt Restructuring (CDR) program.  

After 2010, with the US market picking up, it has seen a rise in exports.  The company has seen a turnaround in its finances.

Read Management Interview to Business Magazine 

CMP: Rs. 241

Market Cap is Rs. 882 cr for a company of annual sales of Rs.1410 cr (2013-3014) and annual net profit of Rs. 104 cr is undervalued. 

Best textile company in terms of ROCE.

ICIL is in sweet spot to become a multibagger stock with rise in pricing of its products, expanding into Australia and South African, expansion of production, exit from Corporate Debt Restructuring program and undervalued.

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Warning: I have invested in this stock. Please do not consider this as investment advice, this is just for educational purpose. Please consult SEBI authorised advisor before investing.

Nifty Options Basics

Options are of two styles
1. European Style
2. American Style

Only difference between them is exercising the option. In European style, options can only be exercised on expiry but in American Style, options can be exercised before expiry.

Nifty options are European style means can only be exercised on expiry only. That is the reason NIFTY options call/put are mentioned as CE or PE, Where C= CALL, P=PUT, E= EUROPEAN STYLE.

All the index based options are European style.

All STOCK options are American style, so these Stock options call/put are mentioned as CA or PA, Where C=CALL, P=PUT, A=American style.

How to trade Nifty Options?
Step 1: Identify the trend.
Step 2: If you are buying CALL buy near support zone. if PUT buy near resistance zone.
Step 3: Put Stop near the breaking of zone if trend reverse. Reverse your trend and go opposite.
Step4: Book full or partial profit near opposite zone.

In-the-money options are very volitale, if you are accurate you can make good profits, if you are wrong and if you delay with out stops, you many lose more.

Arvind Remedies Ltd [ARL] a potential multibagger

Company Story: Arvind Remedies Ltd is a Chennai based pharmaceutical company in India. It is manufacturing and marketing world-class allopathic and ayurvedic pharmaceutical products within and outside India. Looking at the need of drugs with less side effects and better efficacy, ARL is engaged in development of dosage forms with unique USP. As a result side effect of existing formulation is reducing and bioavailability of drug or end point therapeutic effect is increasing. Currently ARL has products in the late clinical stage in different therapeutic segments like Neuro de-generation disorder, Arthritis, Cardiac, Depression and Viral Diseases.

Having grown notably in terms of production capacity, product categories, market share, advancements in R & D, market reach and global acceptance, it’s today a significant force to reckon with in the Indian Pharmaceutical Industry.

ARL is in four Business Segments for faster growth and profits. They are

1.Ethical: The Ethical market is continuing its journey from strength to strength in its strategy of capturing the market share. ARL     has expanded its territory in the Northern India During the year ARL has launched few products viz. ARVICEP 100 Antibiotec, ARGNDIA – infertility, ARVINEX – control of heavy menstrual bleeding.

2.Institution: The Company has been able to cover almost all the States making its presence in all parts of the country, by supplying to Central Govt. departments like Railways, Defence, ESI Hospitals, and all the State Government Hospitals through-out the country.

3.Contract: Apart from ARL's own manufacturing activities, it is concentrating on utilizing its spare capacity for manufacturing products of other reputed companies, under leave & licence manufacturing and third party agreements.

4.International market: The year 2012-13 was significant for ARL in so far as it registered a substantial growth and made its presence felt in the African countries like Zambia, Kenya, Malawi, Ivory coast, Togo and Senegal and Central American countries.

ARL’s full-fledged plant at Irrungatukottai, spreading over 2.4 lac sq. ft has the facility to manufacture oral solid dosage forms, oral liquid dosage forms, topical preparations, liquid parenterals and hard & soft gelatin preparations. ARL is actively involved in Brand Marketing and Generics sales. By developing the off patented products through R & D and by registration of products in ANDAs, ARLis hopeful to enhance its exports rapidly in the coming years.

Multibagger Potential:

1.R & D pipeline has a number of Herbal products, in the development stage, and a new Herbal Product is expected to be launched every 9 to 12 months.

2.Promoters are holding 36.40 %( as on SHP of Sep 2014) and history of SHP indicates promoters are adding slowly.

3.Market cap of just 313.40Crs[As on November 07, 2014] for a company of making sales of 911Crs and profit of 58.90Crs [Y-o-Y 2013]


My view: This stock is not popular because of high debt and pledging of shares by promotors.

Manali Petrochemical Ltd [MPL] a safe investment

Company story:

MPL is almost debt free, cash rich, consistent dividend paying company.

MPL is only domestic producer of Polyol, which is used in the manufacture of Polyurethane Foams (PU) which in turn is used in automobile seats, furniture, garments and mattresses. Polyols have a healthy demand from auto, refrigerators and mattresses segments; they contributed ~56% of MPL's total revenues. 

MPL is also leader in production and marketing of Propylene Oxide, Propylene Glycol in India. The company operates two production facilities at Manali to manufacture Propylene Oxide, Propylene Glycol and Polyol.

Propylene Oxide is important commodity chemical used in the manfacturing of thousands of eveyday products.

Propylene Glycol is used as solvent in cosmetics, pharmaceuticals, engine coolent etc.

CMP: 17.75

Market cap of Rs.303cr for company with sales turnover of Rs.554.44cr (2013-2014) and net profit of Rs.29.05cr indicates it is undervalued; also company has cash reserves of Rs. 125cr. This is typical cash cow.

Investment in MPL is for those who expect consistent dividend and growth of 25% plus per year.

Note: I have invested in MPL. Please do not consider this as investment advise, this is just for educational purpose.

Shilpi Cable Technologies Ltd[SCTL] a multibagger stock

It engaged with E&Y to draw its growth plan to become USD 1 Billion company by 2020.Based on the plan,it intends to launch its own brand for House wire and Modular Switches in the Year 2014-15. It is now professionally managed and has been attracting skilled workforce and seasoned industry experts in the last 1-2 year to enhance its managerial bandwidth to support 
its growth plan.

The present Break up of Sector wise sales is as under:

1. Telecom 33%

2. Electrical 30%

3. Consumer Durables 15%

4. Automotive 25%

Key drivers of business growth

       

       1. New capacities in Aurangabad, Bahadurgarh and Hosur were operational for the Company only for partial period during FY 2013-14. The revenues of the Company will get substantial boost this year with benefits of these capacities in the current year made available for full year.

        

       2. Export avenues opened in 2013-14.Initial ground work done by company has been able to open significant markets 

in South America,Africa,Middle East and South east Asia giving boost in the export front.

       3. More investments to further strengthen the manufacturing facilities.

       4. Launching a major initiative in B2C market for house wire and switches through dealer network. Eventually this is expected to be one of the major revenue streams of the Company.

Now lets look into financials,

Current market cap is just Rs.450 crore(as on November 05,2014) for company with sales of Rs.1754 crore(annual) and net profit for the 2013- 2014 is Rs.100 crore. Sales growth year-on-year is more than oubled. Also it has debt of Rs.230 crore.

Shilpi will be multibagger in long term as the growth story unfolds.

Note: I have invested in the Shilpi cable. This is just for educational purpose, do not consider this as investment advise.

Warren Buffett's 3 Favorite Books: A Guide to the Intelligent Investor, Security Analysis, and the Wealth of Nations