Buy Riddhi Siddhi Gluco Biols Ltd

Riddhi Siddhi Gluco Biols Ltd (RSGB) is the largest manufacturer of starch, liquid glucose, dextrose monohydrate and other derivatives, high maltose corn syrup and byproducts like corn gluten meal and enriched fibre, which are used in various applications such as chocolates, processed foods, glass and medicines, paper, glucose and textiles.

RSGB controls about 17 per cent of the total starch market. With the current expansion in place the market share is expected to increase around 25% by FY09. Currently exports constitutes around 10% of it's revenue and the company is projecting exports to increase 25% of it's revenue by FY10.

RSGB major revenue comes from clients like Nestle, HUL, Ranbaxy, Ballarpur, ITC, Grasim, Indian Rayon and Godrej.

At the current market Rs. 237/- the stock trades at around 10 times it's trailing 12 month diluted EPS of 24. Investor with medium to high risk profile can consider investment into this stock with a horizon of 20 to 24 months. We expect the stock to do EPS of around 38 in FY09E. Based on our FY09E the stock has a target of around Rs. 440/-

Positive on

1) The company recently added 500 tpa of starch capacity which is expected to be reflected in FY09 earnings.

2) Roquette which has around 14.95 per stake in RSGB and is also the world 5th largest starch manufacturer. Roquette will help RSGB add more value added products in its portfolio by way of providing technology and knowhow. The new products will be for nutrition, biotech and health and dextrose for sugar free goods.

3) The new value added product will help RSGB realize better margins.

Risks

1) Increase in Raw Corn Prices. Corn prices are in Increase due to US policy on using corn as alternate fuel.

2) There has been under utilization in the first two quarters of FY07 due to fire in one of it's plant. The company seems to be back in business after 5 months of severe disruption.

Orchid Chemicals - A Value Buy

Orchid is a globally recognized, integrated pharmaceutical company with core competencies in the development and manufacture of Active Pharmaceutical Ingredients (APIs) and Finished Dosage Forms as well as in drug discovery.

Orchid product range for the US market comprises 21 antibiotics and 20 non-antibiotic dosage forms, many of which are also aimed at European as well as other regulated and emerging markets.

Currently regulated markets like US, Europe and Japan contributes to around 77% revenue, while the less regulated market like Hongkong, China, India etc contributes to around 23%.

At the current market price of Rs. 222/- the stock trades at around 13 times it's 12 month diluted EPS of 17.08. Last two quarters the company saw a good spurt in their Operating Margin. The EBITDA margin improved significantly to around 35% during the quarter. This was made possible due to their new product Cefixime and Cefdinir. We expect the company to do EPS of around 21 in FY08. Based on it's FY08E EPS, Orchid has a target of around Rs. 340/- with a horizon of 12 to 15 months.

Betting On

In the antibiotics space Orchid expect to launch new products in the cephalosporins, betalactams and carbapenem spaces between 2007 and 2010 in US, EU and Japan. In the non-antibiotic space, Orchid is developing a robust pipeline of over 80 products covering diverse therapeutic segments.

Orchid is done with it's investment phase and hereon the investment is expected to get translated into revenues. Orchid has invested in and completed projects for expansion and diversification in the cephalosporin, betalactam and non-penicillin, non-cephalosporin (NPNC) or lifestyle drug spaces. Cephalosporin projects have already been translated into revenues; betalactam, carbapenem and NPNC projects will translate into revenues in this fiscal and beyond.

Orchid has also entered into the CRAMS (Custom Research and Manufacture Segment) with two agreements under execution

1) With Pfizer Inc. for animal healthcare products
2) With Biovitrum AB to undertake medicinal chemistry

Fundamentals

1) Cephalosporin and betalactam dosage form facilities would start generating remunerative generic business in Europe from the second half of 2007-08.

2) The Company intends to establish a marketing presence in Japan, the second largest pharmaceutical market in the world (estimated at around US$ 60 billion).

3) Entered into marketing alliances for antibiotics as well as non-antibiotics dosage forms with major pharmaceutical players in the US and Europe, strengthening its regulated market position.

Risks

1) Orchid further dilution of Equity can reduce the Earnings visibility.

2) Rupee appreciation against the dollar can impact the Operating Margins.

3) Cost control and taxes imposed by government can reduce the profitability of the firm.

Buy Alok Industries - A hidden gem in Textile Arena

Alok Industries Operates in a diversified business portfolio ranging from Home Textiles, Retail (Home and Apparels), Garments, Spinning, Yarn and Apparel Fabrics.

Alok revenue mix comes from Home textiles (18%), Textursing (26%), Apparel Fabrics (49%), Garment (2%) and Cotton Spinning(5%).

Currently Exports account for 35% of the total revenue. Out of which exports to US account for 53% and Asia 24%.

At the current market price of Rs. 66/- the stocks trades at around 6 times it's trailing 12 month EPS. Investor with a Low to medium risk profile can consider investment into this stock with a horizon of 18-24 months. Since the company has major additions coming up across it's businesses, it is too early to set a target price for the stock. The company seems to me a multibagger in the making.

Inspite of the rupee appreciation the company current quarter Operating margin were flat at 26.35%. This was made possible due to the mix of it's high margin business and diversified geographical portfolio. The Net profit margin were not impressive but it is expected to increase with the current expansion in place.

Alok's current significant customer base include Walmart, Kohls, Bed Bath and Beyond, GAP, CK, Ambercrombie & Fitch and others.

Expansion Details

1) Alok is scaling up it's Home Textile capacity from 60 to 82.5 million meters p.a. This is expected to get completed by end of FY2008.

2) Alok is adding a Terry towel manufacturing unit of 6,700 TPA and expected to commence operation by end of FY2008

3) Alok is currently increasing it's garments capacity from 8 to 15 million pieces p.a by FY08. The company is expected to get better realization on garments as 80% of it's garment is exported to EU territories.

4) Expansion of it's Texturising capacity from 75,500 TPA to 118,000 TPA is on the way and is expected to add in FY09 revenues.

The company has further expansions to it's plate which will be effective FY09. The details of these expansions are not covered in the current analysis.

Positives

1) The company subsidiary is planing to add around 100 stores as part of it's retail wing (H&A) by end of March' 2008. Currently it operates around 14 stores in major metros.

2) Alok has entered in to a agreement with "Aisle 5 LLC", under which it will manufacture and distribute home decor, bath, sleeping and dining home products in US and Canadian Market.

3) Acquisition of 60% stake in Mileta, a czech company to add to revenues.

4) Alok has signed a trademark license with peacock alley to market it's home linen products in the domestic market.

Risks

1) High Debt/Equity ratio.

2) Frequent increase in equity base which inturn has dampened the Earnings Per Share

3) Further rupee appreciation can impact profit margins of the company.

Novartis India - Value Buy

Novartis India is a 51 per cent subsidiary of Swiss giant Novartis, One of world`s leading pharmaceutical and consumer health company. Novartis main businesses in India include pharmaceutical (70%), Animal Health (7%), Generics(8%) and OTC(15%).

Novartis pharmaceutical segment includes therapeutic medicines like hypertension, anti inflammatory and anti fungal. Generic segment includes gynaecology and anti-TB. OTC includes vitamins and minerals. Animal health includes drugs for cattle.

Novartis top leading product portfolio includes Voveran, Methergin, Regestrone, PZA Ciba, Otrivin, Calcium Sandoz and others.

Investor with a medium risk appetite can consider investment into this stock with a horizon of 12 months. At the current price of Rs. 336/- the stock trades at 11 times it's 12 month trailing EPS of 30.72. In the current quarter Q2' 07 the company saw a healthy operating margin of 33.64% as compared with a average of 24% in the earlier few quarters. This translated in to around 22% increase in net profit growth q-o-q. This seems to me a surprise number for a company which has been growing at a rate of 10% for the last 5 to 6 quarters.

Betting on current valuation

As of now there is no data available to compute it's forward earnings. But at the current price the stock is availabe at a discount to it's MNC peers. The stock has a target of Rs. 410/- which translates to 14 times it's 12 month trailing EPS on par with it's MNC peers of equal cader.

The company will get a even better re-rating if the current quarter performance continues in the forward earnings.

Fundamentals

1) Excellent product portfolio and diversified business operation
2) Fifth largest MNC pharma in India by profit.
3) Looking for new global brands to be introduced in India, which will increase the topline further.
4) One of the few players in the growing Animal health arena in India.
5) Decent dividend paying company.

Risks

1) Uncertainty about price control regime looms large
2) Changes in regulatory environment e.g. VAT, MRP based Excise, Service Tax etc
3) Evolution and enforcement of Intellectual Property Rights (IPR) in India
4) counterfeiting of Novartis drugs by Indian pharmaceuticals and selling at an cheaper rate.

Result Snapshot and Analysis Q2' 07 (Sept' 07) - Part 3

Till Date: 27-Oct-07

Large Cap/Midcap/Smallcap Results Analysis

Hits

1)
Dalmia Cement net rises 59.17% in Sep`07 qtr

Snapshot:

Net sales up 42.08% y-o-y
Operating margin at 43.93% as compared to 37.39%
EPS for current quarter at Rs.10.56

Summary:

At the current market price of 515.50 the stock trades at 12.27 times it's Annualized FY08E EPS of 42

2)
Tamilnadu Newsprint (TNPL) net rises 43% in Sep`07 qtr

Snapshot:

Net sales almost flat y-o-y
Operating margin at 30.41% as compared to 23.42%
EPS for current quarter at Rs.4.80

3)
NTPC net up 30.64% in Sep`07 qtr

Snapshot:

Net sales up 17.66% y-o-y
Operating margin at 30.41% as compared to 23.42%
EPS for current quarter at Rs.2.34

Summary:

At the current market price of 228.75 the stock trades at 23.17 times it's Annualized FY08E EPS of 9.87

4)
Colgate-Palmolive Q2 earnings jump 2.36 times

Snapshot:

Net sales up 13.70% y-o-y
Operating margin at 20.89% as compared to 6.33%
EPS for current quarter at Rs.4.02

Summary:

At the current market price of 385.95 the stock trades at 24.24 times it's Annualized FY08E EPS of 15.92

5)
Tulip IT Services Q2 earnings climb 30.29%

Snapshot:

Net sales up 21.46% y-o-y
Operating margin at 22.43% as compared to 15.58%
EPS for current quarter at Rs.10.79

Summary:

At the current market price of 886.85 the stock trades at 21.42 times it's Annualized FY08E EPS of 41.39

6)
Elecon Engineering Q2 net up 5.90%

Net sales up 4.70% y-o-y
Operating margin at 16.49% as compared to 17.60%
EPS for current quarter at Rs.6.67

Summary:

At the current market price of 297.15 the stock trades at 14.27 times it's Annualized FY08E EPS of 20.82

Misses

1)
Shipping Corporation (SCI) net declines 43.26% in Sep`07 qtr

Snapshot:

Net sales down 14.34% y-o-y
Operating margin at 34.99% as compared to 37.29%
EPS for current quarter at Rs.6.48

Summary:

At the current market price of 268.55 the stock trades at 8.42 times it's trailing 12 months EPS of 31.87

2)
Moser Baer net declines 87.40% in Sep`07 qtr

Snapshot:

Net sales down 10.83% y-o-y
Operating margin at 35.13% as compared to 29.04%
EPS for current quarter at Rs.0.19

Summary:

At the current market price of 302.10 the stock trades at 60.66 times it's trailing 12 months EPS of 4.98

3)
Nagarjuna Fertilizers Q2 net falls 52.18%

Snapshot:

Net sales up 10.80% y-o-y
Operating margin at 11.41% as compared to 14.91%
EPS for current quarter at Rs.0.20

Summary:

At the current market price of 56.30 the stock trades at 28 times it's trailing 12 months EPS of 0.50

4)
BEML`s net down 33.49% for Sep`07 qtr

Snapshot:

Net sales down 21.79% y-o-y
EPS for current quarter at Rs.5.95

Summary:

At the current market price of 1612 the stock trades at 30.7 times it's trailing 12 months EPS of 52.34

5)
Asahi India Q2 consolidated net falls 71.47%

Snapshot:

Net sales up 42.25% y-o-y
Operating margin at 21.64% as compared to 24.73%
EPS for current quarter at Rs.0.35

Summary:

At the current market price of 105.45 the stock trades at 34.57 times it's trailing 12 months EPS of 3.05

6)
Jindal Stainless net declines 56.91% in Sep`07 qtr

Snapshot:

Net sales down 1.49% y-o-y
Operating margin at 14.62% as compared to 20.60%
EPS for current quarter at Rs.2.62

Summary:

At the current market price of 162.55 the stock trades at 7.74 times it's trailing 12 months EPS of 21

Neutral

1)
Arvind mills net up 89% in Sep '07 qtr

Snapshot:

Net sales up 43.36% y-o-y
Operating margin at 14.18% as compared to 20.81%
EPS for current quarter at Rs. 0.47

Summary:

At the current market price of 75.20 the stock trades at 68.36 times it's trailing 12 months EPS of 1.10

For Live Result updates visit the Market News page @ http://profitfrommarketnews.blogspot.com

Note :
The information above is just an update on the current quarter results. This information is neither an offer to sell nor solicitation to buy any of the securities mentioned herein.Please perform your analysis before entering into these scripts.

Result Snapshot and Analysis Q2' 07 (Sept' 07) - Part 2

Till Date: 20-Oct-07

Midcap/Smallcap Results Analysis

Hits

1)
Grindwell Norton net jumps 7.19 times in Sep`07 qtr

Snapshot:

Net sales up 6.04% y-o-y
Operating margin at 21.40% as compared to 20.22%
EPS for current quarter at Rs.16.49 (Includes extra ordinary item of Rs. 775 million)

Summary:

At the current market price of 133.75 the stock trades at 5.77 times it's trailing 12 months EPS of 23.16.

2)
State Bank Of Mysore net rises 53.49% for Sep`07 qtr

Snapshot:

Net sales up 45.41% y-o-y
profit margin at 14.83% as compared to 14.05%
EPS for current quarter at Rs. 253

Summary:

At the current market price of 7600 the stock trades at 9.03 times it's trailing 12 months EPS of 841.

3)
Uttam Galva net rises 10.84% for Sep`07 qtr

Snapshot:

Net sales up 32.54% y-o-y
Operating margin at 8.47% as compared to 10.90%
EPS for current quarter at Rs.2.90

Summary:

At the current market price of 39.60 the stock trades at 3.15 times it's trailing 12 months EPS of 12.56.

4)
Accentia Technologies net up 12.02 times for Sep`07 qtr

Snapshot:

Net sales up 1227% y-o-y
Operating margin at 33.11% as compared to 32.31%
EPS for current quarter at Rs.17.54

Summary:

At the current market price of 231.85 the stock trades at 6.08 times it's trailing 12 months EPS of 38.11.

5)
Godavari Fertilisers net up 47.56% in Sep`07 qtr

Snapshot:

Net sales up 24.03% y-o-y
Operating margin at 9.17% as compared to 7.97%
EPS for current quarter at Rs.15.22

Summary:

At the current market price of 149.55 the stock trades at 5.85 times it's trailing 12 months EPS of 25.55.

Note: Godavari Fertilisers sales is on a seasonal basis and the same performance may not continue in the quarters to come

6)
Prakash Industries net rises 74.31% for Sep`07 qtr

Snapshot:

Net sales up 38.43% y-o-y
Operating margin at 23.09% as compared to 23.68%
EPS for current quarter at Rs.5

Summary:

At the current market price of 128 the stock trades at 7.83 times it's trailing 12 months EPS of 16.34.

7)
Petronet LNG net up 74.31% in Sep`07 qtr

Snapshot:

Net sales up 21.48% y-o-y
Operating margin at 13.56% as compared to 11%
EPS for current quarter at Rs.1.54

Summary:

At the current market price of 73.20 the stock trades at 13.26 times it's trailing 12 months EPS of 5.52.

8)
Orchid Chemicals net doubles in Sep`07 qtr

Snapshot:

Net sales up 20.10% y-o-y
Operating margin at 34.37% as compared to 31.76%
EPS for current quarter at Rs.6.46

Summary:

At the current market price of 229.70 the stock trades at 10.32 times it's trailing 12 months EPS of 22.25.

9)
Chettinad Cement Q2 net jumps 48.55%

Snapshot:

Net sales up 25.77% y-o-y
Operating margin at 34.15% as compared to 34.97%
EPS for current quarter at Rs.16.16

Summary:

At the current market price of 436.10 the stock trades at 9.89 times it's trailing 12 months EPS of 44.07.

Misses

1)
Geometric Software consolidated net drops by 10.11% in Sep`07 qtr

Snapshot:

Net sales down 0.77% y-o-y
Operating margin at 21.09% as compared to 27.16%
EPS for current quarter at Rs.0.83

Summary:

At the current market price of 123.90 the stock trades at 17.48 times it's trailing 12 months EPS of 4.97.

Neutral

1)
Welspun India net down 8.36% in Sep`07 qtr

Snapshot:

Net sales up 6.27% y-o-y
Operating margin at 20.97% as compared to 19.94%
EPS for current quarter at Rs.2.28

Summary:

At the current market price of 62.05 the stock trades at 8.65 times it's trailing 12 months EPS of 7.17.

For Live Result Analysis visit the Market News page @ http://profitfrommarketnews.blogspot.com

Note :
The information above is just an update on the current quarter results. This information is neither an offer to sell nor solicitation to buy any of the securities mentioned herein.Please perform your analysis before entering into these scripts.

Rallis India - Value Buy

Rallis India is one of India's leading agrochemical companies. The company deals with pesticides, speciality fertilisers, micronutrients and seeds.

Rallis has an extensive distribution system with more than 1,500 distributors and 30,000 dealers nationwide. It also has marketing alliances with several multinational agrochemical companies, including FMC, Nihon Nihyaku, Dupont, Syngenta, Makhteshim Agan and Bayer.

Investor with Low to Medium risk horizon can consider investment into this stock with a horizon of 12 months. At the current price of Rs. 465/- the stocks trades around 5 times it's trailing 12 month EPS of 95. The current quarter results includes a one time profit from sale of land of Rs.873.8 million. Taking into account the income from company core business, excluding the one time payment on sale of land the company trades at 13.7 times it's 12 month trailing EPS of 34. At the current valuation the stock is available at a discount to it's peers like Bayer. Buy the stock with a target price of Rs. 660/- based on it's FY08E EPS of 44.

The company currently has a good domestic presence and the international business currently accounts for just 22% of the company’s revenues. The company currently is taking aggresive initiative to grow it's international business in the short to medium term. Rallis is also looking for strategic acquisitions and licensing deals in the international market to enhance it's global presence. Currently the global agrochemical business accounts for a huge $35 billion of which more than two-thirds is off-patented (without patent exclusivity) products. Rallis initiative of tapping into the off-patented international business can prove better earnings visibility and margins in the future.

Fundamentals

1) In the domestic market, Rallis is the second largest player after Bayer CropScience Ltd.
2) International business expected to grow at a faster rate in days to come.
3) Rallis currently enjoys about 14% market share in the local pesticide and crop-protection market.

Risks

1) The Company´s business is seasonal in nature and the performance can be impacted by weather conditions.
2) Delay in the initiative to increase it's international business.