Rohit Ferro Tech Ltd. (Code: 532731) (Rs.65) is a leading producer of high carbon ferro chrome apart from manufacturing ferro manganese and silico manganese through submerged arc furnace route. It has set up a greenfield plant in Jajpur-Orissa thereby taking its total capacity to 1,65,000 MTA from 55,000 MTA earlier. Further, it has set up a fifth furnace with 15000 MTA capacity in Bishnupur, which is expected to go operational soon. To become an integrated player, the company has applied for a mining lease to the Government of Orissa for chrome ore as well as manganese ore. Presently, it is sourcing manganese ore from Australia besides local sourcing. On the other hand, due to higher production, better margins and better availability of raw-materials, the company is stressing more on production of ferro manganese in place of high Carbon Ferro Chrome. For future it has chalked out a plan to setup a 110 MW captive power plant to bring down its power cost. In order to fund this, it recently made a preferential allotment of 80 lakh convertible warrants at Rs.43 per share to promoters as well as strategic investors like Kampani Finance, Foster Capital etc. On the back of stunning Q3 results, it may end FY08 with sales of more than Rs.500 cr. with PAT of Rs.50 cr. i.e. an EPS of Rs.14 on its current equity of Rs.34.50 cr. The company has the potential to post an EPS of Rs.20 on its fully diluted equity of Rs.42.50 cr. for FY09. Keep accumulating at declines.
A few days back, GM Breweries Ltd. (Code: 507488) (Rs.79) came out with disappointing results for the March 2008 quarter. Sales improved marginally to Rs.49 cr. but net profit declined by 25% to Rs.2.65 cr. due to lower operating margin. Accordingly, the company declared 25% dividend (including 5% special dividend being the Silver Jubilee year), which gives a yield of nearly 3% at CMP. Although the March 2008 quarter results were below expectation, the entire FY08 figures are pretty decent as sales grew by 10% to Rs.186 cr. and PAT increased by 25% to Rs.14.70 cr. thereby registering a healthy EPS of Rs.16 on its equity of Rs.9.40 cr. At the current market cap of Rs.80 cr., the scrip is trading at a low P/E multiple of 5. With a whopping gross block of Rs.68 cr., low debt : equity ratio, strong cash flows, decent margins etc., the company deserves much better discounting. With 68% holding, the promoters are investor friendly and have an uninterrupted record of dividend payment from the day of listing. At a modest discounting by 12 times, the scrip has the potential to cross Rs.200 mark in the medium-to-long-term.
Source: Internet (money times)
