Kamat Hotels Ltd. (Code: 526668) (Rs.137) primarily operates a 245-room five star Ecotel hotel, ‘The Orchid’, near the Mumbai domestic airport and 190 room service apartments, ‘Lotus Suites’ (now renamed as VITS) near Mumbai international airport. In December 2007, the company opened another 100-room five star hotel called ‘Garh Heritage’ in Pune and a 200-room ‘Orchid Hotel’ in Vaishnodevi. Besides, it runs around 10 highway restaurants, which contribute less than 5% of its turnover. Notably, the company is adding 130 rooms to ‘The Orchid’ at an investment of Rs.80 cr. and has a capex plans of Rs.250 cr. for setting up various properties under the VITS brand at Aurangabad, Nagpur, Pune, Nashik, Goa, Baroda etc. To fund its expansion plans, the company raised a capital of Rs.80 cr. through FCCB route last year. Each FCCB will be converted into an equity share at Rs.225 per share. For FY08, it reported 30% growth both in its topline and bottomline at Rs.148 cr. and Rs.27 cr. respectively. This translates into an EPS of Rs.20 on its current equity of Rs.13.80 cr. incidentally; foreigners contribute around 40% of its total revenue even though the company follows the rupee tariff system. Although the company boasts of very aggressive expansion plans, it is actually slow in execution. Hence on a conservative basis for FY09, it may report total revenue of Rs.175 cr. with net profit of Rs.30 cr., which works out to an EPS of Rs.17 on its diluted equity of around Rs.18 cr. A strong buy for 50% gain in 12-15 months.
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Blue Bird (India) Ltd. (Code: 532781) (Rs.36.55) is one of the leading manufacturers of paper based notebook products and office stationery. Although notebooks form its core business, the company has also ventured into publishing academic textbooks and self study books for children apart from general publications on subjects such as ayurveda and biographies. It also offers end to end solutions in commercial printing. Its marketing and sales team supports the distribution network of over 600 dealers and distributors spread across 18 cities in India and overseas representatives in many countries. In order to cater the Central and South India markets efficiently, the company has put up two new plants at Indore and Bangalore apart from its main plant in Pune. Financially, the company is weak in managing receivables as it has very high debtors equivalent to four months of sales. This has led to huge debts and the company has privately placed Rs.100 cr. Redeemable NCDs with LIC Mutual Fund for one year recently to fund its working capital requirements. Hence, interest cost is the biggest drag on its financials. Despite healthy margins, it is estimated to report total revenue of Rs.485 cr. and net profit of Rs.28 cr. for FY08 i.e. an EPS of Rs.8 on its equity of Rs.35. Still, it can easily give 30-40% return within a year from current levels.
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Kolte-Patil Developers Ltd. (Code: 532924) (Rs.86.65) is in the midst of developing 28 projects (24 in Pune and 4 in Bangalore), with a total saleable area of around 18 million sq. ft. consisting of 10 residential complexes, 11 commercial buildings, 5 IT parks, 1 integrated township and 1 service apartment. In addition, it has entered into a MoU or has acquired development rights for another 22 million sq. ft. of saleable area in and around Pune and Bangalore. Although the actual land bank owned by the company is less than 15 acres but the development rights is equivalent to whopping 755 acres of land. With this, the company has a total developable space of massive 40 million sq. ft. For FY08, its revenue jumped by 60% to Rs.369 cr. and net profit shot up 55% to Rs.129 cr. after paying tax to the tune of Rs.37 cr. Hence it reported an EPS of Rs.17 on its equity of Rs.75.30 cr. Assuming the company reports lower operating margin of 30% for FY09 (against 43% in FY08), it is estimated to clock a turnover of Rs.650 cr. with PAT of Rs.150 cr. i.e. an EPS of Rs.20 cr. on its current equity. In short, although the profit margin of company is incredibly high, the scrip can still give decent returns in the medium-term.
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Due to hardening of interest rate, rising CRR and recent hike in repo rate, the banking sector has taken a huge beating on the bourses. Most banks are trading at their 52-week low levels and Allahabad Bank Ltd. (Code: 532480) (Rs.68.45) is no exception. It is among the very few banks which are trading at a huge discount against their book values. Moreover, Allahabad Bank is fundamentally a strong bank with Gross NPA at 2%, Net NPA at 0.80%, Capital Adequacy Ratio above 12%, Net interest margin at 2.80% and importantly with a book value of Rs.117. For FY08, it registered 20% growth in total deposit and gross advance whereas its net profit shot up by 30% to Rs.975 cr. This works out to an EPS of a whopping Rs.22 on its current equity of Rs.447 cr. Against this, it declared 30% dividend. Hence the scrip is currently trading at a P/E ratio of less than 3 times and with a dividend yield of 5% at CMP. To maintain its growth momentum, the bank has obtained approval for opening 116 more branches and has additionally applied for authorization of 180 more branches in FY09. Besides, the bank is focusing to improve its fee based income and has made tie-ups with several organisations for marketing of mutual funds and insurance products. A safe bet.
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Blue Bird (India) Ltd. (Code: 532781) (Rs.36.55) is one of the leading manufacturers of paper based notebook products and office stationery. Although notebooks form its core business, the company has also ventured into publishing academic textbooks and self study books for children apart from general publications on subjects such as ayurveda and biographies. It also offers end to end solutions in commercial printing. Its marketing and sales team supports the distribution network of over 600 dealers and distributors spread across 18 cities in India and overseas representatives in many countries. In order to cater the Central and South India markets efficiently, the company has put up two new plants at Indore and Bangalore apart from its main plant in Pune. Financially, the company is weak in managing receivables as it has very high debtors equivalent to four months of sales. This has led to huge debts and the company has privately placed Rs.100 cr. Redeemable NCDs with LIC Mutual Fund for one year recently to fund its working capital requirements. Hence, interest cost is the biggest drag on its financials. Despite healthy margins, it is estimated to report total revenue of Rs.485 cr. and net profit of Rs.28 cr. for FY08 i.e. an EPS of Rs.8 on its equity of Rs.35. Still, it can easily give 30-40% return within a year from current levels.
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Kolte-Patil Developers Ltd. (Code: 532924) (Rs.86.65) is in the midst of developing 28 projects (24 in Pune and 4 in Bangalore), with a total saleable area of around 18 million sq. ft. consisting of 10 residential complexes, 11 commercial buildings, 5 IT parks, 1 integrated township and 1 service apartment. In addition, it has entered into a MoU or has acquired development rights for another 22 million sq. ft. of saleable area in and around Pune and Bangalore. Although the actual land bank owned by the company is less than 15 acres but the development rights is equivalent to whopping 755 acres of land. With this, the company has a total developable space of massive 40 million sq. ft. For FY08, its revenue jumped by 60% to Rs.369 cr. and net profit shot up 55% to Rs.129 cr. after paying tax to the tune of Rs.37 cr. Hence it reported an EPS of Rs.17 on its equity of Rs.75.30 cr. Assuming the company reports lower operating margin of 30% for FY09 (against 43% in FY08), it is estimated to clock a turnover of Rs.650 cr. with PAT of Rs.150 cr. i.e. an EPS of Rs.20 cr. on its current equity. In short, although the profit margin of company is incredibly high, the scrip can still give decent returns in the medium-term.
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Due to hardening of interest rate, rising CRR and recent hike in repo rate, the banking sector has taken a huge beating on the bourses. Most banks are trading at their 52-week low levels and Allahabad Bank Ltd. (Code: 532480) (Rs.68.45) is no exception. It is among the very few banks which are trading at a huge discount against their book values. Moreover, Allahabad Bank is fundamentally a strong bank with Gross NPA at 2%, Net NPA at 0.80%, Capital Adequacy Ratio above 12%, Net interest margin at 2.80% and importantly with a book value of Rs.117. For FY08, it registered 20% growth in total deposit and gross advance whereas its net profit shot up by 30% to Rs.975 cr. This works out to an EPS of a whopping Rs.22 on its current equity of Rs.447 cr. Against this, it declared 30% dividend. Hence the scrip is currently trading at a P/E ratio of less than 3 times and with a dividend yield of 5% at CMP. To maintain its growth momentum, the bank has obtained approval for opening 116 more branches and has additionally applied for authorization of 180 more branches in FY09. Besides, the bank is focusing to improve its fee based income and has made tie-ups with several organisations for marketing of mutual funds and insurance products. A safe bet.
Source: Internet (MT)
