Monday, July 7, 2008

STOCK IDEAS: KLG Systel, Ansal Housing, NCL Industries, India Glycols

Within a matter of six months, the share price of KLG Systel Ltd. (Code: 531269) (Rs.359.55) has fallen one third from its high in January 2008 despite posting a robust performance. For Q4FY08, its topline doubled to Rs.76.50 cr. and net profit shot up 75% to Rs.14 cr. For full FY08, the figures are far more impressive as it registered 120% and 140% increase in 14 revenue and profit to Rs.269 cr. and Rs.52 cr. respectively. Thus it posted an EPS of Rs.45 on its current equity of Rs.11.70 cr. but declared only 27.50% dividend for FY08 against 25% last year. The company specialises in offering technological solutions for the entire business lifecycle i.e. right from concept and creation, through plant design, project execution and management operations & optimisation to expansion/ revamp. It also provides on-line IT solutions to distribution utilities, using its self-developed software Vidushi, SG61 Technology and solution for determining the transmission & distribution losses, fixing the areas of power theft, on-the spot billing & cheque collection, enhancing revenue collection efficiency of the utilities and addressing consumer grievances. On the other hand, to capitalise on its Engineering Services Outsourcing (ESO) potential, the company has gained engineering design domain-expertise in various industry verticals and has ventured into planning, design and erection of large scale infrastructure projects. For FY09, it is expected to clock a turnover of Rs.325 cr. and profit of Rs.60 cr. i.e. an EPS of Rs.45 on estimated diluted equity of around Rs.13.25 cr.
As per the experts, the real estate cycle has peaked out and the property prices are poised to correct substantially in the near future. Coupled with rising input costs, some of the companies are even excepted to slip into red. However, Ansal Housing & Construction Ltd. (Code: 507828) (Rs.96) being into construction of integrated township in smaller cities may continue to perform well. For Q4FY08, on a standalone basis, its revenue grew by 20% to Rs.65 cr. but its EBIDTA jumped up 50% to Rs.24 cr. But due to higher interest and tax, its net profit remained flat at Rs.13.25 cr. For FY08, its total revenue was up 25% to Rs.250 cr. and PAT increased by 30% to Rs.55 cr. posting an EPS of Rs.31 on its current equity of Rs.17.70 cr. This is among the few companies making full tax provisioning, which ensures that its profits are for real. For future growth, it has lined up gigantic 56.10 million sq. ft of development (80% in the residential segment) spread over 22 cities in the next five years. It has a rich land bank of 2500 acres with about 50% in its own name while the rest is under firm collaborators’ agreement. Earlier the company had made a preferential allotment of 17 lakh warrants to the promoters at Rs.208 and 29.50 lakh warrants at Rs.225 to others, which may not get converted into shares considering the low CMP. For FY09, it can report a topline of Rs.300 cr. with PAT of Rs.60 cr., which translates into an EPS of Rs.34 on its current equity whereas the diluted EPS of Rs.28 on its fully diluted equity of around Rs.21.50 cr. A good contrarian bet.
The rising crude oil price is hurting most manufacturers but is indiretly benefiting India Glycols Ltd. (Code: 500201) (Rs.233.50) since it is engaged in production of ethylene oxide (EO)/mono ethyl glycol (MEG) from molasses against the conventional route of making it through distillation of crude. Thus while the price of the final product is shooting up its raw material cost remains the same thereby boosting its profit margin. It reported stellar performance for Q4FY08 as sales jumped up 60% to Rs.339 cr. and net profit stood at Rs.27 cr. against the net loss of Rs.1.90 last year. For FY08, its sales was up 50% to Rs.1304 cr. whereas PAT has more than quadrupled to Rs.178.50 cr. thereby registering an EPS of Rs.64 on its equity of Rs.27.90 cr. As a measure of backward integration, the company has set up a new distillery with an annual production capacity of 66,000 KBL at Gorakhpur in Eastern U.P and has also taken over a sugar company called M/s. Shakumbari Sugar. Moreover, it is adding an Extra Natural Alcohol (ENA) facility at Gorakhpur to meet the requirement of domestic and international markets. On a conservative basis, it is expected to clock a turnover of Rs.1500 cr. with net profit of Rs.165 cr. i.e. an EPS of Rs.59 on its current equity. It’s a good opportunity to accumulate this scrip at every decline.
NCL Industries Ltd. (Code: 502168) (Rs.37), the flagship company of the NCL group is engaged in four business segments namely cement, cement bonded particle boards, prefab and hydel power. Presently, cement contributes 75% of its revenue, board and prefabs contribute 20% and the balance comes from hydel power. On the back of aggressive expansion, the company has doubled its cement manufacturing capacity to 630,000 TPA and is further looking to triple it to 20 million TPA within a couple of years. It has also set up a new particle board manufacturing facility in Himachal thereby taking its total capacity to 80,000 TPA. On the other hand, its prefabricated structures division is witnessing good demand and has bagged a huge order worth Rs.50 cr. a few months back. Fundamentally, it recorded 30% growth in sales to Rs.193 cr. whereas PBT grew by 45% to Rs.43 cr. Due to high tax provisioning, its net profit improved marginally by 7% to Rs.29.50 cr. posting an EPS of Rs.9 on its current equity of Rs.32.50 cr. With rising input costs and the government interference on cement prices, the company is estimated to report a topline of Rs.275 cr. and maintain its profit of around Rs.30 cr. i.e. EPS of Rs.9 on its fully diluted equity of Rs.34.90 cr.
Source: Internet (moneytimes)


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