Wednesday, March 3, 2010

Stock Idea: Orient Ceramics

Orient Ceramics is a Delhi-based company manufacturing ceramic tiles. This company has got its manufacturing plant located in Secunderabad in Uttar Pradesh. Off late the company has been doing lot of initiatives to increase the market share. The company has introduced new ranges of tiles. These new ranges have got good response from the market. The company is planning to open more retail stores and also have larger distribution network of distributors and retailers in various cities where they are currently not present. The third thing is that the company has also decided to start retailing of other construction related items, which makes it a one stop shop for all construction needs."
On the financial side:
For FY09 the company achieved sales of about Rs 225 crore and made Rs 6.4 crore in profit after tax (PAT), which results in an EPS of about Rs 6-6.5.For the first nine-months of the current financial year, sales are at Rs 175 crore. The PAT is up by 35% to about Rs 6 crore. For full year, expected sales are around Rs 250 crore with a PAT of Rs 8.5 crore, which results in an EPS of about Rs 8. At the current price of about Rs 45, the stock is trading at a price to earnings multiple of about Rs 5-6.
This is a full tax paying company. The company pays tax with no concessions. If you look at the market cap of the company this company has a market cap of about Rs 45 crore. Sales is Rs 250 crore and cash profit is Rs 20 crore, which means it is going at less than two-and-a-half year’s of its cash profit. This company has a dividend history of the past 20 years. Only during 1993 it skipped dividend. Otherwise from 1990 to 2009, the company has been regularly paying dividend. Considering all these factors at the market cap of about Rs 45 crore the stock qualifies as a value buy.
Source: by Ashish Chug

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