Stock Idea: Pennar Industries CMP 31

Business transformation, financial restructuring and productivity coupled with general buoyancy in Indian economy leads to impressive turnaround Transformation from commodity play to niche engineering as value added products ratio enhanced from 20% in early part of decade to 70% in FY09 and expected 80% in FY11 Riding big on Railways expansion of Rs 2,500 bn in the current five year plan; Pennar aims to increase revenue share from Railways to 30% by FY11 from 24% in FY09
Pennar has diversified exposure to various industries like auto, railway, building products, pollution control, white goods, road safety, electrical and fabricated products Enjoy strong relationship with Tata Motor, Ashok Leyland, TVS, ICF, BEML, L&T, ABB, Thermax, BHEL, Alstom Power, HCC and IVRCL.

Robust revenue and EBITDA CAGR of 41% and 96% in last six years; EBITDA margin consistently improved from meager 1.4% in FY02 to 11.6% in FY09, and further to 13.7% during 1HFY10 Financial position dramatically improved as D/E ratio enhanced from 13.3x in FY05 to 0.6x in FY09
Gradually enhancing metal capacity in verticals like heavy engineering without pressurizing the balance sheet as major expansion funded by internal accruals High margin pre-engineered building systems is new growth driver; 90% subsidiary Pennar Engineering Building System (PEBS) has technical know-how agreement with NCI Building Systems, USA, one of the world’s largest pre-engineered building solution providers with sales of $967 mn in CY09 (Nov)
Stock currently trades at just 1.3x cash profit during FY10-12 Completed Buyback of 3,125,000 equity share (~2.5% of capital) at a price of ~ Rs 25/share, likely to improve sentiment and reduce float from market.

Valuation
PIL is trading at P/E and EV/EBITDA of 4.4x and 2.9x on FY12 estimated earnings respectively. We believe the market would recognize PIL’s transformation into an engineering company with consistent increase in cash profits and result in re-rating of the stock. We recommend ‘BUY’ with SOTP TP of Rs 95 (206% upside from CMP), where we value standalone
business at Rs 81 (7.0x FY12 EV/EBITDA – inline with 4-year average multiple of 6.8x) and Rs 14/share for PEBS.

Source: Internet (Valenotes)

Intraday Trading Calls for 10th March

Indian Stock Market may open flat to positive and remains highly volatile for the day today. A flat Positive closing expected.

Today's Intraday Stock Tips / Trading Calls (Keep strict Stop Loss for Each Trade):

SCRIP NAME	TRIGGER	PRICE	TARGET 1	TARGET 2
SASKEN COMM.	Buy Above	178.65	184.25	190.00
	Sell Below	175.40	171.35	167.00
KPIT CUMMINS	Buy Above	130.00	133.55	137.00
	Sell Below	127.75	124.25	120.00
PURVANKARA	Buy Above	103.80	108.20	114.00
	Sell Below	101.60	98.30	95.00
PRITHVI INFO	Buy Above	72.75	76.25	80.00
	Sell Below	71.35	68.15	65.00
WHIRLPOOL INDIA	Buy Above	172.70	177.45	182.00
	Sell Below	170.00	165.35	160.00
ATLANTA	Buy Above	200.00	206.70	214.00
	Sell Below	197.05	191.45	186.00
BRFL	Buy Above	210.80	216.75	224.00
	Sell Below	207.50	202.10	196.00

GOOD LUCK

Stock Idea: Elder Pharmaceuticals Ltd.

Elder Pharmaceuticals Limited—BUY—355—INR
Sector— Pharmaceuticals (Bulk drugs & Formulations)
Regd.off— C-9, Dalia Industrial Estate, Andheri (W.), Mumbai - 400053
Listed— BSE, NSE
Company overview—
Company started its operations in 1989 and established its factory in June. In 1991 company started Research and development center for its pharmaceutical products and got recognition from the Government of India. In 1994, company tied up with Haw Par, Singapore to establish its presence in the market. Company came into stock market in 2000 by public issue. In 2003 company commissioned Patalganga Bulk Drug plant. Company ranked among the first 50 companies in India as per ORG Audit. Company's strength lies in marketing products, which are original research products where there are no patent violations and the company has created its own brand equity in pharmaceutical marketing. Elder, which has it's headquarter in Mumbai, is proficiently supported by branch offices in Chennai, Kolkata and New Delhi. It has sales depots in almost every state in the country. Company’s multi expert sales team hence ensures adequate focus on each of the covered therapeutic segments. The focus is on promotion of products in the wound care segment, antibiotics, gastroenterology, respiratory and painkillers segment. Company is engaged in the manufacture of a wide range of pharmaceutical products through research and development and also in the manufacturing and marketing of diverse products through licensing agreements with international pharmaceutical companies. All the company’s plants conform to and follow the most stringent quality control standards recommended as per GMP guidelines.
Products & services—
Elder Pharmaceuticals principal activities include the manufacturing and marketing of prescription pharmaceutical brands, surgical and medical devices. Shelcal, Elder’s No.1 brand is one of the top brands in the Indian Pharmaceutical industry. It is one of the leading players in the pharmaceutical formulation market in India, being a market leader in three therapeutic segments - Women’s Healthcare, Wound Care and Nutraceuticals. Elder has a strong portfolio of brands like Shelcal, Eldervit and Chymoral among others that are leaders in their respective therapeutic segments and manufactured in various dosage forms like tablets, capsules, injections and liquids. Company has products for Antibiotic, Antihistamines & Antiallergics, Antacid & Antiflatulant, Antiulcers, Antidepressant, Anti inflamatory & Analgesics, Antispasmodics, Antifungal, Laxative, Antihelmentics, Cough syrups, Steriods, Antimalarial, Antidiarrhoeal, Cardiac care, Eye/Ear Care, Hematinics, AntiTB, Nutritional Supplement etc. Company has entered into alliances with foreign companies for manufacture and sale of their products under license from them. It also has a presence in the OTC segment and sells the Tiger range of products from Singapore, SOLO Eucamenth tablets, AMPM mouthwash and toothbrushes. The company has diversified into sale of medical equipments. Export markets include Switzerland, Germany, England, Denmark and a few African countries. Company exports its pharma products to Colombia, Vietnam, Madagascar, Mauritius, Nigeria, Uganda, Sri Lanka & Mexico.
Company has alliances and marketing rights with ABC Ltd, USA Oxo-Chemie, Germany Paul Hartmann, Germany, Angelini, Italy GEA Ltd, Denmark TRB Chem., Switzerland Alfa-Wasserman, Italy, Sigma-Tau, Italy Tanabe, Japan Fujisawa, Japan Uriach, Spain, Covex, Spain Ferrer, Spain, Blistex, USA Haw Par, Singapore, Invacare, USA, APR, Switzerland Zambon, Italy Biorga, France Stiefel, USA Sciclone, USA Poli, Switzerland etc. for various products.
Valuation—
Company has strong position in National and International Health Care arena, with focus on research and global collaborations. At current market price, stock is trading at 8.75 P/E multiple of its FY2011 estimated EPS. We recommend investors to "BUY" "Elder Pharmaceuticals Limited" with medium to long-term investment horizon.
Source: Internet (Valuenotes by Abhishek Jain)

Stock Idea: Glenmark Pharmaceuticals Ltd.

Glenmark Pharmaceuticals Ltd— BUY—255—INR
Sector — Pharmaceuticals (Bulk drugs & Formulations)
Regd.Off.— 22, Bhulabhai Desai Road, Mumbai, 400026
Listed — NSE, BSE.
Company Overview—
Glenmark Pharmaceuticals Limited was incorporated in the year 1977. Glenmark is an India-based one of the fastest growing pharmaceutical company headquartered at Mumbai. Glenmark has built a visible and growing branded generic formulation presence across all its markets in Asia, Africa and CIS countries. A number of its products have emerged as brand leaders in India and these markets. Company is focused on the manufacture and marketing of formulation products and active pharmaceutical ingredients in India as well as globally and enjoys a diversified and growing presence in regulated and developing international markets. Over the past five years, the Company has also catalyzed its growth through investment in dedicated research and development including cutting-edge New Chemical Entity research. Company operates in over 75 markets for formulations and also supplies Active pharmaceutical ingredients to over 50 markets worldwide. Glenmark has strengthened its integration across the pharmaceutical value chain through operations across its various manufacturing plants, i.e. for formulations at Baddi, Goa, Nasik and Sao Paolo (Brazil) for API in Ankleshwar, Kurkumbh and Solapur. The Ankleshwar plant acquired from GlaxoSmithKline has received US FDA acceptance while the API manufacturing facilities at Kurkumbh and Solapur focus on supplying intermediates and APIs to less regulated markets. Company also acquired an ANVISA approved formulations facility in Brazil.
Products & Services—
Glenmark Pharmaceuticals Limited focuses on manufacturing and marketing formulation products within India. Glenmark made a foray into the bulk drug business in 2001. Today, it has generic formulation and API business interests in over 65 countries across the world including the highly regulated markets of USA and Europe. The formulation business spans several product segments such as Dermatology, Internal Medicine, Pediatrics, Gynecology, ENT and Diabetes. Company's business segment portfolio broadly comprises of both formulation and bulk drug sales. Company follows a branded generic model in markets across Asia, Africa, CIS/Russia and Latin America. In contrast, in the highly regulated markets of USA and Europe, the company has adopted a business model of registering and marketing generic drugs. The Bulk Drugs or API business for Glenmark handles the sales and marketing of active pharmaceutical ingredients to customers in many markets across the globe and also serves some of the captive needs of the formulations business within the company.
Formulations: Glenmark's formulation business has invested in building a manufacturing footprint to cater to the demand. The current footprint includes - One WHO-GMP plant at Nasik to cater to semi-regulated markets including India. The plant handles several dosage forms including liquids, solids, semi-solids and dry powders. A plant at Goa built to USFDA and EU standards. The plant has capabilities to manufacture tablets, capsules and ointments/creams. Another one ANVISA approved manufacturing plant in Brazil to cater to Latin American markets. This plant has capabilities in solids, liquids and semi-solids. In India, the company markets about 100 molecules/combinations spanning a diverse set of therapy segments. Over 50 of these molecules/combinations are also being marketed across the semi-regulated markets of Asia, Africa, Russia/CIS countries; more products are under registration in these markets. In formulations, Company is focusing working on Anti-diabetics, Respiratory Tract Infections, Cardiovascular, Pain & Anti-Inflammation, Dermatology, Gynecology, Internal medicine, and Pediatrics etc.
Active Pharmaceuticals ingredients— Active pharmaceutical ingredients (API), which are used as raw material in the manufacture of formulations, are the building blocks in the pharmaceutical industry. Company’s R&D center in Navi Mumbai employs over 350 scientists who have a vast experience across several disciplines and technology platforms. The research activities encompass process engineering for APIs, new chemical entity research and novel drug delivery systems. Company also operates a second research facility at Sinnar, near Nasik in India that focuses on developing formulations for India and markets across Asia, Africa, Latin America and CIS/Russia. Glenmark is amongst the few Indian Pharmaceutical Companies to have taken initiative to invest proactively in original drug discovery research.
Recent News—
On 22 jan, Glenmark Generics, USA, a subsidiary of Glenmark Pharmaceutical has received tentative approval by the United States Food and Drug Administration (USFDA) for Trandolapril and Verapamil hydrochloride extended-release tablets, its generic version of Abbott’s Tarka® tablets. Glenmark’s current marketing portfolio consists of 49 products authorized for distribution in the United States and it has nearly 50 ANDAs in various stages of the approval process with the USFDA.
On 2 mar, Glenmark Generics, (GGI) USA, a subsidiary of Glenmark Generics (GGL), has received ANDA approval from the United States Food and Drug Administration (USFDA) for Ropinirole Hydrochloride tablets 0.25 mg, 0.5 mg, 1 mg, 2 mg, 3 mg, 4 mg and 5 mg. Ropinirole Hydrochloride tablet is the generic version of GSK’s Requip® tablet in the US market. Total sales for Ropinirole Hydrochloride tablets in the twelve month period ending December 2009 were USD 104 million, as reported by IMS Health.
Valuation—
At current market price, stock is trading at 11.74 P/E multiple of its FY2011 Estimated earnings. We recommend investors to buy "Glenmark Pharmaceuticals limited" for medium term investment horizon.
Source: Internet (Valuenotes by Abhishek Jain)

Stock Idea: Tulsyan NEC

This Company is listed on BSE as well as NSE. It got its listing permission from NSE a couple of months back. This is a company, which is in two lines of business: Steel and woven sacks. The company manufactures TMT bars, MS alloys and billets in the steel division. They also manufacture HTP and PP woven sacks. Tulsyan NEC is not ideally one of those steel companies which you would want it to be in terms of backward linkages. The company as of now doesn’t have any backward linkages. It buys steel scrap/sponge iron for manufacture of steel and it also buys power from the grid. It doesn’t have its own captive power source.
But if you look at the other positives of the company, this company is available at a market cap of just about Rs 33 crore. The company does sales revenue of about Rs 650-700 crore. This company has been a profit making company for the past 15 years. It has made profit not just at the operational level but also in the net level in the last 15 years. The company has got a track record of dividend for the last ten years which is uninterrupted – even during the worse phases of the steel cycle this company has paid dividend in the last 10 years.
The company made an operating profit of about Rs 46 crore last year and operating profit for the first nine-months is about Rs 31 crore. PAT for first nine months is about Rs 4.5 crore, which results in an annualized EPS of about Rs 12. At the current price of about Rs 65 this stock is trading at a PE multiple of about 5-6.
The other good thing happening here is that the company is now going in for backward linkages, about 2-3 months back this company has acquired a sponge iron plant called Chitrakoot Steel and Power Limited, which has got a 30,000 tonne per annum for sponge iron capacity, which they are increasing further to about 1 lakh tonne per annum. The company is also putting up a 35 megawatt power plant. They have already acquired about 75 acre of land. This will be operational in Q3 2011, which is FY12.
Considering all this, the company had been making good profits for the past 15 years without any backward linkages. Now the backward linkages are coming. The market cap of the company is just about Rs 33 crore – even assuming a 1% increase in net profit margins on a sales of Rs 700 crore results with an EPS increase of about Rs 14.
Of course, this is not an ideal steel company in terms of linkages but its available at a market cap just about Rs 33 crore on sales of Rs 700 crore. The downside from these levels looks extremely restricted but once the linkages are there, obviously, the profitability will go up. Also there is a potential for huge upscale increase in profits after the linkages are available.
So at the current price of Rs 60-65 I think it’s a stock to accumulate for the next maybe two years. Once the linkages are in place the profits can go up really sharply.

Source: Internet (moneycontrol.com by Ashish Chug)

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: moneycontrol.com by Ashish Chug

Stock Idea: Unitech Ltd.

This leading Delhi based realty company managed to sell a part of its stake of its telecom venture, Telenor and raised Rs.2022 crore through this sale. This is going to be used to discharge a part of the its gargantuan debt of Rs.6200 crore. That’s good news. But what the market is now concerned about is the slippage in its schedule of deliveries. It has missed the scheduled delivery of its past projects of 17 million (m) sq feet, which it now plans to complete by end- FY11.
Till 31st Dec 2009, the company launched 24.42 m sq feet and this was shockingly equal to launches it had during the boom time of 2007. Seemingly, the company got carried away by the ‘affordable housing’ bandwagon and was quick to launch huge projects. Of the 24.42 mln sq feet launched, almost half or 13 mln sq feet have been booked by customers. And this, over the next four years, is expected to bring in revenue of Rs.1375 per annum.
Though there was assurance that the company has managed to raise funds to reduce its debt, there is concern that if all the money is used to reduce debt, from where will the company get money to fund the projects under implementation?
For the 9MFY10, the net income of the company was down 28%. Interest costs have almost halved, yet net profit was down 44% at rs.511.64 crore. For FY09, the company had a net profit of Rs.1197.71 crore and it is unlikely that the company would be able to surpass that number for FY10.
The company will be able to stand back firmly on its feet only by FY11. The annualized EPS of Rs.2.87 discounts the current market price by around 25 times. Wait for the company to speed up its implementation schedules and then take a long term call.

Source: Internet (premiuminvestments.in by S P Tulsian)