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November 2013 Posts in three Free Access Modules ~ Scrip Standpoint ~One Company under Scrip Tease ~19 Companies under Scrip Watch

Leave a Comment / Automobiles, Cement, Chemicals, Dairy, Hospitality, Information Technology, Infrastructure, Mineral Resources, Pharmaceuticals, Real Estate, Reflections, Retail, Sectors, Steel, STOCKS, Tyres, VALUATION / By

Check these November 2013 Posts on our Website in the various Free Access Modules

Scrip Standpoint Module ~ Four Week Ending Posts and Four Specific Posts 

Scrip Tease Module ~ One Company

Scrip Watch Module ~19 Companies ~ These are not committed SS Selects that Clients have access to in Other Modules 

  • Lupin @ Rs 853 ~ ‘Lupin’ Good ! ~ Pin Up Pharma Poster Scrip Maybe ! ~ 28-Nov-2013
  • Technocraft Industries @ Rs 103 ~ The Best is Yet to Come says the Company ~ but will it!? ~ 27-Nov-2013
  • Redington India @ Rs 68.55 ~ Riding on Apple!? ~ 25-Nov-2013
  • Max India Ltd @ Rs 200 ~ Revives halfway between 52 Week High/Low ~ 22-Nov-2013
  • Jubilant Life Sciences Ltd @ Rs 119 – Price Surges on Delisting News ~ 22-Nov-2013
  • Sintex @ Rs 30 ~ Poised for a Turnaround? ~ 21-Nov-2013
  • Sobha Developers @ Rs 312 ~ Better Positioned than Peers ~ 21-Nov-2013
  • IL&FS Transportation @ Rs 117 ~ Sluggish Relative Valuations in a Sluggish Scenario ~ 20-Nov-2013
  • JP Associates @ Rs 49.6 ~ Building market expectations! ~ 19-Nov-2013
  • OCL@ Rs 139.55~Dalmias Cementing Stake Steadily ~ 18-Nov-2013
  • Coal India @ Rs 274 ~ Q2 Result Update ~ 16-Nov-2013
  • Heritage Foods @ Rs 181 ~ Profitable Dairy Segment but Loss making Retail Segment ~ 15-Nov-2013
  • Aurobindo Pharma @ Rs 282 ~ Yet Valued at a Discount To Peer Group despite Good Growth Potential ~ 14-Nov-2013
  • Suven Life Sciences @ Rs 69.9 ~Sixfold Rise in Q2FY14 PAT ~ What else lies ahead! ~ 13-Nov-2013
  • Ashok Leyland @ Rs 15.25 ~ Sliding Through Tough Times ~ 12-Nov-2013
  • Mangalore Chemicals @ Rs 53.3 ~ Juggling with Control Issues ~ 11-Nov-2013
  • Ashoka Buildcon @ Rs 53 ~ On Reformatory Roads ~ 06-Nov-2013
  • Oriental Carbon and Chemicals @ Rs 117 ~ Does it Deserve to be traded in the PCA as an Iliquid Scrip ? ~ 05-Nov-2013
  • Tinplate Co of India @ Rs 46 ~ Will it ever break away from a Narrow Quoted Range ? ~ 05-Nov-2013
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    Nitin asks about ~ Tide Water Oil yet solid at Rs 6750 while Shree Renuka Sugars at Rs 25+ has disappointed greatly and eroded by 70% with continuing micro and macro industry woes

    1 Comment / Chemicals, Controversies, Corporate Governance, Investing Themes, INVESTOR MISTAKES, Nifty, Reflections, Sectors, Sensex, STOCKS, Sugar, VALUATION / By

    Nitin  asks about ~ Tide Water Oil (TWO) at Rs 6750 and Shree Renuka Sugars (SRS)at Rs 25+ at subdued Sensex and Nifty levels of sub 16200 and 4900 respectively 

    My Views on these two Scrips are contrasting….. TWO continues to be solid despite some margin stress,while SRS has disappointed greatly and eroded by 70% with continuing micro and macro industry woes and struggles to service high Debt and regain significant lost ground  in the share price

    TWO @ Rs 6750 (FV Rs 10)

    http://www.bseindia.com/xml-data/corpfiling/AttachLive/Tide_Water_Oil_(India)_Ltd_300512_Rst.pdf

    Standalone Networth at March 31,2012 is Rs 308 crs with Equity low at Rs 87 lakhs (FV Rs 10) giving a Book of @ Rs 3500 per share and thus a P/BV just below 2…Has no Bonus History but has just announced doubling of Dividend from last year => Rs 120/ share  => 1200% => 1.77% yeild…will involve Rs 10.45 crs and this is  yet below 20% of PAT payout

    Standalone PAT has dropped yoy from Rs 64 crs to Rs 59 crs as Cost of raw materials consumed has moved sharply up to 69% of Net Sales from 63%….Though Selling & Marketing Costs have shown a significant decline it is largely offset by the jump in other expenses

    Nearly all of the Networth  =>Rs 292 crs is the Capital Deployed in the Core Business of Oil and Grease,leaving little scope for Other Income Generation through Investments …Standalone EPS has dropped yoy to Rs 678  (consolidated is yet lower at Rs 665 after considering two Veedol subs) from Rs 736….Price Earning Multiples hover around 10

    Market Cap is @ Rs 600 crs while Net FY 12 Sales were @ Rs 800 crs

    The 52 Week Share Price range is Rs 8540 and Rs 5676

    Government PSU Andrew Yule holds 228390 shares of TWO =>26.22% of the Equity => worth @ Rs 150 crs at CMP of Rs 6750…A few years ago Andrew Yule had approached the Government to allow it to sell the TWO Stake to help it recover….it then withdrew this request as it began to recover in it’s operations and was able to raise funds  without resorting to the sales of TWO Shares

    There are @ 12500 TWO Shareholders,but none is a FII…Apart from Andrew Yule,the other significant holdings are with LIC (4.22%),United Insurance (10.04%) and a few Body Corporates  like Victory Retail Marketing (4.61%) and Standard Greases & Specialities (23.24%,that’s higher than even Andrew Yule Holding))…TWO Employee Welfare Trust holds 2.57% with a current value of @ Rs 15 crs => half of annual Employee benefit expenses of @ Rs 30 crs read more

    Jubilant Industries @ Rs 290 reaches target set in March 2011 last year…up 70% + from Rs 171 when recommended strongly last year in March…while Sensex drops 5%…Bottom Up for Alphas…Pointless to concentrate Mind and Money Resources on Indices

    8 Comments / Agriculture, Chemicals, Crop Protection Chemicals, Derivatives Strategies, Inspiring and Motivating, Investing Approaches, Investing Themes, INVESTOR MISTAKES, Nifty, Reflections, Sensex, STOCKS, VALUATION / By

    Being saying this for a while now….Bottom Up as Top Down may not produce strong returns in the short term….this is being indicated even now….be Stock Specific,rather than bet on Indices…keep a longer term perspective…You begin with Rs One Lakh and whore it technically or fundamentally on the bourses every single day,churning trades in and out to end the year struggling to preserve the Capital itself ! …your Broker’s mighty pleased…not you !….The Other Option is to risk a specific stock for portfolio selection and give it time to flower so that you get a nice alpha  return on your principal over time…. 

    In March 2011,a year ago,I had strongly recommended JUBILANT INDUSTRIES @ Rs 171 as a SS Scriptech Stock Select with a target of Rs 250 to Rs 300 in the ensuing 12 months…..It touched Rs 300 last month and is now @ Rs 290….appreciating 70% in  a year and meeting target set…in the same period the Sensex has lost a 1000 points or over 5% end to end reacting from 18200 then to 17200 now

    The Idea of this Blog is not to Boast on this Selection,but emphasize the Other Option of being Stock Specific and giving it time to flower….going Bottom Up to seek Alphas…and not focussing your resources of both,Mind and Money on Indices  

    Reproducing the Recommendation Template below…why I liked Jubilant Industries @ 171 in March 2011 

     
     
    A SCRIPTECH SPARKLE SS 2 STOCK SELECT
     
    JUBILANT INDUSTRIES at Rs 171
     
    AN AGRO CHEMICALS  STOCK AT HALF IT’S BOOK VALUE,LESS THAN 4 PE AND ZERO DEBT CURRENTLY 
     
    NETWORTH    : RS 291 CRS
     MARKET CAP : RS 137 CRS
     
    TARGET RANGE  =>Rs 250-Rs 300 INSIDE 12 MONTHS
     
    SENSEX : @ 18200     NIFTY : @ 5450
     
     
    LIMITED DOWNSIDE …VERY GOOD UPSIDE OF 40% TO 70% IN A YEAR 
     
     
     

    TARGET RANGE OF RS 250-Rs 300 MAY BE BE ACHIEVED IN THE NEXT FEW MONTHS !

    Jubilant Industries Ltd (JIL) looks good at Rs 171… it’s a SS 2 Stock Selection….It’s been listed on BSE and NSE for a month now registering a High of Rs 300 and a Low of Rs 100 on the day of listing itself on February 14,2011

    There are four straight catalysts that may push JIL towards the target range inside the next few months

    • Recently the Agri Products(single super phosphate and agro chemicals for crop protection) ,Performance Polymer(Food Polymer-Solid PVA…VP latex and SBR Latex….consumer and application polymer products) and IMFL  Divisions got demerged from Jubilant Life Sciences Ltd (JLSL) into JIL….JIL listed last month…Not many are aware of this new listing..they soon will be….the demerger share ratio was 1:20…every shareholder of JLSL,and there were 25285 of them,got 1 share of JIL of FV Rs 10 for every 20 shares of JLSL of FV Rs 1 held by them  
    • JIL has no debt currently although it has an enabling resolution to borrow upto Rs 500 crs
    • JIL had a networth of Rs 275 crs,excluding defered tax, at September 30,2010 It grew to Rs 282 crs at December 31,2010 and is likely to cross Rs 290 crs at March 31,2011….Equity is Rs 8.01 crs of FV Rs 10 while Reserves are expected to cross Rs 280 crs this month end…this should result in a Book Value of @ Rs 362…giving a Price/BV of just 0.47…in other words JIL is available at half it’s book value 
    • JIL has recorded a net of Rs 27.59 crs for the nine months at December 31,2010….It should close the year at a net of over Rs 35 crs…that’s an EPS of @ Rs 45…and that’s a PE of below 4 !
    JUBILANT GROUP PEDIGREE
     
    JIL forms part of the Bhartia Group of Jubilant Companies….Jubilant Life Sciences (earlier Jubilant Organosys and even earlier Vam Organics) and Jubilant Foodworks are the prominent companies from  68 Companies in the Group…Shyam and Hari Bhartia are the Promoters…..Last year they created huge wealth for shareholders of Jubilant Foodworks..the Domino’s Pizza Franchise in India…in January 2010 Jubilant Foodworks came out with an IPO in the Rs 135-Rs 145 book building range and issue was oversubscribed over 31 times (51 times by QIBs and under 4 times by Retail Investors)…On February 8,2011 it listed at Rs 200… nearly 40% over IPO issued price of Rs 145….thirteen months later it is Rs 545 !….275% over issue price !
     
    JIL DIVISIONS
     
    Agricultural Products Division

    There are four products segments here

    • Crop Nutrition……Fertilizers that increase crop yeild and quality…Primary Product is ‘Ramban’ Single Super Phosphate
    • Plant Growth Regulators…help in plant growth and balance maturity by curtailing unwanted vegetative growth…Primary Product is Vam-C
    • Crop Protection…these are Pesticides,Insecticides,hebicides and Fungicides…right from Seed Sowing Stage to Harvesting…JIL currently does not manufacture these but only trades in them
    • Industrial Chemicals…these are Sulphuric Acid (Captive use in the SSP manufacturing process and also commercially sold to other Soap,Detergent,Fertilizer,Sugar Refiners,Colours,Dyes,Paper and Aluminium Units)  and Sodium Silico Fluoride sold to Glass Units
              Plant Locations
    • Gajraula in Uttar Pradesh…..SSP Production (Powder & Granulated Forms) 165000 MTPA…Sulphuric Acid 68640 MTPA
    • Kapasan in Rajasthan….SSP Production (Powder & Granulated Forms) 264000 MTPA….Sodium Silico Fluoride 1440 MTPA
    Performance Polymer Division 
     
    Here too there are four product segments
    • Consumer Products….these are marketed under the brand of ‘Jivanjor’ and  cosntitute wood adhesives(premium,middle,economy),wood finishes,footwear adhesives and epoxy sealants (for sealing leakages in sanitaryware and water pipes)…Epoxy Sealants are not manufactured by JIL but only traded
    • Food Products…Solid Poly Vinyl Acetate (SPVA) is a synthetic food polymer made for use in the manufacturing of the gum base used for making chewing gum and bubble gum…Synthetic Polymers ,of which SPVA is only one type,form the main gum base constituent  in  90% of all gum base manufacturing activity worldwide…JIL markets it’s SPVA under the brand name ‘Vamipol’ to chewing gum base manufacturers globally
    • Latex…Three kinds of Latex are manufactured…Vinyl Pyridine,Styrene Butadiene Rubber or SBR and Nitrile Butadiene Rubber or NBR…the first two are used for dipping of tyre cord and conveyor belt fabric by tire manufacturers who have in house dipping facilities and also by tyre cord fabric dippers…in addition they are also used to manufacture SBR Tyre Carcasses,V-Belts and Conveyor Belts…NBRs are used in automotive gasket binding operations…JIL even exports Latex to countries in Asia,Europe and Latin America 
    • Application Polymer Products…These are high quality polymer products developed for application in lamination,flexible and general packaging and pressure sensitive adhesives….Poly Vinyl Acetate (PVA) Emulsions and Poly Utrethane (PU) adhesives are the two product categories…PVA finds application in pressure sensitive adhesives(tapes and labels),laminated adhesives(bonding film to paper/paper boards such as  books,calendars,posters and greeting cards) and packaging adhesives(side pasting in cartons and corrugation)…PU adhesives Re used to produce flexible packaging laminates used to making pouches to package products like edible oils,coffee,shampoo and detergents…these products are sold through channel partners and to original equipment manufacturers in India and even in Germany and Dubai
              Plant Locations

    • Gajraula in Uttar Pradesh…..Wood Adhesives 16000 MTPA…Food Polymer Products 10000 MTPA….Application Polymer Products 3600 MTPA
    • Sahibabad….Footwear Adhesives 2800 Kilo litres per annum
    • Samlaya near Vadodra in Gujarat…All three kinds of Latex 14000 MTPA + research and developement laboratory for testing all kinds of latex and recognised by the Department of Science and technology,Government of India
    IMFL Division

    JIL has been bottling IMFL products on a contractual basis for various established brands engaged in liquor business in India. Capacity is 100,000 cases per month for IMFL. with technological capacity to handle all sizes of bottles, with a configuration of five automatic/semi-automatic lines. All lines are equipped with the required Vats (used for blending alcohol) for storage of extra neutral alcohol and labeling machines which provides flexibility for bottling various sizes of IMFL. JIL also has a fully equipped, state of the art laboratory to support the bottling plant. The bottling plant is located at Nira, which is about 70 kms from Pune in Maharashtra

     FINANCIALS AND BASIC VALUATIONS : A  SYNOPSIS

    A Synopsis of JIL’s Projected results as at March 31,2011 and for the actuals for the nine months at December 31,2010 actuals  are presented below…Agri Products and Performance Polymer Divisions comprise nearly all of the sales in near equal proportion….However Agri Products enjoy a 13% operating margin against 9% reported by Performance Polymers Division…and of the Total Capital Employed of Rs 290 crs at December end 2010,46 % has been applied in the Agri Products Division while 39% has been applied in the Performance Polymers Division 

     

     

    Jubilant Industries @ Rs 171

     

    Financials & Basic Valuations

     

    (In Rs crs unless otherwise stated)

     

     

    Head

     

    March 31,2011

    Full Year Projected

     

    December 31,2010

    Nine Months 

    Net Sales
    575
    446

    Profit After Tax
    36

    28

     

        
     

    Equity ( FV Rs 10)
    8.01
    8.01

    Reserves (exc Deferred Tax)
    282
    274

     

     

     

    Net Worth
    290
    282

     

     

     

    Market Cap
    137

     

     

     

     

    EPS in Rs
    45

     

    Book Value in Rs
    362
     

     

     

     

    P/E Multiple
    3.8

     

    P/B Multiple
    0.47

     

     

     

     

    Promoters Stake in Equity

    47.51 %

     

    FII/DII/Public Holding (on listing on Feb 14,2011)

    18.54/13.59/20.36 %

    –

     

    SOME RISK FACTORS

    • Promoters, Directors and Group Companies are involved in a number of legal
      proceedings that, if determined against them  could adversely impact JIL’s business and financial condition
    • JIL derives a significant portion of revenue from a few customers, and a loss of one or more customers or a reduction in their demand for JIL products would adversely affect JIL business,financial condition and results of operations
    • Low entry barriers may result in new smaller players entering the market and putting pressure on margins in the application polymer business which may have an adverse effect on JIL business
    • JIL is governed by the Fertilizer Control Order, 1985 which requires it to obtain a certificate of registration, which is valid for a period of three years from the date of issue, for it to be able to sell,offer for sale or carry on the business of selling of fertilizer at any place as a wholesale dealer or retail dealer. Further, certain of their products are required to conform to the standards as notified by the Central Government/State Government in the Official Gazette

    Increased usage of radial tyres in India, which use significantly lower amounts of vinyl-pyridine latex when compared to bias ply tyres, will lead to a reduction in demand of vinyl-pyridine latex thereby adversely affecting JIL business, financial condition and results of operations 

    The demand for vinyl-pyridine latex used in the manufacture of tyres is directly linked to the performance of the automobile industry. Any reduction in demand for automobiles may lead to a consequent reduction in demand for tyres and vinyl-pyridine latex thereby adversely affecting JIL business, financial condition and results of operations.

    Emergence of new technologies like „Hot Melts‟ and their increased use, if any, in the future will reduce usage of poly vinyl acetate based PSA‟s which may have an adverse effect on JIL business

    The availability of vinyl-pyridine monomer, a key raw material in vinyl-pyridine latex manufacturing,is linked to the availability of beta-picoline. Any interruption in the continued supply of beta-picoline would affect the availability of vinyl-pyridine monomer and thus adversely affect JIL business,financial condition and results of operations.  read more

    IPO Disasters…Orient Green @ Rs 14 & Tirupati Inks @ Rs 8 ! …A 10 Month countdown to Blast off!…10,9,8,7,6,5,4,3….down 70% +

    3 Comments / Chemicals, Chuckle !, Controversies, Corporate Governance, Inspiring and Motivating, Interesting News Sightings, Investing Approaches, INVESTOR MISTAKES, IPOs, Power, Reflections, Sectors, STOCKS, VALUATION, When My Mind Meanders..., When the Heart Explodes through the helpless Mind / By

    IPO Disasters…Orient Green @ Rs 14 & Tirupati Inks @ Rs 8 ! …A 10 Month countdown to Blast Off!…10,9,8,7,6,5,4,3….down 70% +

    IPO Scrip

    BSE Code

    Listing

    Issue Size

    Rs Crs

    IPO Price

    Rs

    Current Price

    Rs

    Market Cap

    Rs Crs

    Volumes

    % Erosion from Issue Price

    Orient Green

    533263

    8/10/2010

    900

    47

    14

    658

    @4 lakh shares

    70

    Tirupati Inks

    533258

    1/10/2010

    51.50

    43

    7.80

    11.9

    A Few thousand

    82

    Both appear to be large scale IPO Pricing Valuation Cons !….advised and probably even abetted by Lead Managers….Sad !….Thousands of Retail Allotees in these Scrips have got gyped badly…..methinks we desperately need the Controller of Capital Issues back again…atleast to set a cap on IPO Pricing ! 

    Now let me set a Cat among the Pigeons !

    ….After such a 70% to 82% Erosion in the Share Price from the Ofer Price in just 10 Months do you think Orient Green and Tirupati Inks present an investment oportunity and are worth buying at Rs 14 and under Rs 8 respectively !…the invested IPO Monies in new projects have yet have to bear fruit..Scrips are Down but Not Out…yet ! or are you Once Bitten,Twice Shy !? ….and Orient Green was a huge IPO Issue Size…Rs 900 crs !

    Got you thinking !  

    Cheers !

    SEBI needs to take Stern action with Promoters like Ghias of Futura Polyester who seem to be enriching themselves in Innovassynth Technologies at the expense of Shareholders of Innovassynth Investments

    13 Comments / Chemicals, Controversies, Corporate Governance, Insider Trading, Interesting News Sightings, INVESTOR MISTAKES, Pharmaceuticals, Reflections, SEBI, Sectors, STOCKS, VALUATION, When the Heart Explodes through the helpless Mind / By

    Where Monies are there there will be Stink !….and SEBI, as the Regulator, needs to wear a Gas Mask at all times !

    The Stink is being seen in the Promoters Ghias of Innovassynth Technologies (IST) raising it’s Equity Capital from Rs 55 crs to Rs 74 crs at par of Rs 10….the Value of IST is much more….Moreover shareholders of Innovassynth Investments (ISI) should have also been offered these shares at Rs 10 too…the sad irony it appears is that ISI itself rejected the fresh Investment Proposal in IST at par to facilitate the allotment to others….ISI is awaiting SEBI Clearance for Listing without an IPO,while IST remains unlisted

    Know the background first

    Ghias were  the Promoters of Indian Organic Chemicals (IOC)….It was rechristened Futura Polyesters (FP) and the Chemicals Division was moved to a new company from August 1,2002 called Innovassynth Technologies (IST)…..FP held 23850070 shares of FV Rs 10 in IST…this was over 40% of the Equity Capital of Rs 55 crs of IST…the rest was held by Rajan Raheja Group,Rakesh Jhunjhunwala and Ghias…they were also on the Board of IST….Rajan Raheja is on the Board of Prism Cement,EIH Hotels (Oberoi Hotel Chain in which Reliance too has a major stake now),Exide,Supreme Petrochem and Sonata Sofware

    FP initially decided to transfer their entire shareholding in IST to the shareholders of FP directly under a Scheme of Arrangement…an initial Ratio of 10:23 was recommended and the shareholders of FP would get the shares of IST directly and free in this ratio of their holdings in FP

    However a revised Scheme was formulated…and the reasons for this are becoming more apparent now…Under this Scheme FP would first tranfer it’s entire Investment in IST to another Company ISI…In turn ISI would allot free the shareholders of FP the shares of ISI in the ratio of 5:11….Thus FP Shareholders would also own ISI shares which would get listed…and ISI in turn held the Investment of over 40% of the Equity in IST….FP would also follow this with a Rights Issue at par to bring back the Networth after adjusting the IST Investment against Equity Capital and then Specific Reserves   

    ISI was to get listed in 2009….BSE apparently even cleared this listing in July 2009 with the condition that SEBI Approval was required as the listing would be without any IPO…ISI applied to SEBI for this permission….till date SEBI has not given it….Why !?…SEBI has been raising queries….ISI claims it has answered all of these and are pursuing this matter with SEBI quite feverishly…what was the nature of these queries is not known…neither the SEBI website has any clues,nor is ISI revealing what these queries were. read more

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