Geodesic
12th July 2009
Recommendation:- BUY (Risk takers), HOLD (Others) - BUY @ Rs. 93.2, TARGET @ Rs. 200 in 12 months, Rs. 350 in next 2-3 years.
- Expect the profits and the margins to slow down for the next 2 or 3 quarters.
- The company has been losing clients, reducing prices and is operating in a tough environment. Else, why would a company that doubled its sales and profits quote a PE of just 3?
- For risk takers, the company has more than 600 crore of cash and is actively looking for acquisitions. It has been progressively canceling the FCCBs as well. Any new strategic acquisitions could lift the spirits and the stock price. The valuations are cheap and its worth taking the risk.
June 06 2009 - The company has reported that the promoters have revoked some of the shares that were pledged.
Our Views:
Mahesh Murthy has revoked around 50,000 shares that were pledged by him earlier. Given the very low holding of the entity, not much inference could be made out of this action.
Solar Explosives Limited
12th July 2009
Recommendation:- BUY @ Rs. 265, TARGET @ Rs. 400 (1 year), Rs. 1000 (2-3 years).
- The top line is witnessing very robust growth and is expected to continue for the time to come.
- We also expect the margins to go up in the coming quarters. We expect the stock to get constant news triggers due to the developments around coal mining, infrastructure growth and private players coming into coal mining.
- Dated June 29 2009 - The company has announced its Quarterly and Yearly results.
- Quarterly Highlights - Sales increased by 102% to about 163 crore. Net profits increased by 33% to 12 crore.
- Yearly Highlights - Sales increased by 77% to about 498 crore. Net profits increased by 22% to about 44 crore
- The sales numbers have exceeded our expectations. However, the profit numbers are not omforting.
- Growth rates of 75% is a huge achievement for a player in a space that is growing at 20 to 25%.
- The profits got a hit due to the increase in raw material cost and the interest charges. Also, the trading vertical has not made any profits. However going forward, we expect the earnings to move up north.
Opto Circuits
12th July 2009
Recommendation:- BUY @ Rs. 138.50, TARGET @ Rs. 250 (by Dec 2009), Rs. 600 (2-3 years)
The scrip is clearly a buy for long term investors. The prices are currently dampened since there were no bonus shares.
News -
Dated June 01 2009 - Opto Circuits India Ltd has informed BSE that the Company has received US FDA approval on a next-generation pulse oximeter (SpO2) module, Sequel developed by its Waukesha-based subsidiary- Criticare Systems Inc. (CSI). The approval enables immediate integration of the module into CSI monitors and marketing and sale of the product to OEM manufacturers across the globe.
Dated June 03 2009 -
Opto Circuits India Ltd has informed BSE that the Board of Directors of the Company at its meeting held on June 03, 2009, has approved the following subject to satisfactory receipt of all statutory, regulatory, corporate and other approvals including shareholders at their Meeting, as may be required.
Our Views:
The new product is a miniaturized, motion tolerant and more sensitive sensor that will go into new generation monitors and other patient monitoring devices.
1. Issue, offer and allot equity shares and any other securities which are convertible into or exchangeable with the equity shares of the Company for an aggregate amount up to 4.00 Billion Rupees (Rupee Four Hundred Crores only) or equivalent thereof in one or more Foreign Currency under Qualified Institutions Placement (QIPs) at such price being not less than the price determined in accordance with SEBI (Disclosure and Investors Protection) Guidelines, 2000.
News -
2. Issue up to 60,00,000 convertible share warrants on preferential basis to
a. Promoters and Promoters group.
b. Directors of the Company,
c. Directors of the subsidiaries,
d. Employees of the Company and its subsidiaries and others.
Our Views:
The company by the above means could end up collecting around 412 crore, which is a huge sum of money. The exact requirement for the money is not clear yet. The company is planning to pay off the debt that it had taken for the acquisition of Critcare Systems. The promoters as always has valued the shares at a higher price than the CMP.
News –
Dated June 18 2009 - Opto Circuits India Ltd has informed BSE that the Board of Directors of the Company at its meeting held on June 18, 2009, inter alia, has recommended a Dividend of Rs 4.00 per Equity share (face value of Rs 10/ each) for the year 2008-2009, subject to the approval of the Shareholders in the General Meeting.
Our Views:
The company is used to announce bonus shares every financial year, but that has not happened this time. This could be one reason why the stock price has corrected from 185 to 138 odd levels.
Dated June 18 2009 - Opto Circuits India Ltd has announced the following Audited results for the quarter & year ended March 31, 2009:
The Group has posted a net profit after minority interest of Rs 553.744 million for the quarter ended March 31, 2009 as compared to Rs 342.072 million for the quarter ended March 31, 2008. Total Income has increased from Rs 1314.032 million for the quarter ended March 31, 2008 to Rs 2266.792 million for the quarter ended March 31, 2009.
The Group has posted a net profit after minority interest of Rs 2094.439 million for the year ended March 31, 2009 as compared to Rs 1306.595 million for the year ended March 31, 2008. Total Income has increased from Rs 4851.455 million for the year ended March 31, 2008 to Rs 8472.869 million for the year ended March 31, 2009
Our Views –
- Very impressive set of numbers from OCI. The revenues are up 75% and the profits are up by more than 60%. This has clearly exceeded our expectations. The company already has cash reserves of 100 crore and with the planned QIP it is planning to pay off the debts. This would decrease the interest payments and would directly push up the bottom line of the company which is already healthy. The company has spent 53 crore on interest payments in FY 09.
- The recent pandemic of Swine flu has pushed up the demand for OCI's products heavily in the US and European markets. The interest and the demand for the disposable and reusable sensors have spiked after the recent outbreak of Swine flu.
- The company earns around 13% of its revenues from the disposable and reusable sensors and this is expected to go up. Besides the reusable sensors, the company has been witnessing surge in demand for its thermometer as well.
Sarda Energy & Minerals Ltd
12th July 2009
Recommendation:- HOLD, CMP @ Rs. 110, TARGET @ Rs. 500 (2-3 years)
- The company has posted only muted growth in earnings in spite of a healthy growth in revenues.
- The company has been hit by the lack of demand in the Ferro alloys division and the higher interest charges.
- For the next two quarters, we expect the company to post muted or declining earnings. The recent fire accidents would also be a reason for this apart from the lesser demand. However, the long term prospects for the company are bright and we will let you know when one can start buying.
Dated June 30 2009 - The company announced its quarterly results for the quarter ending Mar 2009.
Quarterly Highlights - The revenue dropped 35% to 139 crore and the net profits reported were at 66 lacs.
Yearly highlights - The revenue increased 51% to 952 crore and the net profit were reported to be 123 crore.
Our Views:
- The sales and the earnings have been on decline for the past few quarters and this is due to the under performance by the Ferro Alloys division.
- The steel division has come up with strong results. The company has lost money on interest and forex as well which is at around 50 crore.
- The recent fire accident at the power division and the stoppage of coal mines could have hit the Q4 numbers and hence the FY 09 numbers as well.
- Though there seems to be a demand revival, the next two quarters may be tough for the company.
Temptation Foods
12th July 2009
Recommendation:- BUY (Risk takers) / HOLD (Others), CMP @ Rs. 27, TARGET @ Rs. 300 (4-5 years)
The company is currently trading at a throw away price. Given the kind of growth that the company has experienced and the opportunities present, the current valuations are completely distressed. It should be noted that still a number of reputed foreign institutions have their holding in the company and some have even taken exposure. Had there not been any kind of pledging /governance woes, the stock would not be trading at these levels but at a much higher level.
News -Dated May 19 2008 –
- The company reported that 722,994 shares that the promoters had pledged were sold by the pledgee in the open market.
- The pledging woes of the company continues. The shares were pledged with Shriram insight of the Shriram Group and they were sold in the open market between May 05 and May 19.
- This has left the promoters with 58.4 lac shares, out of which around 72 % remains pledged. It was only last month that Indiabulls had sold around 40 lac pledged shares of the promoters.
- Quarterly Highlights – The company reported total sales of 225 crore (down 11%) and a net profit of 15.34 crore (up 14%)
- Yearly Highlights – The company reported total sales of 870.07 crore (up by 160%) and a net profit of 52.44 crore (up by 120%)
- The EPS was at 20.86 rupees for FY 09(up by 120%)
- Clearly, the results are impressive. The Sales, Profits and the EPS have all more than doubled but the state that the company is in currently does not call for a toast.
- The quantum jump in the revenues and profits were due to the acquisitions that the company made in late 2008. There was no new acquisitions or any type of inorganic growth in FY 09. The growth rates will be lowered if the company is not able to pursue its inorganic growth strategies.
Evinix Accessories Ltd
12th July 2009
Recommendation:- BUY @ Rs. 3.05, TARGET @ Rs. 15 (with-in 2 years)
It's a multibagger in making. Read below why it's a multibagger?
- This company has all the qualities in it that a micro cap company with the potential of becoming a multibagger should have.
- They have been very aggressive in rolling out their “CUT” stores and aim to launch at least 125 such stores by the end of year 2009.
- The good thing about the management is, since the beginning of their operations in 1996, their target consumer has been the younger generation. They are very well aware of the needs of people in the age-group of 16-35 and are best poised to cater to their demands.
- Their “CUT” stores are unique in many aspects. “CUT” offers bargain deals of international brands under its "Mix and Match” scheme. It has a “Chill out zone” called “ADDA” where people can relax and unwind themselves after shopping.
- Evinix Accessories Ltd, total market cap is at 35-40 Cr. The organized retail accounts for less than 4% of the total retail market in India. Organized retail is expected to grow at an average rate of 40% per year over many years ahead with apparel and food and grocery constituting the majority share. The clothes and fashion accessories industry is expected to touch a level of about 41,000 Cr in organized retail by 2015.
- Evinix being a bellwether in case of fashion and lifestyle segment, has an opportunity to grow by 100 times in the years to come.
- The company may face problem in rolling out its more stores across various cities on account of increase in the price of commercial property and also because the rentals have increased a lot over the last few years.
- Operating margins may get hampered on account of increase in raw material prices there by increasing cost of raw material and thus effecting bottom line of the company.
- This type of business gets affected in years of slowdown, as the consumer tends to hold on his savings for tough times ahead.
- Some new player can always emerge who can take the market by storm.
- The strong performance in the past is not a bullish sign and doesn't indicate the same or better performance in the future. Each year is different from the previous one!
- Do not let representative ness bias win over your common sense! Always do your homework and do not forget to do a research before you invest your money!
- The business is consumer driven. Therefore in a slowdown the company may be adversely impacted as the partners would want to reduce their prices in order to stimulate demand
Epic Energy Limited
28th July 2009
Recommendation:- BUY @ Rs. 32 or lower, TARGET @ Rs. 200 (2-3 years)
Want to know why we say it's a multibagger? Read our detailed research on this multibagger.
