Arun the Stock Guru -Stock tips,Free Trading Tips,Bse multibagger calls,Buy/sell stock analysis

Ratnabali Capital Markets Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-27T02:56:00.000-07:00

Scripscan:Ratnabali Capital Markets Ltd
cmp:105
Code:531391

Investing-reflections:Ratnabali Capital Markets offers brokerage and depository services, and also trades on its own account.The company is a member of the BSE, NSE and MCX, and depository participant (DP) with the NSDL. It operates in the capital, futures and options (f&o), and currency markets.The company appears to have morphed its business model from brokerage services to trading and therefore, current performance doesn’t appear to be comparable to the past – it reported marginal net profits of 2.5cr on revenues of over 700cr in the last twelve months. It employed minimal debt relative to assets to finance its operations (at 30th September 2011).The business is primarily exposed to low retail participation in the capital markets, which is largely sentiment driven and driven by a fear of falling prices and even stagnation. Moreover, there is significant competition in this industry and rapid technological changes that have reduced barriers to entry and increased the need for technology investments.The company appears to be engaged in the trading of futures and options for its own account, which is subject to substantial risk of losses.

Shree Steel Wire Ropes Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-27T02:53:00.000-07:00

Scripscan:Shree Steel Wire Ropes Ltd
cmp:3
Code:513488

Investing-reflections:Shree Steel Wire Ropes manufactures stainless steel wire ropes and regulating equipment for Indian Railways (IR), its main customer.The company has developed new products for IR in the past, for which it has received approvals for production and supply. The company is currently IR’s regular supplier in this product segment.The company reported stable performance over the last five years – reporting about 1cr of operating profits on revenues of 5cr in the last financial year.It employed no net debt to finance its operations.However, the company can expect severe competition from new entrants as and when IR’s requirements increase.Needless to say, the company is exposed to substantial customer concentration risk since IR is its main customer – any cancellation of business will practically wipe out existing revenues.

Haryana Leather Chemicals Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-27T02:50:00.001-07:00

Scripscan:Haryana Leather Chemicals Ltd
cmp:15
Code:524080

Investing-reflections:Haryana Leather Chemicals produces leather chemicals for tanners to manufacture leather products. It also has a small acrylic division.The company is reasonably well-entrenched in India and China, and caters to all segments of the leather industry. Indian tanneries are now competitive with European manufacturers on quality and compliance, and have relative low cost advantages, which bodes well for the company’s future prospects. The company is attempting to constantly expand its customer base to countries such as Indonesia, Vietnam, Ethiopia etc. The company reported consistent growth in revenues and operating profits over the last five years – reporting just under 3cr of operating profits on revenues of over 32cr in the last twelve months. It employed no net debt to finance its operations.The business is impacted by declining raw hide availability and exposed to increasing costs of raw materials such as basic organics, crude oil, etc. This leads to significant pressure on profit margins despite the order book size since the business has limited pricing and bargaining power relative to its customers (tanners). This is reflected in relatively low returns on capital.Exports constitutes an appreciable proportion of sales and to that extent, the business is exposed to a strengthening INR.Other relatively smaller risks include increased regulations on safety, environment, etc., and development of new and better products by competitors.The acrylic division is unprofitable as a result of significant increases in acrylic monomer prices (raw material), which customers were not willing to accept in sale prices. Therefore, this division has under-utilised capacity.

Morgan Ventures Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-27T02:48:00.001-07:00

Scripscan:Morgan Ventures Ltd
cmp:4
Code:526237

Investing-reflections:Morgan Ventures operates in the businesses of investments, windmill operation, and trading of capital equipments.It places funds with other companies through inter-corporate deposits, bills discounting facilities etc.It operates a wind project with 4,275mw generation capacity that is eligible for earning carbon credits under the UN framework. However, this business is seasonal and exposed to uncertain wind patterns.It also acquires capital equipment in liquidation auctions and resells it as is or as scrap. Future business would depend on the availability of liquidation auctions and similar opportunities. Moreover, demand for capital equipment is cyclical and may be substantially diminished in down years.The company reported declining performance over the last five years – reporting net losses in the last twelve months on revenues of just over 2cr. It employed only a moderate debt load to finance its operations.Management’s focus in the future is likely to be on the windmill operation and capital equipment segments – with a curtailing of the investment business.

Trans Freight Containers Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-27T02:45:00.001-07:00

Scripscan:Trans Freight Containers Ltd
cmp:8
Code:513063

Investing-reflections:Trans Freight Containers was operating in the business of manufacturing containers.The company currently has no operating activity and management is considering diversification into other businesses such as specialised fabrication of multi-purpose accommodation units. It has had no operating activity for the last several years. The container business was subject to heavy Chinese dumping that made the business so unprofitable it had to stop operations altogether.The company does, however, have fixed assets – building, estate, plant and machinery along with loans and advances (earning interest income), some inventory of marine cargo containers and cash balances. It reported its net worth at just over 30cr alongside a debt load of 10cr, which is covered by cash balances of 13cr (as at 30th September, 2011).Management has been selling land holding as well as liquidating fixed assets and inventories, and recovering loans in the last couple of years. They haven’t however, paid any dividends or made any cash distributions to shareholders despite halting operations and liquidating some of the company’s assets.Therefore, minority shareholders are dependent on management’s timetable for liquidation and their capital allocation skills in the new businesses they pursue (for which there is no track record to analyse) to determine their returns on this investment in the company’s equity.

BLB Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-26T00:37:00.002-07:00

Scripscan:BLB Ltd
cmp:3
Code:532290

Investing-reflections:BLB operates in the brokerage industry serving retail customers.It also does arbitrage and commodity trading for its own account and real estate investing through a subsidiary.The company reported erratic performance over the last five years including net losses that have reduced net worth during market downturns. It reported net losses on revenues of about 130cr in the last twelve months.However, it also reported a net worth of 122cr (at 30th September, 2011) consisting of 80cr of net current assets and just over 20cr of investments, which should have a minimum market value of 5-10cr on quoted companies and mutual funds unless the composition has changed significantly from 31st March, 2011.The business suffers from various issues such as lack of retail interest in the stock market, severe competition, increased technology outlays, increased regulations and compliance costs, etc. It is likely to downsize its operations from that existing in the past.Moreover, its arbitrage operations have been arbitraged away due to increased competition along with computerised trading that has made the market far more efficient than in the past.Management is currently looking for new business avenues to expand operations. Its existing operation in commodity derivatives appears to be fraught with material risk of losses.Its investments through its real estate subsidiaries are not transparent and difficult to analyse.Regulatory authorities such as SEBI ought to look into improving disclosures on real estate investments and unquoted investments – specifically disclosing market value or range of fair value – to enable investors to make a judgment on it. There is a lot of it going around listed companies and the lack of information makes it difficult to make investment judgments about the company.

Tirupati Starch & Chemicals Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-26T00:34:00.000-07:00

Scripscan:Tirupati Starch & Chemicals Ltd
cmp:9
Code:524582

Investing-reflections:Tirupati Starch and Chemicals manufactures maize starch and dextrose products.Maize Starch finds applications in basic industries such as textiles, paints, detergents, paper, ceramics, pharmaceuticals etc. and Dextrose is used primarily in the food processing and pharmaceutical industries. It has two plants located at Indore that is currently running at full capacity.The company reported steady performance in the last five years – reporting about 6cr in operating profits on revenues of about 50cr in the last financial year. It employed a moderate debt load to finance its operations.Management haven’t discussed the business and its prospects in any intelligent manner to the company’s shareholders, which is a definite negative in their appraisal.The business is exposed to increases in maize and raw starch price as well as power costs arising from power shortages.The audit report contains several qualifications – a lot of which question the accuracy of the inventory records. This coincides with a large increase in inventory balances in the last financial year to about 9cr – perhaps a figure that investors ought to view with sceptical eyes. The report also gives a damning conclusion on the company’s internal audit system citing it as “weak”. This is unlikely to help investor confidence in relying on the financial statements.

Longview Tea Company Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-26T00:32:00.000-07:00

Scripscan:Longview Tea Company Ltd
cmp:6
Code:526568

Investing-reflections:Longview Tea, contrary to its name, is primarily in the business of making loans and advances.These loans and advances appear largely uncollectable. Moreover, it is the recipient of interest-free loans from other companies – the repayments appear to be in doubt.The company generates no revenue and reported continuous operating losses in the last five years. It also owes about 50lacs of net debt as at 30th September, 2011.Management haven’t bothered with discussing the company and its plans – perhaps their mood is killed by the company’s large accumulated losses.The company’s auditors have pointed to the lack of provisioning of 35lacs for uncollectable debtors, 41lacs for uncollectable loans and advances and 1.43cr of uncollectable interest. The loans and interest haven’t been classified as ‘non-performing assets’ per RBI norms.Further, the company still hasn’t obtained registration from RBI for its lending activities – although these appear to have ceased for the time being and the company hasn’t accepted public deposits.

Inhouse Productions Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-24T19:55:00.001-07:00

Scripscan:Inhouse Productions Ltd
cmp:10
Code:526610

Investing-reflections:Inhouse Productions appears to be in the business of producing films/television (tv) programs and providing outsourcing services for the medical industry.The company reported declining and marginal operating profits on declining revenues in the last five years – reporting 27lacs of operating profits on revenues of about 8cr. Its debt load appears to be effectively backed by its net current assets.Although healthcare revenues and profits are substantially higher than the tv segment, curiously enough, management have devoted all their attention to discussing the tv segment and have scarcely mentioned healthcare.Even more intriguingly, management have not mentioned the name of a single film or tv program in their lengthy discussion of the business and its prospects, casting severe doubt on the legitimacy of the whole operation.Scanning through the balance sheet, the company has 2cr of investments in miscellaneous unquoted companies in leasing/finance, websites, and entertainment industries. It also owns 6cr of film inventory – value of which is unknown and 5cr of inter-corporate deposits (no mention of which companies). It has taken loans from “a” bank, which is strange since bank names are usually mentioned in the accounts.Management claim to counter the risk of employee attrition with the high quality of its plots and storylines – again, the names of programs containing such fantastic plots remain unmentioned.Management have also stated their intention to get into the business of trading tv programs and films. Their particular edge in making this profitable remains unclear although they assert they can do this because of their contacts and track record in the industry, which remains unconvincing.Overall, the whole operation stinks of fraud and investors would do well to keep away from this stock unless they have reliable information to the contrary.

Polychem Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-24T19:52:00.000-07:00

Scripscan:Polychem Ltd
cmp:167
Code:506605

Investing-reflections:Polychem engages in the manufacture of specialty polymers and property development.The specialty polymers find application in 1) investment castings used in the automotive industry (expected to grow strongly over next five years) including exports to Japan, and 2) as filler in cement for structural repair of columns/beams in old buildings (dependent on repair work on ageing buildings).The company also has about 1.4cr of assets deployed in property development.The company reported continuous operating losses in the last four years on a revenue base of about 5cr in the last financial year. It owed no debt and operated with over 6cr of liquid investments and cash at the end of the last financial year.The business is subject to cost increases of its primary raw material – styrene monomer, which is a crude oil derivative and hence, exposed to crude oil price increases.Moreover, the business has limited pricing power with customers and consequently, profit margin pressure looms as the main risk factor impacting the business.Since it is a net importer, a weakening INR would adversely impact profits.The trend of redeveloping buildings instead of repairing them reduces demand for polymers used as filler in cement and poses a threat to a portion of the company’s revenue stream.

Rama Vision Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-24T19:49:00.001-07:00

Scripscan:Rama Vision Ltd
cmp:4
Code:523289

Investing-reflections:Rama Vision is in the business of trading in the FMCG (Fast Moving Consumer Goods) segment.It procures and distributes a broad portfolio of products in the mother/baby care and other personal care sub-segments. It distributes goods such as ‘Kindoh’ biscuits, ‘Real Thai’ foods etc.The company’s strength appears to lie in its distribution network and market knowledge.There appears to be plenty of per-capita growth potential in branded products with expected economic growth in the country.The company reported marginal profits on growing revenues – reporting 72lacs of operating profits on revenues of 18cr in the last financial year. It operated with minimal net debt as at 30th September, 2011.However, the company is in the business of trading and not owning the brands themselves depriving it of the main source of value and the risk of suppliers choosing other distributors.There is strong competition from international players who are focusing on volume with consequent price wars with particularly intense competition in the personal care segment.Since the company is a heavy importer, it is exposed to a weakening INR. It is also exposed to high taxes (e.g. customs duty) in its business.

Bhagwandas Metals Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-24T19:47:00.000-07:00

Scripscan:Bhagwandas Metals Ltd
cmp:7
Code:530095

Investing-reflections:Bhagwandas Metals trades in steel products.The general demand outlook for steel appears to be positive with government expenditure on infrastructure projects and improving consumer demand – although the company’s ability to outsmart competitors is not as certain.The company reported reasonably stable revenues and operating profits (albeit with wafer-thin margins) over the last five years – reporting 63lacs of operating profits on revenues of 70cr. It operated with a net cash position of about 2cr as at the end of the last financial year.The primary issue with the company is that it’s a trading outfit and does not own manufacturing facilities – while this gives it flexibility to adjust to market conditions, it doesn’t own the value-generating activities that is essential for building competitive strength in its industry.Demand for steel is subject to the interest rate cycle and a period of high interest rates (such as currently) results in delayed government projects and consumer spending.Moreover, the industry suffers from bouts of overcapacity and stiff competition that depresses sales and profit margins.

Katare Spinning Mills Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-24T19:44:00.001-07:00

Scripscan:Katare Spinning Mills Ltd
cmp:21
Code:502933

Investing-reflections:Katare Spinning Mills operates in the textile (cotton yarn) and hotel industries.The profits on both segments are similar.Management expects cotton yarn demand to remain strong domestically and internationally over the long run.The company operates a hotel in Solapur with about 54-room capacity. It is enjoying reasonable occupancy rates as a result of tourism and industrial development around the area as well as a refurbishing exercise undertaken on the hotel in the previous year.The company reported reasonably stable operating profits (but declining margins) on growing revenues – reporting over 2cr in operating profits on revenues of 47cr.Its net debt load appeared to be backed by net current assets alone.The business is exposed to hikes in cotton prices, which shot up over 100% in the previous year.This has resulted in lack of demand and un-remunerative prices resulting in poor returns on substantial capacities added in previous years. Inflationary factors also raise other costs, which the company is unable to pass on effectively to customers as a result of relatively low bargaining power with brand-name customers.The textile industry suffers from periods of overcapacity depressing selling prices and profit margins.Overall, the industry is notorious for generating low returns on capital.The company, being a net exporter, is adversely impacted by the recessionary economic conditions in customers’ countries as well as a strengthening INR.Besides, government policies on cotton and yarn exports distort the demand/supply equation, which affects the company’s results (usually adversely).

Santaram Spinners Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-24T07:56:00.001-07:00

Scripscan:Santaram Spinners Ltd
cmp:3
Code:531323

Investing-reflections:Santaram Spinners operates in the textile industry and is in the business of producing cotton and cotton yarn.The company entered into cotton ginning and export in the previous year perhaps due to the remunerative prices obtainable on cotton and the relatively low investment required (which is the reason for lower switching costs for farmers as the demand/supply situation changes).Management assert that the company has the necessary machinery, farmer access, and port connection for cotton export and reported large profits from this segment last year (due to high cotton prices).The company also engages in trading of cotton and yarn (i.e. not produced by itself), which sometimes forms the majority of sales (such as the previous year).The domestic and international market for cotton and yarn is large. The domestic market, in particular, is expected to grow over the long run with higher disposable incomes resulting from expected economic growth. The scope for investment in retail infrastructure is large and could aid this growth.The company reported marginal profits in the last five years on erratic revenues – reporting just about 20lacs of operating profits on 80cr of revenues in the last financial year.It operated with a moderate debt load relative to assets.The yarn segment is still the larger portion of the company’s business and hence, the company is still exposed to high cotton prices for the time being although this could change as cotton ginning capacities increase. The cotton ginning business would be subject to monsoon conditions.The textile industry is exposed to the economic cycles impacting consumer spending habits as well as investment activities. It is subject to intense competition from China as well as government regulations that have the power to distort the demand/supply balance.Exports are impacted by a strong INR and low bargaining power with branded retailers who impose stringent quality, labour, and environmental regulations.Cotton products are substituted by synthetic textiles during times of high prices, which affect the company’s sales.Increased automation is also rendering power loom and hand loom products obsolete over time.

Wallfort Financial Services Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-24T07:53:00.001-07:00

Scripscan:Wallfort Financial Services Ltd
cmp:27
Code:532053

Investing-reflections:Wallfort Financial Services operates in the brokerage industry.It currently has about 100 institutional clients and management intends to focus on institutional business – both foreign and domestic – over retail.The company has more than half its current net worth of about 70cr in stocks.Its net worth has fluctuated over the last five years – declining in 2008 as well as 2009 as a result of losses during periods of market downturn. In similar vein, it reported net losses of 2.5cr in the nine months ended December 31st, 2011. Therefore, its performance appears to mirror the market in direction – with no special ability to withstand downturns.The business is marked by intense competition and low volumes during market downturns and stagnation. Further, its arbitrage opportunities have disappeared due to competition and uniform settlement cycles. Management haven’t declared dividends to shareholders despite large liquid assets and lack of profitable growth opportunities - indicating a lack of minority shareholder orientation.

Indian Toners & Developers Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-23T22:16:00.002-07:00

Scripscan:Indian Toners & Developers Ltd
cmp:12
Code:523586

Investing-reflections:Indian Toners is in the business of manufacturing toners and developers for laser printers, photocopiers, and digital machines.The company obtained the status of an ‘Export House’ in the previous year, which brings with it export benefits and the like. It is also diversifying and expanding its product range through a pilot plant, which appears to have met good market success in the prior year.The company reported stable performance over the last five years – reporting about 10cr of operating profits on revenues of 63cr in the last financial year. It operated with a net cash position of about 4cr in the last financial year.The company’s strategy appears to be to build its brand image by providing quality products at reasonable prices in an industry where customers are implacably cost-conscious. The generic product is a commodity with multiple suppliers providing intense competition including clandestine importing of cheap toners.The business is exposed to increases in oil prices and international freight costs. The company has limited pricing power in passing on these costs to customers as a result of the factors discussed above.It is also somewhat unique in that it exports practically 100% of its production while importing about 97% of its requirements. Being a net exporter, it is exposed to a strengthening INR. However, volatile exchange rates (as witnessed over the last year) are bound to make business relatively more difficult for this company than others.Management haven’t paid any dividend in the past preferring instead to reinvest in the business (at modest rates of return) and pay down debt. Now that debt is fully repaid, it will be interesting to view management action – whether it will pay out a reasonable portion of its earnings or reinvest in sub-par opportunities.

Vaghani Techno-Build Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-23T22:14:00.000-07:00

Scripscan:Vaghani Techno-Build Ltd
cmp:6
Code:531676

Investing-reflections:Vaghani Techno-Build operates in the real estate industry.It is engaged in the construction and development of infrastructure and trading of Transfer Development Rights (TDR), which originate when landowners sever building/development rights from a particular piece of property.The company reported negative reserves several years ago although it appears to have recovered ground at present. Pre-tax operating profits were reported at 2cr per year for the last three years but have slipped back into marginal losses over the last nine months.The business is exposed to all the risks of the construction and real estate industry including high interest rates, execution risks (availability and costs of material, labour, etc.), stringent government regulations (taxes, permits, etc.), and other relevant factors.The balance sheet reveals stock of ‘Industrial Units’ (recoverability unknown), advances for capital goods (projects unknown), and debts are older than six months.Management have never declared dividends from its resources – this may be due to intermittent losses but it certainly does not appear to be forthcoming in the foreseeable future.

TCFC Finance Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-23T22:12:00.000-07:00

Scripscan:TCFC Finance Ltd
cmp:17
Code:532284

Investing-reflections:TCFC Finance is engaged in share trading – primarily in secondary companies.The company reported just over 60cr in stock-in-trade as at 30th September, 2011.Management haven’t provided details of their trading strategy and hence, we’re unable to judge its viability. It does not appear to be stable since they seem to be willing to change course depending on their assessment of economic conditions. They also appear to be engaged in the ‘hedging’ of equity shares and mutual fund units, which could expose the company to unlimited losses in a sustained bull market.The company reported a drop in net worth in 08/09 as a result of the financial market downturn and also reported losses of about 4cr in the nine months ended in December 2011 as a result of market weakness. The performance is erratic, as expected, and appears to depend largely on the performance of the markets – with no special ability to withstand market downturns.

Industrial & Prudential Investment Company Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook

2012-05-22T22:41:00.001-07:00

Scripscan:Industrial & Prudential Investment Company Ltd
cmp:1500
Code:501298

Investing-reflections:Industrial and Prudential Investment Company, as its name implies, is an investment company.It appears to hold investments for the long-term and dividend income dominates its earnings stream. It owns a widely diversified list of equity and mutual fund units amounting to over 300cr in market value.Its largest position appears to be in KSB Pumps, which amounts to 10% of its total portfolio by market value.The income is overwhelmingly constituted of dividends on long-term investments, which has been steadily rising over the last five years – amounting to over 6cr currently, thereby contributing to a steady increase in reported net worth over the same period.It is unlikely to realise large capital gains during periods of market exuberance if it continues to stick to long holding periods regardless of market conditions. Furthermore, it is exposed to market declines if it intends to liquidate portions of its portfolio in the short/medium term, which appears unlikely in any significant manner.

Simplex Realty Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-22T22:36:00.001-07:00

Scripscan:Simplex Realty Ltd
cmp:100
Code:503229

Investing-reflections:Simplex Realty is engaged in the business of real estate construction and similar activities.The company appears to have one residential/commercial project running currently in Mumbai on a revenue-sharing basis with the land owner. The plans for the project appear to be approved and the commercial certificate is pending.The company reported negative reserves and net worth in 2006 and 2007 and restored it in subsequent years with apparently large net profits, which weren’t backed by cash flows – although over 40cr of loans were wiped out as a result. The performance has been highly erratic and there are currently no revenues (see above) until the project is completed.Management appear optimistic about the medium to long-term outlook of real estate activities primarily due to the demand/supply gap primarily as a result of government thrust on infrastructure development including housing and retail as well as commercial demand from the IT and Financial Services industries.The business is primarily exposed to high competition particularly in the major cities where small construction companies supply the majority of residential construction output in a highly fragmented market.The business is at least equally, if not more, impacted by the interest rate cycle, which dampens demand and crimps profitability in high interest environments. Moreover, it is affected by RBI policies on real estate lending and other regulations such as clamping down on ‘teaser’ rates, which perversely benefits this industry.This business, like most businesses in the country, is exposed to input cost inflation at every level. It is also exposed to myriad execution risks from the grant of government permits and levy of taxes to the availability of labour/materials and suitability of weather conditions.The company’s equity is largely constituted by loans and advances including advances for property development of 44cr (see project description above) and inter-corporate deposits of 38cr (recoverability unknown). Management has also made an investment in a renewable energy business – presumably to assist in constructing ‘green’ buildings. The economic viability of this investment is also not ascertainable based on the information provided.

Inter Globe Finance Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-22T22:33:00.000-07:00

Scripscan:Inter Globe Finance Ltd
cmp:12
Code:511391

Investing-reflections:Inter Globe Finance is a non-banking finance company (NBFC) operating out of Kolkata.It conducts three activities, which are – financing, inter-corporate investments, and capital market operations. Net interest income forms the largest component of income.The company has undergone a lot of restructuring in the recent past, which involved a reduction in share capital and then the issue of shares to amalgamate 22 companies into itself, which included the induction of new promoters into the fold.The company repaid its debt with the new equity infusion. It owned about 4cr of quoted investments at market. Loans to companies of about 7cr formed the bulk of remaining assets (creditworthiness and loan underwriting standards unknown).Due to the restructuring and new management, analysis of the past record appears to be futile except to the extent that past accumulated losses are now wiped out and future prospects are uncertain.Management plans to expand the company’s financial products/service offerings and also enter into warehousing activities, in which their competence is unknown.The lending activities are subject to the risks of changing interest rates, credit misappraisals, economic downturns and the capital market activities are exposed to financial market risks.Worryingly, the company is actively attempting to increase its borrowing power to aggressively expand loan portfolio in the next year or two.

Kohinoor Techno Engineers Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-21T23:36:00.001-07:00

Scripscan:Kohinoor Techno Engineers Ltd
cmp:2
Code:519485

Investing-reflections:Kohinoor Techno Engineers is in the business of software development for diamond machinery.The company is over 25 years old with an 80% market share for laser machines and has a worldwide customer base. Management intends to move into the business of producing diamond machinery directly. They also engage in short-term diamond trading/manufacturing/processing as and when market conditions appear lucrative.The company’s net worth, however, has gone nowhere in the last decade and has been reporting negative reserves for the last decade. Performance over the last five years has been marginal at best and net profits over the last year were just under 7 lacs on revenues of about 3cr.The business is dependent on the capital investment cycle, which is adversely impacted in a high interest rate environment. The industry appears to be a highly competitive where the company has limited competitive advantage as evidenced by their low profit margins.The company reported 1.7cr of accumulated losses indicating the lack of economic viability in its current business.Management have indicated that they are looking to enter new markets and produce new products including textile products because of ‘changing government rules and world market scenario’.This seems to be prime indication that the future course of the business is unpredictable at the moment and more importantly, untested. Equity shareholders would be taking a bet on the capability of management in their new ventures.

Kalyani Investment Company Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-21T23:33:00.001-07:00

Scripscan:Kalyani Investment Company Ltd
cmp:370
Code:533302

Investing-reflections:Kalyani Investment Company holds investments primarily in the debt and equity of Kalyani Group companies – constituting over 90% of total investments.It relies mainly on dividend income and held over 1,400cr in market value of quoted investments – the most notable of which is a stake in Bharat Forge Limited, a group company, valued at over 1,000cr at current market prices.The primary risk pertaining to the value of the company appears to be adverse developments in the Kalyani Group companies in which it is invested in. Apart from this, it is exposed to market value declines for whatever reason. In the same vein, it is unlikely to realise capital gains in the event of market exuberance due to the long-term nature of its holdings.The company also holds several questionable looking unquoted investments such as 0.1% non-cumulative preference shares (and equity investment) in an entity that is a debt restructuring (CDR) candidate. Little information is provided on unquoted investments.Management don’t appear to be too shareholder-oriented – they haven’t declared any dividends on the equity shares despite large liquid assets. Interestingly, they declared dividends on preference shares due to the ‘extent of distributable assets available. Without losing their breath, they refused dividends on equity shares in the very next sentence. One wonders why the dividend reasoning for preference shares is inapplicable to equity shares.

Schablona India Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-21T23:28:00.002-07:00

Scripscan:Schablona India Ltd
cmp:26
Code:507894

Investing-reflections:Schablona India manufactures designer tiles.It operates three divisions, which are Decorative Tiles (largest), Ceramic Transfer Sheets, and Trading (<20% of revenues).The company focuses on custom-made design work to mitigate the high competition in its industry and also outsources some of its tile production to maintain cost competitiveness and respond flexibly to market conditions.It reported consistent growth in revenues and operating profits over the last five years – reporting 3.5cr in operating profits on revenues of over 40cr in the last financial year with similar performance in the last nine months ended 31st December, 2011. It operated with a moderate net debt load relative to assets and earnings.The business is linked to the construction cycle, which is adversely impacted in a high interest rate environment.The industry is characterised by high competition – particularly from the unorganised sector. There is substantial bulk selling at the entry level, which depresses selling prices for all competitors. Moreover, even major customers are increasing their capacity creating a double-barrelled problem of reducing revenues and increasing competition.The market is somewhat dynamic with consumer preferences changing alongside fashion trends. The company’s focus on custom designs could result in lower volumes and lack of market acceptance.The business is exposed to rising costs of input, energy, transport, etc. as a result of inflationary pressures.There is also a fair degree of technology involved in the manufacturing process and therefore, substantial technological advancements could render the current operating model obsolete and/or increase upgrading costs substantially.

Daikaffil Chemicals India Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

2012-05-19T06:34:00.002-07:00

Scripscan:Daikaffil Chemicals India Ltd
cmp:10
Code:530825

Story:Daikaffil Chemicals India is a chemical manufacturing Company established in 1992.It has come a long way since and established a decent name in the chemical industry. Other than the production of chemicals, which after processing becomes a part of everyone's day to day life, Daikaffil entered the consumer arena in 1995 by converting into a Public Limited Company.Daikaffil Chemicals manufactures and supplies optical brighteners for use in cellulosic fibers, pulp and paper, detergents, and soaps primarily to the United States, Europe, and south-east Asian countries. It also offers naphthols, dye intermediates, and stilbene derivatives, as well as digament red 170 pigment for use in paint and printing ink industry.Daikaffil has a production facility in Tarapur. The unit was established in 1992 and from a small turnover of about 1 crore that year, the unit has achieved higher sales in the range of Rs. 20 crore, with reasonable profits and reserves.Its clientele includes established names in the industry like Clariant, KIWA, ERCA spa, DAIKA (Japan) and many more.It needs to scale up its operations to get a higher multiple in the bourses.The company pays a dividend of 80 paisa which at present prices gives a massive yield of 8%.It has a tiny equity base of 5 odd crs and thus marketcap is just 6crs.The promoters own around 32% stake in the company as on present date.Its not a great bargain considering its business model but investors already owning it may just cling on to it for some more quarters hoping for some better performance from the company.A hold at present levels(more so because of the dividend perspective).