Jindal Stainless - Good Quarter

Jindal Stainless Net Zooms 120.47% In Sep`06 Qtr

Jindal Stainless has posted a 120.47% rise in net profit after tax and exceptional items, to Rs 970.5 million for the quarter ended September 30, 2006 as compared with Rs 440.2 million for the quarter ended September 30, 2005. Total income increased by 41.25% to Rs 11,500.5 million for the quarter ended September 30, 2006 from Rs 8,142.1 million for the quarter ended September 30, 2005. Net sales increased by 41.37% to Rs 11,446.4 million for the quarter ended September 30, 2006 from Rs 8,096.4 million for the quarter ended September 30, 2005. EPS increased by 85.5% to Rs 7.42 for the quarter ended September 30, 2006 from Rs 4 for the quarter ended September 30, 2005.

Jindal Steel is reported to be close to buying out ThaiNox, Thailand`s largest stainless steel company, for USD 325 million.

Excerpts from CNBC – TV18’s exclusive interview with Ratan Jindal:

Q: Can you take us through your margin picture?

A: This quarter has been pretty good. we have increased turnover wise about little over 40% as compared to the same quarter last year. EBITDA margins are about 105-110% and profit after tax is almost about 120%.

Q: How realisations pan out for the quarter?

A: The turnover has gone up from Rs 1200 crore plus for this quarter compared to last year turnover of Rs 885-883 crore.

Q: How are you looking at steel prices at this juncture? Are you seeing them stable at current levels or do you think a slight slippage is likely towards the end of FY07?

A: Stainless steel is also being recognised by the Government of India as a separate entity and separate product. It has a strong market as stainless steel is actually replacing lot of competitive material like steel and plastics and few other material. I am seeing a very good growth going forward and stainless steel prices should also remain quite firm for next two-three quarters.

Q: Can you take us through your acquisition plans, we understand that you are planning to start operations in the form of subsidiaries in several European countries?

A: Yes, we have acquired an Indonesian company some time back and we have been able to run it at 100% capacity. We have decided to expand the capacity three times, over next one year itself.

Within Jindal Stainless we are expanding our value added products like cold rolling as well as our precision strips. Globally we are definitely looking for more similar acquisitions; wherever there is opportunity we are quite vigilant and alert and we hope to expand our network globally.

Q: Are your margins likely to fall because of the rising nickel prices?

A: We are world leaders in 200 series. There are three typical grades of stainless steel, 200, 300 and 400. There is a 400 series, which is without nickel and there is 200 series, which contains low nickel. So both these grades are growing at a much faster pace . We are the leaders in 200 series, and also making our presence felt in 400 series.

Q: What is your current order book stand at?

A: We are overbooked for a year actually and that is why we are increasing our melting, rolling and all the existing capacities at Hisar. We have increased by 15% this year and hopefully by next year it will be up by 20%. We are pretty full and that is why we are taking up the Orissa project, which is 1.6 million tonnes fully integrated stainless steel plant.

PSL LTD. - Pipping Dreams

PSL - Net Profit Surges 70 %

PSL, a key enabler of Infrastructure and construction projects, engaged in various types of pipe coating and pipe manufacturing today announced their second unaudited quarter results with an incredible growth of 69.85 % in the net profit, from Rs. 7.96 crore in the half year last fiscal to Rs. 13.52 crore in the second quarter of the current fiscal. Total income for the same period showed a sustainable growth of 35.91% from Rs. 231.93 crore to Rs. 315.22 crore. Correspondingly, the PBT for the second quarter of 2006-07 saw an increase of 39%, from Rs. 11.74 crore to Rs. 20.50 crore.

There has also been a tremendous increase of 53.65% in the EPS from Rs. 2.74 to Rs. 4.21. The increase in the profit is a direct consequence of PSL's major ongoing expansion program. The company has recently set up a unit for JSC Nefte - Gastruba, an Arcelor Mittal affiliate at Kazakhstan.

Mr. Ashok Punj, Managing Director, PSL Ltd. says, "We have been growing steadily in Q2 & H1 FY2007 and the results speaks for itself. We are hopeful to complete and book most of our major projects in FY2007 ahead of schedules. This should translate into healthy performance in H2 FY2007. We are also expanding our target market from the Middle East countries to the West. This year is very crucial for us as we are executing projects in the domestic as well as the international market".

Amara Raja - Raja Of Returns

Recommended at Rs. 193.00 on this Blog, Today's closing Rs. 441.20

Amara Raja Clocks 175% Growth In FY05-06 Earnings

Amara Raja Batteries witnessed a growth of 66% in its net gross revenues for the year 2005-06. The company generated revenues of Rs 4458.29 million in the year 2005-06.

It earned a net profit of Rs 238.46 million in the year 2005-06, a growth of 175% over the corresponding fiscal`s profit of Rs 86.90 million. Robust growth in top line, increased operational efficiency and cost control measures have helped the company post healthy margins. Operating margins improved to 9.26% in FY2005-06, from 5.26% in FY 2004-05.

Both, industrial and automotive batteries have registered impressive growth during the year. The automotive battery segment grew 70% over the previous year. The growth was fueled by high growth in OE, after market businesses and private label businesses. It`s exports volumes surged 83% on YOY basis. Aggressive marketing initiatives and increased market penetration ensured this growth.

Shipping Corporation - Excellent Quarter

SCI Net Zooms 114% In Sep`06 Quarter

Shipping Corporation of India has posted a net profit after tax of Rs 3212.90 million for the quarter ended September 30, 2006 as compared with Rs 1499.50 million for the quarter ended September 30, 2005. This represents a growth of 114.26% in the current quarter. Total income has increased by 46.88% to Rs 10977.70 million for the quarter ended September 30, 2006, from Rs 7473.70 million for the quarter ended September 30, 2005.

Shipping Corporation of India (SCI) is planning to acquire 10 offshore support vessels in the next three years. In its first phase, SCI will acquire five anchor handling and towing cum supply (AHTS) vessels with 70 tonne bollard pull capacity. The estimated cost of these vessels is over Rs 2750 million. The company would acquire five more vessels in its second phase. At present, SCI owns 10 offshore support vessels and manages 21 such vessels for Oil and Natural Gas Corporation (ONGC). SCI is also bidding for ONGC`s new tender for providing services of 26 offshore supply vessels.

The company has drawn up a five-year fleet expansion programme, involving a capex of Rs 150 billion for acquisition of 70 ships. The company currently has a cash reserve of Rs 25 billion. However, for funding the fleet acquisition programme, it needs an equity funding of Rs 40 billion over the next five years. It denied any plans to approach the capital market to finance the acquisition programme.

Clutch Auto - Grab It Now

Clutch Auto - Multibagger In The Making

Clutch Auto Ltd (CAL), India's leading clutch manufacturer with market share of over 60%, is on fast-growth trajectory. With exports rising, revenues are expected to grow at a CAGR (FY06-08) of 46% and net profit at a CAGR of 82%. EPS would expand from Rs 9 in FY06 to Rs 25.7 in FY08. At the current price of Rs 124, the stock is trading at 8.7x FY07E and 4.5x FY08E earnings.

Company Background

Clutch Auto, established in 1971, is India's largest clutch manufacturer and exporter with over three decades of undisputed leadership. Its production facility is located at Faridabad. The company enjoys over 60% market share in tractors and commercial vehicles (CVs). Its clientele includes Tata Motors, Ashok Leyland, Maruti Udyog, Mahindra & Mahindra, Bajaj Auto, TAFE, Toyota, BEML, Escorts and State-run transport undertakings. In CVs, it is a major supplier to Tata Motors with a 60% market share. It has dominant market share of 80% in tractors and supplies to all manufacturers in India.

CAL is growing both organically and inorganically. In FY05, it expanded clutch plate capacity by 122% to 2 millions pieces and trebled clutch cover capacity to 1.5 millions pieces at capital expenditure (capex) of over Rs 5 crore. It acquired the clutch division of Pioneer Inc, US, in March 2006, which was renamed Pioneer Clutch Inc.

Investment Positives

Thrust on exports
CAL is targeting the US heavy-duty clutch market (estimated at $550 million) with its patented products. The acquisition of the clutch division of Pioneer Inc will strengthen its foothold in the US. Pioneer is a quasi manufacturing and distribution company in the US with a warehouse facility of over 55,000 square feet, access to 7 warehouses, 20 marketing networks, sales force of over 100 people, and most importantly a client base of 500 companies in the replacement market. Pioneer's established distribution would help CAL acquire the formers' clients.

The company has bagged a five-year order worth US$60 million from Fleet Pride, which should further aid its export growth. Fleet Pride's established network would also enable CAL tap the formers' clients. We expect export revenues to grow at a CAGR (FY06-08) of 78.8% to Rs 153.6 crore in FY08.

Product patents - a competitive advantage
CAL manufactures 500 different types of clutches including 16-patented products. It has 7 product patents, which have been approved but are awaiting registration. The company is confident of receiving the registrations in the current year. Further, it also has another 14 products under patent filing. Out of the 21 products, patents for 12 (10 in the US) are pending for overseas market. The approval of patents would open up a huge export market for the company.

EBITDA margins to expand
Higher export margins (about 4 - 6%) and implementation of Kaizen technology along with a reduction in headcount would result in higher EBITDA margins. We expect EBITDA margins to expand remarkably to 22% in FY08 from 16.3% in FY06, supporting bottom line growth in coming years.

Debt restructuring to boost net profit
The company is repaying its high-cost debt with funds raised by issuing preferential warrants worth Rs 49 crore. It has also managed to raise funds at cheaper interest rates from the Technology Development Board (TDB) and a few banks, which would further ease finance cost pressure on net profit. Net profit margin (NPM) would improve from 8.5% in FY06 to 13.3% in FY08.

Financials:

For FY06, CAL reported excellent sales growth of 58% to Rs149.3 crore, supported by more than 100% rise in export revenues to Rs 48 crore. EBIDTA registered a 55% growth in FY06. However the rise in raw material costs hit EBITDA margins, which were down by 30 basis points to 16.3%. The repayment of high-cost debts with low-cost loans supported net margins expansion to 8.5% from 6%.

Going forward, with rising export revenues and focus on high-value added products we expect net sales to rise at a CAGR of 45.5% to Rs 316 crore in FY08. Contribution from exports would increase from 32% in FY06 to 45% in FY08. With improving EBITDA margins, net profit would expand from Rs 12.7 crore in FY06 to Rs 42 crore in FY08; CAGR of 82.1%.

Valuation

With the positive trend in automobile industry, demand for clutches is expected to see a strong upsurge. This will translate into robust earning growth and improvement in profitability ratios for CAL. The stock is currently trading at 8.7x FY07E and 4.5x FY08E earnings. The attractive valuation warrants re-rating of the stock.

Adlabs Films - Big Is Beautiful

Adlabs Films To Demerge FM

Adlabs Films Limited, a part of the Reliance-Anil Dhirubhai Ambani group, would demerge the FM radio business and establish it as a separate company, an official said. Chief Operating Officer of BIG 92.7 FM, the radio division of Adlabs, Tarun Katial said it would be hived off into a separate company. However, he declined to give a time-frame in this regard.

Launching BIG 92.7 FM here today, Katial said Kolkata was the company’s fifth radio station after Delhi, Hyderabad, Chennai and Bangalore, which would soon be followed by Mumbai. As per the national roll-out plan, the FM station would be launched in 45 countrywide destinations by April 2007. Katial said that as per a survey carried out by IMRB, the FM station plans to touch 200 million listeners in India.

Adlabs had invested nearly Rs 400 crore on purchase of transmission equipment, building infrastructure and obtaining licence. He said the company plans to take FM radio as an entertainment medium not only in key metros, but also in virgin markets. Initially, the FM station would target 1,000 towns and 50,000 villages across the country.

Katial said Abhishek Bachchan had been selected as the brand ambassador for the FM station whose punchline would be, “Big is Beautiful”. The radio station’s content would be localised to the preference of the listeners. For instance, Katial said, for the first time ever the Feluda series of detective stories by the legendary film maker Satyajit Ray would be serialised on the network.

Elder Pharma - Healthy Results

Elder Pharma`s Net Spurts Up 95.2% In Sep`06 Qtr

Elder Pharmaceutical has posted a 95.2% rise in net profit after tax and exceptional items to Rs 141.85 million for the quarter ended September 30, 2006 as compared with Rs 72.67 million for the quarter ended September 30, 2005. Total income has increased by 30.41% to Rs 1108.8 million for the quarter ended September 30, 2006 from Rs 850.22 million for the quarter ended September 30, 2005. The EPS has increased by 89.66% to Rs 7.89 for the quarter ended September 30, 2006 from Rs 4.16 for the quarter ended September 30, 2005.

The company is mainly into the manufacturing of bulk drugs and formulations and has both its plants at Navi Mumbai. Formulations and bulk drugs are major contributors to the company`s revenues.

Zicom - Excellent Results

Zicom Q2 Net Doubles To Rs 2.71 Cr

Electronic security solution provider Zicom Electronic Security Systems posted an increase of over two fold in net profit at Rs 2.71 crore for the quarter ended September 30, as compared to Rs 1.32 crore in the corresponding quarter last year. The gross sales of the company increased by 88.74 per cent at Rs 37.39 crore for the second quarter ended September 30, as against Rs 19.81 crore a year ago, the company informed the National Stock Exchange.

"We are looking forward to a successful year ahead, with a foray in retail segment and with growing retail market our top and bottom lines are expected to increase. With booming infrastructure sector and increasing awareness of security, we expect our sales to grow in both retail and integrated security solutions business," Zicom Electronic Security Systems Chairman Manohar Bidaye said.

Pantaloons - Retail Revolution

Pantaloon Expects Rs 5000 Cr From JVs

Kishore Biyani-promoted Pantaloon Retail India Ltd (PRIL), part of the Future Group, is targeting a revenue stream of Rs 5,000 crore by 2010 from joint ventures. The group is planning to invest Rs 500 crore in the same period in the joint ventures. This will be a ten-fold return on investment in four years. “We hope to invest Rs 500 crore in these joint ventures till 2010 and reap Rs 5,000 crore,” said Ved Prakash Arya, director - operations & COO, Pantaloon Retail.

The company is looking at this giant revenue stream to flow in from seven key areas where it has entered into joint ventures and taken equity stakes. For instance, the latest is the initiative with Lee Cooper. “Basically, we recognise that we do not have the expertise in certain areas that are better handled by those in the segment. So, we have identified some key segments and have forged alliances that fit in with our plan to reach the consumer where they are, with what they need,” said Arya. The segments identified broadly include footwear, lifestyle, kidswear, food, entertainment and health. There are others such as mobile and beauty where the group has initiated on its own with ventures such as Star n’ Sitara saloons.
For footwear it has 51 per cent stake in a joint venture with Liberty India and already has six stores under the banner of Shoe Factory. “Here we stock not only just brands, but also imported footwear and other brands. This segment is roughly valued at around Rs 20,000 crore and we want to be part of it,” he said. For kidswear, it has tied up with Gini & Jony and is looking to take a major position in the Rs 7,000 crore segment.

In the foods segment, it has tied up with Pan India Food Solutions that has under its banner food outlets such as Bombay Blues, Copper Chimney and Noodle Bar among others. These will help PRIL create food courts where the company seeks to establish malls. For foraying the entertainment space, it has forged an alliance with Mumbai-based Galaxy Entertainment that runs a bowling company, video arcade and sports bar.

In the arena of health, PRIL has looked at the area of preventive care with fitness where it has tied up Talwalkars and it already has its venture Indus Clothing that takes care of yoga and fitness wear. It has also entered into a joint venture with the Manipal Group and hopes to set up pharmacy chains, pathology labs and “we are also looking at the consulting space with Manipal,” said Arya.

In lifestyle segment, it has a joint venture with Planet Retail India Ltd that has under it ventures such as Marks & Spencer and has exclusive distribution license for brands such as Puma, Wilson and Speedo among others. PRIL has also got an alliance going with Etam for lingerie and inner wear and with Goldiam International Ltd and retails its jewellery brand Ola.

Centurion Bank - Growing Aggressively

Centurion Bank - Net Up 49 %

Centurion Bank of Punjab (CBoP) has registered 49% rise in net profits to Rs 31.1 crore for the second quarter ended September 30, 2006 against Rs 20.9 crore for the corresponding period last year. The bank’s earnings per share (non-annualised) increased to Rs 0.21 from Rs 0.16 during the same period last year. The net interest income for the quarter increased by 44% to Rs 135 crore from Rs 94.1 crore in the corresponding quarter last year. The net interest margin for period improved to 4.7% from 4.4% last year, while cost of deposits increased to 5.4% against 4.6% during the previous fiscal. Other income comprising primarily of fee-income increased by 70% to Rs 88.1 crore in the second quarter from Rs 51.7 crore in the previous year.

CBoP chief operating officer Anil Jaggia said, “Our principle growth engine would be the organic route. However, we are actively seeking any inorganic growth opportunity.” The net non-performing loans stood at 1.3% of net advances as on September 30, 2006, against 2.6% last year. Capital adequacy stood at 11.6% compared with 10.9% last year. “We may look at raising hybrid Tier I capital and Upper Tier II capital, after receiving approvals from the RBI for raising capital through private placement,” said Jaggia. Deposits grew 41% to Rs 11,383 crore during the quarter from Rs 8,071 crore last year. Meanwhile, net advances increased 61% to Rs 8,385 crore from Rs 5,113 crore during the previous year.

Elder Pharma - Healing Wounds

Elder, Rye Ink Licensing Pact

Elder Health Care, part of the Elder Pharmaceuticals group, has entered into an in-licensing tie-up with Rye Pharmaceuticals Pty of Australia to develop, manufacture and market the later’s wound care products for first aid and burn applications, in India. Rye Pharma is a is a pioneer in self-researched wound care, first aid and skin care products selling them in 28 countries around the world. The wound care segment in South Asia is estimated at Rs 1350 crore and growing at about 11 per cent.

With the in-licensing agreement, Elder will be launching the burn therapy product –BurnAid of Rye into Indian market. BurnAid, a range of burn gels, gel dressings and burn kits, offer rapid cooling to the burn, and offer fast ongoing pain relief. The principal ingredient in BurnAid is tea tree oil (Melaleuca Oil) a scientifically proven natural substance having therapeutic benefits. Rye’s products are approved for sale in the US, European Union, Australia and few more global markets at present. Elder is working out plans to manufacture this product and similar other products of Rye - in India at its newly set up Uttaranchal facility.

Elder plans to take Rye’s products to the defence and hospital sectors, industrial medical clinics, ambulances and all workplaces within the country. Elder is targeting a turnover of Rs 10-12 crore in the first year itself. This alliance also marks Rye’s entry into India. Anuj Saxena, managing director, Elder Health Caresaid that the group’s focus in the years to come shall be to bring to India globally accepted products. “We found Rye’s products bio-chemically superior without any side effects.” Adds John Price, Managing Director, Rye Pharmaceuticals,” Elder group already has a substantial presence in the wound care segment through its highly successful products like ‘Chymoral’ and Salutyl’ under license from ABC and ‘Oxoferrin’ under license from Oxochemie, Germany.

NIIT Tech - Defensive Play

NIIT Tech In Deal With Singapore's DSTA

IT solutions company NIIT Technologies today entered into a multi-million dollar contract with Singapore's Defence Science and Technology Agency (DSTA) to support its eGovernance initiatives.

Under the contract, DSTA will be outsourcing the development and maintenance support of their Government Electronic Business portal (GeBIZ) to NIIT Technologies, Arvind Thakur, CEO of NIIT, said, refusing to divulge further details about the deal size.

The whole process when implemnted would result in significant time and cost savings for the users, he added. "NIIT Technologies will soon start negotiations with various state governments and PSUs for implemenation of the solution and is expecting to sell one solution in the next 12 months," he said.

The company will also productise the application and market the solution to other Governments in South Asia, Middle East and Central Europe, Thakur said, adding that the primary market for this would remain India.

"The marketing tie-up with DSTA marks a new phase in NIIT's decade old presence in Singapore. This tie-up will help us address the fast-growing eGovernance market in India and other countries as well," he said.

GeBIZ, developed by DSTA, was successfully implemented for Singapore government agencies in 2000. The GeBIZ portal (www.Gebiz.Gov.Sg), is a one-stop eBusiness site which facilitates trading between government organisations and its local and overseas suppliers, on an "anytime, anywhere" basis.

Pantaloon Retail - Way To Go

Pantaloon Board Nod For Alpha JV, Stock Split

The board of directors of Pantaloon Retail India, at its meeting held on September 30, approved an MOU with UK-based Alpha Airports Group Plc (Alpha), for forming of a 50-50 joint venture (JV) company.

According to a release issued by Pantaloon to the BSE today, the JV company will develop travel, retail and food & beverage catering businesses at the leading airports in India.

Pantaloon also reported a 47% jump in its net profit at Rs 158.3 mn in the quarter ended June 30, 2006 as against Rs 107.9 mn in the year-ago period. EPS increased to Rs 5.89 in the reporting quarter versus Rs 4.29 in the corresponding quarter a year earlier, the Mumbai-based company said in a statement. Pantaloon's sales during the April-June quarter were up 61% at Rs 5.75 bn as against Rs 3.57 bn in the year-ago quarter.

The board also approved a stock split in the ratio 1:5, ie each equity share with a face value of Rs 10 to be sub-divided into five shares of Rs 2 each.