Srikalahasthi Pipes Ltd - recommend to buy

.Company Profile -

Srikalahasthi Pipes Limited (LIL) was incorporated on 1 November, 1991 by Lanco Group of Companies to manufacture Pig Iron and Cement. The installed capacity of Pig Iron was 90,000 TPA and with similar capacity 90,000 TPA for cement.
The company is engaged in engineering, procurement, and construction (EPC); and power, natural resources,infrastructure, and property development businesses. The company operates through five segments: EPC and Construction, Power, Property Development, Infrastructure, and Resources.
• The EPC and Construction segment provides EPC services for various projects, such as thermal and hydro power projects, chimneys, cooling towers and balance of plant, and transmission and distribution projects, as well as for roads, highways and bridges, metros and railways, buildings and airports, sea ports and marine structures, and water and pipeline facilities.
• The Power segment is engaged in generation and trading of power from thermal, hydro, wind, and solar sources.
• The Property Development segment develops integrated properties comprising commercial and
residential buildings.
• The Infrastructure segment is involved in the development of civil and urban projects, such as roads,
highways, ports, airports, railway lines, etc. on build, operate, and transfer basis. The Resources segment is engaged in the exploration, mining, and marketing of coal.
• The company is also involved in the construction of water supply and irrigation projects, including dam,tunnels, etc.

Why to buy?

1. Future looks promising -

India is expected to become the second-largest steel producer in the world by 2016. Easy availability of low-cost manpower and presence of abundant iron ore reserves make India competitive in the global setup.

2. Industry to revive -
Since government of India focusing more on civil and urban projects and lanco being major player in the south India will likely to benefit in a big way from such projects. Further, company is able to reduce debt to equity ratio from 2.21 to 1.8 this fiscal year which is likely to improve southwards further to 1.5 in FY15. Net margin will likely to be around 6-7% in FY15 from current 4% which is showing healthy improvement in bottom line.

At the current market price of Rs. 72.40, the stock P/E ratio is at 4.24 x FY15E and 3.52 x FY16E respectively. Earnings per share (EPS) of the company for the earnings for FY15E and FY16E are seen at Rs. 17.07 and Rs. 20.56 respectively. Hence, we recommend to buy the stock on any decline from CMP for the target of 110 in medium to long term.

vinyl chemicals (India) - fevicol strength...

Vinyl Chemicals India Ltd is a Pidilite group company incorporated on 15th May, 1986 with the object of manufacturing Vinyl Acetate Monomer (VAM). It's a chemical company which make chemicals for textile, paints, alcohol, adhesive industries since 1991. 

Why to invest?

1. Strong promoter group - 
pidilite group is well known and market leader in their segment. They have very clean record on their balancesheets with no corporate goverance issue which can always give soothing to investors holding the group company.

2. Worst history behind - 
The Company commissioned a 10,000 TPA, Vinyl Acetate Monomer(VAM) manufacturing plant in the Raigad district of Maharashtra, in technical collaboration with Uhde GmbH,Germany, on 25th October, 1990. 
Due to some reason, the VAM plant made continuous losses and was demerged into Pidilite Industries Ltd. (PIL) in FY08. Due to the demerger, the Share Capital of the co. reduced from Rs. 18.34Cr. in FY07 to Rs.1.84Cr. in FY08. Networth reduced from Rs.30.8Cr. to Rs.2.7Cr., Debt reduced from Rs.32.4Cr. to Nil and Total Assets reduced from Rs.63Cr. to Rs.2.7Cr.
The Net Fixed Assets were reduced from Rs.39Cr. to Rs.25 lakhs and the company ceased to be a manufacturing concern.
This demerger was a boon for VCIL shareholders since the VAM plant was a liability. Today, the VAM plant which is now a part of PIL, is inoperative. The VAM plant generated revenues of Rs.93Cr, Rs.15.7Cr. & Rs.2.1Cr. in FY09, FY10 & FY11 for PIL. Clearly, the demerger was a bail out of VCIL by PIL.

3. Excellent growth and dividend - 

(in Cr.)	2014	2013	2012	2011	2010
Income Statement
Revenue	292.78	243.56	211.48	157.27	125.67
Other Income	1.04	0.84	0.21	0.15	0.19
Total Income	293.82	244.40	211.69	157.42	125.86
Expenditure	-282.45	-235.37	-204.26	-151.59	-117.13
Interest	-0.04	-0.22	--	--	-0.09
PBDT	11.33	8.81	7.43	5.83	8.64
Depreciation	--	--	--	--	--
PBT	11.33	8.81	7.43	5.83	8.64
Tax	-3.85	-2.87	-2.42	-1.89	-2.92
Net Profit	7.48	5.94	5.01	4.30	5.72
Equity	1.83	1.83	1.83	1.83	1.83
EPS	4.09	3.24	2.74	2.35	3.12
CEPS	4.09	3.25	2.74	2.35	3.13
OPM %	3.88	3.71	3.51	3.71	6.95
NPM %	2.55	2.44	2.37	2.73	4.55

In the current bull run, it's very difficult to get such good dividend paying and trustworthy management backed company to get at less than 10 PE. We expect company to do well in mid to long term. Hence, we ask our readers to take a positional call with growing company and be a part of their growth. 

Pioneer embroideries - coming on track

About Company - 

 Pioneer Embroideries Ltd is India's largest manufacturer - exporter of Embroideries, Bobbin laces, Raschel laces and other garment accessories. PEL owns the No. 1  retail brand Embroidered clothings named "Hakoba".  The company have seven manufacturing units spans 5 states from Tamil Nadu to Haryana. Apart from the domestic sales PEL exports its products to Latin America, North America, Europe, Africa and the Middle East. 

Why to invest into it?

1. Company is showing growth potential -

The company's top-line growth is satisfactory since the past decade and unfortunately its bottom-line is not so. In 2008 (up to 2008, PEL having a regular dividend paying track record), to meet the financial requirement for setting up a Dope Dyed Polyester Yarn (DDPY) division, the company had issued FCCBs for $30mn, which were proposed to convert into shares but not happened that because of the sharp fall in its share prices on account of the Global financial crisis. (In fact just $2 mn converted in 2008, $16 mn restructured in FY 2014 and $11 mn was pending). Recently, the company had bought back the remaining FCCBs. It has settled the defaulted dues with ICICI bank by one time settlement. As per the CDR package instruction, in March, 2013 the promoters of the company  had subscribed 1651978 shares at Rs. 21.22 per shares and another 3125948 shares at Rs. 19.77 per shares to aggregate  Rs. 9.7 crore. Last week PEL has completed the OTS with State Bank of Patiala. So it is clear that the company management is confident with the company's overall growth in the coming years.

2. Well known brand -

 -  - The word itself conjures up images of embroidery. Not surprising coz over the years  has become synonymous with embroidery. Infact it is one of the most respectable brands in the country (with its fame spread overseas as well) and enjoys a heritage brand status.  is also documented in the Indian fashion industry.

3. Bottom line will improve fast -  

Finance cost reduced considerably in the first HY of the current FY. We believe the trend will continue in the coming quarters, once it fully settled the dues as per the schedule and arranged the low cost fund. We hope that the company's financial performance, especially in the bottom-line will considerably improve in the future and it would reflect in its stock price too.

palred technologies - E commerce benificiary

About the company -

Palred Technologies is operating with the objects of building multiple verticals in IT and IT related businesses postsale of the core business in October 2013. These new domains of business will include IT services, Software solutions for Media & Entertainment Business, online businesses such as etailing, online financial services portals, and online entertainment. In addition they are also exploring direct entry into Media & Entertainment domain. They have acquired and plan to continue to acquire a lot of IP, content, technology, knowhow and perhaps operating businesses to be able to get a start into these verticals as they do not possess these internally in the company. While systems and processes are being implemented, to commence these business operations, trial run of latestone.com is in progress.

Why to invest?

1.       Ecommerce business –

     We have seen Just Dial and other e commerce business (unlisted entities like flipkart, snapdeal and cab aggregator business like olacabs) are getting lots of funds from private players. Since palred is gearing up for compete in the same business, there will be enough room for business to grow considering demand in India.

2.       Excellent Management Record –

Palam Srikanth Reddy, founder of Palred did BE from REC Trichy and M.S from Stanford, US. He worked as Logistics Manager at HP,Singapore and rose to become MD, Emery Worldwide India (Now UPS). He founded Foursoft and sold off Foursoft (dealing in logistics software) to kewill Group and gave shareholders extreme reward in terms of 29 Rs dividend.

3.       Financial Performance will improve with right acquisition –

During the year under review, your Company has acquired on January 8th 2014, Deals15.com from Premium Web Services which provides internet services and software services/solutions to business to business e-commerce and website development for the purpose of business operations in online e-commerce as it is being emerged as a profitable area of business and it would be an effective way to initiate the business post sale of Four Soft Limited.

We believe company can do wonders if there are good management with enough growth in business, since in the past management has shown the same, we do not wish to miss the opportunity to catch the company in its infant stage. Hence, we initiate a positive recommendation on the company with the target of 35 Rs.

adcc infocad - SME stock - potential multibagger

Company Profile - 

ADCC is a global leader in serving geospatial and information technology domain to facilitate the professionals with customized solutions for versatile engineering domains. 

ADCC to cater to the GIS industry and has emerged as global Premier Software Solution provider through its Alliance with World Leaders like 

• Autodesk Inc. USA world‘s one of the biggest Design Content Company, 
• Mathworks (Matlab), 
• Dassault (Catia), 
• Adobe, Digital Globe India & Africa (High Resolution Satellite Imageries), 
• Integraph (Erdas Imaging & LPS Software and extensions) 
• Siemens, 
• Sanako (Language Lab), 
• National Instruments (Experiential Engineering Laboratories), 
• ESRI (GIS mapping Solution, Software , Services).

 ADCC has developed and improvised GIS solutions, to design & to capture, store, manipulate, analyze, manage and present all types of geographical data and has developed domain expertise in the fields of GIS, Remote Sensing, LiDAR (Light Detection and Ranging), Photogrammetry, Energy System and solutions, Engineering Design Services, Surveys and Customized Application Development, with requisite human resource of 1400+ professionals that include geologists, engineers, designers and 3D modelers and spread across 3 continents encompassing 5 countries.

Not limiting to only GIS they provide integrated solutions in fields like

• Education Software Solutions
• Energy Solution & Services
• Industry Software Solutions
• Design & Animation
• SEO
• Software Development
• Engineering Design Services

It has main base at Nagpur and branch offices across India at Mumbai, Pune, Hyderabad, Ahmedabad, Lucknow, Company has marked its global market presence through its overseas subsidiary offices in Africa- Nairobi (Kenya), the Company boasts the state-of-art infrastructure at Nagpur with ultra modern IT Systems for Data Security and Integrity.

Why to Buy?

1. GIS market is increasing - 

We believe there's a lot of integration on going with data mapping and related services. GIS mapping is one of the key area which has yet not fully unfolded and there's a huge untapped market in this field. With new management ADCC can grab chunk of market share by spending on latest technology and hardware products.

2. Digital revolution by govt. of India - 

In a way, Govt. of India digital marketing will also impact GIS services in a direct or indirect way. Though we may not see these effect in initial stage, but we can't deny the potential that is out there. Further, they are already providing solutions to some of government agencies. Hence, future projects on analysis of digital revolution by govt. of India will help company to grow.

3. Robust growth - 

During the last five years AIL has reported steady growth

Hence  by looking at the potential we maintain our positive stance on the script. The script is traded in BSE SME and normal lot size of the stock is 3000.

LLOYD ELECTRIC & ENGINEERING - KHUSHIYON KI GUARANTEE

Company Profile  -

Achieving the highest quality standards and sustaining them over an extended period of time has been the cornerstone of Lloyd Electric and Engineering’s success over the past two decades. With an in-depth understanding of efficient manufacturing processes and its customer requirements the company continues to deliver a wide range of cost effective heat transfer solutions. With an eye for detail & a collaborative approach with its clients, Lloyd has continuously raised the standards for both product delivery and service support. This management philosophy had lead to it become not just a dependable partner to some of the leading global HVAC&R companies but also the preferred choice for their heat exchanger needs.


With its extended capability to design, develop, manufacture & maintain highly engineered HVAC systems for the Railway industry, Lloyd is uniquely positioned in the mobile HVAC systems space as well as in the heat transfer industry. The company’s strong track record in investing in the latest technology, state-of-the-art equipments & training its workforce on regular basis has enabled the company to attain a leadership position in each of the markets it operates in.

Why to buy?

1. Higher presence in railway HVAC system business (60-65% revenue Lloyd derives from this sengemt)

2. Market Leader in growing heat exachngers & coil business ( 40% market share )

3. OEM supplier to Air conditioning companies ( Majority of company depends on Lloyd for this  counter)

4.Own Brand product - with higher margin ( AC, TV and consumer Electronic business)

5. European market acquisition to become established global player.

Our View - 

At CMP of 149 Lloyd is trading at 6 - 7 PE. Since lloyd is focusing in establishing its own brand value, we believe lloyd is likely to consider as a long term player. Hence investor with longer term outlook can start investing in this counter for 3 year target view of 300 Rs. 

adi finechem - silent rocket

Company Profile :- 

Adi Finechem Limited engages in the manufacture and sale of specialty fine chemicals in India, the United States, Europe, and Japan. It provides oleo chemicals and products for the nutraceutical industry. The company’s oleo chemical products include dimer fatty acid, monomer fatty acid, linoleic fatty acid, and soya fatty acid for use in amines, alkyd resins, plasticizer emulsifiers, polyamides, lubricants, metal soaps, and enzymes; saturated fatty acid used in alkyd resin, amines, and esters; distilled fatty acid for alkyd resins and textile auxiliaries; glycerin for use in textile auxiliaries and paints; and oil for industrial purposes, such as oil feed chemicals, biodiesel, and mould release agent. It also offers intermediate nutraceutical and health products comprising natural concentrated tocopherols for the natural vitamin E/food, feed, and cosmetic industries; and natural concentrated sterols for the natural sterols, food, and pharmaceuticals industries. The company was formerly known as H. K. Finechem Limited and changed its name to Adi Finechem Ltd. 

Why to Buy?

Specialized Products :-

More than 55% of Adi Finechem‘s business consists of specialized products like Dimer Acid and Tocopherol where it is either sole or one of the lowest cost producer in India, providing edge to the company.In remaining products also,prices move in tandem with raw material prices giving AFL stable margins.

Capacity Expansion :-

It has lined up additional Rs 22cr capex for taking capacity to 45,000 MT which is expected to be operational by Oct’14. Phase 1 of capacity expansion has already completed and we will likely to see the numbers will getting reflected from coming quarters.The revenue potential after the expanded capacity is Rs 280 cr p.a.(FY14 revenues Rs 152 cr).

Excellent growth :-

Our view :-

At 318 CMP company is trading at 20 times of FY14 PE and we expect company to post 20 Rs. EPS in FY15. So a company operating in speciality chemical business is currently trading at 16 PE of FY15 earnings per share. Further, capacity expansion will continue to deliver growth for the company. Hence we recommend this stock at CMP of 318 with the target of 30% upside potential.

Kellton Tech - story unfolding

Company Overview - 

Kellton Tech is a global IT company with a portfolio comprising an exhaustive list of IT services in the web, mobile, security, ERP and cloud Space. Kellton Tech boasts a global presence spanning three continents, three countries and five cities.  Founded in 1993, we are a two-decade-young organization. Created with a vision to offer infinite possibilities with technology they are committed to providing end-to-end IT solutions, strategic technology consulting and product development services. 

Interesting points to buy -

1. Company provides end  to end solution in the growing IT sector like ERP, cloud and mobile sector. We believe this choice of growing sector will help company to generate increasing revenue in coming quarters.

2. Company has very widely known clients like PVR , makemytrip DailyNews Newyork, Educomp, Nokia, Kaplan, Nielsen. Company provides quality solutions to the world's widely known companies.

3. Kellton Tech Selected Among the 'Top 20 Travel & Hospitality Solution Provider in June 2014.

4. Company is providing consistent performance, 

Total Income From Operations	41.81	40.22	26.42	25.22	12.63
Total expense	37.25	37.74	24.5	23.38	11.18
Net Profit/(Loss) For the Period	2.52	1.49	1.22	1.13	0.85
Basic EPS	0.71	0.42	0.34	0.32	0.24

5.Promoters increased their shareholding by subscribing to the warrants at Rs 15 per share and they haven't pledge a single share till date.

Our View- 

We expect company to post EPS into similar lines for rest of the Financial year which makes it 2.9 for the entire year. At CMP of 21.5 company is trading at the PE multiple of 7-8. Further, company has taken lot of acquisition on the book pursuing aggressive expansion strategy. (FYI - It acquired Kellton tech from USA and changed their own name to Kellton tech to focus better on their US market.) Further, promoters are steadily increased their stake in the company which shows their commitment to the company. We consider company is currently in the infant stage and has lot of potential to grow into multifold return. Hence we recommend this stock for long term investment at CMP 21.5.

Capri Global Capital Limited- back on track

Company Profile - 

Capri Global Capital Limited (CGCL) was set up in 1997. It is a Non-Banking Finance Company (NBFC) registered with Reserve Bank of India (RBI) as ND-SI (Non-Deposit taking systemically important) and is listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Until 2011, CGCL offered an entire bouquet of financial solutions and services with emphasis on debt advisory services and has executed transactions close to INR 50,000 crores during FY2009 to FY2011. In October 2010, we successfully completed a Qualified Institutional Placement (QIP) and raised INR 445 crores taking a foray into Asset Financing and the Lending business in FY2012, thus leveraging on its extensive domain knowledge and understanding.

We take pride in recognizing the fact that in a short period of time we have made significant disbursements fuelling the economy and help build enterprises. With a firm hold in the Wholesale Lending space, CGCL has now forayed into lending to Micro, Small and Medium Enterprises (MSME). Our focus continues to be on generating supreme quality asset book spread across multiple locations where MSME clusters exist. Our present product range includes - loans for Purchase of Equipment and Machinery, Working Capital loans, loans for Business or Capacity expansion, Term Loans against Property, loans for Purchase of Commercial Property, and Lease Rental Discounting.

Uneven Background -

It is erstwhile MoneyMatters for those who remember 2010 Housing Finance Scandal. The CEO was arrested by CBI for alleged bribing of PSU bank executives(same story as Bhushan Steel). Would like to caution that the earlier promoter Rajesh Sharma and associates still own about 25% of the shares.

But story seems to have changed now and looks like a turn around story, Capri Global partners, a US based real estate investment group has taken the control of the company and now owns about 50% of the shares. Its chairman Quintin E Primo III is now Non Executive chairman of the Capri Global Capital India and is very serious about leveraging the expertise of Capri Capital to grow Capri Global India. And has been a successful international investor.

Quintin E Primo III a 1st generation entrepreneur is a Harvard MBA, built Capri Capital with a few others Harvard /Kellog/Wharton MBAs. Their background looks very solid.

Primo had a humble beginning and has grown Capri brick by brick. From what I have read and watched about him so far, have been impressed and he sounds like a very ethical person.

Current Business - 

Capri Global India is, its networth is about Rs 970 crores and no loan.

They have 3 verticals of lending , SME lending(Rs 280 crores) , Wholesale Lending (Rs 505 crores)and now they are planning  to finance affordable housing.

Whole sale lending consists mainly Residential real estate.

Their CAR is 94% compared to 15% of the regulatory norm hence they could borrow multiple times their current loan book, so huge potential. Technically they could stretch their loan book by another Rs 6000 crores. They have aggressive plans of expansion in tier two/three cities in next 2 years. 

Our View - 

Company is currently trading at PE of 7 and 0.6 of its book value price where many other company trading at their book value of 2-3 in lending finance business, this looks a dirt cheap stock. Further, promoters are buying from open market every year to the max. permissible limit of 5% which is also a boosting factor for me. A successful international chairman with lots of potential would be an additional gem into the basket. Considering all this factor, we can not rule out capri global to trade at 280-300 level in coming quarters. Hence, at CMP of 173 we recommend a buy for the target of 280.

Review of stock performance

Stock	Reco price	Current price	High price	Current view
Granules India	350	920	940	Hold
Kovai medical	175	454	465	hold
Mold-tek packaging	64	183	190	Hold
Biocon	480	510	553	Buy/hold
Manjushree technopack	263	425	468	hold
Indo count industries	87	148	162	Book partial profit
Ganesh ecosphere	76	178	188	Hold
Hester bio	199	426	471	Book partial
Steel strip wheel	285	315	345	Buy/hold
Arrow coated products	147	198	198	Buy/hold
Epc irrigation	170	207	237	Hold
Orient beverages	65	851	85	Hold
Ccl products	104	119	122	Hold
Gujarat ambuja exports	62	63	69	Buy/hold
Gulshan polyoyl	230	240	252	Buy/hold
Arss infra	28	42	71	Suggested book profit at 62
Aarti drugs	377	795	814	Hold
v-guard	492	866	906	Passive investors hold
Dynamic products	34	60	69	Partial profit book
Rs software	207	767	829	Book partial
Vimta lab	109	111	134	Exit
Insecticides india	275	767	809	Book partial
Ajanta pharma	1038	1744	1798	Hold
Wonderla	168	320	355	Hold
Dhunseri	130	123	187	Demerge
Avt natural product	37	51	55	Hold
Sicagen india­	17	17.5	21	Exit
Kpr mill	170	327	339	Book partial
Kitex garment	246	464	464	hold

cheers and keep minting profit with us...