kovai, dynemic products, v-guard, aarti drugs

Kovai Medical old recommendation here.
Stock has given decent return from our recommendation. Almost 90% return. Still positive on this counter.

Dynemic Products- old recommendation here.
Stock has already gave us decent return. Yet it has lot of steam left. Recommend to hold.

V-guard - old recommendation here.
Recommend to hold.

Aarti drugs - old recommendation here.
Recommend to hold.

hester bioscience - a buy

Company Overview
 Hester Biosciences is a 25 year old company specialized in the manufacturing of advanced veterinary vaccines. It is the second largest poultry vaccine manufacturer in India. The company operates one of the largest single location animal manufacturing units in Asia. Its primary manufacturing facility is located in Merda-Arday, in Gujarat. The company has a large product basket of 39 live and inactivated vaccines. In 2008, the company changed its name to Hester Biosciences from Hester Pharmaceuticals. Hester Biosciences has two subsidiary companies, Hester Biosciences Mauritius (wholly owned) and Hester Biosciences Nepal Private Ltd (65% holding). The facility in Nepal is a 100% export oriented unit, aimed at expanding reach to the markets of Nigeria, Sudan, Pakistan, Iran, Ethiopia and Middle East.

This company initially started with Poultry vaccines, and then entered in large animal’s vaccine segment based on its growth plan. Beginning this financial year, Hester has launched 3 additional divisions - Large Animal Biologicals, Large animal healthcare and Poultry healthcare, besides its existing Poultry Biologicals division.  With the launch of these divisions, Hester expects a better penetration in the domestic as well as in the international veterinary market.

Financials
Total revenue of the company rose from 16 crores to 23 crores and company managed to post decent PAT with good margin in hand. with the QOQ EPS at 5.11 Rs. stock price have reasonable steam left. We can expect here 20% return over 12 months period of time. Hence we initiate  a buy call with the price target of 240 at CMP 199.

KITEX Garment - must buy

Market Leader:
Kitex has an in-house manufacturing facility at Kizhakkambalam, Kochi, with an installed capacity of producing 550000 units of garments per day. The company derives majority of its revenue from export sales as it is a 100% EOU (Export Oriented Unit), with exports to international markets contributing more than 90% to sales revenue in FY14. Jai Jai Mills is the only second player in India with capacity of 500000 pieces of garments per day, there are very few organized players in the world of Infant wear Apparel. Hence Kitex Garments is clear domestic market leader where it does not face any serious competition from domestic players.

Preferred Player:
The big branded garment players in the USA and Europe depend upon India, China and the neighbouring countries as a manufacturing hub, due to availability of the raw materials and skilled labour at lower prices in these countries, to get the required output at the lowest possible cost. Despite stiff competition from other countries, international buyers show preference to company’s product for its quality and timely delivery and hence Kitex Garments is confident of achieving better working results in the coming years. Also Kitex garment is the only company in the world which uses Acutex 1 quality of yarn (raw material) and due to this it is the most favorable supplier for infant clothes in world. They are the only company with 100% certified safe process for the Infant clothes. Kitex garments use Organic processed fabric for infants during the dying process. Stiching threads and embroidery threads are bought from CODES which is the world no 1 player in thread market. This makes Kitex Garments as preferred player in International market.

Big Customers:
Kitex garments has key focus in US markets , Gerber ,no 1 wholesaler in USA buys products from kitex garments, Turtle another major player in retail market of USA buys from the company and then sells to Wallmart and also sells under its own brand. Mother Care, Tesco are also one of the major buyers of kitex products. Toys r us another major retailer buys from the company and then sells through their own. 

Strong Manufacturing Facilitiest:
Kitex Garments has a flexible manufacturing system which enables it to change the production volume and design of garments by allowing variation in process sequence and assembling of parts. This allows the company to be responsive to the ever-changing consumer demand in the fashion market. Also Company has spend 72 crores last financial year as a capex where they have spend on buying new machines , upgradation of current facilities etc. In the next two years company is planning to spend 125 crores in capex which will help the company to expand its capacity from 550000 units per day to 1100000 units per day.

Strong Buyer Criteria:
Company has strong criteria for taking purchase order where they should have a minimum $15 Millions on FOB (Free on board) basis. In USA Company has a very strong presence where buyers directly approach the company and comes to see sample and gets approved. Elsewhere other companies do send the samples and gets approval after 1 months where they have no assurance of getting confirm order. Hence Kitex Garments has seller power compare to industry where it is buyer industry.

Own Brand:
Company is planning to launch its own brand in USA in next 3 to 4 months time. Company has filled all the necessary documents for the new name. The company is expected to do a sales of 3-5 $ millions of sales in the coming year.

Higher Aspirations:
Company is moving to the next level by modernization, installing high tech and time saving machinery and supportive systems, improving quality of work by employee training, and by Research and Development in major areas pertaining to the industry. Company aspires to become FIRST in the World in INFANTWEAR APPAREL segment by 2015 Calendar year. 

Valuation

The company is taking all efforts to improve the quality and productivity to get more orders at competitive rates. Due to the own processing plant the company is able to quote better rates and maintain high quality & productivity in the finished goods manufactured. Also company is expanding its capacity from 550000 units/day to 1100000 units/day by increasing its raw material capacity from 23 tonnes/day to 40 tonnes/day. Barring unforeseen circumstances the company is confident of achieving better results in the next two years with double digit growth.
We assign a valuation of 15.00x on FY 2016E EPS which indicates a target price of Rs 360 which is fair valuation for this stock considering the industry it’s operating in.

Ganesh Ecosphere

Ganesh ecosphere (Incorporated in 1987) is the largest player in india in Regenerated Polyster Staple Fibre( RPSF) with total installed capacity of 57600 TPA .

Investment Summary:

• PET recycling has got tremendous growth potential: With changing lifestyle and higher disposable income, Indian PET demand is expected to grow at 7.5% pa from current level.

• Capacity expansion will lead to growth in turnover:  Because of enhanced capacity, Turnover in FY14E will grow to Rs 640 cr from Rs 199 cr in FY 10.

• Entry into value added segment will lead to margin expansion: Ganesh ecosphere is consciously undertaking forward integration to enter into value added segment. Ganesh ecosphere will be foraying into spinning of yarn and also they are setting up recycled POY( Partially oriented yarn) unit. Entry into value added segment will help Ganesh ecosphere enhance EBITDA margin significantly.

• Tax Break: Icing on the cake: Ganesh ecosphere enjoys significant tax break for its Rudrapur RPSF plant.The tax incentive availed for Rudrapur plant includes Nil Excise duty, Full exemption from income Tax for first 5 years and 30% exemption for subsequent 5 years, Sec 80I© and Concessional CST (1%) vis-à-vis normal rate of 2%.Thus effectively Ganesh ecosphere is paying MAT which further strengthens bottomline.

Valuations: At the current market price of Rs 76, as Ganesh ecosphere is in a very promising space of waste recycling and is expected to register very high growth rate going ahead, we are expecting ganesh ecosphere to post decent returns. Hence, we are giving target of 94 in this counter.

RSSOFTWARE UPDATE

Old recommendation here.

I expect IT companies to do well in coming quarters. Hence one can hold at current level though targets achieved. Updating my target to 320 in this counter.

manjushree technopack indo count industries update

Manjushree technopack old recommendation here.

Hits 318 today. Recommend to hold the stock.

Indo count industries old recommendation here.

Hitting upper ckt today. Recommend to hold.

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