Sunday 22 February 2015

IMPORTANT UPDATE



Dear friends, Due to unavoidable circumstances and other personal and professional commitments I will not be able to update the blog, hence the blog will go off-air from Monday, 23rd February 2015. All the updates on: PARNAX LABS LTD, NARMADA GELATINES, RICHA INDUSTRIES, GUJARAT AUTOMOTIVE GEARS, SHILP GRAVURES, VIDHI DYESTUFFS, MINDTECK, NGL FINE-CHEM, DYNEMIC PRODUCTS, SKM EGG PRODUCT EXPORTS AND PRIME PROPERTY DEVELOPMENT CORP will be posted on the stock's respective message board on moneycontrol message boards (mmb.moneycontrol.com)
Our MMB id is: "THE ACE INVESTO" link below:
http://mmb.moneycontrol.com/india/messageboardblog/boarders/746865616365696e766573746f72
You can also email on theaceinvestor@gmail.com for any discussions.

Friday 20 February 2015

RICHA INDUSTRIES LTD - NEWS UPDATE

Richa Industries recommended on 22nd January 2015 @ 33.

Today company has made following announcement to the BSE:

Richa Industries Ltd has received approval from the Research, Designs and Standards Organization (RDSO) of the ministry of Railways for fabrication and supply of steel bridge girders of the Indian Railways.
The registration in the approved list of RDSO will be valid for two years from now.

The RDSO approval has given room to Richa Industries to enter into new segment. With the help of this approval, Richa is now eligible to participate in tenders of Indian Railways which is an initial step to venture into new segment.

Commenting on this, Dr Sandeep Gupta, Joint MD, Richa Industries Ltd said, "Getting RDSO approval is indeed a great achievement for us. This approval is an endorsement for Richa's commitment to quality and indicates our potential and world-class capabilities. Besides, The Railways have an aggressive plan for major development in the sector and lot of projects are coming up. Working in partnership, Richa's expertise will support in the development in a major way".

Under the Min. of Railways of India, RDSO functions as a technical adviser and consultant in respect of design and standardization of railway equipment and problems related to railway construction, operation and maintenance.

Being a premier organization in the PEB sector, Richa has also recently received the internationally recognized OHSAS 18001:2007 certification by Indian Register Quality System (IRQS)

What this announcement means is that beside the PEB sector boom on back of warehousing and Make in India demand, Richa Industries will also participate in the modernization and development of the Indian Railways.

On a lighter note, Richa Industries has now become a proxy-play to the Narendra Modi led government and it's great plans of development. So if we trust Narendra Modi to do well, Richa Industries automatically becomes a strong-buy.

Thursday 19 February 2015

VALUE PICK - PARNAX LAB LTD.


About The Company & Products 
Parnax Lab Ltd. is a pharmaceutical company headquartered in Gujarat.
The company has subsidiary named "Naxpar Pharma Ltd" which has manufacturing unit in Baddi (Himachal Pradesh) and is into bulk syrup and tablet formulation manufacturing for pharma giants such as Glenmark, Kopran, Pfizer, Ranbaxy, Sun Pharma, Wockhardt, Zuventus, Wanbury, Cipla and etc to name a few.

The company has a vast product portfolio with core segments being: Alimentary System, Cardiovascular System, Musculoskeletal System, Anti-Biotics, Anti-Malarials, Central Nervous System, Vitamin Supplements, Respiratory System and Skin including Herbal Comestics and Nutraceuticals.

The manufacturing facilities of the company is well equipped along with a separate area for Ayuverdic formulations.

Naxpar Pharma is looking to acquire FDA/MHRA/TGA/MCA accreditation soon for the Baddi unit which help them venture out into the large export markets.

The company has its subsidiaries in Africa and Nigeria and also has a presence in Mauritius and Kazakhstan.

The Ace Investor - Value Pick
(BSE:506128) PARNAX LAB LTD.
Company listed on BSE, Currently trading around 41-42 with a market cap of under 40 crores.
Promoter Holding is at 61.26%, Total Debt on the books is at just about 30 crores.
 15% of total promoter holding is pledged for secured loan included in the above total debt figure it comes at 9.19% of the total share-capital.
  
The company as mentioned above has giant pharmaceutical companies as its client.

Coming to financials, The standalone numbers are not impressive but if we take a look at the consolidated numbers the company is turning around at a good pace, Check the annual result table below:-

Particulars
FY12
FY13
FY14
Period
12 months
12 months
12 months
Sales
93.06
55.82
68.57
Operating Profit
0.36
7.44
8.28
OPM
0.39%
13.33%
12.08%
Other Income
0.63
0.96
1.10
EBIDT
0.99
8.40
9.38
Interest
4.25
3.82
3.65
Depreciation
1.90
1.93
2.10
Profit before tax
-5.16
2.64
3.64
Tax
-2.37
0.93
0.91
Net profit
-2.80
1.71
2.49
EPS
-3.29
2.01
2.93
 
 As it can be seen above, The company is a relatively new pharma company after the merger of three subsidaries and it is turning around, For FY12 company was in loss and after FY13 it has shown sales growth of 22.84% YoY in FY14.

This was the performance till FY14, Now let us take a look at FY15.
Company recently announced stable numbers for Dec-14 Quarter, and now we are only one quarter away from getting the FY15 number.

Check the table below for the FY15 quarterly performance so far:-

Particulars
JUN 14
SEP 14
DEC 14
MAR 15
FY15
FULL YEAR
(In Crores)



PROJECTED
PROJECTED
Sales
21.30
27.03
28.76
28.76
105.85
Net profit
0.89
1.78
1.66
1.66
5.99
Adjusted EPS in
1.05
2.01
1.96
1.96
6.98

As seen above we have taken the flat Dec-14 performance to be repeated in next quarter which will take the sales to 105.85 crores and EPS to 6.98.
 
Price to earning ratio of the company comes at around 6 by taking the projected FY15 number.
P/E of 6 is extremely low when compared with other pharmaceutical stocks and industry average of more than 30.

 Now this being a turn-around story, As i have said in past while looking for turnarounds i prefer to go for companies at cheap valuations which have already turned around rather than going for companies which are still showing losses and yet to turn-around.


Parnax promoters have bought 30,100 shares from open market on 3rd February 2015 around the price of 32.50 

Recently another Pharma company named "Godavari Drugs" has turned around, It has business similar to Parnax but the clients and product line information is not known. The Godavari promoters have been aggressively increasing their stake by buying from the open market and have increased their holding to just less than 50% now.

If we see the trailing numbers for Godavari it has sales of just 42 crores which is a lot lower than Parnax, Net Profit is at 3.73 crores and the EPS is at 4.97.

Godavari Drugs from the beginning of 2014 has shown a huge rally (from Rs 7.77 to Rs 72.60 with recent 52wk High of 86.85) to trade at a P/E of 17.47.

While Parnax from the beginning of 2014 was at Rs 50 and now is at 41 which means there has been no rally despite the turn-around and the P/E of around 6 is extremely cheap.

Parnax stock can undergo heavy re-rating and if Parnax keeps growing at this rate which it should then it should be trading at significantly higher valuations.

As said Godavari after turn-around traded at a P/E of 17.47, Similar pe of around 15 will take Parnax to 105 levels if full year EPS is actually at 6.98.

All in all i feel Parnax is a value pick right now and investors should go for it, Last few days heavy accumulation has been noted in Parnax after December quarter results announcement which might be promoter buying yet to be disclosed to exchange. 

105 would be fair level for Parnax with current set of earnings however in future if company expands with the FDA approval and does the right things it can trade at significant higher levels and I feel something great can be cooking in this counter since promoters have purchased from the open markets and earnings have improved simultaneously.

If Godavari can trade at 17.47 P/E so should Parnax which has higher sales than Godavari.

YBRANT DIGITAL LTD. - UPDATE

  YBRANT DIGITAL recommended on 15th October @ 53
Please exit from Ybrant Digital at current market price of Rs 28 (Loss of  47%)

I think it is good to exit now since stock has not shown any sign of recovery and lot of rumors are sent on MMB on a daily basis.

Will re-enter as and when things settle down.

Note: We will update fresh value pick today at 3:20: PM 


Update::: Please note: i am not aware of any fundamental change in Lycos Internet Ltd, I exited the stock due to the breakdown in stock which can surely be based on only rumors which have no susbstance.

Please do not speculate about Ybrant Digital Ltd: The company is fundamentally sound as per data available in public domain, Only the stock is not showing it in the price.