Calls review:Midfield Industries Ltd
Suggested sell price:397(5.12.2010)
Present price:41
Returns:88%
Link:http://www.arunthestocksguru.com/2010/12/midfield-industries-ltd-blind-sell.html
Scripscan:Midfield Industries Ltd
Code:533220
cmp:397
Story:Midfield provides packaging consumables like high tensile steel strapping in various dimensions and strengths, different seals for different applications, collated nails & corner boards being used for general and the end of line packaging of goods by varied industries.The company faces severe competition both from multi-nationals like ITW Signode, operating on a large scale in India and globally, as well as the fragmented unorganized players in India. It also enjoys very low pricing power. Also, the price-conscious industrial packaging industry has been witnessing increasing client preference for plastic strapping over metal.Midfield takes over 200 days to collect credit sales,compared to the industry average of 3 months.The cash conversion cycle remains a worry for the business going forward.The company’s client base is not diverse as the top 10 customers account for around 48% of their sales.Its revenues are significantly dependent on sale of steel strapping. No long-term contracts with customers add more woes.It would also be prudent to note that midfield's revenues are dependent upon meeting client specific requirements and largely on a case-to-case basis.Thus if there's a change in client's preference from metal to plastic strapping then it can get severely affected.In the past 5 fiscals, the company had reported negative operating cash flows for 3 times, which adds to the concern regarding availability of free cash flows.At present price of 397 its quoting at 35 times its forward earnings which is horrendously over expensive for a tiny company like midfield.To me the fair value should be less than 100rs.Altogether a blind sell
Present update:I know a few people aren't that happy on my calls review as they feel my timing was superb on all of them.Sensex moved hence everything moved.But that's not the case people as just like my buy suggestion I have penned a lot of sell suggestions too.Midfield has been a major nightmare for investors who have bought that company at such huge levels.As can be seen it has tanked by 88% from my suggested sell price.I thought at 70-75 it may stabelize a bit but pathetic market condition and lacklusture result by the company took the toll over it.At present levels, hoping against hope, its a hold but do sell whenever you get a good rally in it.
Tuesday, December 27, 2011
Tulsyan NEC Ltd:-Buy/sell/growth prospects and recommendation,news and results,target price and analysis,view and outlook,multibagger
Scripscan:Tulsyan NEC Ltd
BSE code:513629
cmp:29
Story:This is a company, which is in two lines of business: Steel and woven sacks.The company manufactures TMT bars, MS alloys and billets in the steel division. They also manufacture HTP and PP woven sacks. Tulsyan NEC is not ideally one of those steel companies which you would want it to be in terms of backward linkages. The company as of now doesn’t have any backward linkages. It buys steel scrap/sponge iron for manufacture of steel and it also buys power from the grid. It doesn’t have its own captive power source.But if you look at the other positives of the company, this company is available at a market cap of just about Rs 45 crore. The company does sales revenue of about Rs 840 crore. This company has been a profit making company for the past 15 years. It has made profit not just at the operational level but also in the net level in the last 15 years. The company has got a track record of dividend for the last ten years which is uninterrupted - even during the worse phases of the steel cycle this company has paid dividend in the last 10 years.The other good thing happening here is that the company is now going in for backward linkages, about an year back this company has acquired a sponge iron plant called Chitrakoot Steel and Power Limited, which has got a 30,000 tonne per annum for sponge iron capacity, which they are increasing further to about 1 lakh tonne per annum. The company is also putting up a 35 megawatt power plant. They have already acquired about 75 acre of land. This will be operational in FY12.Considering all this, the company had been making good profits for the past 15 years without any backward linkages. Now the backward linkages are coming. The market cap of the company is just about Rs 50 crore - even assuming a 1% increase in net profit margins on a sales of Rs 840 crore results with an EPS increase of about Rs 15. Of course, this is not an ideal steel company in terms of linkages but its available at a market cap just about Rs 45 crore on sales of Rs 840 crore. The downside from these levels looks extremely restricted but once the linkages are there, obviously, the profitability will go up. Also there is a potential for huge upscale increase in profits after the linkages are available.So at the current price of Rs 29,I think it’s a stock to accumulate for the next maybe two years. Once the linkages are in place the profits can go up really sharply.
BSE code:513629
cmp:29
Story:This is a company, which is in two lines of business: Steel and woven sacks.The company manufactures TMT bars, MS alloys and billets in the steel division. They also manufacture HTP and PP woven sacks. Tulsyan NEC is not ideally one of those steel companies which you would want it to be in terms of backward linkages. The company as of now doesn’t have any backward linkages. It buys steel scrap/sponge iron for manufacture of steel and it also buys power from the grid. It doesn’t have its own captive power source.But if you look at the other positives of the company, this company is available at a market cap of just about Rs 45 crore. The company does sales revenue of about Rs 840 crore. This company has been a profit making company for the past 15 years. It has made profit not just at the operational level but also in the net level in the last 15 years. The company has got a track record of dividend for the last ten years which is uninterrupted - even during the worse phases of the steel cycle this company has paid dividend in the last 10 years.The other good thing happening here is that the company is now going in for backward linkages, about an year back this company has acquired a sponge iron plant called Chitrakoot Steel and Power Limited, which has got a 30,000 tonne per annum for sponge iron capacity, which they are increasing further to about 1 lakh tonne per annum. The company is also putting up a 35 megawatt power plant. They have already acquired about 75 acre of land. This will be operational in FY12.Considering all this, the company had been making good profits for the past 15 years without any backward linkages. Now the backward linkages are coming. The market cap of the company is just about Rs 50 crore - even assuming a 1% increase in net profit margins on a sales of Rs 840 crore results with an EPS increase of about Rs 15. Of course, this is not an ideal steel company in terms of linkages but its available at a market cap just about Rs 45 crore on sales of Rs 840 crore. The downside from these levels looks extremely restricted but once the linkages are there, obviously, the profitability will go up. Also there is a potential for huge upscale increase in profits after the linkages are available.So at the current price of Rs 29,I think it’s a stock to accumulate for the next maybe two years. Once the linkages are in place the profits can go up really sharply.
Saturday, December 24, 2011
Electrosteel Steels Ltd:-Buy/sell/,growth prospects and recommendation,news and results,target price and analysis,views and outlook,multibagger
Scripscan:Electrosteel Steels Ltd
Code:533264
Cmp:8
Story:The Electrosteel Steels Ltd. (ESL) is promoted by Electro steel casting Ltd. (ECL) to setup a 2.2 MTPA Integrated Steel and Ductile Iron Spun Pipes project in Jharkhand, India. ECL has obtained mining blocks of iron ore and coking coal in the state of Jharkhand and has set up ESL for implementing the integrated steel and DI pipe plant. The company is setting up a plant near Siyaljori village in Bokaro District of Jharkhand. The proposed plant will be based on Blast Furnace (BF) - Basic Oxygen Furnace (BOF) - Billet Caster and Hot Rolling Route and will produce 1.2 MTPA of long steel products. It will also have a 0.33 MTPA DI pipe production facility in the same complex and will be provided with hot metal from the Blast Furnaces. The plant will also have production facilities for 0.27 MTPA of Commercial Billets and 0.40 MTPA of Pig Iron.Given the cost competitiveness of the project and a substantial portion of the capex having been already spent (56.6% of Rs 73.6 billion), the project on completion will create long term value for investors.But high equity base of the company at over Rs. 2,000 crores, low promoters stake of 34%, stiff competition in the sector, low financial capability of the promoters and high debt equity ratio are some risky and unfavourable features which makes one wary.It seems that the company and its promoters are taking a leap beyond their capacity, raising fears of the company and its promoters falling flat on their noses.At least that is the inference which one can draw from the past experiences of some leading industrial groups in 94-96, like Jindals, Essar, Lloyd,ushaIspat,Ispat Industries etc.At best a hold at present prices.
Code:533264
Cmp:8
Story:The Electrosteel Steels Ltd. (ESL) is promoted by Electro steel casting Ltd. (ECL) to setup a 2.2 MTPA Integrated Steel and Ductile Iron Spun Pipes project in Jharkhand, India. ECL has obtained mining blocks of iron ore and coking coal in the state of Jharkhand and has set up ESL for implementing the integrated steel and DI pipe plant. The company is setting up a plant near Siyaljori village in Bokaro District of Jharkhand. The proposed plant will be based on Blast Furnace (BF) - Basic Oxygen Furnace (BOF) - Billet Caster and Hot Rolling Route and will produce 1.2 MTPA of long steel products. It will also have a 0.33 MTPA DI pipe production facility in the same complex and will be provided with hot metal from the Blast Furnaces. The plant will also have production facilities for 0.27 MTPA of Commercial Billets and 0.40 MTPA of Pig Iron.Given the cost competitiveness of the project and a substantial portion of the capex having been already spent (56.6% of Rs 73.6 billion), the project on completion will create long term value for investors.But high equity base of the company at over Rs. 2,000 crores, low promoters stake of 34%, stiff competition in the sector, low financial capability of the promoters and high debt equity ratio are some risky and unfavourable features which makes one wary.It seems that the company and its promoters are taking a leap beyond their capacity, raising fears of the company and its promoters falling flat on their noses.At least that is the inference which one can draw from the past experiences of some leading industrial groups in 94-96, like Jindals, Essar, Lloyd,ushaIspat,Ispat Industries etc.At best a hold at present prices.
Friday, December 23, 2011
Jindal Steel & Power Ltd:-Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger
Scripscan:Jindal Steel & Power Ltd
cmp:480
Code:532286
Story:The OP Jindal group metal firm Jindal Steel & Power (JSPL) has shot up 900% to Rs 480 in the past five years. Investors fancy for the counter was due to the company’s ability to post high profit on small equity base, boosting return on capital employed and return on net worth. The stock underwent profit booking in the past year after four years of unabated surge, which propelled it to a record high of Rs 778 on 21 October 2009.Booming financial performance on rapidly expanding capacity resulted in a highly liberal 5:1 bonus in September 2009. Post-bonus, equity swelled to Rs 93.45 crore, with promoters owning 58.4% end June 2011. Foreign and institutions held 23.03% and 6.53%. Thus, public holding is a low of 12.04%.Though JSPL’s dividend payout has increased steadily over the years, the soaring stock has weighed on the dividend yield. In January 2008, it resorted to a 5-for-1 stock-split to boost liquidity.JSPL is India’s largest sponge iron steel producer with a significant presence in sectors like mining, power generation and infrastructure. The current market price of Rs 480 discounts the TTM consolidated EPS of Rs 40.30 by a P/E multiple of 12. Consolidated net profit rose at CAGR of 45.14% and net sales 38.27% in the past five years to FY 2011. Profitability growth and expansion plans along with global product demand and prices will determine the share price direction going ahead. JSPL, too, has been named as a beneficiary of illegal mining of iron ore at Bellary by the Karnataka Lokayukta.
cmp:480
Code:532286
Story:The OP Jindal group metal firm Jindal Steel & Power (JSPL) has shot up 900% to Rs 480 in the past five years. Investors fancy for the counter was due to the company’s ability to post high profit on small equity base, boosting return on capital employed and return on net worth. The stock underwent profit booking in the past year after four years of unabated surge, which propelled it to a record high of Rs 778 on 21 October 2009.Booming financial performance on rapidly expanding capacity resulted in a highly liberal 5:1 bonus in September 2009. Post-bonus, equity swelled to Rs 93.45 crore, with promoters owning 58.4% end June 2011. Foreign and institutions held 23.03% and 6.53%. Thus, public holding is a low of 12.04%.Though JSPL’s dividend payout has increased steadily over the years, the soaring stock has weighed on the dividend yield. In January 2008, it resorted to a 5-for-1 stock-split to boost liquidity.JSPL is India’s largest sponge iron steel producer with a significant presence in sectors like mining, power generation and infrastructure. The current market price of Rs 480 discounts the TTM consolidated EPS of Rs 40.30 by a P/E multiple of 12. Consolidated net profit rose at CAGR of 45.14% and net sales 38.27% in the past five years to FY 2011. Profitability growth and expansion plans along with global product demand and prices will determine the share price direction going ahead. JSPL, too, has been named as a beneficiary of illegal mining of iron ore at Bellary by the Karnataka Lokayukta.
Mahindra Ugine Steel Company Ltd:-Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger
Scripscan:Mahindra Ugine Steel Company Ltd
cmp:45
Code:504823
Story:The company is into alloy steel which is doing reasonably well. Its stamping business is likely to do exceptionally well because the capacity of stamping business is likely to move up by about 60-70% over the next two years.They are setting up a new plant at Pantnagar which were catering to Telco and M&M. Their ring business, which is a small business about Rs 30 crore is also doing reasonably well. Since the power cost in this business is very high the company has invested about Rs 14 crore in Wardha Power Company.The Wardha Power Company will commence operations anytime now and this is going to reduce its power bill substantially. So we have worked out that in 2012-13 the turnover will be about Rs 2,000 crore. Profit could be as high as Rs 30 crore resulting in an earnings per share of about Rs 10. I am exceptionally bullish on this company from a little longer term perspective.Its capacity expansion will come into play in 2013-14, then EPS could go as high as Rs 15 which was the EPS between 2004 and 2008. At Rs 15 kind of EPS the stock can easily touch Rs 115 in about three years from now. It is a Mahindra Group company.I was amazed to see XUV500 which is an international product coming from Mahindra Group. The future of this group is very bright. Companies like Mahindra Ugine should do exceptionally well because they are catering to the group companies besides other permanent companies.
cmp:45
Code:504823
Story:The company is into alloy steel which is doing reasonably well. Its stamping business is likely to do exceptionally well because the capacity of stamping business is likely to move up by about 60-70% over the next two years.They are setting up a new plant at Pantnagar which were catering to Telco and M&M. Their ring business, which is a small business about Rs 30 crore is also doing reasonably well. Since the power cost in this business is very high the company has invested about Rs 14 crore in Wardha Power Company.The Wardha Power Company will commence operations anytime now and this is going to reduce its power bill substantially. So we have worked out that in 2012-13 the turnover will be about Rs 2,000 crore. Profit could be as high as Rs 30 crore resulting in an earnings per share of about Rs 10. I am exceptionally bullish on this company from a little longer term perspective.Its capacity expansion will come into play in 2013-14, then EPS could go as high as Rs 15 which was the EPS between 2004 and 2008. At Rs 15 kind of EPS the stock can easily touch Rs 115 in about three years from now. It is a Mahindra Group company.I was amazed to see XUV500 which is an international product coming from Mahindra Group. The future of this group is very bright. Companies like Mahindra Ugine should do exceptionally well because they are catering to the group companies besides other permanent companies.
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