RAM RATNA WIRES LTD (BSE:522281) FV RS.5 CMP 68.00

RAM RATNA WIRES LTD (BSE:522281) FV RS.5 CMP 68.00

Company : Ram Ratna Wires, headed by Shri Rameshwarlal Kabra having experience of near 48 years in enameled copper winding wire and cable industry, with its leading and trusted brand in winding wires, RR Shramik is the leading manufacturer and suppliers of winding wire in the electrical equipment industry both national and international market, including, Gulf, Africa and Europe. The products of the company are utilized in various equipment including transformers, cables, transmission lines, switchgear, capacitors etc. The company has Joint Venture at Bangladesh with RR-Imperial Electricals Limited which would manufacture Enamelled Copper Wire, Cables and Enamelled Strips and have 10% stake in JV and company also hold 2.15% of RR Kabel Ltd.

Products : The Product line includes sixteen products that broadly fall into five groups i.e. Enamelled Copper Wire (ECW), Enamelled Copper Strips (ECS), Submersible Winding Wire (SWW), Bare Copper Strips (BCS) and Enamelled Aluminium Wire (EAW), fiber glass covered strips and enamelled fiberglass covered and varnished strips. The end products meet all of the well-known Indian and international standards including IS, IEC, JS and NEMA. The company operate in the transmission and distribution (T&D) industry, and it is the first choice for large Original Equipment Manufacturers (OEMs) and top electrical companies of India as well as MNCs. Through dealer-market nationwide, the company also cater to thousands of small manufacturing and repairing units of electrical equipment in the country, thus company has equal share of organized and un-organized sector spread across the country. The Company continues to develop value added products like corona resistant wires, triple insulated wires as per customer’s requirements, keeping pace with developments across the world.

Production & Technology : The state of the art production facilities spread across two units located at Silvassa, equipped with the latest machinery have the expertise in manufacture of winding wire of all types – Copper and Aluminium, round and rectangular. The production systems are often customized to the client needs. The company is focused on production of more value added items like enamelled aluminum winding wire, fiberglass insulated wires & strips and paper covered wires & strips which have also shown substantial increase in production, compared to that of previous years. Even though an economic slowdown has plagued the power sector recently, company had a record production over the last couple of years. Future expansion plans are in the pipeline to meet the growing potential in the industry.

The Company has developed, processed and supplied the high tech products like corona resistant enameled wires as per RDSO specification. This product has the capacity to safeguard the electrical equipment from the danger of premature burning of coils of equipment like Motors which are fed from inverter. Likewise, triple insulated wires manufactured as per Japanese specification (JIS :3005) and UL safety Standards 60950 is ideal for items like power supply units of in Electrical & Electronic equipment.

Sector Outlook : The demand for winding wire is directly linked with the growth in power sector, Both Hydrocarbon based as well as Green and Clean Power. The Union budget for the financial year 2016-2017 focus on accelerated growth within power sector with increased outlay of the tune of ` 79,884 crores. This combined with programs like “Make in India” and “Skill India” will give a big boost to domestic production of Electrical & electronic equipment and hence greater demand for winding wires is expected.

Winding wires & strips form a very important segment of Indian Electrical Equipment Industry which includes both power generation, Transmission and Distribution (T&D) equipment. If the coil of any electrical equipment like Generator, Motor, Transformer, Relay or Switchgear, Domestic appliances etc. burns or fails, the equipment is dead and hence, winding wire/strip is often known as the “Heart” of the equipment. It is used in all sectors namely Railways, Defence, Agriculture, Infrastructure etc. of Indian economy.

Valuation : This closely held company with 73% promoter stake and having book value of 35 Rs, dividend payout ratio of 21.62%, TTM Sales of over 700 Cr, ROE of 15.63% and ROCE of 16.95%, with improving OPM and profits in coming quarters the ROE and ROCE will only improve. Falling copper price and weak USD to benefit the company as copper is the main Raw material of which 32.74% of the total consumption is imported by the company alongwith state of the art machinery for quality production. With expected EPS of over Rs 9 for FY17, as compared to Rs 4.25 for FY16, the stock is available at PE of just 7.5 FY17 (Industry PE above 20).

As per the projection by Union Power Ministry, by the year 2020, every home in the country will be electrified. The Union Budget 2016-2017, have given prominence to Agriculture and Rural sector, apart from infrastructural development. All these factors will boost the demand for Electrical equipment for Industry and domestic consumption in the vast rural sector which in turn will result in huge demand for winding wires.

PEARL POLYMERS LTD – 24.50 (BSE:523260 NSE:PEARLPOLY) – The makers of PEARLPET Jars, Bottles & Containers!!!

PEARL POLYMERS LTD – 24.50 (BSE:523260 NSE:PEARLPOLY) – The makers of PEARLPET Jars, Bottles & Containers!!!

Company : Pearl Polymers Limited, Established in 1971, the makers of PEARLPET brand kitchenware since 1984, are the pioneers in bringing ISBM (Injection Stretch Blow Molding) technology to India. PPL is one of the most distinguished and reputed manufacturer and exporter of all types of PET containers and bottles in India.

The brand PERALPET is the most trusted household name in kitchen storage solution being the pioneer to offer Pet Jars and Bottles to the Indian market, which replaced heavy and difficult to maintain Glass products from the Indian homes in the early 1980s, due to the various qualities like : Non-toxic, Food-grade and Re-usable, Unbreakable, Strong and Light-weight. PearlPET uses virgin PET, PP or LDPE materials which are universally approved by USFDA, EU Directive 2002/72/EC, BIS IS:12252 -1987 and other regulating bodies for Food, Beverage and Water storage, products & raw material do not use Bisphenol A (BPA) or other harmful plasticizers/chemicals, steel cap jars have strong durable stainless steel cap, rust free & unbreakable, Air tight, 100% recyclable and are environment friendly.

 Today PEARLPET branded products includes hundreds of items of various colors, size and utility, like : Water Bottles, Food Storage and Micro Fresh in different variants and price range. Through the network of four plants (Baddi, Pant Nagar, Mahad & Jigani) and numerous offices through the length and breadth of the country, and a production capacity of over 100 machines currently, Pearl Polymers have successfully changed the packaging industry in the country. The company also sells its products online through every major e-commerce site, thereby directly serving the consumer which not only saves money, but in the process also gets direct feedback from the consumers instantly, which help the company to improve and innovate further.

The company has robust R&D Department, the success of which has been realized through several packaging awards, like the World Stars, Asia Stars, India Stars and Plast Icons Awards that have been awarded to Pearl Polymers Limited, both nationally and internationally. In addition to the PearlPET brand, Pearl is also the largest custom-molded rigid packaging supplier in India doing job work for various FMCG brands in Food and Beverage segment.

The company is continuously automotive the process to cut the cost by investing in Online Carton Printing machines, Collating machines, Automated shrink tunnels, Labeling Machine & Conveyors, etc. The company is also working on using 'Tritan' material (A specialty grade Polyester) for making high end products for Indian market. The concept of bottles, jars & containers is very new in Indian market & has immense potential for growth. The company will soon be launching Fresh & Seal range of new products under its MicroFresh line of microwave friendly products.

Valuation : This 45 year old company with 54% Promoter holding, having strong brand value among household and retail segment, which also happen to be the pioneer into bringing safe to use plastic products in Indian kitchen and having production facility at 4 different locations and production line of over 100 machines, is available at a market cap of only 40 Crore (Brand valuation alone should command more than 75 Cr) and 30% discount to Book Value of Rs 31.5 per Share, and having FY 16 Sale of Rs 176 Cr thus giving Mcap to Sales of less than 0.25 times. The promoters are working on to turn the company around in few quarters, which can be seen in their efforts of cost cutting, reducing debts and selling online through e-commerce. With the price of crude stabilizing near 50$ the company will have a stable pricing for raw material.

The company should begin to report good numbers going forward and command good PE ratio. Investors should study this HIDDEN GEM for long term growth. (The company is also listed in NSE so the quarterly and yearly price band does not apply.) 

Ravalgaon Sugar Farm Ltd (BSE : 507300) FV INR 50 – CMP 4500

Ravalgaon Sugar Farm Ltd (BSE : 507300) FV INR 50 – CMP 4500

The Ravangaon Sugar Farm Ltd was founded in 1933 as part of the Walchand Group but operates independently today. The Company's registered office and manufacturing facilities are situated in Ravalgaon, in the Nasik district of Maharashtra.

The company has 3 Divisoin, viz.. Sugar, Confectionery & Machinery.

Sugar : The Sugar Division has a capacity of 2,000 TCD and is situated in the Nasik belt of Maharashtra. The factory produces S-30, M-30 and L-30 varieties of white sugar. The factory is automated and monitored by computerized operations control. Ravalgaon's operations are run in an environmentally responsible manner. The plant is energy independent and supplies the excess energy it generates to the township. Water for production is drawn from the cane itself and treated water is discharged back into the earth. The Ravalgaon factory complex has planted thousands of trees in an around the plant as part of its green initiative.

Confectionery : The confectionery division has been operational since 1942 and has a strong pan India presence. It produce hard-boiled sweets and toffees under the Ravalgaon brand. Company own innovative and timeless products, including Pan Pasand, Mango Mood, Coffee Break, Choco cream besides the all time favorites cherries & che( strawberry, orange, lime flavours ), Supreme (cardamom, rose & butterscotch). , which are marketed throughout India by in-house sales force, and are available in traditional and modern trade retail outlets. The state-of-the-art factory has multiple high-speed cooking, forming and packaging lines for hard-boiled sweets and toffees.

Machinery : Ravalgaon's Industrial Machinery Division (IMD) started producing best-in-class machinery for the sugar, confectionery and other allied industries since the 1950s. Ravalgaon branded hoppers, graders, silos and double-twist candy wrapping machines manufactured in the early years of IMD's operations are functional even today across the country.

Valuations : The company has a tiny equity of Rs. 34 Lakhs only, divided into 68,000 Shares of Rs 50 paid up, of which the management holding is 53.3%. The numbers are bad like all Sugar companies  looking at downward trend in sugar industry since last few years.

Rationale : This 8 decade old closely held company having good assets in the books is engaged in turning around sugar sector, confectionery and sugar machinery is traded at a market cap of only Rs 30 crore. While other sugar stocks have multiplied 4 to 5 times, Ravalgaon, the hidden gem has not even doubled in last 12 months, thus leaving good scope for future appreciation. Few years back there were acquisition of confectionery business at a very high valuation (Nutrine was acquired by Hersheys at  270 Cr & Lotte bought 60% stake in Parrys valuing the company over 100 cr, share price of Sampre Nutrition which produce confectionery for big brands multiplied 15 times in last 1 year, so till when Ravalgaon will remain undiscovered?) Looking at these Confectionery division of Ravalgaon, which has well accepted strong brand can easily fetch close to 150 Cr, which comes to Rs 22000 per share, plus sugar biz should be valued at atleast 75 cr, which is another Rs 11000 odd per share, while Current market price is just Rs 4500, making it grossly undervalued. Only concern is liquidity which can be taken care of if by splitting the Face Value and by issuing bonus shares. A very small exposure of few odd shares is warranted as buy and forget type of investment for multifold returns in long term.

  

KLRF LTD (BSE 507598 FV RS.10) RS. 55 – Hidden GEM

KLRF LTD (BSE 507598 FV RS.10) RS. 55 – Hidden GEM

One can buy KLRF at CMP which is close to recomended price for short to medium term.

Company : Kovilpatti Lakshmi Roller Flour Mills, as KLRF with its brand as "Kuthuvilakku" came into existence way back in 1964 with the establishment of 46,800 MT of wheat flour at Gangaikondan in Tamil Nadu, near the southern tip of the Indian subcontinent. The various business of the company is as below :

Flour Mill Division : This is the flagship Division with licensed and Installed capacity of : 74,000 MT per annum working at 70% capacity (thus leaving scope for further scalability). KLRF has commissioned a traditional stone mill and transformed itself into well known manufacture of branded whole meal Atta which has more fibre, minerals, vitamins and rich in aroma. The company now has product portfolio of entire range of flour, which meets the demand across users such as Bakeries, Parotta Makers, Hoteliers, Sweet & Confectioneries Manufacturers and domestic end users. The company is pioneer in tapping high margin retail segment by launching half kg, 1 kg pack of various attas it manufactures, which is well accepted by the consumers due to its consistent quality, well recognized brand at affordable price. Company has Brands as : Kuthuvilakku, Kera Brand, Alamaram Brand for various basket of products.

Textile Division : In 1982, the company expanded into textiles business by the name of KLRF Textiles, a 30000 spindle unit and 1344 rotors, after further expansion it became one of the leading yarn manufacturer and exporter in the country. The division scored operating loss of 3 crore, this is mainly due to fall in yarn prices due to global slowdown and less off take from China.

Sheet Metal Division : KLRF SHEET METAL INDUSTRIES was established in October 1978. Initially this unit has been installed to cater the needs of M/S. LAKSHMI MACHINE WORKS. KLRF SHEET METAL INDUSTRIES is engaged in a diversified business like, ferrous castings, flour milling, textile spinning, sheet metal fabrication, plantation and flour milling machinery manufacturing, rice color sorting machine manufacturing and trading of electrical and Industrial goods.. KLRF SHEET METAL INDUSTRIES is also acting as a trading agent of Probat Werke of Germany ( for their entire range of Coffee Roasting machines ) and M/s. Mahlkonig , Germany ( for their entire range of Coffee Grinding machines ). KLRF SHEET METAL INDUSTRIES has got all the facilities required for sheet metal fabrication under one roof.

Windmill Division : Wind Mill Division at Aralvoimozhi Village in Kanyakumari District, Pazhavoor Village and Dhanukkarkulam Vilalge in Tirunelveli District, Tamil Nadu with a capacity of 6.25 MW. The entire power generated by the windmills is captively consumed. All the windmills are well maintained and the performance is satisfactory.

Engineering (Foundry / Casting) Division : The company has Foundry division with licensed and installed capacity of 10,800 MT per Year, which is running at 90% capacity and contributing 30% of turnover.

Investment Rationale : During 1^st Half of FY16, the company achieved turnover of Rs 106 Cr, on which it earned net profit of Rs 5 crore, resulting EPS of Rs 10 per share in first six months only. In 2^nd half FY16, company can double the turnover and net profit, which will result in EPS of Rs 20 per share for entire FY16. (In FY15 The turnover of the company in FY15 as 222 Cr, on which EBIDTA of 12.67 Cr was earned. Food Division earned EBIDTA of 9.3 Cr (56292 MT) accounting 59% of turnover, Textile division has incurred EBIDTA of -2.31 CR and Engineering Division has earned EBIDTA of 5.68 Cr.)

The management is optimistic on Food Division of the company due to consistent demand and favorable availability of quality wheat. Due to continuous losses and considering uncertainty in the sector, the management has decided to close down 2 units of textile division & 1 unit of sheet metal division, for which the approval has been obtained from shareholders. This will help company to wipe out loss and proceeds from sale will help the company reduce the debts. While in engineering division increased production as achieved due to availability of dedicated power supply. Increased production and improved performance is expected in FY16.

Valuation : The share of this more than 50 year old company with Fv of Rs 10 paid up and tiny equity of Rs 5 Cr only, having book value of Rs 46 and having TTM sales of 195 Cr & management holding of 51%, with recession proof business of Branded Food and high potential Foundry/Casting Heavy Engineering business, which is already making good profit alongwith ROE and ROCE of 14 & 11 percent and OPM margin of 13% is available at market cap of only 30 crore which is very cheap looking at the potential earning power of the company, as company has closed down its loss making division and proceeds of which is utilized to reduce debt, which again will improve the profit, which is already 6CR in last 3 quarters (Rs 12 EPS per Share). The current PE of 5 and market cap of 30 crore is very attractive as peers are trading at a PE of 20 and Mcap to Sales of 4, thus this turned around company can achieve EPS of close to Rs 30 TO 35 per share in net couple of years, if it can trade at PE of even 10 can give immense scope of appreciation in the long term.

KLRF Ltd - Result Update

Result Update YoY Sales up 20% 46.3 Cr to 54.3 Cr Operating Profit up 90% from 1.33 Cr to 2.46 Cr Net Profit 66.93 Lakhs against loss of 43.4 Lakhs last year QoQ Sales remained stable at 54.38 Cr against 53.75 Cr in last quarter Net Profit 66.93 Lakhs against 1.57 Cr (including +90 lakh exceptional item last quarter) last quarter Company is stabilizing its operation, result for which shall be seen in coming quarters. 9 Months EPS is Rs 11.23 per share. http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/7A18BB47_13EE_410B_89E6_4ED5260DD81B_153014.pdf

Result Update - Rajoo Engineers

Good result considering recession period. Company is able to sail through difficult times, which can be seen from decent numbers posted. Company able to remain in profit. http://corporates.bseindia.com/xml-data/corpfiling/AttachHis/E1DB66FE_FE50_4325_BAC8_14C9400285C5_165324.pdf Sales down 20% QoQ and YoY Profit down 30% QoQ and YoY Company able to maintain 9 months profit YoY, Which is up by a quarter of a %. Hold for long term gain

KLRF LTD (BSE 507598 FV RS.10) RS. 55 – Hidden GEM

KLRF LTD (BSE 507598 FV RS.10) RS. 55 – Hidden GEM

Company : Kovilpatti Lakshmi Roller Flour Mills, as KLRF with its brand as "Kuthuvilakku" came into existence way back in 1964 with the establishment of 46,800 MT of wheat flour at Gangaikondan in Tamil Nadu, near the southern tip of the Indian subcontinent. The various business of the company is as below :

Flour Mill Division : This is the flagship Division with licensed and Installed capacity of : 74,000 MT per annum working at 70% capacity (thus leaving scope for further scalability). KLRF has commissioned a traditional stone mill and transformed itself into well known manufacture of branded whole meal Atta which has more fibre, minerals, vitamins and rich in aroma. The company now has product portfolio of entire range of flour, which meets the demand across users such as Bakeries, Parotta Makers, Hoteliers, Sweet & Confectioneries Manufacturers and domestic end users. The company is pioneer in tapping high margin retail segment by launching half kg, 1 kg pack of various attas it manufactures, which is well accepted by the consumers due to its consistent quality, well recognized brand at affordable price. Company has Brands as : Kuthuvilakku, Kera Brand, Alamaram Brand for various basket of products.

Textile Division : In 1982, the company expanded into textiles business by the name of KLRF Textiles, a 30000 spindle unit and 1344 rotors, after further expansion it became one of the leading yarn manufacturer and exporter in the country. The division scored operating loss of 3 crore, this is mainly due to fall in yarn prices due to global slowdown and less off take from China.

Sheet Metal Division : KLRF SHEET METAL INDUSTRIES was established in October 1978. Initially this unit has been installed to cater the needs of M/S. LAKSHMI MACHINE WORKS. KLRF SHEET METAL INDUSTRIES is engaged in a diversified business like, ferrous castings, flour milling, textile spinning, sheet metal fabrication, plantation and flour milling machinery manufacturing, rice color sorting machine manufacturing and trading of electrical and Industrial goods.. KLRF SHEET METAL INDUSTRIES is also acting as a trading agent of Probat Werke of Germany ( for their entire range of Coffee Roasting machines ) and M/s. Mahlkonig , Germany ( for their entire range of Coffee Grinding machines ). KLRF SHEET METAL INDUSTRIES has got all the facilities required for sheet metal fabrication under one roof.

Windmill Division : Wind Mill Division at Aralvoimozhi Village in Kanyakumari District, Pazhavoor Village and Dhanukkarkulam Vilalge in Tirunelveli District, Tamil Nadu with a capacity of 6.25 MW. The entire power generated by the windmills is captively consumed. All the windmills are well maintained and the performance is satisfactory.

Engineering (Foundry / Casting) Division : The company has Foundry division with licensed and installed capacity of 10,800 MT per Year, which is running at 90% capacity and contributing 30% of turnover.

Investment Rationale : During 1^st Half of FY16, the company achieved turnover of Rs 106 Cr, on which it earned net profit of Rs 5 crore, resulting EPS of Rs 10 per share in first six months only. In 2^nd half FY16, company can double the turnover and net profit, which will result in EPS of Rs 20 per share for entire FY16. (In FY15 The turnover of the company in FY15 as 222 Cr, on which EBIDTA of 12.67 Cr was earned. Food Division earned EBIDTA of 9.3 Cr (56292 MT) accounting 59% of turnover, Textile division has incurred EBIDTA of -2.31 CR and Engineering Division has earned EBIDTA of 5.68 Cr.)

The management is optimistic on Food Division of the company due to consistent demand and favorable availability of quality wheat. Due to continuous losses and considering uncertainty in the sector, the management has decided to close down 2 units of textile division & 1 unit of sheet metal division, for which the approval has been obtained from shareholders. This will help company to wipe out loss and proceeds from sale will help the company reduce the debts. While in engineering division increased production as achieved due to availability of dedicated power supply. Increased production and improved performance is expected in FY16.

Valuation : The share of this more than 50 year old company with Fv of Rs 10 paid up and tiny equity of Rs 5 Cr only, having book value of Rs 46 and having TTM sales of 195 Cr & management holding of 51%, with recession proof business of Branded Food and high potential Foundry/Casting Heavy Engineering business, which is already making good profit alongwith ROE and ROCE of 14 & 11 percent and OPM margin of 13% is available at market cap of only 30 crore which is very cheap looking at the potential earning power of the company, as company has closed down its loss making division and proceeds of which is utilized to reduce debt, which again will improve the profit, which is already 6CR in last 3 quarters (Rs 12 EPS per Share). The current PE of 5 and market cap of 30 crore is very attractive as peers are trading at a PE of 20 and Mcap to Sales of 4, thus this turned around company can achieve EPS of close to Rs 30 TO 35 per share in net couple of years, if it can trade at PE of even 10 can give immense scope of appreciation in the long term.