Garware Polyester Ltd (BSE 500655) FV RS 10 CMP 132

The Company : Garware Polyester Limited (GPL) founded in the year 1957, is the pioneer and the largest exporters of polyester films in India. GPL is the only manufacture of sun control window films in India and a trend-setter in Sun Control Film industry with a history of more than 3 decades of technological development. The Company has four manufacturing plants for Polyester Film and manufactures Film of thickness ranging from 10 micron to 350 micron. 

The Company possesses Patented Technology for Dyed Polyester Film in India and USA and is the Second Company in the world to possess such Technology. The Company is already backward integrated through the establishment of a Batch Process Polyester Chips plant which ensures a steady stream of supply of chips for the Film Lines. The BOPP line set up by Company in last year was part of the Company’s efforts to ensure forward integration too. Thus Company’s strength is its integrated manufacturing facilities, R&D Center and development of specialty products for various applications.

Products : The Company manufactures Bi-axially oriented polyethylene terephthalate (BOPET) / Polyester Films, Sun Control Films, BOPP Films, Thermal Lamination Films and Specialty Polyester Films of high quality for a variety of end applications. GPL also manufactures the premium grade heat rejection films based on the latest `Nano Technology’ developed in its in-house R&D facility center. The Company has introduced Infrared rejection films which can reduce infrared heat up to 92%. It has also developed the film to reduce the impact of mobile tower radiation.

Domestic Business : Growing Retail sector, increasing preference towards packaged items, liberalization and rising middleclass is expected to increase in consumption of Polyester Films thereby adding to growth of this segment in the domestic market. Increased usage of window films in offices, commercial buildings and malls will continue to add to the growth of the Company’s business in the premium segment of window films. GPL has well recognized brands and integrated manufacturing facilities which are expected to augur well for the company’s future growth.

Global Business : Through its subsidiaries situated in USA and UK the company has developed a wide network of dedicated customers in Europe, USA, Far East, Middle East, Brazil, Australia, China, Russia, New Zealand, Eastern Europe, Mexico and Africa. The quality of GPL products is rated amongst the best in the world and the Company pays special attention on customer service and satisfaction due to which the customer base is consistent and increasing. The aim is to expand export base and catapult international operations into a major growth driver. GPF is the marketer of the brand ‘GLOBAL WINDOW FILMS’ which is registered in the US and is one the most popular brands. The subsidiary is catering to Russia, Europe, Asia-Pacific and Africa market film under the brand “Garware Sun Control”.

Future Strategy : The strategy is to focus on the specialty films, launch new products, strengthen network and Services and speed up brand building initiatives. Plans are afoot on a marketing warpath, overhauling the product portfolio and penetrate newer markets, launch aggressive advertisement campaigns. The shrink label application film is very well stabilized in the market. With demand outlook for High Shrink films remaining robust, the Company has plans to shift to the specialty PET shrink Films, where it sees a tremendous opportunity. In thermal film, GPL has developed Gold & Feather feel films. With foray into BOPP, GPL has now become the only company in the segment which will be manufacturing BOPET, Sun control Films, Thermal Lamination and BOPP.

Valuation : GPL, a six decade old company with promoter holding of 61% (Zero Pledge) posted a Consolidated total revenue for FY 17 of 925 Cr & Net Profit of 19.9 Cr on an equity of 23.23 Cr giving an EPS of Rs 8.57 per share. Borrowing stands at 267 Cr (Short Term) and 19.9 Cr (Long Term) Finance cost remained 32 Cr. The company is having 4 Lakh shares of Garware Wall Ropes (At current market price of 850 per share, the value is close to 33 Cr)Freehold Land, Lease hold land and an entire Building in Vile Parle, Mumbai, near Airport, the value of which should be many times of current market cap (300 Cr). 

If company can sell even part of its mentioned asset and retire the entire debt than savings on interest alone directly gets added to the bottom line, which can boost the EPS by 15 Rs per share. Debt to Equity Ratio is 0.63, Debtor Days at 19.31. With bottoming out of the Polyfilm Industry in near future and Softening of interest rates, and falling Crude price, the profitability of the company with reducing debt, may improve going forward by 15 to 20% CAGR for the next few years, plus the company is back on dividend paying list after 5 years, that shows confidence of management towards future growth of the company, hence Investor may study this asset rich company for long term investment.

(Investor can follow Hidden Gem Telegram Channel : t.me/hiddengemsmultibaggers )

Kabra Extrusion Technik Ltd (BSE 524109 NSE KABRAEXTRU) – CMP 146 (FV RS 5)

The Company : Kabra Extrustiontechnik (KET) is the flagship company of Kolsite group and one of the largest players in the plastic extrusion machinery known for its innovative offerings. KET specializes in providing plastic extrusion machinery for manufacturing pipes and films. It has two manufacturing locations in Daman.

The company since 1962, has done more than 14,000 installations worldwide and presence in more than 85 countries in Americas, Middle East, Asia and Africa, KET enjoys leadership position in the extrusion market with Coveted 2 star Export House Status. Company has set benchmarks in plastics extrusion industry by modern R & D techniques and various processes to cater the market requirements for low power consumption, high output, maintenance free and user friendly plastics extrusion plants.KET  received Two Consecutive National Awards for Technology Innovation in year 2015 & 2016 respectively. KET as a company through constant R&D and Innovation has introduced several products and solutions for the “First” time in the plastic extrusion industry since 1970. The number of such “First” stands at 57 till 2010 and many more thereafter. 

Collaborations : KET is having Global Collaborations with the leading companies in plastic industry, as : Battenfeld-Cincinnati (Germany-Austria-USA), Penta S.r.l. (Italy), Greiner (Austria), Unicor (Germany), Extron Mecanor (Finland)

Market Solutions offered by KET serving the ever growing :

Agriculture (Plasticulture) : Plasticulture represents use of applications of plastics in Agriculture, Horticulture, Water management & related areas. A variety of plastics materials and end products are deployed in Plasticulture applications - for water conservation, irrigation efficiency, crop and environment protection, as well as end product storage and transportation.

Infrastructure : Infrastructure is one of the key focus areas of growth. Plastics pipes & profiles play a major role in the fields of Housing, Industrial & Public Infrastructure, Sanitation, Water Reticulation, Irrigation, Desalination & Effluent Treatment, Micro-ducts (Fibre optics) & conduits.

Packaging : Flexible packaging offers solutions for diverse applications in various user sectors including staples and food products, beverages, pharmaceuticals, personal care & household products, cigarettes & tobacco products and a wide range of industrial applications. 

Telecom : For telecommunications, cables can be installed in water, in air or underground. The ducts in which the fibre optic cables are installed are usually made of polyethylene. KET manufactures high speed telecom micro-duct lines and high performance bundled sheathing lines to produce micro-duct for 3G & 4G data communication.

Valuation : KET, an R&D and Innovation driven, closely held dividend paying (continuous since last 10 years) company where Indian promoters hold 56% stake (Zero Pledge) & Battenfeld Extrusion (Germany & USA)holds 14% stake, with global presence and well accepted products across continents and serving growth sector such as Agriculture, Infra & Construction, Packaging & Telecom is available at a market cap of just 466 Cr, with sales of 270 Cr for FY17 and Net Profit of 27.6 Cr, giving EPS of Rs 8.68 per share is available at a PE of 16.8 which is bargain than Industry PE of 29.5 and Book value of 58. For FY 18 & 19, KET is likely to deliver topline growth of 10% and bottom line growth of 15%, giving an EPS for FY 18 & 19 at Rs 14.5 and 12.6, at current market price the share is available at an attractive forward PE of just 12.6 times, thus giving investment opportunity for long term growth.

LKP Securities Ltd. (BSE:540192 FV : Rs 2.00) CMP 11.05

LKP Securities Ltd. (BSE:540192 FV : Rs 2.00) CMP 11.05

LKP Securities Ltd, demerged from LKP Finance from December 2016, has been one of the oldest and reputed stock broking of the country since 1948 is today one of the largest multi dimensional financial services group and India’s first to be awarded the prestigious ISO9002 certified KPMG Quality Registrar, USA. Since 1948, LKP with its 3772+ outlets across India covering 200 cities in the country, including 25 regional offices at all the major cities, Continues to provide clients with a single source capable of meeting all their needs – be it Equities, Debt, Corporate Finance, Investment Banking, Merchant Banking, Wealth Management or Commodities. 

LKP Securities Limited and its associates enjoy the following Registrations & Memberships : 

Category I Merchant Bankers with SEBI, Membership of BSE & NSE (Capital & Debt Market), AMFI registered all India Mutual Fund Distributors, Member of Commodity Exchanges MCX, NCDX and DGCX (Dubai), Member of NSE for Interest Rate Futures, Member of MCX SX and NSE Currency.

The business verticals are as : 

Equities : 

Retail : LKP offers a wide spectrum of services that includes Equity Broking in Cash and Derivatives, Internet based trading, Demat services & Research services 

Institutional : Clientele at the institutional desk include Mutual Funds, Financial Institutions, Foreign and Domestic Institutional investors, Insurance companies, Banks and Corporates. Some of our esteemed domestic clients include among others – UTI MF, Birla MF, LIC, HDFC MF, Pru ICICI MF, Reliance MF, Principal MF, Sundaram MF, Tata MF, Benchmark MF, ILFS, Canara Robecco MF, ABN Amro MF and FII clients include Morgan Stanley, JP Morgan, Matterhorn and Blackstone among others. Clients whom we have been serving for the past twenty-five years include UTI, LIC, IDBI, ICICI, Tata Group, Birla Group, and Dabur, Jain Irrigation, Emco, Godrej, JB Chemicals, Paper Products and UB Group of Companies among others.

Fixed Income Markets : LKP is recognized as major dealer of Fixed Income Securities, executing deals for Banks, Institutions, FIIs, MFs, Insurance companies, Primary Dealers, large Corporates, PSUs & PF Trusts. 

Primary Market Division : LKP’s vibrant 'Primary Market' Division does syndication business in IPOs', Company Fixed Deposits, Capital Gain Bonds (U/s 54EC), 8.00% Saving (Taxable) Bonds floated by RBI & various bonds floated by Central & State Governments.

Mutual Funds & Insurance Advisory : LKP Investment Advisory Services Offer tailor-made wealth management services to Retail, High Networth Individual and Corporate Clients. 

Commodities : Alpha Commodities offers a complete bouquet of client- friendly services in the burgeoning Commodity Futures market.

Currency Derivatives : With the launch of currency derivatives, LKP offers its clients yet another segment for trading. Jointly regulated by SEBI and RBI provides traders with another lucrative trading avenue.

Valuations : A 70 year old closely held company with nationwide retail client base along with marquee institutional & corporate clientele is trading at a market cap of ~80 odd crore. Company reported total income for March Quarter of Rs 16.68 Cr and Net Profit of 3.32 Cr giving an EPS of 0.45 per share. Expected FY 18 EPS is Rs 1 per share. The stock is trading at just 11 times FY 18 , while the industry PE for brokerage companies is above 20 making it a good investment candidate for long term growth, as new generation has taken over the company with new team in place to drive its overall business to create shareholder value after demerging the company from LKP Finance Ltd.

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.