Alufluoride Limited - Beneficiary of commodity cycle runup

Price: Rs. 110-140
CMP: Rs. 138.25
P/E: 16.40 ~ Expected P/E: 29.07
Book Value: Rs. 32.73
Price/Book: 4.22

Target: No specific target as is a mega multibagger, hold for 5-10 years, I'll review these stocks every March.

In my watchlist since 42 days.

Alufluoride Ltd (AL) is producer of high quality Aluminium Fluoride (ALF3) chemical with its plant located at Vizag , Andhrapradesh.  Aluminium Fluoride is added as a flux in the process of primary Aluminium Production. This is of critical importance as it lowers electricity consumption during the smelting process. Consequently, primary Aluminium Smelters are the biggest users of ALF3. AL is the only Company in Andhra Pradesh producing high purity Aluminium Fluoride having technology association with Alusuisse, Switzerland. This technology facilitates conversion of Fluorine effluents from Phosphatic Fertilizer Complex into Hydrofluosilicic Acid and then to Aluminium Fluoride.

Growth Triggers:
1. Till 2 years ago, company faced challenges in acquiring uninterrupted raw material supply of Hydrofluosilicic Acid. Though the company is having long term supply contract with  Coromandel Fertilizers Ltd (CFL), which is not fulfilled. Last year onwards AL is purchasing the same from Paradeep fertilizers and stability in operations.

2. Aiming for further growth, management allotting 8 lakh shares to promoters for capex and 2MW solar plant setup in the current location. This preferential allotment will increase the mgmt stake from current 53% to 65%.

3. Main application of ALF3 i.e Aluminium prices are improving on LME exchange. Recent pollute curbs implemented by China is also aiding the price jump of aluminium.

Hidden opportunity (aluminium fluoride as a new cathode material for lithium-ion batteries, this will take another 10 years for development):
Electric Vehicles (EVs) have caught the fancy of automakers and policy makers alike in India and around the world. With the Government’s push to make India a 100% EV nation by the year 2030, automotive companies are carefully treading into the EV space to expand their portfolio. This push for EVs will create a significant change in India’s securing lithium supplies, a key raw material for making batteries, becoming as important as buying oil and gas fields overseas.

With the proliferation of EVs, smart phones to laptops and storage of green energy production, lithium-ion batteries are gradually witnessing a rapid growth. Innovative battery designs, chemistries and cell formats are being introduced for power performances in order to meet the advanced needs of products today. These batteries, often called LiB, are rechargeable and with higher energy capacity thus allowing on-the-go consumers to keep using devices without replacing the batteries or frequently charging them.

Given the ambitious plan for an all-EV fleet powered by lithium-ion batteries by 2030, As lithium ion batteries are charting new frontiers like electric cars, designers are constantly working towards resolving issues that come with breakthrough innovation, mostly that of cell balancing and safety. For instance, one kWh of electricity is enough to go about 6km, so a 200km “full tank” range requires about 35 kWh of battery. Globally, prices for lithium ion batteries are about $250/kWh, roughly working to about Rs 5.7 lakh in battery costs alone, excluding import duties, considering batteries are imported.

To improve the lithium-ion batteries charging performance, AlF3 has been widely used to modify  the surface of cathode materials and graphite via a low-temperature (400◦C) reaction approach. The improved electrochemical performance was tentatively attributed to the “buffer” layer provided by the AlF3 coating, which reduced the activity of the extracted oxygen and suppressed the electrolyte decomposition.

Financials:

1. Growing at good 20% growth in top line and 70% growth in bottom line.

2. Debt free status and capacity expansion completion indicating strong financial status.

3. Positive cash flow of 6cr for last FY coupled with improved financial ratios.

4. Company holds reserves of 15cr including 12cr Mutual fund investments +3cr cash on hand against market cap of 96cr.

Conclusion:

Company is positioned well on fundamentals and attractively available under 96cr market capitalization with stock price trading @135rs, estimated conservative EPS of 8rs and PE of 16 with debt free status.

Disclosure: I hold investment in Alufluoride Limited.

Source: http://www.smallcap-valuefind.com/2018/01/alufluoride-limited-beneficiary-of.html?m=1

Apollo Micro Systems IPO Review

Apollo Micro Systems IPO Review:
Apply for Listing Gain
Expected Market Premium: Rs. 135-140
Price Band: Rs. 270 to 275 Per Share
Expected Listing Price: Rs. 410 to 415 Per Share

Apollo Micro Systems IPO Dates & Price Band: (Approx)
IPO Open: 10-January-2018
IPO Close: 12-January-2018
IPO Size: Approx Rs. 156 Crore (Approx)
Face Value: Rs. 10 Per Equity Share
Price Band: Rs. 270 to 275 Per Share
Listing on: BSE & NSE
Retail Portion: 35%
Retail Discount: Rs.12
Equity: - Shares

Apollo Micro Systems IPO Market Lot:
Shares: Apply for 50 Shares (Minimum Lot Size)
Amount: Rs.13,150 (For Retailer, Employee)
Amount: Rs.13,750 (For QIB, NII)

Apollo Micro Systems IPO Allotment & Listing:
Basis of Allotment: 17-January-2018
Refunds: 18-January-2018
Credit to demat accounts: 19-January-2018
Listing: 22-January-2018

Apollo Micro Systems Financial:
The Apollo Microsystems has good growth in last five years. As the PAT in 2017 increased to 86% with 18.6 crore compared to 10 crore in 2016. The Revenues increased 32% in 2017 compared to 2016 while PAT goes down around 22% in 2017 compared to 2016. Still a good bet is on.

Apollo Microsystems is a company from Hyderabad. They are doing business of designing, development and manufacturing of electronics and electronics mechanical systems. They are specialize in custome built hardare and software solutions for aerospace, defence, space, automative and railways. The ipo market boom in 2017 and its going to have a same way in the coming year 2018 as well. As the company financial it looks good and we can expect a early listing gain for the company. The ipo is around 156 crore so the subscription numbers might go on a higher side. Another small size ipo with big gain is coming up.

Company Promoters:
Karunakar Reddy

Apollo Micro Systems IPO Registrar:
Bigshare Services Private Limited 
E2, Ansa Industrial Estate, Sakivihar Road,
Sakinaka, Andheri (E)
Mumbai – 400 072
Phone: +91 22 4043 0200 
Fax: +91 22 2847 5201
Email: ipo@bigshareonline.com
Website: www.bigshareonline.com

Apollo Micro Systems IPO Lead Managers:
Aryaman Financial Services

Company Address:
Apollo Microsystems Limited 
Plot No 128/A, Road No. 12, BEL Road
IDA Mallapur, Uppal Mandal
Hyderabad - 500076
Phone: +91 40 2716 700 
Fax: +91 40 2715 0820 
Email: cs@apollo-micro.com
Website: www.apollo-micro.com

Conart Engineers

Price: Rs 48.25
P/E: 17.55
Industry P/E: 44.54 ~ Expected Price: Rs 120
Period: 1-2 years
Book Value: Rs 53.19
Price/Book: 0.91

Technicals: Forming higher top higher bottom... moving in a range catch as soon as possible... has just reversed. Once breaks the range on upside can give a big spike... will take its time though.

Fundamentals:
1. Company has reduced debt.
2. Company is virtually debt free.
3. Stock is trading at 0.88 times its book value.
4. With an equity capital of Rs.3 crore and reserves of Rs.10.54 crore, its share book value works out to Rs.48.85.
5. Debt free, Cash Rich Infrastructure Company available at such a valuation is a steal.

About Company:
Incorporated in 1973 in Mumbai, Conart Engineers Ltd (formerly known as Conart Builders Pvt Ltd) provides general contracting and project management services for industrial, commercial and residential construction projects. It offersgeneral contracting services such as cost monitoring and control, schedule development and control, subcontractor management, field engineering and site management, safety assurance, project accounting, change management, shop drawings and material submittal review and quality control. It also undertakes design-build and turnkey projects. In addition, it provides construction project management services (i.e. material planning, concept design, rough estimate, constructability review and construction bidding), cost estimating, CPM scheduling, change order evaluation, project cost controls, safety, quality management/field inspections, technology services and constructability review services. It serves the heavy manufacturing, chemical and petrochemicals, pharmaceuticals, residential and commercial, textiles, research and development, heavy engineering, electronics and computer markets. 
Conart has been providing its clients with at-risk general contracting services for more than Four decades. Our clients rely on us because we are responsive, provide outstanding service.

Their customer list includes:
ABB
Advani Oerlikon Ltd.
Alstom Projects Ltd.
Voltas Ltd
Asian Paints
General Motors
Gujarat Alkalies & Chemicals Limited
IPCL
Laffans Petrochemicals Ltd.
Lupin Agricare Ltd.
Parekh Platinum Ltd.
Paushak Ltd (Darshak Ltd)
Sabero Organics
United Phosphorus
Glaxo
JB Chemicals
Pune Municipal Transport
Gujarat Industries Power
Raymond Woollen Mills Ltd.
Cadila Healthcare Ltd.
Apollo Tyres Ltd.
Bombardier Transportation India Ltd.

Nalanda International School was constructed by them.

Conart Engineers is working very intensively in Infrastructure Space, it is the space where India will invest as much as Rs 3,96,135 crore in creating and upgrading infrastructure in this financial year, and this will increase year on year as India is a Developing Country and will remain so for many years to come. Infrastructure will play a very vital role in India's Growth Story and Conart has the potential to make the most of this massive opportunity.

Industry Growing Opportunities:
Minister of Road Transport & Highways and Shipping, announced the target of Rs.25 tn ($370.6 bn) for investment in infrastructure over the next three years including Rs.8 tn ($118.6 bn) for developing 27 industrial clusters and an additional Rs.5 tn ($74.11 bn) for road, railway and port connectivity projects. India’s 2016-17 Union Budget has budgeted nearly Rs.2.2 lakh crore ($32 bn) for the infrastructure sector, which is expected to boost India’s GDP to 9%. The total length of National Highways is expected to cross ~2,00,000 km in the next 5 years thereby offering significant opportunities in the State/National Highway segment. States like Bihar, Gujarat, Madhya Pradesh, Maharashtra, Karnataka, Rajasthan, Uttar Pradesh and West Bengal have planned several projects both on EPC and PPP basis. The Central and State Governments have granted infrastructure status to affordable housing for urban and rural housing projects in the current Budget. The Central Government aims to complete 1 crore houses by 2019 under various schemes.

They are into civil construction and seem to have recently gone into Construction Project Management. This seems to be an area with better profit margins.

Compuage Info

Price: Rs 60-62
P/E: 20.25
Industry P/E: 44.15 ~ Target: Rs 98

Period: 6-12 months
Book Value: Rs 19.58
Price/Book: 3.14

Technically: Long term breakout around the counter for Investors

Fundamentally:
1.Promoter's Stake has increased.
2.Company has steady financial performance.
3.CIL has a broad based product mix across 3 main Group Categories –
CIL's product mix is spread across three product category groups which includes the IT Product Vertical, Enterprise Product Vertical and the Mobility Product Vertical.
4.Top 3 vendors for CIL include HP, Cisco and Samsung.
During FY17 CIL has added 14 new principal relationships to its product portfolio.
5.CIL has also made huge inroads PAN India through its Geographical Reach which is a key variable in this industry
6.CIL has outlined a 4 point strategy to propel and sustain its growth engine in future also –
This includes – Service Orientation with Vendors, Cash Flow Management, Regular investments in Technology
and Strong Relationship Management with its Reseller network.
7. Lots of other factors not possible to list down.

Clients:

About Company:
Compuage Infocom Limited is an information technology distribution company that distributes computer peripherals, Telecom and Power Products. CIL also provides products support services for Information Technology products and Installation and annual maintenance services for these products. CIL was founded in 1987 and has its headquarters in Mumbai. The company
also has subsidiaries in Singapore. Over the last 30 years CIL has developed a
strong network of over 10000 channel partners across 800 cities & is currently
associoated with 32 marquee brands with 42 warehouses & 61 service centres
across pan India.

Gujarat Heavy Chemicals Ltd

Price: Rs 324.40
P/E: 8.01
Industry P/E: 19.87 ~ Expected Price: Rs 600
Book Value: Rs 135.31
Price/Book: 2.40

Technically: Multi year breakout

Fundamentally:

1. Company has good consistent profit growth of 28.26% over 5 years.

2. Company has a good return on equity (ROE) track record: 3 Years ROE 29.52%.

About:

GHCL (Gujarat Heavy Chemicals Ltd) is a multibagger stock in the making. It is among India’s three largest soda ash manufacturers. It reports Ebitda (earnings before interest, taxes, depreciation and amortisation) margins ranging from 28 per cent to 33 per cent.

GHCL’s Ebitda margins are higher than that of its closest rival Tata Chemicals for 2014-15.

Moat in soda ash business

GHCL has the big advantage that the business has a huge moat. There is a large amount of capital expenditure necessary to set up a soda ash plant. An investment of Rs 2,500 crore is required to set up a soda ash plant of 500,000 tpa.

Soda ash prices have been on an uptrend in the past few years. This has enabled all soda ash manufacturers to report high profits.

Textiles business

GHCL has the additional advantage of having diversified into the business of home textiles. It has integrated yarn spinning into the manufacture of home textiles. The textile division is also generating huge profits today for GHCL.

GHCL has also been able to increase its capacity utilisation in the textiles division from 70 per cent in 2013-14 to 85 per cent in 2015-16. GHCL has a number of marquee clients like Target, Bed Bath & Beyond, Revman and Wal-Mart (Mexico).

Capacity expansion

GHCL is investing about Rs 375 crore to increase the installed capacity of the soda ash plant. The expansion will be funded through internal accruals.

Debt reduction

It is also stated by GHCL that it intends to reduce the debt burden from Rs 1,297 crore as of 31st December 2015 to Rs 1,100 crore. The reduction in debt will mean that the Company enjoys higher profits as the interest savings will be massive.

Strong cash flows

GHCL has utilized cash flows for repaying overseas debt. In the last two years, GHCL has embarked on a capacity expansion plan of the soda ash segment, textiles and has also installed wind turbine systems. The major focus from FY18 will be debt reduction and paying investors dividend or shares buyback.

Dividend distribution policy

In FY16, GHCL declared dividend of Rs 420 mn at 16.4% gross payout. As per the dividend distribution policy, there will be a 15%-20% gross payout of standalone profits. Further, the company has also introduced ESOPs to reward employees. The company has appointed S R Batliboi (E & Y) as its statutory auditors. These steps will create value for shareholders in the long run.

Valuations are compelling

GHCL’s revenue will grow 6% while the EBITDA will grow 10%/ CAGR during FY16-18E. The company will focus on significant debt reduction from FY18E. The valuations are attractive because the stock is trading at 4.4x FY18E EPS of Rs 38, EV/EBIDTA of 3.2x and P/BV of 1.1x. The Company has significant re-rating potential given its strong earnings growth of 21%, RoCE / RoE of 26%/28% and strengthening balance sheet with D/E of 0.6x (FY18E).