Balasore Alloys

Balasore Alloys
A GOOD ALLOY FOR YOUR PORTFOLIO

Why Balasore Alloys?
1. Government thrust on infrastructure/
National Steel Policy
2. Quality product mix
3. Improving margins

Source: https://sharemultibaggerstocks.blogspot.in/?m=1

For all the technical analysts out there, Balasore Alloys has given a recent 12 year break out, ie. prises have risen above previous highs made in 2008 with huge surges in volume which is a big positive for the company:-

Price: Rs 84.20

Investment Perspective: 1 year

Upside: 40-50% expected

Source: https://sharemultibaggerstocks.blogspot.in/?m=1

Target: Rs. 126

About Company:
Balasore Alloys Limited is engaged in the manufacture and mining of ferro alloys. The company is also engaged in manufacturing and selling of ferro chrome of various grades. Its products include high carbon ferro chrome (FeCr60) and low silicon ferro chrome (FeCr65). It focuses on the production of products, such as low and medium-silicon, low phosphorous, medium-carbon and high-chromium. BAL is India’s second largest pure play integrated ferro chrome (FeCr) producer and is one of the few ferro alloys manufacturing companies in the country having captive mines.

Financials :- On the financial front, Ballasore Alloys posted a whopping 82.81 per cent hike in its net sales to `308.44 crore for the first quarter of FY2018 as compared to `168.72 crore in the same quarter of the previous fiscal. The company’s PBIDT grew by 173.54 per cent to `49.63 crore in the first quarter of FY18, as against `18.14 crore in the same quarter of the previous year.
The company’s net profit grew by 374.25 per cent to `24 crore in Q1FY18, as compared with `5.06 crore in the same quarter of the previous
financial year.
On the annual front, the company posted a 20.75 per cent hike in its net sales to `1,036.90 crore in FY2017, as against `837.97 crore in the previous financial year. The company’s PBIDT witnessed an increase of 129.46 percent to `203.67 crore in FY2017, as compared to `88.76 crore during the previous financial year. The company’s net profit grew by 379 per cent to `89.53 crore in FY2017 as compared to `18.69 crore in the fiscal year
The key risk for the company's profitability remains slowdown in the Chinese economy. The stock is currently trading at 6.76 P/E, which is reasonable.

Sharp increase in ferrous chrome and
chrome prices :-
The prices for ferro chrome have increased by ~100 per cent, while chrome prices are up by ~300 per cent since February 2016. The benefits of price rise will be seen in the coming quarters as well. The prices have risen during the previous year; however, the most important question is whether or not the prices will remain firm in the coming quarters. In all likelihood, the prices of ferro chrome are expected to remain high owing to huge consolidation among producers.

Source: https://sharemultibaggerstocks.blogspot.in/?m=1

Stainless steel:-
When it comes to ferro chrome, the production growth and price of stainless steel is a key driver of demand, as it accounts for over 85 per cent of global ferro chrome consumption. The ferro chrome industry is largely dependent upon the performance of stainless steel sector. India is the second largest stainless-steel producer in the world after China.

Final View :- On the expectation that the demand for stainless steel will remain intact and the prices for ferrous chrome will be steady, one can buy Balasore Alloys with a 1 year investment horizon perspective.

Yash Papers

This is an investment idea so it's a buy and hold stock (no stoploss or target), these investment ideas will be reviewed every March. This ideas may give you a multi-multibagger return in a long run.

CMP: Rs 41.69

Mkt Cap: Rs 184.31Crs

EPS: Rs 3.17

Book Value: Rs 16.38

Price/Book: 3.19

P/E: 16.5

Industry P/E: 13.37

Source: https://sharemultibaggerstocks.blogspot.in/?m=1

Why Yash Papers: It makes recyclable papers made with use of bagasse-based biomass (considered as waste), putting that into application they have created a brand called chuk (making paper plates, paper cups, paper mugs, etc) substitutions for cutlery(used for serving food items). The quality it has, the brand they are making & the efforts they are putting in it is a big positive. Chuk as a brand has a Hugh market. Plus adding to the positives is the financial performances shown by it in past quaters.

Source: https://sharemultibaggerstocks.blogspot.in/?m=1

Negatives:
High interest cost, opting out for CDR package will reduce interest rates, similarly as the plant is running with full capacity may not face any liquidity issues which it faced earlier.

About Company:
Yash Papers, located in Faizabad, India, is synonymous with machine-glazed varieties of paper. Their brand revolves around manufacturing the best wrapping grades of papers in India. They make MG wrapping papers in both brown and white varieties.

Established in 1981 by entrepreneur KK Jhunjhunwala, Yash Papers started by producing low grammage kraft grades of paper. Beginning with just one paper making machine, they successfully doubled capacity on that machine, then added a second machine in 1991 to more than triple their paper-making capacity. This level of growth within ten years helped them quickly establish dominance over the low grammage kraft market.

Product Details:
Yash Paper mainly deals in Kraft paper, Poster paper, Egg trays and disposable tableware products. The difference between Kraft and poster lies in the level of bleaching the product. For understanding sake, bleaching is the process which adds value to the product by way of quality and appearance. So can we conclude it as a simple commodity kind of business , doing so may be immature with out reading further.

The company products kraft paper, bags, pulp products is a value added products used across Quick Service Restaurant (QSR), FMCG, personal care, beverages and pharmaceutical sectors.

The company operates in sustainable business model,  what is the meaning of Sustainable? Sustainable means coming to an end after a phase. Just with little more digging, if our previous generations exists on earth even now, think of difficulties faced in our survival on this limited space. For me sustainable is all about regeneration capabilities. Yash management adapted same theme into business. We will evaluate the business model along with financial improvements happened in the past one year.

Yash Business model :
Raw Material Advantage : On the raw material front plant located in a strategic location of UP, where sugar cane cultivation is very high and availability will not be a issue. In fact  Yash constructed go-down to preserve wet based raw material to avoid any cyclical and quality issues. 

Self Reliance: Own power plants of 8.5MW  run by Agri products to support all the plants requirements.

Process Innovation: Sludgy convertion to Egg tray units, extraction of Silica from Rice husk are few examples of the process innovation.

Product Reach-ability: Regular products catering to esteemed clients such as KFC, MCD, LIC and Tata groups. Where as newly launched products are going to reach wide user base with good margins to players like Food Panda, Pizza Hut etc...

Operational Observations:
Basically Yash Papers Limited (YPL) comprises following 5 units – Unit-1, Unit-2, Unit-3, Egg Tray Unit and Tableware Unit.

Capacity of Unit-1 is 20 TPD, Unit-2 is 30 TPD and Unit-3 is 70TPD, which is 39100 MTs per year (considering plant usage linking between pulp and paper, understand it is not 365*120 = 43,800 MT).Production of paper 35,794 MT (Kraft Paper 18,446 MT and Poster Paper 17348 MT) and saleable pulp of 5,088 MT during FY 2017, translated to 91% capacity utilization which is exactly similar to last year.The Company exported 5,335 MT Kraft and Poster Paper in 2017 Vs 6,693 MT in FY 2016. Though exports are reduced, sales were not reduced. we can see the first sign of domestic demandimproving Q4 last quarter on domestic front.In the Q1 quarter sales increased only by 0.7cr yet operating margins expanded from 3.6% to 9.6%. Kraft paper prices are increased by 23% in this quarter, second indication of domestic demand growth.During current quarter Q2 , August month 3376 MT produced from Unit 1,2 & 3 translated to fully 100% utilization, clear cut indication of growth keeping all the doubts aside.Plant de-bottlenecking to improve the paper manufacturing capacity to 45000 tonnes per annum. Last year average sales from paper per MT is 45k and on pulp it is 32k. This year already Kraft paper prices are increased by 23% or 6rs per kg, now improved prices together with plant de-bottlenecking is going to improve sales & net profit. On top of it tableware plant will come into stream line during Q3 will augur well for company.Promoters converted preferential warrants to equity is another confidence indicator of YPL business, subsequently promoter stake increased from 35% to 40%.YPL successfully came out of CDR package, which would lead to a reduction in the average interest cost of loans – the benefit of this is expected to reflect in the current year. Similarly completed repayment i.e unpaid deposits of 1.2cr for the previous period.  The reserves of the Company stand at 22.49cr during the year as compared to 14.86cr in the previous year 2015-16.

Operational Efficiencies:
Self reliant considering own power production from Rice Husk & Steam based power plants. Out of total capacity of 8.5MW, one power plant 6 MW is used for Unit 1,2 & 3 operations. Second power plant 2.5 MW is for power back as well as for Tableware plant.Recovery of spent chemicals & lime from recovery units making it reusing the every resource perfectly back into manufacturing process is what sustainable according to me.Installation of egg tray machine based on 100% usage of ETP sludge is completed and egg tray production is increased from 5,71,900 in 2016 to 65,15,550 pieces of egg tray 2017. Remember sludge is generally a waste generated during paper production, good that company is effectively using the waste material.Automation in Softwood pulp mill , step towards plant automation making the product quality right all the time coupled with operational stability.Development of new colored grades of paper for domestic / export and successful trial at plant scale.Research about Silica extraction from rice husk ash is an interesting area currently company is exploring.Development of stone paper from lime sludge, already lime sludge is used as paper filler at one end.

Growth trigger in the form of New Unit:
YPL plans of setting up of 100% biodegradable products from bagasse-based paperboard single use biodegradable tableware at Faizabad (Uttar Pradesh) with an installed production capacity of 3,300 MTPA  is completed and trial Production also completed this month. These products are sold under CHUK brand and i expect Q3 onwards revenue contribution will come from this plant. Once the Plant get stabilize, expect 90cr business with this plant alone in next 2 years with good margins considering value added custom products in nature.

This plant starts with initial capacity of 3300 MTPA in next one year can be doubled the capacity to 6600 MTPA , this plant expenditure is close to 51cr gathered by way of internal accruals + financial borrowings.

Already yash enjoys niche clientele in the form of KFC, LIC, MCD, Coffee day etc..now Yash got 9 clients for CHUK products such as Food Panda,Paradise hotels,Pizza hut, costa coffee targeting quick service restaurants. These products are priced between 1-7rs making affordable across the usage chain and protecting the margins. 

As people are more becoming educated and changing their life style or food habits according to eco friendly environment. Similarly Govt also focused more on protecting environment with different policy initiatives such as Clean Ganga, Swatcch Bharat, i expect company products will appear soon in Indian railways as well.

 
Altogether company is clearly in a bright spot considering Existing plant de-bottlenecking, New plant commercialization, product offering to bigger players, favorable pricing with 6rs price increase in last quarter, CDR exit reducing interest rates..is it called inflection point in company journey, YES is my answer.

Vardhman Holdings Limited

Buy Vardhman Holdings Limited (Share it with others too., your appreciation is my motivation)

Current market price: 3670. Long term target: 7500. Book Value: 1435. P/E Ratio: 5.5

Sector: Finance

Industry: Finance - NBFC 

EPS : Rs.663.35

Book Value : 1435.16

Price/Book : 2.63

P/E : 5.5

Industry P/E : 43.66

Source: https://sharemultibaggerstocks.blogspot.in/?m=1

About Company

Holding company of Vardhman Group Stocks.

Holds shares of Vardhman Textiles, Vardhman Special Steels & Vardhman Acrylics.

Also holds shares of Infosys, Sun Pharma, Asian Paints, Havells.

Source: https://sharemultibaggerstocks.blogspot.in/?m=1

Key holdings: Market Value

Vardhman Textiles Rs.1,975 Cr

Vardhman Special Steels Rs.34 Cr

Vardhman Acrylics Rs.4 Cr

Total Rs.2,013 Cr

Market Cap of Vardhman Holdings: Rs.775 Cr

Cash/Current Investments as of September 2017: Rs.200 Cr (so they are cash rich, in fact most of the cash is deployed into current investments)

It is a zero debt company.

If you look at market value of Investments verses it's own market cap it's trading at a 60% discount to its value of Investments. 

If we remove the cash from that ie. Ex-cash it's trading at a discount of 70% to value of Investments.

Source: https://sharemultibaggerstocks.blogspot.in/?m=1

But concern for company is earning mostly through dividend though the earnings per share has gone up from Rs.35.85 in FY13 to Rs.150.9 in FY16, dividend has remained constant at Rs.3 per share.

Another concern is the free float for the company is very low.

Promoters 74.9%

Baring India PE 2.94%

Anil Goel 2.94%

Seema Goel 1.03%

Anand Shah 1.93%

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Swasti Vinayaka Art

This is an investment idea so it's a buy and hold stock (no stoploss or target), these investment ideas will be reviewed every March. This ideas may give you a multi-multibagger return in a long run.

Price: Rs 7

Swasti Vinayaka

Some times we will get stocks at throw away prices, we are going to discuss one such stock which has all the good qualities to give guaranteed returns in one year time in my perspective.

Selection of stock is done based on below merits
1. The company is maintaining healthy dividend yield of 6% for last 7 years.
2. Company D/E level came down from 2.4 to 0.6 in last 4 years, so expecting more dividend from next year.
3. Net profit margins are improved from 14 to 29% in the last 3 years.
4. Company operating margins are improved from 32% to 55% during the last 3 years.
5. Company ROE, ROCE levels are 32% & 30% respectively.
6. Any company management who maintains good relationship with retail share holders coupled with good dividend distribution policy & strong fundamentals, surely will be rewarded by market participants.

What it does: Company is operating in real estate, sale of jewellery & Signio paintings (through canvases that tell tales of the Hindu epics, Islamic histories and chronicles).

Promoter family hold 51% stake in company, management is clearly investor friendly considering the fact of dividend distribution across listed companies though the stock prices are less than 9rs for the last 7 years.

Currently 75% of revenue contribution is coming from risk free rental income, the other 25% is coming from other divisions such as jewellery & signio paintings sale. The Signio painting division certainly can prosper considering it as a premium segment serving for higher classes of the society where margins will be very high. This segment can provide the requisite next leg of growth for the company going forward.

Financials

Improving Financials for the last 3 years
Operating margins for the last 3 years were 32% , 48% & 55%.
EPS 0.35, 0.48 & 0.64
Continues dividend track record for last 7 years.
Positive cash flow for the last 8 years.
ROE 24, 28, 32
ROCE 22,27,30
PAT Margins 13%, 22% & 29%.
Tax rate 33,34 & 34
D/E ratio reduced from 1.9 to 0.6 in current FY.

When the fundamentals are good, business exhibits strong financial ratios, high dividend distribution track record of last 7 years coupled with promoter integrity in any company, market always will give a premium in valuation to that company.

Note : I am quite sure that this company is going be listed in next year economic times multibagger stocks section, please mark my words.

Advanced Enzymes Technologies

This is an investment idea so it's a buy and hold stock (no stoploss or target), these investment ideas will be reviewed every March. This ideas may give you a multi-multibagger return in a long run.

Price: Rs. 270

Advanced Enzyme Technologies : 

1. Blue chip stock in making
2. The operations i.e Enzymes is an extensive  R&D based technical know-how business, only very few companies can survive in the longer term. Because R&D requires good capital investment and skilled workers are required to get the work onto successful track.
3. Started from scratch by first generation entrepreneur and achieved several milestones in last one decade.
4. Business across 50 countries.
5. The products can be utilized across human , animal, food , non-food sectors and bio-fuel sectors.
6. Promoted by Rathi family
7. Company's innovation got several accolades with awards such as Most innovative exporter's award 2012, India’s Fastest-Growing Mid-Sized Cos 2013,  Bio-Excellence in Industrial Research in 2014 & Best Nutraceutical Company in 2016.

Positives:
1. Segment (Human healthcare, Animal nutrition and bio processing) have lot of growth opportunities exist going forward as people are becoming more sensitive and rejecting genetic modification & opting for natural way.
2. Operating margin remained robust & will stay so, supported by strong R&D set-up and healthy demand in the US.
3. Good to see company is spending > 5% of sales on R&D efforts across several years. 
4. Generally when any company having multiple subsidiaries difficult to expect profits from all the units, AETL is an exceptional one with profits from all the active units.
5. As the company is financially sound, expansion is coming by organic (product expansion) and  inorganic (acquisition of JC Biotech and Evoxx tech) ways .

Negatives:
1. Any sudden regulatory compliance issues may have adverse effect
2. Currency fluctuation : Susceptibility to volatile foreign exchange (forex) rates as Exports account for majority of the revenue. However currently the company does not hedge its net forex exposure, which poses a risk.

Growth triggers:
As an industry itself, enzymes market is in exciting phase projected to show high gains in light of its extensive usage across several industries food processing, germination in breweries, pre-digestion of baby food, fruit juice clarification, meat tenderization, cheese manufacturing, and conversion of starch into glucose with limited competition globally.
Company invested in Advanced Biodiesel Limited, to demonstrate company’s products usage  in the manufacturing of Biodiesel i.e. manufacturing of biodiesel using enzymatic route.
Company acquired 100% stake in Germany-based Evoxx Technologies Gmbh (Evoxx) through its wholly owned subsidiary, Advanced Enzymes Europe B.V for 57 crore. This acquisition is is expected to strengthen the group's foothold in Europe as well as boost research and development (R&D) capabilities.
Company intends to intensify its focus on new age applications such as Palm Oil extraction and Biodiesel, and set up  Malaysian subsidiary to drive growth in this highly potential market