Atlas Cycles (Haryana) - Multi Bagger

Company overview—

Atlas Cycle (Haryana) Ltd. is India's second-largest cycle manufacturer. It is also one of the largest exporters of bicycles. It has units at Sonepat, Sahibabad, Rasoi and Gurgaon, all in Haryana. Atlas Cycles Industries Ltd was incorporated in 1950, the company started making bicycle saddles in 1951, and the first bicycle was produced in 1952.The name of the company was changed to Atlas Cycles (Haryana) Ltd in March 2001. Atlas introduced the first racing bicycle and the first geared bicycle in the country. Atlas is today ranked amongst the largest bicycle manufacturers in the world. It is the second largest manufacturer of bicycles in the country after Hero Cycles Ltd.

Products & services—

Company has three well-integrated Bicycle plants to meet the rising domestic and international demands as well as five ancillary units for manufacturing components. It has manufacturing facilities at Sonapet, Rasoi, Sahibabad and Gurgaon near Delhi. To meet its entire steel tube requirements the Atlas Steel Tube mill was set up at Gurgaon. Atlas cycles as well as components are exported to over 35 countries among them are advance countries like Italy, Holland, U.K., Japan and Australia.

It has a task force of over 5000 professionals. Atlas has been involved in setting up large cycle plants in countries like Tanzania, Zambia and others. It is the first Indian bicycle industry to get ISO-9002 accreditation. The company is working on a plan to produce new generation bicycles made of materials such as carbon fibre and titanium in India with a European partner for catering to the European market. It has also chalked out a restructuring plan for increasing the profit margin through backward integration.

Financials—

Quarterly results for jan-mar 2009

Description	Amount(Rs. in lakhs)
Net Sales/Income from Operations	17948.00
Other Operating Income	-
Consumption of Raw Materials	264.00
Purchase of traded goods	13920.00
Depreciation	759.00
Other Expenditure	147.00
Total Expenditure	2548.00
Profit before Other Income, Interest & Exceptional Items	17638.00
Interest	170.00
Profit after Interest but before Exceptional Items	73.00
Exceptional items	97.00
Tax Expense	97.00
Other Related Items	10.00
Consolidated Net Profit for the period	325.00
Basic EPS before Extraordinary items (in Rs.)	2.98
Diluted EPS before Extraordinary items (in Rs.)	1649989.00
Basic EPS after Extraordinary items (in Rs.)	50.74
Diluted EPS after Extraordinary items (in Rs.)	50086.00
Public Shareholding (%)	.15
Promoter & Promoter group Shares Pledged	96.87

Valuation—

At CMP, stock is trading at 10.27 P/E multiple of its financial year 2010 estimated earnings. We recommend investors to buy “Atlas Cycles (Haryana) Limited” with medium to long term investment horizon.

11 small, mid-cap stocks worth buying

With the Sensex recovering substantial ground from the lows it hit in March 2009, small and mid-caps are back in the news again. So much so that they seem to have become the flavour of the season, with every second market expert giving the green signal for buying them. "Apart from investing in large-caps, investors can consider investing in mid-caps at the current juncture as there continues to remain value in this segment of the market owing to the drubbing that the mid-cap stocks witnessed in 2008," says Angel Broking in its latest report on 'mid-caps'.

Also because despite their recent outperformance vis-a-vis the large-caps, some fundamentally sound companies are available at investable valuations. And considering that there is limited value at the current juncture in large-caps, "we believe that mid-caps will take the baton in their hand as they have the potential to outperform going forward as concerns with respect to the segment would continue to get allayed with the passage of time," says the report.

Angel Broking, therefore, has selected 11 stocks from the small and mid-cap space representing different sectors such as auto-ancillary, tyre, hotels, IT, consumer durable, construction, packaging, logistics, pharma, cement and oil & gas. According to it, these companies are either expected to report improved financial performance over the next few years on the back of the economic recovery and/or are available at very attractive valuations, which warrant them as value buys.

Here they go:

Amtek Group

The Amtek Group is India's leading auto components player in the forgings and castings space. The group has been aggressively pursuing an inorganic growth strategy and has also been rapidly scaling up capacity.

It has a track record of successfully exploiting synergies from its acquisitions and such integration benefits are likely to go up further.

Amtek Auto (AAL) has announced to merge Amtek India (AIL) and Ahmednagar Forging (AFL) with Amtek Auto by December 2009 or January 2010.

Considering the swap ratios, AIL and AFL are trading at 43% and 27% discount at Rs 44 and Rs 64. This provides an opportunity to enter Amtek Auto through AIL and AFL with a significant discount to its current market price.

Apollo Tyres

Apollo Tyres (ATL), India's premier tyre company, is set to witness a turnaround in its fortunes post the decline in the global commodity prices. It is estimated to post 6.7% and 31.7% CAGR in revenues and earnings over FY2009-11E, respectively.

This is despite the slowdown in industrial activity, which will result in declining demand for tyres from the OEMs in the short term.

In the last nine years, the company did not lose any volumes even though there was a severe downturn in the commercial vehicles (CV) Segment in FY2001.

Over the years, ATL's average growth in volumes has been in the range of 16%. On the valuation front, the company has always traded at around 8x one-year forward P/E multiple. At the Rs 29, the stock is trading at 6.1x FY2011E EPS and 0.8xFY2011E P/BV, which is attractive.

Asian Hotels

The worst seems to be over for the hotel sector and the operating environment is set to improve post 2HFY 2010.

In case of Asian Hotels (AHL), given its sharp underperformance vis-a-vis peers, despite better earnings visibility, potential value unlocking through demerger and cheap valuations, we believe the company is an attractive play for investors to play out the consumer story.

At the CMP of Rs 301, AHL trades at attractive valuations of 6.2x FY2011E earnings.

Bartronics India

Bartronics India (BIL) enjoys a pre-eminent position in the Indian AIDC segment and has also grown this business globally in countries like Malaysia and the US.

The company is also the only smart cards manufacturer in India and this segment is expected to surge on demand from the telecom, banking and government sectors.

The company through bagging the Rs 5,000-cr ‘Aapke Dwar’ order has also opened up a new avenue for growth in e-governance.

BIL is expected to record CAGRs of 39.6% and 34.7% in top-line and bottom-line, respectively over FY2009-11E. At the CMP, the stock trades at 3.2x FY2011E EPS. Angel Broking recommends a Buy on the stock with a Target Price of Rs 235.

Blue Star

Blue Star (BSL), India's largest central air-conditioning company, is on course to scale greater heights riding on favourable industry scenario, superior project execution skills and its preferred status among institutional buyers.

BSL continues to be a major beneficiary of the strong growth momentum across various verticals, such as, SEZs and cold chain infrastructure amidst slackness in demand from the IT/ITES and retail sectors.Angel Broking believes that BSL's leadership position, noticeable high-growth prospects and first-mover initiatives in the emerging cold storage space will aid its growth going ahead.

It also expects BSL to post a strong 22.1% and 16.8% CAGR in revenues and earnings over FY2009-11E. At Rs299, the stock is trading at compelling valuations of 10.9x FY2011E EPS and 4.2x FY2011E P/BV.

Consolidated Construction Consortium

Consolidated Construction Consortium (CCCL) is a leading sub-contractor providing turn-key solutions in the Infrastructure, industrial, commercial and residential sectors. The company's margins may improve amidst cooling commodity prices.

Further, on the valuation front, CCCL is trading at a substantial discount to its peers, which is unjustified given its superior return ratios, de-leveraged balance sheet, strong order book, earnings CAGR of 30% and no equity commitment over the next few years.

Essel Propack

Essel Propack (EPP), the world's largest packaging company, is part of the Essel Group. The company is expected to register an improvement in its performance on the back of low crude oil prices and stabilisation of new units.

The company may post 13.5% CAGR in sales over the next two years and record consolidated profits of Rs 44.4cr in CY2010, as against the loss of Rs 88.3cr in CY2008. At the CMP, the stock is trading at inexpensive valuations of 0.6x P/BV and 0.3x EV/Sales on CY2010 estimates. Angel Broking initiates Coverage on the stock, with a Buy recommendation and a Target Price of Rs 37.

Gateway Distripark

Gateway Distriparks (GDL) is an integrated port-based logistics player with a presence in the rail container and cold chain distribution businesses.

GDL's presence at strategic locations and its ongoing expansion plans may make it a key beneficiary of the growing container traffic in India going ahead.

At Rs 88, the stock is trading at 8.9x FY2011E EPS of Rs 9.9 and 5.4x EV/EBIDTA of FY2011E. The stock is trading at attractive valuations on the back of our estimated Earnings CAGR of 15% over FY2009-11E

Ipca Labs

Ipca Laboratories (Ipca), a vertically-integrated company with a geographically diversified business model, has grown at steady pace in the past posting a CAGR of 15.7% and 24.1% in net sales and net profit during FY2005-08 primarily driven by its domestic formulations segment.

Going forward, the next leg of growth for the company is expected to come from the export segment as it leverages its API capabilities to create a sturdy business in the regulated and emerging formulations markets. Angel Broking estimates Ipca's net sales to post a CAGR of 16.9% and adjusted net profit to register a CAGR of 29.4% over FY2009-11E.

JK Lakshmi Cement

JK Lakshi Cement, a JK Group company, is an established cement player in north India. The company is increasing its cement as well captive power capacity. Cost savings on account of the decline in input costs, additional captive power and strategic tie up to source power would help the company maintain its margins amidst downturn. At Rs100, JKL is trading at an EV/tonne of US $47/tonne on FY2011 capacity, which seems to be attractive.

Shiv Vani Oil

Shiv Vani Oil & Gas Exploration Services (SOGES) is an integrated oil servicing company focused on onshore drilling and seismic surveying. It is the visible play on the huge upcoming investments in the Indian E&P segment. We expect SOGES to record a CAGR of 32.8% and 29.1% in top-line and bottom-line respectively, over FY2009-11E. At the CMP, the stock is trading at 5.1x FY2011E EPS. Angel Broking initiates Coverage on the stock, with a Buy recommendation and a Target Price of Rs 406.

Checking out the multi-baggers

Rajalakshmi Sivam

If you were keen on buying the multi-baggers in this particular rally, you should have bought small-caps from the beaten down realty and infrastructure sectors on March 9.

Thirty-eight of the BSE-500 stocks were multi-baggers in this rally, delivering a threefold or higher gain to their investors. The Sensex rose 70 per cent in this period.

Realty/infra lead from front

The real estate and infrastructure sectors would have been the last to be picked by fund managers had they been asked to pick out-performers in March. While the former was grappling with dwindling demand and a severe liquidity crunch, the latter was feeling the effect of a capex slowdown. But both sectors have surprised, with more than half the list of multi-baggers coming from them.

Housing Development and Infrastructure Ltd. (HDIL) tops the multi-baggers list, with a five-fold price increase over this period. A recovery from a very low valuation and a unique business model made it stand out from its competitors.

B.L. Kashyap and Sons, Orbit Corp, IVR Prime Urban and Mahindra Life Space Developers were the top real estate gainers while Housing Development and Infrastructure, Reliance Industrial Infra- structure and Hindustan Construction led the infrastructure gainers. Fifteen of the 38 multi baggers came from these two sectors. Depite the trepidation about the rupee wreaking havoc on IT companies, a few stocks from the sector did make it to the multi-baggers list — NIIT, Everonn Systems and Tanla Solutions.

Small-cap bias

Predictably, a clear small-cap bias was observed among stocks delivering manifold gains.

Twenty-eight of the 38 stocks that delivered fantastic returns by tripling in price were small-caps (market capitalisation less than Rs 2,000 crore). Reliance Industrial Infrastructure, B.L. Kashyap & Sons and Orbit Corporation topped small-caps.

Of the remaining, nine were mid-cap stocks. HDIL is the top gainer both in the BSE-500 and BSE Mid-cap space. Reliance Capital was the lone large-cap that notched up threefold gains.

Though multi-baggers were rare in the Sensex pack, a few index stocks did see prices double.

Seven stocks of the Sensex 30 saw prices rise over 100 per cent since March 9. The top index gainers were ICICI Bank (up 156 per cent), Reliance Infrastructure (up 152 per cent) and DLF (up 147 per cent).

Low price

If you didn’t pick realty or infrastructure on March 9, you may have done equally well betting on stocks with a low absolute price. It bears mention that 28 of the 38 multi-baggers traded below Rs 100 on March 9.

Nineteen of them languished below Rs 50 before the rally. This clearly points to the investor fancy for low-priced stocks.

Multi Bagger: Mundra Port - Recommended Price Rs 548.25

	S.P.Tulsian, Investment Advisor: Mundra Port and SEZ, an Adani group company, is the only listed non-captive private sector port. It is engaged in developing, operating and maintaining the Port and port based related infrastructure facilities, including multi-product SEZ. With the UPA getting second term, the thrust is expected to be on infrastructure development and port development is expected to get further impetus. That puts Mundra in an extremely advantageous position in the current times. Its agreement with Maruti, for the export of the A-Star car has started bearing fruit. Currently the export markets are dull and despite that the company has managed to do well, so once the markets in Europe starts picking up, business will boom, for both Maruti as well as Mundra. The fact that there has been a growth in cargo
	Past Multi Baggers Recommendations Stock Reco Price Peak after reco %Gain Balasore Alloys 6 78 1203 Reliance Infra 330 3202 870 TRF 240 2100 775 Opto Circuits 119 581 390 Usha Martin 32 154 380 Genus Power 246 1050 328 IDFC 55 235 327 Indo Tech Trans 200 808 304 Hind Zinc 288 1119 289 Thermax 255 968 280
	volumes is indicated by the financial performance of the company. For FY09, the net revenue of the company grew 45% at Rs.1188.05 crore. EBITDA was up 30% at Rs.734 crore. Net profit for FY09 has more than doubled to Rs.432.52 crore. One can argue that the doubling up o net profit is on account of the lower tax of Rs.53.34 crore in FY09 compared to Rs.149.44 crore it posted in FY08. But this was on account of tax incentives it has received for the SEZ. Yet, the 45% growth in pre-tax profit is not small fry. The performance for Q4FY09 shows a marginal decline in revenue, a fall of 13% on a YoY basis. The slump in the revenue was mainly on account of lower receipt of lump sum income from sale of leases in the SEZ. Given the slump in realty, it may take a quarter or two more for the booking in SEZ space to take off but once companies get back on their capex plans, SEZ rentals will become a major bread winner. There is no cause for concern over the Q4 revenue as there are indications of a growth in volumes of cargo and also the mix of the cargo has got better as it has now moved more in favour of bulk. Cargo handled during Q4FY09 grew by 12% to 9.5 million tonnes and this growth is way above the average of 1% growth recorded by all major ports in this period. For FY09, cargo handled rose 24% and that is phenomenal given the fact port traffic in all over India grew 2.1% in FY-09 due to the global slowdown. 54% of the cargo came from bulk and of this, coal formed the main cargo. Once the economy bounces back, coal requirement will also go up significantly. Promoters hold 81.20% stake in the company of which, it has pledged 14.48%. Public float is 19.80% but of this, institutional holding is 9.22%. This actually leaves a meager floating stock of just 9.58%. For FY10, even on conservative estimates, it is expected to post net revenue to the tune of around Rs.900 crore and net profit is expected to be around Rs.625 crore. On an equity of Rs.402.02 crore, EPS would be at Rs.15.55. The company had touched a high of Rs.928 on 27th May 08’ and low of Rs.50 on 28th Nov 08’. At the current price of Rs.548.25, it is somewhere in between. At the current price of Rs.548.25, Mundra is a great buy as the company will boom with the economy. A good stock to ride the revival