Seven out of top 10 Asian small-cap funds are Indian

ndian funds have grabbed seven out of the top 10 spots in the league table of leading small-cap funds across , thanks to some canny stock-picking amid growing investor appetite for cheap with potential to deliver multi-bagger returns. 

An analysis of nearly 300 Asian small-cap schemes shows leading the charge, delivering an 82% return over the past year. Managed by Vinit Sambre, who has been with DSP BlackRock for a little over three years, this fund has also soundly beaten the 58% rise of BSE’s Small-Cap Index since August 2009. The 30-share benchmark Sensex has gained 20% during this period while the wider BSE 500 Index is up 27%.

The other six schemes — and ING Vysya CUB — have given investors returns between 44% and 57% on a trailing 12-month basis. These schemes manage anywhere between `46 crore and `954 crore.

Four of these funds were launched during the peak of the previous bull run between January 2007 and March 2008, and investors in them have also had to endure a massive erosion in their initial investment in the downturn that followed.

Mutual fund tracking firm Value Research called the DSP fund as an impressive product in the entire “small-cap universe”, noting that the stocks held by it were “credible, known names and there is a marked absence of momentum in the portfolio”. The fund’s holding includes companies with a high return on equity and strong leadership niches in their industries.



Value Research CEO Dhirendra Kumar said the closed-ended nature of some of these funds helped them weather the turbulence. “These funds did not face redemption pressures through the declining phase. This, in turn helped them invest for the longer term,” he said.

The DSP fund became open-ended in June this year and fund manager Mr Sambre has kept nearly 10% of his `311-crore corpus in cash to meet potential redemptions and to latch onto any opportunity in the market.

There are 10 small-cap funds in India, which manage roughly `3,450 crore in stocks. These account for just 2% of the total AUM under equity schemes.

Market experts say that as many large-cap stocks became fully priced and relatively unattractive over the past year, the rally shifted to small caps. Stocks such as cooler maker Symphony and luggage maker VIP Industries have led the small-cap charge in the market. Ahmedabad-based Symphony has surged 830% while VIP has risen 548% in the past 12 months. In comparison, top two gainers on the Sensex — Tata Motors and Tata Consultancy Services — are up 135% and 61%, respectively.

“Many small caps with excellent businesses were trading at a pathetically low valuations — many were trading below book value and at dividend yields of 5-7%,” says Deven Choksey, chief executive officer at KR Choksey Shares & Securities. “They just got purchased heavily.”

Even though small-cap funds have delivered solid returns in the past one year, experts say that investors must be cautious and have just 10-15% of their equity exposure in such funds or companies. This is largely because of the volatile nature of their stock performance.

“Investors should have a strong stomach and the ability to

withstand substantial declines in such funds,” says Mr Kumar at Value Research. 

Multibagger-Delta Corp - Target 250-300 in long term

Mehraboon Irani, Sr. VP - Equity, FCH – Centrum Wealth Managers Ltd , in a chat with ET Now talks about the favourite buys for long term.

ET Now: What is it that you would buy right now, a couple of names may be?

Another company we like as my old favourite, a stock, which I have been following from 2003, which of late virtually anybody and everybody in the street has started talking about, it is a company called Delta Corp, which once upon a time was known as Arrow Webtex. I have been following this company and owning this stock from 2003. We have a target of over Rs 250-300 for this stock over the next 18 months. A whole lot of things are happening in this company. There is a preferential allotment taking place today. Big investors have started entering the stock and now virtually everybody is talking about this particular company, it is in the niche segment called casinos and the gaming business and virtually commands the entire casinos in the country right now and is planning to set up similar casinos in three other places in India besides Sri Lanka, that’s what we understand, so we feel Delta Corp even at the present level is a great buy and virtually it could be a multi-bagger even from here over the next 1.5 years.

MIC Electronics Limited - Multibagger

MIC Electronics- Seemingly good prospects, but one should wait

MIC Electronics Limited. is a leader in the design, development & manufacturing of LED Video Displays, high-end Electronic and Telecommunication equipment and development of Telecom software since 1988. Importantly, MIC has no real competitor in India in its LED business and is currently enjoying monopoly position in the market.

However, during the last one year, the performance of the company has deteriorated, and has not improved as evident from the latest June quarter results. The demand for its LED solutions seems to have shrunk in the last 1 year. So, does it culminate into an ever-lasting situation ? Well, not exactly.

Looking into the future, I can see enough demand for its LED true colour displays, and also for its LED lighting solutions, which have proved to be quite efficient. The LED lighting solutions are finding wide-spread usage, and should be omnipresent by the next decade, as LEDs represent the most energy and cost-efficient lighting source, consuming 10 times less power than CFLs and being biodegradable. In India, Railways is implementing LED lighting systems in a big way.

I would not put in numbers for the growth expected in the segment of LED displays, but a quick comparison with developed countries like US, UK really tell us that how short we are on our billboard advertizing expenditure, and thus with businesses growing like never before, advertizing is one space which will flourish like anything.

Performance

As I mentioned that performance was not that great over the last year. The company reported Rs 305 cr in revenues for 2008-09 and a bottomline of Rs 68 Cr, with diluted EPS at Rs 5.77. The performance was actually satisfactory till March, but the sales and profit dipped in the June quarter with both sales and profit dipping by more than 50% in the June quarter. The current market price stands at Rs 52, and if I take into account the diluted EPS (outstanding 1,74,81,725 convertible share warrants issued at Rs. 122/-each on preferential basis have been considered.), then the valuation satnds at a P/E of 9. However, the probability of conversion seems remote.

Fund Raising

MIC Electronics has decided to raise an amount of Rs 218.96 crore by issuing warrants to various promoters, non-promoters and from international markets. The company would offer 93,75,000 warrants at Rs 44.36 per share amounting to Rs 41.58 crore and would further issue 71,25,000 warrants at Rs 44.36 a piece, aggregating to Rs 31.60 crore to various promoters and non-promoters.

Further, the company would raise $30 million (nearly 145.77 crore) by issuing Global Depository Receipts (GDRs) and American Depository Receipts.

The company has contemplated resorting to another issuance of warrants, as I said earlier that the possibility of conversion of earlier issued warrants seems remote. Thus in effect we can consider the above accounted valuations, which is not that high. Although the future of the company seems good, but one should await positve developments in the income statement, before taking an exposure.

MIC Electronics Limited. is a global leader in the design, development & manufacturing of LED Video Displays, high-end Electronic and Telecommunication equipment and development of Telecom software since 1988. An ISO 9001: 2008 certified, it has marked presence in the highly dynamic domains of:

•  LED Video, Graphics and Text Displays
•  LED Lighting Solutions
•  Embedded, System and Telecom software
•  Communication and Electronic Products

Today, MIC's flagship products are LED Video Displays (indoor / outdoor / mobile), that have become an integral part of Sports Stadiums, Transportation Hubs, Digital Theatres and Theme Parks, Advertisements and Public Information Displays.

Headquartered at one of the fastest emerging IT cities, Hyderabad (India), it has nation wide presence in the form of a vast network of marketing, sales and service support centres in all metros of India. To meet the demand of its products worldwide, it has offices in Australia,Korea and USA. Now the company is gradually setting up operations in other international markets.

How to identify Multibagger Stocks?

Rakesh Junjunwala rightly defined the stocks markets as “Markets are like women always demanding, unpredictable and volatile.” No one know whats next. For an instance take it – Does any one knows when this recession is going to end ? No, no can say it accurately, one can just predict but as all know that the future is uncertain.

But what one can do is spot out some value stocks in this badly beaten markets and think of long term investment in them. But a question comes here that which company to invest in?
The answer to the above question is invest in the company in which you have faith and confidence and more over of which you are aware of.

Here are few easy steps to identify Multibagger stocks.

1. Go for a company which gives regular dividend. Dividend paying stocks mostly lie in A group category.
2. Preferably go for a Mid cap stock which in future can become a large cap. Mid cap stock have a greater chance to move upwards and that to fast. Preferable a stock whose market cap is less than 1000 Crores.
3. Go for a stock in a particular sector which is in boom.
4. Look out for the companies financial. In this check out the companies profit f last 4-5 years and check it out that it is increasing every year. One can also check out EPS of the company.
5. Check out whats running these days, Say for example there is a invention of a new technology which will be in demand in a near future. An excellent example is invention of 3G. Even TATA Nano can be taken in consideration as it is only one of its kind being the cheapest car in the world.
6. Check out for a companies order value. There are various companies which have a good amount of orders for future which are of great importance to a company.
7. One can also look out for a company which has good amount of land / property. Unitech had a lot of lad which can in the eyesight by end of 2005. An investment of Rs 40,000 then would be worth over 1 crore by the end of 2007.
8. Last and not the least be confident in your stock.

Few don’t s in selecting a multibagger stock.

1. Don’t select a Penny Stock.
2. Don’t loose hope in your company.
3. Don’t depent on others , do your own research.

Happy Investing.

Wim Plast (Cello Brand) - Multibagger

What if you come across a company that has been growing at a three-year CAGR of 64 per cent in profits, has continued to post brisk growth in the first nine months of FY10, been a consistent dividend payer since 1998 and generates a dividend yield of over 2 per cent, has no debt in its books and is still available at a PE of just 6x? There are no prizes for guessing it right but here is your chance to grab Wim Plast (WPL) for long-term prospects, which we have chosen to recommend in this issue with its CMP of Rs 170. A fairly low profile company, its identity tag lies in the fact that it is a part of the Cello Group, which has diversified interests in manufacturing plastic household and thermoware, writing instruments (Cello pens), toothbrushes as also plastic furniture.

Wim Plast, the only listed entity of the Cello Group, reports its business under one segment, i.e. plastic moulded and extruded articles. It has products such as plastic moulded furniture and bubbleguard sheets with a strong presence in the western and northern regions where its market share is around 11-12 per cent. Other peers include Nilkamal and Supreme Industries with 20 per cent and 11 per cent market share respectively. The balance belongs to players in the unorganised market. The moulded furniture segment is a major growth driver for WPL while the contribution of the bubbleguard sheet segment is fairly low at this point of time. Bubbleguard sheets are a combination of three polypropylene sheets, which find applications in making false ceilings, tiles protection, construction, modular offices, etc.

Though on a ten-year horizon WPL hasn’t shown growth as one would have expected, things have begun to look brighter over the past three years during which time it has restored consistency and improved its progress rate. Its three-year CAGR of 64 per cent in bottomline and 14 per cent in topline is noteworthy. Besides, there is a sharp improvement in the margins, increasing by 584 basis points on account of aggressive marketing initiatives, increased distribution network, new products and better cost management.

WPL is now tapping fresh markets in the eastern and southern regions. This augurs well as it will help it to push its revenues further. In terms of its financial performance, WPL has repaid all its debts and is now a zero debt company. With no interest outgo the margins going forward would remain healthy. Besides, WPL has been consistently paying dividends since 1998. And with its FY09 dividend of Rs 3.5 per share the yield is high at over 2 per cent. In 9MFY10, WPL posted 36 per cent revenue growth to reach Rs 96.48 crore (71.03 crore), while profits grew by 182 per cent to Rs 12.37 crore (Rs 4.39 crore). Unfortunately, a fire mishap at its Jodhpur depot caused the company an estimated loss of Rs 50 lakh. However, WPL has assured its stakeholders that this will not affect the profitability of the company.

For FY10, WPL’s revenues could be around Rs 129 crore, while profits could be Rs 16.45 crore. At these estimates WPL provides an estimated EPS of Rs 27.42, thereby resulting in a PE of just 6x. This makes it quite attractive as compared to its competitors Nilkamal and Supreme Industries, which are both available at 8x. In fact, on the EV/EBITDA basis, WPL is available at just 4x, which is low and puts WPL in a favourable position. Our recommendation is that you should buy this scrip at its CMP of Rs 170 with a one year target price of Rs 221.

SABERO ORGANICS GUJARAT – Multibagger

Sabero Organics Gujarat has been able to maintain a comfortable lead in terms of margins and can be banked upon as good scrip for the portfolio

There are a few companies whose unusual scrip movement may indicate that it is more of an operator’s fancy and the broader market may overlook the fundamental strength and the value pick it could be for long term. Sabero Organics Gujaratinvestors from considering it from a long-term perspective. In fact it is these wild gyrations that first caught our attention and we decided to go beyond this brisk scrip movement and try to understand what this company is really about. (SOGL), a fairly unknown name till last year, could be one such scrip whose unusual movement from a 52-week low of Rs 10.30 in March 2009 to a 52-week high of Rs 70.30 during November 2009 might have put off

SOGL is basically into the business of manufacturing crop protection chemicals. This Rs 377 crore turnover company has a presence in three broad segments viz, fungicide, insecticide and herbicide. The company is engaged in the production of largest-selling products globally such as Mancozeb, Acephate, Monocrotophos and Glyphosate. Nearly 65 per cent of the company’s sales are generated from exports, while the balance 35 per cent from domestic market. There are several reasons why we feel SOGL is a better pick for long-term investment.

First, SOGL has a well-diversified range of portfolio which helps de-risk its business. Its products span across fungicides, insecticides and herbicides which contribute 40 per cent, 40 per cent and 20 per cent to the total sales respectively. On the product front, Mancozeb is SOGL’s key product and contributes 40 per cent to the topline, while other core products such as Acephate, Monocrotophos, Glyphosate each contribute 15 per cent to the total sales respectively with the balance 15 per cent coming from Chloropyriphos and others intermediates.

Second, what have been the major driving factors for the growth of SOGL are the aggressive product registrations, new product launches and capacity expansion undertaken last fiscal. SOGL already owns 240 registrations in 50 countries and there are about 50- 60 registrations in the pipeline. SOGL is also developing new products and aims at launching at least 1-2 products every year. Besides, SOGL had also undertaken capacity expansion with aninvestment of Rs 35 crore in FY09 whereby it doubled the capacities of Mancozeb, Chloropyriphos and Glyphosate. It is also expanding the capacity of Monocrotophos through de-bottlenecking. All this expansion allows SOGL to generate growth through higher volumes.

But the biggest step for SOGL’s is its entry into the Brazilian market. SOGL got its first registration of Chlorpyriphos in Brazil in April 2009 and also got a technical registration for its product Mancozeb last month. Brazil is the second largest agro-chemical market in the world after the US and the biggest markets for Mancozeb, SOGL’s top revenue contributor. Once this happens, it could push SOGLs revenue growth to another trajectory altogether. Explains Chuganee, “Brazil is a big market for Mancozeb and the growth out there could be 50 per cent more than what we are currently doing.”

For 9MFY1O SOGDs revenue grew by 25 per cent to Rs 333.74 crore while its net profit increased by 61 per cent to Rs 31.59 crore. This result was on account of higher volumes, increased realisations and flat raw input prices. In fact management expects the product prices of Mancozeb and Glyphosare to go up, even as input prices are expected to remain stable. This could positively impact margins in the coming quarters. For FY10, SOGL could post revenuesSOGL generates PE of mere 5.5x, compared to 16x of Rallis India and 46x of United Phosphorous. On an EV/EDBITA basis too SOGL is available at 2.41x, which is quite low and makes sense to grab it at its CMP of Rs 80 with a one year target price ofRs 108. of around Rs 450 crore while profits could be around Rs 42 crore. At these estimates,

Garden Silk Mills - Multibagger

While at one time its commercials of Garden Vareli had created a strong brand image, the company has been keeping a low profile in recent times. But this is not to say that it hasn’t been riding a strong growth curve

With the worst behind it, the textile sector is back in the reckoning and a few select scrips make sense from the investment point of view. One such scrip is Garden Silk Mills, which has been seen reviving its brand image and airing its famous old commercial on a few channels. This scrip, like many textile companies, seems to have been ignored due to the sector remaining out of investors’ fancy, but Garden Silk Mills (GSM) has continued to grow almost unnoticed over the years. In fact what caught our attention is not only the brisk growth of the company but also its continuous expansion, consistent dividend track record of 19 years, high dividend yield of 2 per cent and the rock bottom valuations of just 4x of its FY10 estimates, which is what makes it attractive from a long-term perspective.

A first glance the name Garden Silk Mills (500155 ) immediately leads us to its association with the brand Garden Vareli and its famous saree commercial. But GSM is much more than just a saree manufacturer. It should be noted that it is an integrated player from manufacturing chemicals to branded fabrics with a turnover of almost Rs 1,700 crore. A look atthe company’s operations shows that it has a presence in the manufacturing of polyester chips, yarns, fabrics and chemicals such as Purified Terephthalic Acid (PTA) and Monoethylene Glycol (MEG).

Yarns, including partially oriented yarn (POY) and processed yarn, are the major revenue contributors and form 49 per cent of its total revenues, while 42 per cent comes from polyester chips, 8 per cent from fabrics and the balance one per cent from others, including PTA and MEG. What’s interesting about GSM is that it continues to strengthen its position in the market and is seen continuously expanding its capacities.The company had doubled its capacities in FY09 to polyester chips’ capacity of 1,600 tonnes per day, 430 tonnes per day of POY and 110 tonnes per day of polv textured yarn (PTY). But in a bid to cater well to all the segments of the polyester chips and yarn, GSM is further expanding these capacities by 10-15 per cent.

These include polyester textile grade chips by 1,30,000 tones per annum, installing machinery to directly spin a diverse range of specialised yarns, upgradation of the existing plant to manufacture high value polymeric chips, installing a draw warping machine for the sizing sector and setting up a captive power plant of 18 MW The expansion, costing around Rs 400 crore, will be commissioned in a phased manner from February 2010 till Q3FY1 1. In fact this expansion is also aimed at increasing GSM’s international presence in markets such as Latin America, Egypt, Europe and China with an aim to touch export revenues of 15 per cent by end of March 2010 from its existing level of 5 per cent.

Once commissioned, this expansion will push the company’s revenues even further. Besides, with the strong brand and product reach that Garden Vareli has, GSM is strengthening its place even further and targeting the working women class across metros, towns and villages with value-added fabrics such as party wear, wedding wear at competitive prices. On the financial front, for 9MFY1O GSM’s revenues increased by 42 per cent to Rs 1,827.85 crore (Rs 1360.21 crore), while profits increased by 5 per cent to Rs 39.67 crore (Rs 37.82 crore). For FY10 we expect GSM to revenues of Rs 2,442-2,500 crore, while profits could be around Ru 55 crore. Thus at an estimated EPS of P.s 14, GSM is available at just 5x, which is quite low and looks worth grabbing at its CMP of Rs 72 with a one year target price of Rs 90.

Pitti Laminations – Multibagger

Pitti Laminations :
CMP: Rs.47.05

Background

Incorporated in 1983, Pitti Laminations Limited (PLL) is engaged in the manufacture of electrical laminations for use in various Motors, Alternators, Direct Current (DC) Machines, Pumpsets, Hydroelectric generators etc. The company also manufactures Die-Cast Rotors and Assembled Stators, besides manufacture and sale of Press Tools, Progressive Tools Jigs and Fixtures. PLL’s manufacturing facilities are located at Nandigaon (Andhra Pradesh). The company has established business relationships with Siemens, BHEL, Alstom Projects, VA Tech Hydro, Crompton Greaves, Cummins Generator Technologies, ABB, Marathon Electric India, and Bharat Bijlee etc. in the domestic market and GE Consumer Products (Canada), GE Transport System (USA), Groupo Electromechanico (Mexico), E-Mod (Germany), and Welco Technologies (USA) in the overseas market.

Investment Rationale & Conclusion

Pitti Laminations has been facing difficult times for the past few quarters. Let us analyze what went wrong for the company and inspite of current negatives what makes us positive on the stock.

What Went Wrong for the Company

Following the meltdown in various global economies witnessed last year, the export revenues of the company got severely dented. The company’s sales growth over the last four years which was mainly driven by exports to GE got greatly impacted on account of reduced order flow and reduced offtake by GE.

Inspite of achieving higher revenues in FY09 (compared to FY08), the company registered lower profits – this was on account of a loss of Rs.9.75 crores on hedging operations on its foreign exchange transactions. The aftereffect of the slowdown in various economies was reduced sales by the company in the first 9 months of the current FY (compared to same period last year). The company has made a loss of Rs.2.56 crores for the 9 months period ended December 2009 – the loss however is on account of an extraordinary expense of Rs. 5.60 crores towards costs related to engineering analysis for repair procedures, which the company has paid to GE.

What Has Changed & What makes us positive on the stock

The economic environment has been improving and the company has received orders worth over Rs.160 crores (US $ 36 mn) from GE, to be executed over the next 2 years.

From initially starting off with manufacture of electrical laminations for use in general purpose industrial motors (25 to 30 HP), the company’s sales mix has steadily shifted away from this segment in favor of application in machines used in the infrastructure sector (transportation, earth moving equipment, oil and gas exploration etc) and the power sector having relatively lower competitive intensity and lower business risk.

The company’s has registered much higher operating margins for 9 months ended Dec 09 over the same period last year. (17.32% against 10.58%). In view of the recent orders from GE and the initiatives undertaken by the company in the domestic markets, we believe the revenues of the company in FY11 can be significantly higher compared with FY10. Significantly higher revenues coupled with improved margins would have a multiplier effect on the profitability of the company. In view of the above factors, we expect the profitability of the company for FY 11 to be significantly higher compared to the current FY.

Valuation

The company currently has a market cap of roughly Rs.42 crores. In view of the order from GE & domestic sales, Sales of Rs.200 crores in FY11 may not be difficult to achieve. Assuming Operating margins of 15% conservatively (as against Margin of over 17% achieved in 9 months ended Dec 09), would result in an Operating Profit of Rs.30 crores. Factoring Interest, Depreciation and Tax, the company can easily achieve an EPS of Rs,12-14. The stock available at a PE of less than 4 and a Market Cap of Rs.42 crores for a company which can potentially make Operating Profit of Rs.30 crores in a single year, therefore looks very attractive.

The major concerns are – any slowdown in the economy would impact the capital goods sector. Moreover, high debt on the balance sheet is another major concern. The other major concern is low liquidity in the stock where the impact cost of buying and selling could be high. The stock is therefore advised for long term investors with an appetite for High Risk.

There is no doubt about the fact that the company has witnessed difficult times, we however believe that the worst may be getting over for the company. We believe the stock can witness a rerating once the effect of the positive factors gets reflected by way of improved financials of the company. The current negatives may therefore be an opportunity for the long terminvestors . Moreover, given the strong demand in the capital goods sector in the domestic markets, the stock has the potential to be a value creator over the long term. We believe the negatives are more or less factored in the current market price of the stock.

Supreme Industries - Hidden Value

Supreme Industries has strong earnings and also real-estate assets to encash

Even in a market that is supposed to be overvalued, there are smaller stocks that are undervalued for their level of growth. Supreme Industries is one such stock. Supreme operates in four segments—plastic pipes, packaging, industrial and consumer products. Its pipes are used for irrigation, bore-wells, portable water supply, plumbing, drainage, underground sewerage, rainwater harvesting and water management. The packaging division caters to the sports industry, electronics, food and textiles.

It manufactures dashboards and other components for the automobile sector which falls under the industrial category. Tata Motors and Mahindra & Mahindra are two customers in this sector. For the consumer goods sector, it produces plastic products for LCD TVs and air-conditioners. Over a period, Supreme has managed to set up 19 plants across India. It has recently expanded the capacity at its Halol, Silvassa, Gadegaon and Pondicherry plants and has also increased the capacity of injection-moulding machines and ancillary equipment. It has started a new factory at Jamshedpur for the ‘World Truck’ project of Tata Motors. Supreme Industries has restructured its business over the past couple of years by selling off unprofitable divisions and investing in the others. It divested its PVC film business at Malanpur (Madhya Pradesh), food service-ware plant in Daman and flexible film division at Pondicherry. It has developed its land in Andheri (West) in Mumbai by constructing a 10-storey commercial complex offering 2.5 lakh square feet area for sale. However, it has been able to sell only one office block out of 18, until now. It earned Rs20.5 crore from the sale of 13,106 sq ft of premises at an average realisation of Rs15,600 per sq ft. At this rate, the total revenue is projected at Rs390 crore. In its restructuring process, it has recently shifted its manufacturing unit for protective packaging from Nandesari in Gujarat to Pune in Maharashtra which has left it with another piece of land worth Rs1.5 crore that can be sold in future.

While the pipes business is largely volume-driven, profitability comes from the industrial and consumer segments. Because of the very nature of its business of manufacturing plastic materials, the company is subject to the volatility of the plastic raw materials prices. In FY08-09, the rise in raw material prices reduced the consumption of plastic, affecting sales. With the softening of raw material prices, it has been able to increase its sales in the past two quarters. Its operating margin is 16%. Its market-cap is 0.68 and 4.11 times its sales and operating profit, respectively. Return on equity is 34%. Worth buying.

UNQUOTED

Westlife Development (Rs33)
Westlife Development offers investment and allied financial services. In the December 2008 quarter, the company reported sales and operating profit of Rs74 lakh and Rs72 lakh, respectively. However, in the June 2009 and September 2009 quarters, sales declined sharply to Rs27 lakh and Rs10 lakh while operating profit was Rs24 lakh and Rs8 lakh, respectively. In the December 2009 quarter, sales plummeted to Rs1 lakh and there was an operating loss of Rs2 lakh. The company’s deteriorating performance is in sharp contrast to its stock price which has gained 4307% from 1 January 2009 to 27 April 2010. Trading volumes have been suspiciously inconsistent over this period.

Tamil Nadu Newsprint & Papers Ltd

Multibagger Low priced NSE BSE Stock Recommendation

We are talking about a Stock Which is Under Rupees 100

its Current Market Price is Rs 91.20

EPS For Last 4 Quarters is Rs 12.87

Which makes Current PE Value at 7.08

PAT Growth in Dec 2009 Quarter YOY was 38 % although Sales Were at Same Level

Goldman Sach Reliance Capital and other Big Players are invested in This Stock

See Latest Shareholding Pattern

Name	Shares
Warburg Value Fund	750000
Birla Sun Life Trustee Company Private Limited A/C Birla Divdend Yield Plus	778000
Ifb Automotive Private Limited	830000
Meenakshi Mercentiles Ltd	1036721
Reliance Capital Trustee Company Limited A/C Reliance Growth Fund	1050000
General Insurance Corporation Of India	2110074
Reliance Capital Trustee Company Limited A/C Reliance Growth Fund	3995510
Goldman Sachs Investments (Mauritius) I Ltd	5350570
Life Insurance Corporation Of India	6891158

The Stock is Tamil Nadu Newsprint & Papers Ltd
NSE Code: TNPL
BSE Code: 531426

Govt of Tamil Nadu is promoter of this GEM and holds 35 %

Technical graph

Buy and hold on any Dip Near 85 .

This recommendation is for investors with 6 month to 1-2 years Holding target

Multibagger Penny Stock Buy KILPEST INDIA LTD.

Multibagger Penny Stock Buy KILPEST INDIA LTD.

BSE Code : 532067

Current Market Price :Rs 13.08

This Stock has Seen Roller Coaster Ride in Last 2 years.Before Stock market Crash This Scrip was Trading at above Rs 100.Subsequent Bear Market took it to lows of Rs 8.

Now it has just Started Gaining Some Strength and Currently Trading above 20 Days EMA Rs 10.06 which is at and 50 days EMA which is at Rs 9.8.

Buy at Current market Price or best Buy at 1-2 Rs Decline from CMP.Hold with Tight Stop loss of Rs 9.45 (Closing Basis)

This is the stock to Buy as Technically it is very strong and has the potential to race to any level as it looks like a multibagger.

Caution:Its a low Volume stock so it could be Very Volatile.

Gruh Finance Limited A Multibagger for Long Term

Gruh Finance Limited

NSE Code: GRUH

BSE Code:511288

This is Company Floated By Hosuing Development Finance Corporation Limited which holds 61.36% Shares Currently.
Current market Price NSE : Rs 238.70
Financial results
Sales have Decreased in March Quarter 2010 at 69.83 Crores as Compared to 83.57 Crores March 2009 Quarter Still Net Profit is higher at 32.80 Crores as Compared to Rs 22.49 Crores YOY

Total EPS For last 4 Quarters is Rs 19.88
PE at CMP is 12
Technical Chart For last 1 year

Latest Shareholding pattern :

Sr. No	Name of the shareholder	Number of shares	Shares as a percentage of total number of shares {i.e., Grand Total (A)+(B)+ (C) indicated in Statement at para (I)(a) above}
1	Ward Ferry Managenment Limited	417000	1.2
2	Acacia Institutional Partners, Lp	467200	1.35
3	Royal Bank Of Scotland	500139	1.44
4	Dsp Blackrock Equity Fund	510231	1.47
5	Dsp Blackrock Small And Mid Cap Fund	544611	1.57
6	Dr Sanjeev Arora	677450	1.95
7	Acacia Partners , Lp	1103775	3.18
TOTAL		4220406	12.16

Verdict :Buy in Any Correction Near 200 Levels

low volatility and can become multibagger Rocket stocks

NSE stocks which are experiencing low volatility and can become multibagger Rocket stocks
These are very special stocks
Because they are in very small Range Now
Accumulating energy like coiled and pressed spring
can shoot or fall anytime depending on the direction of breakout
KEEP A CLOSE WATCH ON THESE STOCKS
AND TAKE POSITIONS IN DIRECTION OF BREAKOUT

NSE Code	close	volume
ICI	593.2	1001
FAME	82.95	2978
HINDCOMPOS	407.85	752
BANARISUG	889.65	814
KOUTONS	339.75	8513
HDFCBANK	1951.8	531706
BILPOWER	164.2	2633
BOSCHLTD	4909.2	2050
NHPC	30.5	4331112
MONSANTO	1713.35	955
APIL	615.95	14003
AMBUJACEM	120.15	2001903
DREDGECORP	607.1	16168
RELBANK	916	208
ITC	266.95	1664717
EDELWEISS	425.3	89314
PLETHICO	379.7	27423
HERCULES	228.7	4488
DALMIACEM	251	26166
KEC	571.85	115795
JINDALSTEL	718.75	905208

Aditya Birla Nuvo - Multibagger

Aditya Birla Nuvo is diversified Company which run many new businesses for one of india's leading business house, Aditya Birla Group.

Business Verticals..

Aditya Birla Nuvo has diversified its business portfolio which has a mix of new & old businesses. Some of them were it enjoys a leading postion are .. viscose filament yarn, carbon black, branded garments, agri business, textiles and insulators.

Over the past few years, Aditya Birla Nuvo, through its subsidiaries and joint ventures, has made successful forays into life insurance, telecom, business process outsourcing (BPO), IT services, asset management and financial services.

Aditya Birla Nuvo’s joint ventures and subsidiary companies are:

- Idea Cellular Limited
- Birla Sunlife Insurance
- Birla Sunlife Asset Management
- Aditya Birla Minacs worldwide limited

This businesses enjoy a good market position in their operating verticals both in terms of revenue & market share.

In Apparels business its houses some of the most famous brand like Peter England, Van Heusen , Louis philippe , Allen Solly and esprit.

Stock Statistics

Market Cap	9,360.47	|	* EPS (TTM)	15.93	|	* P/E	57.04	|	* P/C	28.36
* Book Value	364.26	|	* Price/Book	2.49	|	Div(%)	40.00	|	Div Yield(%)	0.44
Market Lot	1.00	|	Face Value	10.00	|	Industry P/E	65.89
* As per latest stand alone adjusted profit after extra-ordinary items.

Shareholding Pattern.

(in %)	Dec-09	Dec-08	Sep-09
Promoter	46.06	41.20	41.52
FII	16.57	20.56	19.26
DII	14.61	16.90	15.97
Others	22.76	21.34	23.25
Total	100.00	100.00	100.00

Insurance Business & IT Services are the biggest value unlocking for share holders in the future.
We recommend Investors to invest in the stock with long term view.

Mahindra Satyam - Multibagger

Fundamental analyst says the stock can give huge profits, going forward

Penny stocks/ Multibagger stocks

1. Parekh Aluminex Ltd.
2. DFM Foods Limited
3. Philips Carbon Black Ltd
4. Relaxo Footwear
5. BLB Ltd
6. Tyche Industries
7. Noida Medicare Centre (NMC) Ltd.
8. Mahindra Holidays & Resorts India Limited
9. PAE Ltd
10. Interlink Petroleum

1) Parekh Aluminex Ltd.:


Parekh Aluminex Limited is the largest manufacturer and exporter of Aluminium Foil Containers (AFC), and also one of the biggest manufacturers in Aluminium Foil Rolls (AFRs) and Aluminium Lids, in India.

2) DFM Foods Limited:

DFM Foods Ltd is an India-based company. The Company operates in two business segments: Wheat Trading and Snack Food. During the fiscal year ended March 31, 2009 (fiscal 2009), the Company produced 3,605 metric tons of snack foods. During fiscal 2009, the Company purchased 4,905 metric tons of wheat.

DFM FOODS LIMITED was incorporated in the state of Delhi on 17th March, 1993 as a Public Ltd. Company, and has been promoted by The Delhi Flour Mills Co.Ltd., Shri R.P. Jain and Shri Mohit Jain. The company was primarily involved in Flour Milling and manufacture of Snack food products. The two divisions of Flour milling and Snack food products were purchased from the promoter Company The Delhi Flour Mills Co.Ltd. as running concerns.

The Delhi Flour Mills is actually the pioneer in the introduction of Snack food products in India. Most of us still remember the brand names like CRAX, NATKAT, which we used to eat during childhood. The company has been doing quite well with its Extruded Snack Foods division. However, it was the Flour Milling/Wheat trading division of the company that was pulling down the profits.

A look at the income statement for past 4 years suggest that it has been growing at a good pace with top-line increasing from Rs 26 cr (FY2005-06) to Rs 78 cr in FY2008-09. Even the bottom-line improved from Rs 30 lakhs to Rs 2 cr for the same period. But, there was still something which was not allowing the company to record better margins. A net profit of Rs 2 cr on sales of Rs 78 cr is very low, making the business risky, no matter how much growth you record. A look at the segment results suggest that on sales of Rs 23 cr for wheat trading the company faced a loss of Rs 3 cr, while on the sales of Rs 53 cr under snacks division it recorded profits of Rs 5 cr. Thus the margins for Snacks division are good.

But, the company has finally understood the negative bearings the Wheat trading business was laying on the overall profitability of the company, and has thus suspended it completely. The management sensing the demand for its Extruded snack products embarked upon a capacity expansion plan of Rs 13 cr. The effects of suspension of wheat trading division and increase in capacity are clearly visible. For the half year ending the Sep'09 the company has already recorded a net profit of Rs 2.18 cr, higher than the net profit of Rs 2 cr for the entire Financial year 2008-09. The sales for snacks division are also higher by 20% at Rs 29 cr in comparison to Rs 25 cr.

Going forward I see a healthy growth of 20-22% for the company on account of further expansion of sales of existing products, introduction of new products, geographical expansion and upgrading technology in manufacturing. Since the consumers of snack products are largely children in the urban areas, the growing population of such a lot provides ample opportunity for the company to maintain the growth rate. Also, at an annualised EPS of Rs 4.38, and with the CMP being 50, I find the company a reasonable buy for the medium term perspective.

3) Philips Carbon Black Ltd :

Philips Carbon Black is an RPG group company; a dominant player in carbon black in India. Phillips Carbon Black Limited (PCBL) is India's largest and the world's 8th largest carbon black company. It is not only the largest exporter in Asia, but also commands a market share of 41% in the domestic market. The company develops, manufactures and markets various grades of carbon black. The major market for carbon black is the tyre industry.

PCBL has three manufacturing units located in Durgapur in West Bengal, Cochin in Kerala and Baroda in Gujarat. A fourth unit at Mundra, in Gujarat, has been commissioned in October 2009. Total production capacity of the company is 360,000 MT per year. PCBL generates power using fuel gases released as a by-product of manufacturing process of carbon black. After meeting the internal demand, the surplus power is sold. The total power generation capacity of the company is currently 60.5 MW with the recent commissioning of 16 MW CPP at Mudra.

The company had registered good set of numbers for FY 2007-08 over FY 2006-07 with the substantial improvement in margins for the same period, however in FY 2008-09 carbon black companies were severely hit by cancellation of existing and future orders, particularly during October to December 2008 which created a panic situation and overseas carbon black manufacturers started dumping carbon black in India. Thus, ripple effect of global financial meltdown started impacting domestic carbon black prices and demand. Philips Carbon too had to bear the brunt and suffered a loss of Rs 64 crore during FY 2008-09.

Now, the economies world over are reviving and the way the domestic auto market registered growth, the demand for tyres too witnessed a surge and thus for Carbon black. As mentioned earlier the company commands a market share of around 40% in the domestic market, the effects of which are visible in the performance of the company for this fiscal. For the nine months ending Dec'09, the company has registered a net profit of Rs 86 crore on a turnover of Rs 912 crore. The company has been able to maintain margins to the tune of 8-9% which is rather good considering it's into commodity business. A large domestic share helps it command pricing power to a certain extent.

At an annualized earning of Rs 110-120 crore, the company is quoting at a multiple of 5-5.2. The company is in the process of further expanding the capacity by 50,000 tonnes, for which the QIP issue and preferential issue of warrants has been approved. The price has been fixed at Rs 196 and considering the valuations and current market price, the downside risk seems limited while there could be a 30-40% surge.

4) Relaxo Footwear:



Relaxo is the fastest and now the largest wholesale footwear company in India. The company caters to the middle segment of the market. The comapny is now venturing into Retail too and has about 78 stores in NCR and north India. The comapny is divided into two verticles and I am the business head of the Shoe Division. This divison is markets the leading brand of Sparx and Schoolmate.

Relaxo stepped into the footwear industry in 1976. It started off with the manufacture of Hawaii slippers and subsequently diversified into manufacturing casuals, joggers, school and leather shoes. It has experienced a record-breaking growth rate of 4800% within the last 10 years! From a modest sale of around Rs. 1 million in the year 77-78, it has today crossed the Rs. 4000 million+ figure.

Relaxo is a brand in itself, but it is one of those brands that caters to the need of masses. It has never tried to establish itself at the higher end of strata, but does high volume business with the lower-income group people.

5)BLB Ltd:



company engaged in providing stock-broking and allied services to investors, apart from specialized trading activities like jobbing and arbitrage. At BLB Limited, Equity Research is a passion;

A significant portion of the Company's income is from the trading operations in secondary market, which also reflects from the fact that the margins of the company hover in the range of 1-2%. The Company has already wound up its Retail and Institutional Broking divisions due to lack of opportunities during the Financial Year 2008-09 and was in the process of surrendering the depository participants of the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). So, going forward effectively all the earnings shall be from trading operations.

6)Tyche Industries:



Tyche Industries is a premier manufacturer of Active Pharmaceutical Ingredients, Nutraceuticals, and Fine Chemicals. At Tyche, we consider no challenge to be insurmountable and are driven by a fierce commitment to find innovative ways to surmount them. It is this focused commitment that has helped us in developing several innovative Fine Chemicals and Intermediates.

Tyche Industries (SIRISSOF) was incorporated in 1998 as Siris Soft, which was promoted by Gokuraju Ganesh Kumar and B. Kasi Raju. It was established as a software company but later on was diversified into the manufacture of fine chemicals. The company got its present name with effect from December 2004. Its commercial production commenced from August 2005 and it dispatched its first export consignment of 5 tons of Glucosamine HCL in September 2005.


7) Noida Medicare Centre (NMC) Ltd.



Noida Medicare Centre (NMC) Ltd. was established on 27 April 1990 with the setting up of a 68 bedded first multi-specialty Corporate Hospital in U. P., having the only whole body CT Scan in NOIDA at that time. The hospital has now grown to be a 120 bedded centrally air-conditioned multi-superspeciality Hospital.

NMC is the first hospital in the State of U.P. to have the distinction of being granted official recognition in 1998, by Government of Uttar Pradesh to carry out kidney transplantation. It was also the first corporate hospital in Noida at that time, however with the passage of time, and with increasing population, many such hospitals have come up in the region. To name a few Max Hospitals. Metro etc.

The NMC group has many other centres to its credit, however as they all are localized in the NCR (National Capital Region) region, thus it is not yet recognized as a national player. The few other centres established by it are as below :




8) Mahindra Holidays & Resorts India Limited:

Mahindra Holidays is one of the leading leisure hospitality providers in India & Is a part of the USD 6.7 billion Mahindra Group, which is one of the leading and one of the largest business groups in India. Mahindra & Mahindra has a successful track record to be the Market Leader in each segment. Apart from Mahindra Holiday's, Country club (CCIL) is the only other major and established player listed on bse, as we have already covered CCIL in our previous post & the same can be access on site. The sector is still in its nascent age, but is surely gaining grounds slowly and steadily specially after the economic revival. This sector basically caters to the needs of HNI's (High Net worth Individuals), Corporate, NRI's etc but now many mid-class specially working couples from software’s industry are getting attracted to the lucrative offers made by these companies, many free gifts like laptops are given on subscribing to their offers. But this sector has immense potential going forward because the number of people in the high income bracket will increase and consequently the demand for such recreational facilities. Their membership usually is for 25 years and once the customer pays a onetime upfront fees subscribing to their membership then the relation lasts long, with the subscriber just having to pay an annual membership fee, which does not cost much but can generate a lot of revenue for the company when the number of members are more. Adding to that another source of income will be from new customers which are regularly added every year.



9)PAE Ltd :

PAE Ltd. is not into Solar Panels manufacturing on its own. On standalone basis, it is in the business of marketing and distribution of Lead Acid Storage Batteries to provide power storage in power back up systems. In addition to batteries, PAE also buys and/or builds power back-up systems from manufacturers and sells to OE, dealers and end users. It also provides total power solutions to end customers by doing installations, commissioning and service of large power back-up systems.

So, basically it is into power related business, but most of it is in the form of distribution and marketing. This is also evident from its low margin results. On a net sale of Rs 250 crore for FY 2008-09, it could only make a net profit of Rs 5.36 crore. Now, the most important thing is that the company has forayed into Solar Panels manufacturing, but not on its own, rather by taking a controlling interest (51%) in Shurjo Energy Private Limited, which was in need of funds to expand its capacity to 10MW from 2MW. In terms of the agreement, the company has totally invested Rs 5.06 crore in Shurjo Energy for acquiring 51% stake in the company.

10) Interlink Petroleum



Interlink Petroleum is a Gujarat based company which was a moreover like a closed chapter till 2008. Interlink Petroleum ltd (IPL) came into limelight when Singapore based Jit Sun Investment took over this company from its earlier promoters. But before discussing further on takeover of management lets first dig into company operational areas.

In mid-90s IPL was allotted two-fields. These are Modhera Oil Field and Baola Gas Field. Both these fields are located in the Cambay Basin and both are proven fields.

Modhera Oil Field: Last seismic survey was done on this field was in 1971 by ONGC, in those days surveys were very primitive so its findings are not worth anything. However, other companies having fields in the vicinity of Modhera, HOEL have done 3D seismic surveys & found extractable reserves of oil in that area.

Baola Gas Field: In this field ONGC had dug 6 wells out of which 2 wells, Baola-1 & Baola-5 were operational till 3 years ago. Thereafter some water channels have interfered with the gas flow & so production had to be stopped.

But because of paucity of funds with the promoters, the old promoters were never able to exploit these fields commercially.

Small caps have the potential to deliver big

If you want to know ‘the power of small’, the best person to ask is a small-cap mutual fund investor. Small- and mid-cap funds that invest in relatively small value, illiquid stocks have handily beaten large-cap funds by a wide margin. While one-year returns on small-cap funds have been in the range of 105-110%, gains on heavyweight blue-chip funds, which are often regarded as flagship schemes, are much lower, with average (category) returns falling between 75% and 78% for one year.

According to fund managers, though the market has run up over the past one year, hurtling stocks to the expensive zone, there are still factors that could sustain small- and mid-caps rally for some more time. While sector frontliners have run ahead in terms of valuations, there are several mid- and small-cap stocks that have relatively more upside to grow in value.

In terms of earnings growth, several mid- and small-cap companies have beaten their larger peers (though business turnover of smaller companies is anything but significant to compare with large-cap companies).

“The best thing about a small company is that minor improvements in corporate numbers or working style reflect on their stock price. Small improvement here and there contribute so much to their stock price,” said A Balasubramanian, CEO, Birla Sunlife Mutual Fund.

According to fund managers, small companies with good management vision and ability to offer rare products or services make it to fund portfolios. Though large-cap stocks tend to balance the earnings capacity of a portfolio, it is lesser-known volatile stock groupings that give the portfolio an extra ‘gain-kicker’. If one were to see small- and mid-cap businesses that made it big over the past few years, companies such as Hero Honda (the larger peer being Bajaj Auto), Maruti (the larger peers — M&M and Tata Motors), Marico and Godrej Consumers (the larger peer being HUL) would top the list.

“Spotting a potential multi-bagger is the key to small- and mid-cap fund management. Small-cap fund managers do thorough research before allocating money to smaller companies. The general belief is that if a small-cap company is doing well, it will match up to large-cap companies in terms of returns,” Mr Balasubramanian added.

Wary investors turn to small companies

Is market beginning to peak out? The shift in volumes from the large-cap space to mid-, and small-caps would seem to suggest so, going by the conventional wisdom, say brokers. In the past few months, trading volumes in top 100 stocks by market capitalisation have shrunk by 30-40% as investors shifted focus to second-line names perceived to be relatively cheap.

“Valuation-wise, large-cap stocks look expensive, while many stocks in the mid-cap segment still offer value. Every other week, we are seeing investors take fancy to some new sector,” says Mehraboon Jamshed Irani, Sr VP-Equity, FCH Centrum Wealth Managers.

Even as retail investors continue to keep away from the market, most stocks in the second-rung space are being accumulated by proprietary desk of broking firms and mutual funds that have a mandate to invest in mid-, and small-cap counters.

Almost 2,000 companies on the Bombay Stock Exchange (BSE) are currently trading at or near their 52-week highs, as fund managers and investors bet on the next multi-bagger stocks. Large-cap stocks have been moving in a narrow range for many months now. This has prompted investors to look to mid-, and small-cap shares for higher returns.

“Large-cap stocks have already run up in the past few months and are trading at a high price-to-earning multiple (P/E). This is part of the cycle and people will continue to buy mid-, and small-caps till the valuation gap is filled,” says Bharat Shah, head-institutional sales, Ventura Securities.

“While large institutions hardly invest in companies outside BSE 200, it’s the domestic HNIs and some mutual funds which usually get attracted to these stocks,” he says.

Average daily volume in top 100 stocks by market capitalisation stood at Rs 2,860 crore and Rs 11,300 crore in November on BSE and NSE, respectively. This has come down to Rs 1,875 in the case of BSE and Rs 8,100 for NSE in March.

“While the participation from retail investors is low, it has slowly been picking up, as the market outlook has been improving in the past few weeks. But this time, the orders are smaller and the derivatives segment is a strict ‘no’ for them,” says the retail head of a
domestic broking firm.

In the category of top 500 to 5,000 stocks, volumes have gone up from Rs 550 crore to Rs 822 crore for November in the case of BSE. In the case of NSE, for top 500 and above stocks in terms of market capitalisation, the turnover has almost doubled from Rs 400 crore to about Rs 785 crore.

Experts feel that there are still a good number of stocks available at reasonable valuations. But investors will have to be careful before buying them. While selecting, they should go for stocks with higher dividend yield and good earnings track record.

“Even if sentiment remains positive, the rally is expected to narrow down to select stocks in the next few days. Companies with a wide variation in quarterly earnings, and those with balance sheet problems should be avoided even if the shares have been rising of late,” adds Mr Mehraboon.

Experts feel that like in the past, shares of many fundamentally-weak companies have climbed to stratospheric levels, only to leave investors stranded later on. Investors should avoid risking their portfolio by putting in money in companies without checking their credentials.