STOCK VIEW -ZENITH FIBRES

Zenith Fibres

BSE: 514266  CMP: 28.50

Zenith Fibres  The company has set up a plant to manufacture PPSF in village Tundav, near Baroda, India. The plant and technology was imported from BARMAG AG, Germany. The company has expanded its capacity of PPSF from August,1996.The plant for expansion was imported from PFE Ltd.U.K. About 60% of PPSF  production is presently marketed in the domestic market. Balance 40% of production is exported to countries like

Nepal, Malaysia, Saudi Arabia, United Arab Emirates, Italy, Australia, South Africa and Japan. The quality of PPSF is very well accepted in both the domestic and the international markets. Fibre is used extensively in Filter

Grade Fabrics, Floor and Automobile Carpets, Geotextiles, Knitted materials, thermal- bonded fabrics, Hygiene

products, Construction Industry etc. Though the company is small, management is conservative & given consistent performance over last 8 years with uninterrupted dividend for 8 years. For the audited full year net profit was Rs 2.43 crore in the year endedMarch 2011 as against Rs 2.86 crore during the previous year ended March 2010. Sales rose 15.89% to Rs 39.38 crore in the year endedMarch  2011 as against Rs 33.98 crore during the  previous year ended March 2010.Net profit of company rose 47.54% to Rs 0.90 crore in the quarter ended June 2011 as against Rs 0.61 crore during the previous quarterended June 2010. Sales rose 36.48% to Rs 12.27 crore in the quarter ended June 2011 as against Rs 8.99 crore during the previous quarter ended June 2010. Company is said to be operatingat rated capacity as demand for the product is said to be encouraging from Geo synthetic mfrs. Seeing to the good demand, company has decided to expand the capacities by 100 % which likely to be operative by 4th qtr of current year with nominal capex of rs 2 crs from internal accruals, weakening of rupee also to help . Company has plan to increase the sales to 100 crs from current levels of 39 crs over next two years time . ROCE of company has remained around 25 levels on average basis for last 5 years. Stock is trading at 25 % discount to the book value of 36. If 1st qtr profits are any indications. Company likely to report eps of around 8 for current year. since dividend yield is also attractive, down side is limited. Investors can safely accumulate this stock on sharp dips for decent growth.