STOCK VIEW - DYNEMIC PRODUCTS

Dynemic Products Ltd. BSE Code: 532707 Last Close: Rs.20.50 

Dynemic Products Ltd. was founded in 1990 and is based in Ahmedabad. It is an ISO 9001:2000 and HACCP certified company that is engaged in the manufacture and marketing of food colours, flake colours, blended colours, salt free dyes, as well as drug and cosmetic colours in India and overseas. Its products are primarily used in food, drugs, pharma, cosmetics, personal care, beverages, confectionery, pet foods, dairy, and edible ink industries. The company also offers dye intermediates, which are used in the manufacture of food colours, acid dyes, reactive dyes, ramazol dyes, metal complex dyes, and direct dyes. The company‟s manufacturing facilities include two well equipped plants spread over 50,000 Sq. Mtrs. of area.
It has an equity base of Rs.11.33 crore that is supported by reserves of around Rs.27.10 crore, which is 2.39 times its equity. The promoters hold 41.28%, non-promoter corporate bodies hold 3.38%, foreign investors hold 0.69% while the investing public holds 54.65% stake in the company.

For Q1FY13, it posted net sales of Rs.23.34 crore with net profit of Rs.1.46 crore against net sales of Rs.17.96 crore with net profit of Rs.1.13 crore in Q1FY12 (Net profit rose 29.20% while net sales was up 29.95% during the quarter). For FY12, it recorded net sales of Rs.82.94 crore with net profit of Rs.5.30 crore against net sales of Rs.63.69 crore with net profit of Rs.5.71 crore in FY11. The Q1FY13 EPS is Rs.1.29 while the FY12 EPS was Rs.4.68. At the current level, the stock is available at a P/E multiple of 3.5. It has paid dividends as follows: FY07: 10%, FY08: 10%, FY09: 10%, FY10: 13%, FY11: 15% and for FY12 it has declared 13% dividend. At the current share price of Rs.20.50 the dividend yield is about 6.3%. Technically, the stock has found support around its 200-day EMA. We, therefore, expect the stock will make a bottom near the current level and ready for an upward journey. We recommend to buy this stock with a stop loss of Rs.18. On the upper side, the stock will zoom to Rs.25-27 levels in the short-term while a close above this level will take it to Rs.34 level in the long-term.