* Dynemic Products Ltd. (DPL) (Rs.20.55) is a major manufacturer and exporter of the complete range of Food Colors, Lake Colors, Blended Colors, FD&C Colors & Dye Intermediates. The company’s products find wide application in the,food, cosmetic, pharma, Ink and edible ink industries.,The company has been a consistent performer with an average ROCE of around 20% for the last three years and an average dividend payout out of the total earnings for the last five years while the last dividend was 13% on EPS of Rs.5.81.
During FY12, sales revenue was Rs.8066.44 lakh with net profit of Rs. 530 lakh as against sales of Rs.6369.34 lakh and profit of Rs. 571 lakh in FY11 i.e. an increase of Rs.1697.10 lakh over FY11. Other income rose from Rs.169.46 lakh to Rs.256.70 lakh during the year. 76% sales of the company is from exports and the company has benefited from the weaker rupee. Last year, DPL had incurred capex the benefit of which is expected to accrue in the current year. In Q1FY13, sales rose 29% to Rs.23 crore while net profit went up to 28% to Rs.1.46 crore. The current year sales is estimated around Rs.95/100 crore with net profit of around Rs.7 crore.
Outlook: The processed food industry has done exceeding well even in the recent turbulent times as more and more people worldwide choose readymade foods, drinks and other consumables rather than make it themselves. DPL foresees a steady increase in the demand for its colours in time to come. There is promoter buying in the stock over the last 15 months slowly, which boosts the confidence of investors. With an
expected EPS of around Rs.6 and ROCE of 20% and expected dividend of 15%, the stock looks attractive for accumulation at current levels.
* Ruby Mills (Rs.694.30) was incorporated in 1917 and is engaged in the business of textiles. Its manufacturing units are located at Khalapur (Raigad district) and in Mumbai. In the realty division, its new building at Dadar, which is one the most modern, has around 10 lakh sq. ft. ready. 25% of which is said to have been sold at an average rate of Rs. 16000 per sq.ft. while around 25% has been leased out at rate of around Rs.130 per sq.ft. as per the recent statement at the AGM. The company has a loan of Rs.325 crore in the realty division and is very likely to repay it in the current year from the sale and rental proceeds thus emerge debt-free. Besides
this, the company is left with land where it can develop another 3.5 lakh sq.ft. Of the remaining 7.5 lakh, it can easily earn lease rental of Rs.108 crore per year at the rate of Rs.120 per sq. ft. per month if fully utilized.
It also has an existing office from which it has recently leased out around 1 lakh sq. ft., which will fetch a return of another Rs.14 crore per year. Thus when there is a pick-up in the economy, we may see the remaining part of the building leased out in the current year. This is likely to fetch decent returns over the long run on its small capital base of Rs.4.18 crore. The book value of the share is Rs.498 while FY12’s dividend was 50%. Investors may please note that this stock was first recommended in this column at very low level of Rs.85/100 from which Mit shot up to Rs.2200 and profit booking was advised between Rs.1800 to 2200 levels long back. At that point, this building was at the proposal stage which has now become a realty rate if at Rs.680. Investors can accumulate this stock on dips for decent long-term growth.
* Modison Metals’ (Rs.41.45) business is mainly related to the power sector. Since the government has announced restructuring of SEB loans along with an increase in the power tariff, the company will benefit from the same. The company has been consistent performer even during adverse conditions.
* UCAL Fuel Systems (Rs.70.50) engages in the manufacture and sale of carburetors, mechanical fuel pumps, and multipoint fuel injection parts to the auto industry in India. The company's products include 4 wheeler carburetors, fuel pumps, 2-wheeler carburetors, genset carburetors, oil pumps, throttle body assembly, delivery pipe assemblies, air suction valves, fuel filters, electric throttle valves, and machined castings. It sells its products primarily to original equipment manufacturers. The company was incorporated in 1985 and is headquartered in Chennai. It is a 40% dividend paying company, the stock looks good for accumulation around Rs.70 levels and the book value is around Rs.132.
* KCP Ltd. (Rs.34.15) is facing power shortage in the area where it has created new cement capacity and its captive power plant will be ready by next year. Price realization, too, has come down in Andhra Pradesh, which is likely to affect margins. Ban on sand mining in Andhra has also affected cement consumption. Investors can think of switching to Suprajit Engineering (Rs.28.20) or any of the other stocks, recommended.
* There is good improvement in the working of KEI Industries (Rs.16.75) over the last few quarters. Investors who bought this stock at higher levels can average the same at the current price as its downside is limited. The share book value is Rs.33 while the current market price is almost half of it.
* First Leasing (Rs.50), which has strong fundamentals, is a stock that has not participated in the mid-cap rally.
Investors can accumulate this stock at the current price of about Rs.50.
* Tata Global Beverages (Rs.142.80) has moved well, investors are advised to stay invested to review profit booking only above Rs.160 level.
* Cipla Ltd. (Rs.380.60) is another defensive stock where investors can think of SIPing systematic on dips.
* Balaji Amines (Rs.59) has flared up from Rs.42 to Rs.59 level. Investors can think of booking part profit at Rs.60/65 level.
* Rapicut Carbides (Rs.71.30) is firm and there is promoter buying in the stock. Its outlook is good. Stay invested or
accumulate below Rs.68 level on corrections.
* Suprajit Engineering (Rs.28.20) has given a good breakout and the stock may move up to Rs.35 level. Investors can continue to hold the same
