UTV Software Communications Ltd ( 410.00) BUY

Snapshot

UTV Software Communications Limited
operates in the verticals of Television,Movies,Broadcasting, Gaming and New Media and is thus close to achieving the status of a 3600 media company. Walt Disney, which is a leading global player in the Media and Entertainment (M&E) Industry,holds 60% stake in UTV.

Investment Rationale

UTV is a 3600 company which is growing across verticals in the media industry. Such a growth is attained by both organic and inorganic means. The company has recently acquired True Games which is inolved in online gaming. By having an alliance with Disney the company is able to use its expertise in various fields like gaming animations, distribution of Hollywood movies etc.

The gaming industry is expected to grow manifolds in the coming years in India. India games which is a subsidiary of UTV has 60%market share in India. Even, in the online and mobile gaming industry,the company is involved actively with the subsidiaries and its strategic partner, Disney for designing games which are made to suit the USA customers, as USA is one of the biggest market for online gaming mainly due to the accessibility of internet and mobile phones.

UTV’s broadcasting business is a low cost model thus reducing the gestation period for the company. All of the channels are in a ‘Pay’and ‘Subscribe’ mode thus generating constant revenues for the company. This segment is expected to break even in FY10 with UTV Movies already in profit in FY10.

UTV has 35 movies on slate to be released in next two years. Of these around 8‐9 movies are of the budget of more than Rs.30 crs. The company is planning to invest around Rs.900 crs in this segment for next 2‐3 years, and is expected to earn revenues in the range of around Rs. 400 crs in FY10. Also because the company follows a studio model & with the company reducing cost of Production the margins in this segment are set to improve going forward.



expecting 15 eps in fy10, 35 eps in fy 11, 63 eps in fy 12 . in last 10 days Goldman Sachs Investments Mauritius I Ltd sold 6.5 lks shares in the open market . last 10 days delivery's 12 laks shares change hand in both exchanges. at avg price of 445.rs. current market price 410 is much lower compare to peers. last month it went up to 570 levels. Walt Disney bought 50 % stake at 750 rs.2 years back . so we can invest for long term and short term prospective


in next 5 days if the scrip holds 400 level it can go to 470 immediately .lower side i can come down to 375 in worst case. scrip can touch 550 in next 3 months.

HAPPY INVESTING


SAHADEV

Sabero Organics Gujarat ( 76.35)

Sabero Organics is an established player in the agrochemical industry which manufactures and sells a variety of specialty chemicals and crop protection products. Sabero has a diversified product portfolio for Insecticides, Herbicides, Fungicides and Specialty chemicals. The main products namely Mancozeb, Acephate, Glyphosate, Chlorpyriphos are the largest selling generic products in their respective segments with markets in most regions of the world. Sabero’s manufacturing facility is located in Gujarat and has received the title of ‘Pioneer Industry’ from the Government of Gujarat.
With more than 240 product registrations in 50 countries, Sabero has subsidiaries in Australia, Europe and Argentina and has also established 2 subsidiaries in Brazil which is the largest agrochemical market in the world. With around 65% of the Company’s revenues been contributed by exports, Sabero focus on various geographies around the world like Latin America, Europe, Brazil, Argentina, etc. Sabero is the largest producer of two of its key products namely Mancozeb and Glyphosate in India and second largest in the world.

Business Highlights:

Sabero becomes the second largest producer of Mancozeb in the world post capacity expansion to 30,000 tones per annum.

Launched new products – Insecticides Methamidophos and Acephate Prills

Company added as a source in the registrations of a large European MNC for:

• Mancozeb Technical (Fungicide) in 7 EU countries

• Glyphosate Technical (Herbicide) in 15 EU countries

• Acephate Technical and 90% prills (Insecticide) in USA MNC.

Details of financial performance

Continues to be one of the lowest cost manufacturer in the world for some key organophosphorous and dithiocarbamate products like Mancozeb, Monocrotophos, Acephate, Chloropyriphos and Diclorovos.

9M FY2010 (April – December 2009) v/s 9M FY2009 (April – December 2008)

• Income from operations (net of excise) at Rs. 33,374 lakhs as compared to Rs. 26,742 lakhs in 9M FY09, an increase of 25 %

• Profit before interest, depreciation and tax increased by 75 % to Rs. 6,912 lakhs compared with Rs. 3,953 lakhs in the corresponding period last year.

• Profit before tax up by 108 % at Rs. 4,888 lakhs as against Rs. 2,352 lakhs last year.
• Net Profit stood at Rs. 3,095 lakhs compared to Rs 1,945 lakhs in 9M FY09, an increase of 59%.

• Basic EPS (not annualized): Rs. 10.58 compared to Rs. 6.66 in Q3 FY09, an increase of 59%.
Q3 FY2010 (October – December 2009) v/s Q3 FY2010 (October – December 2008)

• Income from operations (net of excise) at Rs. 10,941 lakhs as compared to Rs 9,012 lakhs in Q3 FY09, an increase of 21 %

• Profit before interest, depreciation and tax increased by 112 % to Rs. 2,373 lakhs compared with Rs. 1,118 lakhs in the corresponding period last year.

• Profit before tax up by 108 % at Rs. 1,687 lakhs as against Rs. 611 lakhs last year.

• Net Profit stood at Rs. 1,027 lakhs compared to Rs. 511 lakhs in Q3 FY09, an increase of 101%.

• Basic EPS (not annualized): Rs. 3.51 compared to Rs. 1.75 in Q3 FY09, an increase of 101%.

New products introduced

In the current financial year, Sabero has introduced Methamidaphos, an insecticide. Methamidaphos which is used across several fruit and vegetable produce and is sold in South America and Africa. In addition, the company has introduced a new environmentally friendly formulation, Acephate prills for sale in Latin and North America. The company is also introducing, two insecticides, one rice herbicide, and a fungicide at the end of the March quarter, to be manufactured in existing facilities, for sale in India as well as international markets.

Going by the current performance of the company and the huge opportunity it has in the
future, Sabero is positioned itself to grow rapidly in the next couple of years. Based on
the above calculations, Sabero is better placed than its peers with a good growth
number and with low price to earnings. At the current price of Rs. 76.80, it is available at
6.5 times, with a market cap of Rs2300 mn, Based on the above estimates, the market
cap of the company at the end of FY2013 can be anywhere between Rs 4320 mn to Rs
13304.2 mn.

Concerns

Raw Material Price Fluctuations: Even though the raw material prices have stabilized
over the last few quarters, there is always a risk of fluctuation in raw material prices that
could affect the profitability of the company.

Currency Fluctuations: About 65% of the total sales of Sabero are exported to various
countries around the world. Any adverse movement in the rupee will impact the margins
of the company. It is therefore exposed to the currency fluctuation issues that could arise
during export transactions. However, there is a natural hedge in the form of imported
raw materials and domestic sales. So about 35% of topline at any point remains
unhedged and the company has no current plans of hedging this exposure

BUY AT CURRENT PRICE . WAIT FOR 4TH QUARTER RESULTS. IT WILL BE A 100 RS STOCK.