Umang Dairies Ltd ( BUY-AT 33.00) ( J K DAIRY)

ABOUT:                                                                                                                      

Umang Dairies Limited provides various dairy products in India. The company offers skimmed milk powders, whole milk powders, dairy creamers, dairy whiteners, tea and coffee premixes, ghee, and fresh cream. It provides consumer packs under the White Magik Dairy Creamer, Milk Star Dairy Whitener, and Umang Skimmed Milk Powder brands; and bulk packs under the brands of White Magik, Gold Star, and Umang Dairy Whitener. The company is headquartered in New Delhi, India. 

The Dairy plant, situated 120 kms from Delhi in the town of Gajraula (Uttar Pradesh), is a state of the art milk processing plant which was setup in the year 1994. The first dairy plant from the private sector to have received ISO Certification. As on date the plant has HACCP Certification from DNV, ISO 9001 : 2008, ISO 14001 : 2004 and OHSAS 18001 : 2007 Certifications. 

The plant has a capacity to process over 8,00,000 litres of milk per day (3,00,000 litres drying plant & 5,00,000 litres liquid milk plant) . The plant has the state of art equipments, imported from Gaulin (USA) & Hassia (Germany). Other major euipments have been indigenously designed by Alpha Laval 

Quality milk is collected through our own extensive Village Collection System - 300 villages & 12,000 farmers. A fully developed R&D centre constantly works for improving systems of milk collection, processing and product upgradation.

The Company continues to maintain its leadership position in Premixes for Tea & Coffee vending machines

PRODUCTS:

CONSUMER PACKS:  WHITE MAGIK   DAIRY CREAMER   DAIRY TOP INSTANT DAIRY POWDER   MILKSTAR INSTANT    DAIRY POWDER   UMANG DANEDAR PURE GHEE

BULK PACKS:UMANG DAIRY CREAMER (UDC)  UMANG SKIMMED MILK POWDER   TEA & COFFEE PREMIXES              FRESH CREAM

SEE Q3 RESULTS

http://www.bseindia.com/xml-data/corpfiling/AttachHis/Umang_Dairies_Ltd_240112_Rst.pdf

  EXPECTING 150CR TURNOVER AND EPS OF 7RS.PRICE TARGET FOR THE COMPANY FOR NEXT 3 MONTHS 50RS.ITS A DEBIT FREE COMPANY .

http://cmlinks.com/moneypore/profilenew/financial.asp?mainopt=8&cocode=4101 

Delisting Candidates

In June 2010, the Ministry of Finance, Government of India, had issued guidelines pertaining to minimum public shareholding for all listed corporates. The guidelines were later revised in August 2010. As per the guidelines, all private sector listed corporates must have at least 25% public holding while listed PSUs should maintain a minimum public holding of at least 10%. The corporates were given time of three years to abide by the guidelines. The deadline for companies to achieve the stated level of public holding is June 2013.

http://content.icicidirect.com/mailimages/ICICIdirect_DelistingCandidates.pdf 

Why are cash-rich companies returning the money?

For a very long period that spanned over four decades, legendary investor Warren Buffett neither paid dividends to his shareholders nor initiated any share buybacks. As long as there were opportunities to invest and to earn a good return on capital, he found such exercises futile. But in September 2011, he shocked the financial world when he announced his plans to buy back shares of Berkshire Hathaway. It was a clear indication that there was a dearth of investible opportunities for the Oracle of Omaha. Given the bleak current prospects for the US economy, his change of stance is quite understandable.

But what's happening in India? Today, the board of Mukesh Ambani-led Reliance Industries Limited (RIL) will consider the proposal for a share buyback program which is touted to be one of the biggest share buyback programs in the history of India. The stock markets have given a thumbs-up to the news and the stock price of Reliance Industries has gone soaring in the last couple of days. It must be noted that the stock had been quite an underperformer in 2011, shedding about one-third of its market capitalisation.

But does the proposed share buyback mean good news? Well, the answer is both yes and no. Yes, because stock buybacks are like indirect dividend payments. By reducing the number of equity shares, it boosts the earning per share of the company.

But there is another way of looking at it and that makes us a little uncomfortable. The money that will be utilised to exercise the buyback could have been invested in building productive capacities, developing infrastructure and other such assets which in turn would have generated income and employment. In other words, the money is being returned to shareholders for lack of investible opportunities. But how can there be a dearth of opportunities in an emerging economy like India? In reality, the problem is not lack of opportunities but a bad business environment. Is it any coincidence that India ranks as low as 134th out of 183 countries on World Bank's 'Ease of Doing Business' index? What is even more disappointing is the fact that the case of RIL is not an exception but a trend. Several other cash-rich companies are also finding it quite difficult to deploy their funds into productive assets. Just a few weeks back we had written about how the cash-rich Piramal Group was also struggling to find viable investment opportunities.

This does not bode well at all for the Indian economy. In a growth phase, an economy akin to a corporate needs investments to keep the growth momentum. If that is not happening, then the future prospects of the Indian economy are certainly under threat.

So what does India need to get past the roadblocks? In one word, it is 'reforms'. Reforms that will make it easy for entrepreneurs to conduct business in a smooth manner. But will the government do anything? Not until pushed onto the brink of a crisis we believe. 

source:eqitymaster

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Midcap and Small Cap Stock Ideas

As always the focus remains on studying midcaps and small caps and currently it seems a good time as the activity has started in the segment finally after a year !!

I would just be putting a stock Name a couple of Cues and would leave it to the readers to add more research. Mind you these are not buy or sell recommendations so we dont need price targets or criticism about the stock/management etc. This is an exercise to inculcate the idea of Researching before Investing as majority of Investors first buy a stock and then research on it.

1) 3i Infotech ——-  CMP 16.2

Market Cap of 310 crores. Revenues of 2500 odd crores. But the major concern is debts of 2000-2500 crores. Will it turnaround with CDR or die a slow death?

2) Aarti Inds  —- CMP 48.85

Div yield of 5%. Book Value of 65 +. P – E of 6. Debts of 550 cr. Looks pretty interesting on the numbers but does the business have that potential.

3) Allsec Technologies — CMP 11.15

Current Market Cap of 17 cr.

At one point of time First Carlyle Ventures had an open offer to buy at 260. The stock also went to 370 + levels in 2007. Marquee names in the shareholding pattern have 48% holding:). Ashish Dhawan is one with 7% holding. Will the company ever revive ? its quoting at less then 5% of its peak value.

Even if its not an Investment it definitely is a great study of Where not to INVEST

4) B L Kashyap & Sons —- CMP 11.6

Market Cap of 246 crores. A provident fund evasion led to a suit of 590 crores . Good enough debts, promoter holding pledged and the concerns just continue. But there seems to be an entry of some domestic funds like ICICI Prudential Discovery Fund and an exit of many of the funds which bought the stock at superbly high levels

5) Balmer Lawrie — CMP 507

Majority of the fundamental analysts love this company as a defensive bet at particular price levels. Currently it quotes at a div yield of 5% and p-e of less then 7.

I would personally suggest this stock at 500-420 levels to be accumulated but please do your own research.

6)Balrampur Chini — CMP 40.2

This could be the most interesting bet to play if one is looking at the sugar cycle. Read this well written post by Neeraj –

One of the reasons to look into the stock is the company did a buy back of 9% of equity at a price of 71 rs in July 2011. Maybe they got the timing wrong with Mayawati and the government. But is definitely worth a watch as in the next cycle this would be very well placed.

7) Bartonics

Not at all a buy call. This was one of the example shown to me by a good fundamental analyst as to how companies keep showing great profit nos on accounting but hiding them in the sundry debtors. A must case study for all

BF Utility — CMP 364

The NICE corridor had P-E arms waiting to dole out a lot of cash and still the potential remains it seems. ( I have not looked into details but have a technical buy call initiated fro 315 levels for 380 + targets and we have been initiating day calls on the stock for last few days. Technically the stock seems to have turned around for long term.  )

9) BOC India  —- CMP 309

This is yet another defensive pick which can be a good delisting candidate. Disclosure: Have had a buy view since long at 310-270 levels:) waiting patiently. Expect delisting offer at 400-450 whenever it comes. Also the shareholding suggests the offer can go ahead this time.

10) Bombay Burmah Trading Corporation — CMP 396

Had earlier covered at 400-450  and saw a 50% jump quickly. The holding value is huge check detailed post here. With yesterdays runup in Bombay Dyeing the stock looks pretty interesting. If somebody has a view of 3-5 years one may definitely look into this stock. Holding value should be 1500-2000 crores. Current market cap at 550 crores. So downside could be limited over the long run.

In the same breadth i would mention about Bombay Dyeing — where insiders have been continously buying at 330-360 levels and has given a technical breakout yesterday.

So today we have covered stocks with the alphabets A-B and we still have space till Z. Definitely we do have a lot of work and opportunities.

 source :nooreshtech

Stock research is incomplete without this...

Companies from a particular sector operate in a similar business and regulatory environment. The dynamics of the business are the same and so is the demand supply scenario. So what is it that makes one stock better than others? A relative study of all companies in the sector answers this. Thus, while investing it is important to not just study the company in detail but also analyze it relative to others in the same field. In this article, we will discuss what qualitative factors we need to watch out for while studying the peer companies.

Criterions for peer analysis

First of all, we need to know which companies are comparable to the one we want to analyze. To be comparable, companies should be similar, for example, these could belong to the same sector. Also, at times being in the same sector may not be sufficient if the companies have different business models. What we mean is that it is actually not useful to compare Pantaloon vis-a-vis Titan even though they are in the same sector. Similarly, an Indian generic pharmaceutical company should ideally be compared with an Indian peer operating in the generics space rather than an innovator multi-national (MNC). For comparable companies in the same sector, the following comparisons may be made:

Market share: Number of players in the business or sector defines the level of competition. More the number of players, more intense is the competition in the industry. In an intensely competitive business, the market share enjoyed by industry players tends to be lower and reduces with addition of competition. The profit margins also take a hit because buyers/ customers have more options available to them and thus more bargaining power. This would induce the companies to reduce their prices to be able to sell more than the others thereby impacting their margins adversely.

Barriers to entry: Barriers to entry are obstacles that make it difficult to enter a given market. These may be in the form of higher capital requirement, use of superior technology or need for constant research and development. A company that is into any such business has a distinct advantage over others. For example a company that has the first mover advantage in using an advanced technology to produce its goods tends to benefit till the time others catch up with it. Thus, it may prove to be a better bet.

Raw material sourcing: It is crucial for companies to procure their raw material from the right places and at the right prices. A company that has a proper arrangement in place for sourcing of such raw material is likely to do better in sustaining profits. Companies sometimes get into long term contracts at pre determined prices to buy their inputs from suppliers. They are thus saved from the risks in price fluctuations. For companies that have exposure to exchange rate fluctuations, it is better to invest in one that is sufficiently hedged against the forex risks that may arise.

Forward/ backward integration: To maintain steady supply of raw materials, firms may decide to manufacture these on their own or have captive capacities. Private labels being introduced by retailers in their stores is one such example of backward integration. Retailing companies are in direct contact with the consumers and know their tastes and preferences the best. To capitalize on this, they may decide to manufacture goods on their own instead of buying from other manufacturers. Although it has its own share of associated risks, but such retailers are expected to generate more profit. Forward integration is when a company decides to make finished products and reach out to customers through its own retail stores .

Brand image: With people getting more aware about brands, brand plays a decisive role in the buying decisions of consumers. A good brand is associated with better quality and greater satisfaction. For companies that operate in consumer oriented sectors, it is particular beneficial to have a known brand or label of products. A brand that has existed for years tends to attract loyalty of customers and thereby help the company in generating more revenues. Owning a well known brand may also give the pricing power to the companies. They may be able to charge a premium for their products thereby increasing profit margins.

Financial numbers: Last but definitely not the least, it is important to compare companies on the basis of their financial numbers. A relative financial analysis of profit margins, average sales growth over several years and debt-equity ratio helps in deciding which company one should invest into. Creditor days speak about the credibility of the company while inventory turnover reflects the efficiency in operations.

A thorough analysis of the above mentioned factors and subsequent relative valuation of all comparable companies can help investors decide the best stocks to invest in. We should remember that a company does not work in isolation. It operates in a business environment that is competitive. Similarly, we cannot analyse a company in isolation, it must be analyzed in relation to peers in the same industry, if any.