coal india

http://www.2shared.com/document/LLHfj78X/coalindia.html


A SPECIAL REPORT


SOURCE: EQUITYMASTER

Gujarat Automotive Gears Ltd cmp (926.50)

expecting 150 eps for full year see this quarter results . expecting price target 1300 shortly

http://www.bseindia.com/xml-data/corpfiling/AttachLive/Gujarat_Automotive_Gears_Ltd_041012_Rst.pdf

BEST BUY'S FOR 2ND QUARTER RESULTS

   1.National Peroxide Ltd   C.M.P     510.00

 http://cmlinks.com/moneypore/profilenew/financial.asp?mainopt=8&cocode=409
  
2.Mastek Ltd                C.M.P      140.00
  
http://cmlinks.com/moneypore/profilenew/financial.asp?mainopt=8&cocode=2732


  3. Mindtree Ltd             C.M.P      660.00


http://cmlinks.com/moneypore/profilenew/financial.asp?mainopt=8&cocode=20581 

  4.Parekh Aluminex Ltd   C .M.P     348.00
  http://cmlinks.com/moneypore/profilenew/financial.asp?mainopt=8&cocode=7902


5. Aegis Logistics Ltd      C.M.P    154.00

http://cmlinks.com/moneypore/profilenew/financial.asp?mainopt=8&cocode=9

LAST QUARTER THESE STOCKS REPORTED GOOD RESULTS . EXPECTING THIS QUARTER RESULTS TO BE GOOD. SO BUY FOR A MONTH . EXIT AFTER RESULTS. IF U WANT.

Chemfab Alkalis Ltd BUY AT 56.00

In India, CHEMFAB ALKALIS LIMITED [CAL] were the FIRST to introduce MEMBRANE CELL TECHNOLOGY in 1985. CAL set up the FIRST MEMBRANE CELL CAUSTIC SODA Plant in the Union Territory of Pudhucherry and commenced production in 1985. The Company is the first in the country to introduce Pollution-free Membrane Cell Technology which became the trendsetter in the Chlor-Alkali Industry. The Company started with 25 TPD capacity in 1985, expanded its capacity in two phases in 1988 and 1996 and today the present installed capacityis106 tons Caustic Soda production per day. The investment for the project is in the order of about Rs.70Crores.

The Company is promoted by M/s Titanium Equipment and Anode Manufacturing Company Limited. The Chairman of the Company, Dr C H Krishnamurthi Rao, is a self-made entreprenur. The Company is a professionally managed one and technology driven. The Company's success story in technological dynamism and commercial affordability made the Government of India to take a policy decision that only MEMBRANE Cell Technology will be adopted in the Country after the success of Chemfab Alkalis Limited. The Company has made outstanding contribution in the field of Environmental protection and energy Conservation and the Company has to its credit awards given by distinguished Institutions, Government of India and others for its contribution in the field of environmental protection, energy conservation and now getting the awards for its contribution and achievements has become a matter of routine of the Company.

CAL, is the FIRST Company in the country to manufacture Barium Sulphate from solid waste and we hold a patent for manufacture of the same.

http://cmlinks.com/moneypore/profilenew/financial.asp?mainopt=8&cocode=1216 

http://www.bseindia.com/xml-data/corpfiling/AttachHis/Chemfab_Alkalis_Ltd_060712_Rst.pdf 

CMC Ltd cmp 1120.00

    Capitaline Corner: CMC



Well positioned


 

Capitalising on opportunities in IT infrastructure management services andembedded systemsA 51% subsidiary of Tata Consultancy Services, CMC is a leading systemsengineering and integration company in India, offering application design, development,testing services and asset-based solutions in niche segments through turnkey projects. Thecompany has over 10,700 employees spread across India, the US, the UK, Europe, MiddleEast, Africa, and Asia-Pacific. Its business is structured around four strategic businessunits (SBUs): customer services (CS), IT-enabled services (ITeS), systems integration(SI), education and training (E&T).

  

The CS SBU focuses on creating solutions and providing services for theIT infrastructure requirement covering infrastructure architecture, design and consultingservices; turnkey system integration of large network and data centre infrastructures. Thescope of services includes supply of associated equipment and software, on-site and remotesupport services at multi-locations for IT infrastructure of domestic and internationalclients.

   

The SI SBU undertakes solution deployment including embedded systems,software development, software maintenance and support, turnkey project implementation,and systems consultancy. It has been one of the key drivers of the transformation towardsmore value-added business with a view to improve overall margin. The SI SBU continues toinvest and grow its solution asset base so that it can offer innovative solutions aroundthe core intellectual properties of these assets. These include enhancements ofbiometrics-based assets for identity management, mining assets for mining solutions,transportation assets, insurance and financial solution assets, and e-governance assets.
  

The ITeS SBU provides a variety of ITeS including business processoutsourcing and knowledge process outsourcing for front-end and backoffice. This SBU hascreated specific business domain expertise such as on-demand software services; officerecords digitisation and document management; recruitment and examination resultsmanagement; legacy data migration management. Also, the ITeS SBU continues to work for theElection Commission as a state-level agency. The ITeS SBU has taken initiatives toleverage its experience in handling large national projects for more rewardinginternational geographies and has over the years been one of the main drivers to increaseinternational revenue of the company.

  The E&T SBU offers education and training solutions for corporateorganisations, government institutions, and individuals.Revenue increased by 48% to Rs 452.28 crore due to 55% increase inrevenues from (SI) to Rs 264.38 crore (58% of total revenue) and 66% increase in revenuesfrom ITeS business to Rs 71.35 crore (16% of total revenue) in the June 2012 quarter overthe June 2011 quarter. The operating profit margin was flat at 16.6%. Net profit grew 68%to Rs 58.43 crore and the profit after tax margin increased 150 basis points to 10.92%. About 64.9% of revenue were from the international business, growing16% over the March 2012 quarter and 66% over the June 2011 quarter. North Americas grew 8%over the quarter and 40% over the year in dollar terms. Services grew 10% over the quarterand 52% over the year contributing 91% of revenue.

 

CMC added 20 clients in the June 2012 quarter. These clients are in ofinsurance, transportation, energy, resource and utilities and the government sector. Theseare all strategic long-term clients.

In India, higher growth is expected to come from two and three tiercities and the small and medium enterprise sector. CMC’s countrywide presence andpartner network can be leveraged to capitalize on this growth. The company’se-Pragati initiative started in 2010 specifically targets this opportunity. Cloudcomputing and virtualisation is proving to be disruptive change in IT business. It isadapting this technology for its own use as well as a part of its offerings.
 

 Convergence of mobility and web is opening several opportunities fornew applications for mobile access to the system particularly in the area of businessintelligence and reporting. Existing applications also need enhancements to incorporatethese technologies. With core competency in mobile technology as well as embedded systems,CMC will tap these opportunities.

 

CMC continues to look forward to building a momentum in product-basedsolutions and services and at the same time it is looking at how it can addressopportunities in the emerging geographies like Middle East and Africa, where the companysees considerable replication potential for its products and solutions developed forIndian markets.

 We expect CMC to register EPS of Rs 73.8 in the fiscal ending March 2013. The share price trades at Rs 968. P/E works out to 13.

 Table


 

CMC : Consolidated Financials
	1003 (12)	1103 (12)	1203 (12)	1303 (12P)
Sales	870.73	1084.4	1469.34	1965.17
OPM (%)	18.6	19.4	15.3	15.4
OP	161.73	210.71	224.32	302.17
Other inc.	18.88	11.8	17.46	25.7
PBIDT	180.61	222.51	241.78	327.87
Interest	3.3	0.22	0.02	0.04
PBDT	177.31	222.29	241.77	327.83
Dep.	9.85	10.46	21.37	29.22
PBT	167.45	211.83	220.4	298.61
Tax	24.23	32.42	68.59	75.09
PAT	143.23	179.41	151.81	223.52
EPS (Rs)*	47.3	59.2	50.1	73.8
* Current equity of Rs 30.30 crore. Face value: Rs 10.
Figures in Rs crore.
Source: Capitaline Databases

Gillanders Arbuthnot & Company Ltd BUY (62.00)

Gillanders Arbuthnot & Co. Ltd. (GACL) 

Several Companies have amalgamated with the Company from time to time. In the recent past, GIS Ltd. which had two major Divisions / businesses viz.

1. Textile Division engaged in the production of Cotton and Man made fibre/yarn and blends thereof.
2. Engineering Division engaged in the business of structural engineering, steel fabrication, execution of turn-key projects and other engineering work under the name ‘Modern India Construction Company’ (MICCO) was amalgamated with the Company.

The Company primarily deals in tea, textiles, engineering, chemical and trading business activities. GACL has a diversified business portfolio which has helped it in achieving a steady performance by overcoming adverse cyclical fluctuations to which its various businesses may be exposed from time to time.

EARLIER IT'S   A GOOD DIVIDEND YIELD COMPANY LAST YEAR POSTED LOSS BUT FIRST QUARTER THEY POSTED GOOD RESULTS 

SEE BELOW LINKS AND DECIDE .

http://cmlinks.com/moneypore/profilenew/financial.asp?mainopt=8&cocode=2415 

http://cmlinks.com/moneypore/profilenew/financial.asp?mainopt=3&opt=P&cocode=2415 

 

Nesco Ltd (BUY) cmp 654.00

Nesco Ltd was established in 1939 as New Std Engg and operated in the capital goods business. The company had plants in multiple locations in Mumbai which it finally consolidated at a single location in Goregaon on the Western suburbs of Mumbai with a 70 acre plot.

The company started incurring losses in its capital goods business and gradually shifted to the business to Gujarat and converted the Mumbai land bank into a exhibition and convention centre. The size of the land bank coupled with close proximity to the airports and the national highway has enabled it to become one of the premier exhibition centres in the country and has conducted over 500 exhibitions and events at the location. The closest competitor in Mumbai, Nehru Centre is less than 1/15^th the size in terms of exhibition space.

The company has also converted its old plant sheds into IT parks and is in the process of constructing a large IT park ( IT park 3). IT park III will have nearly 8,00,000 sq feet of space and the company has leased  out a significant chunk of this project which is under construction and should be ready for fit outs in the next couple of months. 

The management has been conservative and has repaid the debt on the books and has used the internal accrual route to fund expansion for the IT park that it is setting up. The management has clearly stated plans for IT park IV and IT park V where it intends to use the cash flow generated out of the exhibition business and rental income to fund construction of the remaining IT parks.

Financials

FY 2011

a) Income

1)       Convention Business -  65.62 crores ( up 21% over previous year)

2)       IT Park ( rent Income ) – 51.61 crores

3)       Capital Goods business -  16.82 crores ( Down from 24.8 crores in the previous year)

4)       Income from investments and other income -  10 crores

b) Cash/ Investments on Balance sheet -  168 crores

c) Net Profit -  68 crores

d) Cashflow from operations -  78 crores

HY -  2011 -2012

a) Income

1) Convention Business -  25 crores ( HY 2011 -  21 crores )

2)       IT Park ( rent Income ) – 51.61 crores

3)       Capital Goods business -  15.29 crores (HY 2011 -  6.61 crores )

4)       Income from investments and other income -  3.15 crores (  HY 2011 -  3.63 crores )

b) Cash/ Investments on Balance sheet -  215 crores

c) Net Profit -  25 crores

Dividend policy

The dividend payout ratio has been poor because the management has chosen to reinvest the cashflow in construction of the new IT building. The management intends to maintain the same as it is averse to taking debt and will use internal accrual to fund further construction over the next four to five years. One can’t argue against this thought process of the management considering the high operating margin and ROCE.

Valuation

The company is currently available at a market cap of Rs 800 crores with no debt on books. Against which we have

Cash / Investment on Books -  215 crores

Net Profit – 68 crores ( Last year) 

IT Park III should start contributing from next year and on a conservative estimate of Rs 80 per sq feet should generate an additional Rs 50 crores of revenue in FY12-13. 

So net cash of the company is available at 5-6 times and which would appear low for a company with high ROE and with steady cashflow and huge entry barrier to the business.

Risks

1)       Though cashflows over the next 4- 5 years are slated to be lined up for construction of IT park IV and V, subsequent to which there is lack of clarity on what the management intends to do with the cashflow going forward. The bladder problem of management either earmarking the cash for its capital good business or blowing it up into unrelated diversifications exists.

2)       The historical low dividend payout ratio though can be argued as logically correct at this stage of the business could however turn out to be a constant thought process for the management.

3)       The biggest risk that I perceive is that the entire business model is constructed around a piece of land in a single location in Mumbai. Mumbai is currently the most expensive city in this country with respect to real estate prices. There is a situation of oversupply of commercial property in Mumbai. The company stands exposed to not just a generic correction in real estate prices ( hence associated rent income )  but more importantly derating of the Mumbai real estate market. There is a increasing trend of companies shifting their IT / ITES operations out of Mumbai to other locations like Bangalore/ Pune/ Gurgaon etc. Case in point is that Intelenet which occupies one of the building did shift a significantly large process of over 2000 ppl to Aurangabad. TCS Eserve which occupies one of the other buildings is expanding its operations in Ahmedabad and other Tier II cities. Considering the 4- 5 year window when shareholders could possibly look at actual cashflow, this is a large risk that the business carries.

 My viewpoint

Prima facie the company appears to be cheap with relatively steady cashflows. I intend to look at company from a different angle.

Is Nesco a cash bargain / holding company and hence should be valued accordingly?

Lets examine the management competency variables

1)       The biggest achievement of NESCO is the piece of land at Goregaon which it fortuitously acquired a long time back.

2)       The current business model and cashflows are dependent on this piece of land.

3)       Can we say the management has competency in the real estate business and can take up more projects beyond this piece of land like any other real estate developer. 

4)       Is the same true about the Convention business? Do we think the management has competency to set up x more convention centres across the country and run it?

5)   The only operating business that management is running which is the capital good business has a chequered past track record.

So lets flip the coin and look at NESCO as a holding company / cash bargain opportunity.  We have a plot of land which on a conservative basis can be valued at RS 2000 crores + 200 crores ( Cash on balance sheet) = Rs 2200 crores.

This piece of land through rent and the convention centre generated about  68 crores of net profit last year . (I m keeping the calculations simple at this point of time without valuing the capital goods business separately) 

Effective yield of 3.4%. This yield should go up to about 5 % with the IT building III coming to play.

The market today values

Holding companies -  25% of intrinsic value

Cash bargains  -  40-50% of cash on balance sheet

 ( One can argue on the merits and demerits of these discounts but if one feels otherwise clearly there are better managements who could  be looked at for cash bargains)

 Considering the relatively lower yield being earned as compared to other cash bargains and management risk we can value the company at about 40% holding value.

 Value of the company -  40%* Rs 2200 crores -  880 crores

Current market cap  - Rs 800 crores.

Conclusion

Considering the lack of visibility of cashflow payout to the shareholders over the next 4- 5 years, I would like to look at this opportunity a couple of years down the line as clarity emerges on the management’s thought process and visibility on dividend payout and deployment of future cashflows.

source :-     investingvalues.blogspot