Gujarat Ambuja Exports: Promoters buy 10,000 shares @ 23.08 on August 26,2011

As per SEBI Disclosure norms promoters of GAEL have bought 10,000 share on August 26,2011

Shares Bought in BSE: 5000 total amount: Rs 1,15,391.00 ie @ 23.08

Shares Bought in NSE: 5000 total amount paid: Rs 1,15,436.00 ie @ 23.09

Trade done through: ASE Capital Markets

Promoter name: Manish Kumar Gupta

% Share holding before: 24.68% (3,41,55,278 shares)

% shareholding after: 24.69% ( 3,41,65,278 shares)

Gujarat Ambuja Exports: Uttarakhand 1MW BioGas Plant-Maize processing unit

Dated: May 26,2010
Innovative has completed commissioning of its BioskrubberTM system at the new maize processing unit of Gujarat Ambuja Exports Ltd (www.ambujaglobal.com)at their Uttarakhand Plant.

The Hydrogen Sulphide (H2S) free clean biogas from BioskrubberTM system will be utilised for electrical power generation by feeding into the 100% biogas based genset.
The power plant is of 1 MW capacity for its captive use
The BioskrubberTM system is giving an output Hydrogen Sulphide(H2S) content of less than 50 ppm as against the design parameters  of less than 200 ppm.

Gujarat Ambuja Exports: Himmatnagar 1MW Bio Gas from Maize Starch Liquid Waste

As per Gujarat Energy Development Agency Gujarat Ambuja Exports has set up a Biomethanation plant. Plant is Completed & commissioned in Dec'2009 under MNRE(Ministry of New & Renewable Energy) Waste To Energy (WTE) scheme.Plant has been running successfully since its commissioning date.Produced Biogas is used in 100% Biogas engines in captive power plants.
Plant Location: Dalpur, Himmatnagar

Ruttonsha International Rectifier: Value Buy.

Ruttonsha Internationa Rectifier

CMP: 13

Market Cap: 9.04Cr

Sales TTM: 24.52Cr

PBDIT TTM: 4.31Cr

Net Profit TTM: 1.45Cr

Reserves March 2011: 3.77Cr

Debt 8.6Cr

ROCE March 2010: 13.15%

Website: www.ruttonsha.com

Annual Report March 2010

Ruttonsha International Recitfier was incorporated in 1969 and became a public limited company in 1992 and listed in BSE. Ruttonsha produces high power semiconductor devices, silicon control rectifier, power rectifier such as bridges, modules, diodes, thyristors in the range of 6Amp to 6000Amps and voltages upto 5000Volts.

There has been a management change old promoters "Ruttonsha" have sold their shareholding to "Mehta's" 

With the management change Ruttonsha International Recitifier (RIR) has been paying dividends. Promoters own 73.13% of shares.

There are only 4000 shareholders and even 2 public shareholders with 4.46% shares are Mehta's. Very low public shareholding well established in its area of business. +ve operating cash flows. The stock is unknown and under owned. Dividend record date is Sept 24-Sept 26, 2011. Dividend is 75 paisa at current prices Rs 13 the dividend return is an easy 5.7% (in 1 month) 

Conclusion: Very low liquidity so difficult to accumulate stock. stock price should rise as the promoters seem to be more investment friendly, company is well established in its area of business. Semiconductors are efficient energy devices and their use should increase with time.

Gujarat Ambuja Exports: June 2011 Result Review.

GAEL: 

CMP: 23

Market Cap: 317.52Cr

Sales TTM: 2038Cr

PBDIT TTM: 156.64Cr

Net Profit TTM: 94.82Cr

Debt March 2011: 233.38Cr

Reserves: March 2011: 478.71Cr

GAEL June 2011 Results are as follows:

1. The Year on Year basis is the right way to look at the results as agro processing industry is dependent on harvesting seasons so Quarter on Quarter comparison leads to wrong conclusions.  The Year-on-Year data is as follows: 

- Sales up by +30.28%

- Expenditure up by +32.47%

- Other Income down by -44.02%

- PBDIT up by +7.5%

- Depreciation down by 4.24%

- Interest up by +142.06%

- Taxes up by +7.77%

- Net Profits up by +0.15%

Observations: 

- Topline growth at 30% indicates there is ample demand for products

- Expenditure has increased more than sales(32.47%).. indicates slight input cost pressures. 

- Interest rates have increased phenomenally. GAEL has less than 10Cr of long term loans, most of the debt (233Cr) is working capital loans for GAEL, the effect of RBI high interest rate policy can be seen in GAEL's income statement.

- Depreciation has reduced which could indicate that new capacity creation is down or the high interest rate scenario is delaying capacity addition.

- Tax increase (7.77%)though higher than PBDIT (7.5%) it is a small amount. GAEL management has been conservative and has always reported higher tax outflow which results in March Quarter reporting almost Zero tax.

- Net Profit Increase has been a pittance 0.15%  Its almost symbolic in nature.

2. On a segmented basis Topline (Sales contribution of various segments)

- Agro Processing Division:  contributed 52.31% 

- Maize Processing contributed 30.51% 

- Cotton yarn contributed 16.42%

- Windmill contributed 0.76%

Observation: 

- Agro processing division has always been the largest contributor. This division has seen a 45.93% increase in sales on a Y-Y basis which is huge.

3. Profit Margins: Profit margins are a percentage of sales.. The margins for each division are.

- Agro Processing Division 2.16%

- Maize Processing Division: 17.92%

- Cotton Yarn Division: 0.81%

- Windmill Division: 72.64%

Observations: 

- Agro Processing division margins (2.16%) are better than June 2010 (0.60%) this improvement is on top of 45.93% increase in sales which is very heartening considering June & Sept are cyclically the worst quarters for agro processing division. This also indicates good demand for products of Agro processing division (cooking oil, wheat, animal feed, deoiled cakes)

-  Maize Processing Division margins at 17.92% is the same as last year (June 2010: 17.91%)

- Cotton Yarn as such has done poorly barely scraping through.

- Windmills Division looks like had a bumper "Windfall" profit margin increased to 72%

Here is another look at the data from Maize processing division. Let us see the contribution of Maize Processing division to the PBIT of GAEL.

Maize Processing division contribution to the PBIT of GAEL

- Year ending March 2010: 42.88% of profits

- Year Ending March 2011: 54.97% of profits

- Quarter Ending June 2010: 71.30% of profits

- Quarter Ending June 2011: 75.10% of profits

Observation:

- Maize Processing division has been consistently increasing its share in the profits of GAEL.

- On a Q and Q basis maize profits decreased from 27.31Cr (March 2011) to 20.21Cr (June 2011) but this is part of the business seasonality which depends on harvesting.

An important thing worth repeating from my old Blog is the Client List for GAEL 

India Client List: -ITC Limited, Amul Dairy, Heinz India,  Britannia Industries,  Dabur India,  Hindustan Lever ltd,  Parle Products,  Vadilal Industries,  Priya Gold Biscuits,  Colgate Palmolive India Ltd,  Paras Pharmaceuticals,  Goodrick Group of Companies,  Biocon Ltd,  British Biologicals,  P&G Pharmaceuticals,  Choice Laboratories,  Balsara Home Products,  JP Laboratories,  Agiomed Ltd,  Manisha Pharma Plast,  Goran Pharmaceuticals,  IPCO Industries,  Anchor Health and Beauty

Global Client List: Ellora Agro industries, Grand mills for flour and feeds, Tata Africa holdings, Katakit, Strategic foods international Co LLC, Modern Co for food products, Refined food company, National Biscuit and confectionaries co, English Biscuit manufacturers pvt ltd, Carton products ltd, Kuwait Biscuit and food manufacturers co,Omani packaging company,San Miguel foods incorporated,National company for sponge and plastics, Kuwait flour mills and bakeries co,IFFCO, MS unipex dairy products co ltd, AB Mauri lanka pvt ltd, Ceylon biscuits limited, Fooz factory for biscuits, Nizwa food industries llc, Mufindi paper mills limited, Myanma pharmaceutical industries

For the year ending March 2011 GAEL had 

- Total Sales: 1,949cr

- Export Sales: 547cr

exports is 28% of sales and 72% of GAEL's sales of 1,949Cr is domestic demand related. 

India with the largest youth population of the world and demand is something we can see by just stepping out  of the house into a shopping mall during weekends. Products like toothpaste and shaving cream consist of sorbitol a Maize Derivative supplied by GAEL to Colgate, HUL, Dabur, Balsara and Choice Laboratory.  GAEL provides inputs for everyday use products like biscuits, IceCreams, cakes, snacks, soups, ketchup and cigarettes

Conclusion: GAEL's June Quarter has been consistent.. there are signs of Interest rate and input cost pressures visible in the results. GAEL's client list includes the leaders of Indian Consumer goods industry like ITC, HUL, Colgate, Britannia, Parle, Dabur, Amul, Vadilal, Heinz, Priya Gold also the fact that only 28% of earnings are export related really makes "Exports" in the company name misleading. 

GAEL is committed to increase its capacity of Maize Derivative business, we will see higher profit margins going forward. GAEL is right now priced like a low margin commodity player .. with increased visibility (due to higher profit margins) the stock should see a re-rating.

here is a link to an old product video which is a must see. (link)
Blog Archives

Pitti Laminations: Time to dip in.

Pitti Laminations:

CMP: 40.65

Market Cap: 38.29Cr

Sales TTM (Twelve Trailing Months): 308.71Cr

PBDIT TTM: 37.3Cr

Net Profit TTM: 11.29Cr

Total Debt 95.69Cr

Pitti Laminations has kept its promise and done well. Pitti Laminations in year ending March 2011 Reported Net Profit of: 8.48Cr (March 2010 Net Profit: 29Lakhs) 

We had predicted that exceptional(one time) expenses of 5.6Cr (related to GE account) in year ending March 2010 was the real reason for the drop in profits. This conclusion was drawn based on the fact that PBDIT Margins had infact improved in March 2010 as compared to March 2009.(Link to old post)

"Pitti is already on its way to recovery.. It has expanded its capacity and the value added products are improving its operating margins. Right now the one time exceptional expenses related to GE is distorting the excellent operating margin improvement."

The surprising part is the stock has not responded to the rise in profitability. The TTM (Twelve Trailing Months) PBDIT is 37.30Cr while current market cap is just: 38.29Cr)  Digging a little deeper we see that the promoters are planning for:

- Preferential allotment of Equity increasing their shareholding to 60% (from 42.84% - AR-2011)

- Equity of Pitti Laminations will increase from 9.44Cr to 13.50Cr thats a 43% increase in Equity.

- A 20% Open Offer of Equity from Public is also proposed after the Preferential allotment, this would theoretically increase promoter shareholding to 80%

So my belief is that the current stock price is kept low to ensure that the preferential allotment happens at a low price to the promoters. Most likely Pitti Lamination stock price will rise after preferential allotment (due to good results ) and the 20% additional open offer will not be successful (as stock price will be quoting at a price higher than the buyback rate.)

In addition to this there is some interesting data in the Annual Reports:

These extracts are from Annual report from year 2009 and 2010
In 2009 report the 2010 tentative earnings has been stated as 5Cr net profit and a decline in topline.
In March 2010 company reported a decline in topline and profit of 0.29Cr (The 5Cr exceptional expense related to GE .. otherwise the company would have reported around 5Cr net profit as predicted in Annual Report of 2009)

In 2010 Annual report
March 2011 net profit has been stated as 5Cr with topline of 227Cr
March 2012 net profit has been stated as 8.34Cr with topline of 264Cr

Now if we see March 2011 actual results Profit: 8.48Cr Topline: 255.64Cr
So somehow in the annual reports the Pitti Management is kind of giving away their future expected sales and profit figures..  Lets see what the March 2011 Annual report has to say.

The company management has predicted a 100% increase in net profits for 2012 (19Cr) and 200% increase in profits in 2013 (26.15Cr)

1. Company has increased its production capacity(10,000MT to 25,000MT)
2. They have hired Sanjay Srivastava from GE in their company.

Conclusion: Company is a well managed entity with a respectable client list. Promoters have expanded capacity and are now going to benefit from increased capacity utilization.  Considering the better earning prospects management is increasing their holding in the company from 42.8% to 60%. They are also planning for an "Open Offer" to the public after the preferential issue which could increase holding to 80%. The company management in the annual reports has been providing forward looking earnings numbers which have been true in the past and if true for the future ..its a great opportunity to Buy. I would say Pitti Laminations is a good buy as the Stock price are intentionally depressed (so that the preferential equity issue can be done at a lower price to the management) Giving individual investors a great chance to buy at prices where the promoters are willing to invest. Pls download the Annual Reports as they might not be available in the future.


PN: These are my personal views and opinion about publicly available information. Please do your own deep dive before investing


Annual Report 2011
Annual Report 2010
Annual Report 2009
Pitti Laminations Blog Archives

Aro Granite: Value Buy

Aro Granite:

CMP: 37

Market Cap: 37.75Cr

Debt: 56.92Cr

Reserves: 94.71Cr

Sales March 2011: 151Cr

PBDIT: 21.65Cr

Net Profit: 9.49Cr

52 Week high/low : 71.9/35

http://www.arotile.com

Aro Granite is an established Export oriented Granite processing firm. Company has also entered the local Indian market. Company has received Special Export Award for the 10th consecutive year from CAPEXIL

Share buyback done by promoters. 8,83,500 shares were bought back and extinguished in year 2010 

Only 5794 shareholders. Promoters own 40.95% HNI (High Networth Investors ) own 28.89% shares. 

Company has been paying dividends for past 12 yrs. stock is close to 52 week lows.

There is 10% of shares pledged by the promoters which could indicate there is liquidity issues.

Conclusion: Aro is a well established company in Granite business. The stock is ex dividend and current market conditions gives us an opportunity to enter at a discount.

Poona Dal & Oil Industries or Suryaoday Agro Industries

Poona Dal & Oil Industries 

a.k.a (also known as) Suryaoday Agro Industries.

CMP: 21.10

Market Cap: 12.04Cr

Sales TTM: 296.64Cr

PBDIT: 5.8Cr

Tax: 1.26Cr

Net Profit: 2.62Cr

Cash Flow from Operation: 2.72Cr (5 yrs Avg 2010-2006) (2yrs avg 9.87Cr)

Debt: 9.75Cr

Poona Dal & Oil Industries is an 18 yrs old Agro Processing Firm located in Pune, Maharashtra. It has 3 Processing plants located in Khed, Shirur, Daund Districts. Not much to write about but promoters hold 70% equity. Company has been paying dividends consistently for 8 yrs. Though a small company by any measure .. the secret is that the company has been managing its finances very well. 

Conclusion: At 12Cr market cap and 9.87Cr Operating cash flows (2 yrs avg)4Cr of cash in hand..  A consistent Dividend payout for past 8 yrs of 90 paisa ( 4.2% return at current market price of 21.1) This stock is a great  value buy for the long term investor. Only 4400 shareholders. An Easy double..

This is a great Value Buy. Pls note promoter have unlisted subsidiaries in the same line of business however due to high promoter holding this should not be a concern.

Gujarat Ambuja Exports: Ready Steady Go!!

I was just looking at the charts of GAEL. This is a 10 yrs chart and here is what I see.

1. in 2003 Split adjusted GAEL was quoting at 1.8-5 per share. Right now the stock is quoting at Rs 23.5 which would mean GAEL on a 8 yrs period has multiplied wealth 13.05 to 4.7  times ie a return of 1305% (if invested at Rs 1.8) or a more modest 470% return (if invested at Rs 5 per share).. Anyway we look at it GAEL has given us great returns if we stick with the company on a long term basis.

2. GAEL Stock has been technically forming a higher bottom and there is a strong support at 22.35 level.

3. The stock has consolidated long term and will be a strong buy if it crosses 30 we will have some resistance at 40 and then its all open blue skies. The sky is the limit as they say.

Conclusion:
I have never really looked at the technical charts but come to think of it 2012 looks all set to be an exceptional year for GAEL technically and with the new Maize Derivatives plant it all looks like the stars are getting aligned. Also long term the company has delivered. We know GAEL is a consistent dividend paying company with conservative management with eyes set at "Maize Derivatives" business as the money spinner.

Future Definition of Wealth & Peak Oil

Mar 15,2013: Perfect Storm: Decaying Growth Dynamics 
Dec 17,2012: Pyramid Scheme/Peak Prosperity
Oct 8,2012: Peak Oil: German Army Report 
July 24,2012: Inflation & Growth: Hindu rate of Growth
April 8,2012: Fall of Central Governance..Hello Self Governance
Jan 25,2012: RBI Recommends Diesel Price Deregulation
Dec 21,2011: Rise of the US Dollar
Nov 28,2011: The Energy and Resource Institute (TERI): SMART GRID 
Nov 19,2011: Reliance Industries: Shale Gas Find 41.6Trillion Cubic Feet in US
Nov 11,2011: Aviation Fuel Cheaper than Petrol
Nov 9,2011: Reinventing Mobility: Vision 2020
Nov 8,2011: Energy Equation is changing fast
Nov 5,2011: Shale Gas: Sweet Spot for growth
Nov 3,2011: Bio-Gas Plant for home using food waste
Sept 23,2011: 15 Trillion Dollar Pump
Sept 13,2011: Sell Gold: Cost of Credit Vs Creation of Credit
August 31,2011: 10 largest oil fields in the world
Aug 15,2011: Indian Railways to opt for LNG
Feb 09,2011: Peak oil is here

August 7,2010: Future Definition of Wealth
Jun 19,2010: Peak Oil: Hydrodrive: Add 25% water to diesel with no performance loss, Biofuels with Positive coefficient of performance

Indian Railway to opt for LNG on large scale.

The Indian Railways is one of the largest railway networks in the world. News out is that Indian railways wants to opt for LNG on large scale (I dont see how they will start using LNG?) to reduce green house gas emission and ensure major operational savings.The govt has also committed itself to Diesel Price decontrol.

(Link to article)

Here is a chart of Petroleum/Crude Oil Production in US.

American Geophysicist M.K.Hubbert predicted in 1956 that american oil production would peak in 1965-1970. 

As can be seen from the charts .. he was right.

-All the new oil production/extraction technologies (available to US) till date have resulted in decrease in production of oil.

-The largest consumers of Oil in US is "Transportation" Industry. In India ..there has been a rise in the production and use of automobiles for personal use.

- Crude Oil Refiner Acquisition cost has moved up steadily which means profit margins are under pressure. (Now we know why Reliance Industries is dropping like a Rock and will continue to do so in the future..)

Conclusions: We live in Interesting times and the next 10-20 years are going to be more interesting. 

- The people in power are aware of "Peak oil" but do not want a panic like situation and are using terms like "Carbon Foot-Print", sustainable development, Renewable Energy

- The Markets are trying to manage the volatility associated with transfer of assets from "Petroleum Dependent" to "Petroleum Independent"

- Public transport system .. govt is making every effort to build climate controlled (AC Buses, Metro Rail, Pvt Taxis) public transportation system palatable to all . 

- Piped Gas though has very high initial setup cost is being pushed to each and every household.

- The value of Gold and other precious metals are rising because of this uncertainty(asset price volatility) as Gold has traditionally been a store of Value.  One must remember that its a store of Value not a medium of economic activity. Infact Gold cannot be used even as currency as most of the gold cannot be valued (purity/weight/coinage)

- A large population of the world is engaged in economic activities which are not "necessary/basic requirements" with rising fuel prices the "economic value addition of some sectors will diminish"  while others will gain prominence.

- With rising cost of petroleum .. quality of life will definitely suffer. 

- Future has always been progressive. An Individual in today's world is enjoying the comforts which even a king could not afford in olden days. But it is important to be aware of changes in circumstances. Just as the "Baby Boomers" are set to retire in US in 2011 their main assets House and Mutual fund/Stock Investments have collapsed in Value.

Hester Biosciences: Value Buy

Hester Biosciences: 

CMP: 114.95

Market Cap: 59.67Cr

Sales March 2011: 41.97Cr

PBDIT March 2011: 18.06Cr

Net Profit: 7.6Cr

Hester Biosciences is the largest single location plant for manufacturing Poultry Vaccines in India. It is expanding capacity and entering into livestock and Pet vaccines. It has expanded capacity by 400% and entering into Livestock vaccines. 

Small shareholder base and low PE. Stock though fairly priced is Cheap at current prices due to high value products being manufactured. Venky's promoter also have poultry vaccine manufacturing but it is in pvt company and not  part of listed Venky's  

Good long term buy.

Company Website: http://www.hesterbiosciences.co.in

Annual Report March 2011: (Link)