Bemco Hydraulic: Hidden Gem

BEMCO Hydraulic
CMP:185.6
Market Cap: 40.59Cr
Year Ended March 2017
Sales: 42.53Cr
Net Profit: 3.62Cr (includes: 2.82Cr Exceptional item)
http://www.bemcohydraulics.net/
http://www.fluidik.co/
http://www.bemcohytech.in/

Bemco Hydraulic was incorporated in 1957. It is now a premier producer of Hydraulic press equipments.

BEMCO, originally an Engineering Craftsman's shop in the late thirties has risen to be a premier manufactures of Portable re-railing equipment, Light weight re-railing equipment, Hydraulic Re-railing equipments, Re-railing Systems, Hydraulic press, Wheel fitting press, Straightening press. Our Portable Rerailing Equipment is designed for re-railing cars and locomotives. The light weight of the rerailing equipment makes it a useful tool in solving re-railing problems safely.
BEMCO now has a well planned and adequately equipped manufacturing setup where every infrastructure is available to design, develop and produce a mega range of Hydraulic press and Light weight Portable re-railing Equipments.BEMCO, by collaborating with Vogel of Germany and Towler Brothers of U.K manufactured the first ever indigenously produced Hydraulic press.
 Re-railing and rescue Equipment catalogue

BEMCO major clients are:
1. Indian Railways, 2. BHEL, 3. BEML, 4. ESCORTS, 5. NFC(Nuclear Fuel Complex), 6. BARC(Bhabha Atomic Research Center), 7. HMT, 8.Ministry of Defense, 9. Kirloskar, 10.FORCE Motors, 11.Siemens, 12.ABB, 13.AMCO, 14.Ashok Leyland, 15.BFW(Bharat Fritz Werner), 16. L&T, 17.CA, 18.Denso, 19.Eicher, 20.FAG, 21.TIMKEN, 22.GRSE, 23. Hero Group, 24.HCL, 25.Honda, 26.Indo Nippon Electricals, 27.Atlas Cycles, 28. Jai Parabolic Springs, 29.Kalyani Group, 30. Lemken, 31. KEC International, 32.Whirlpool, 33. KSB, 34.Lucas TVS, 35. Brakes India, 36. Avon cycles, 37. Mahindra, 38. MICO, 39.NBC Bearings, 40. New Holland, 41.NRB Bearings, 42. Indian Ordinance Factories, 43.Panasonic, 44.Piaggio, 45.Rane (Madras), 46.Rane, 47.RSB Group, 48. Salem Steel, 49.Sintex industries, 50.Sona Steerings, 51.SRF, 52.SUNFAB, 53.Sundram Fastner, 54.Suzuki, 55.TELCO, 56.TAFF, 57.Toyota, 58.TTK Prestige, 59.TVS, 60.Vespa, 61. Vikram Sarabhai Space Center, 62.Voltas, 63.Bharat Forge, 64.Wheels India, 65.ZF India.

Bemco Total Issued Equity Capital:  5.39Cr out of which Equity Capital: 2.19Cr, Preferential Equity:3.20Cr
Bemco Hydraulics has Preferential capital which is being given 11% interest..
March 2013 Equity Capital: 1.45Cr, Preferential Capital:3.38Cr
March 2014 Equity Capital: 1.79Cr, Preferential Capital:3.20Cr
March 2016 Equity Capital: 2.19Cr, Preferential Capital:3.20Cr

the Equity capital is increasing while the Preferential capital is reducing.. which is an indication of better days for equity shareholders.

Latest Year ending March 2017 Results.
Stand alone profits have an exceptional item 2.8Cr which is writeback of "Deferred Payment Liabilities"

Also if you see the Reserves
March 2016: -87.27Lakhs
March 2017: +ve3789.92Lakhs (37.89Cr)

Property Plant and Equipment:
March 2016: 697.52 lakhs (6.9Cr)
March 2017: 4212.35lakhs (42.12Cr)

So looks like the books are being cleaned/strengthened.. so that the company has respectable assets and earnings, liabilities (preferential capital) is being reduced.. I would say its all due to BASEL-III guidelines..
Companies can no longer get access to capital if they do not have a strong balance sheet or income/profits.

Also with AADHAR being linked with PAN .. fictitious PAN/individual investors on paper is a thing of the past..shareholders have to be identified.. and hence stock prices will reflect true value..

CMP:185.6
Market Cap:40.59Cr
March 2017  Total Shareholder funds: 43.29Cr
which means Book Value is higher than CMP..??? EPS with exceptional income @ 16.99
giving a PE of  11, Book Value of 197.6

Another interesting observation is demat shares
Public shareholding: 5,53,430 share out of which only 3,52,700 shares are in demat form (63% available for trading)  ie Free float is: 3,52,700 x 185.6 = 6.5Cr

If you look at the detailed public shareholding.. actual demat shares with public (shareholders with shareholding less than 2 lakh (20,000 shares)) is just 82,659 shares ie 82.659 x 185.6 = 1.53Cr Free Float

Conclusion: Bemco Hydraulic is a well established name in  its line of business.. Hydraulics is required in heavy industry as well as in Shopfloor automation.(robotics). company has also started manufacturing low power consumption hydraulic systems which would be used in automation activites in the industry. With make in India and involvement in Railway, space, defence and heavy industry I expect topline to improve. Management is also converting its preferential capital into Equity which means management expects equity to do well in the future... its a good long term buy.. Hidden Gem.

Manugraph India: Revisited

Manugraph India was recommended in Sept 9,2010 @ 50.10 Market Cap: 152.84Cr
Today Sept 15,2017 Manugraph CMP is: 50.05 Mcap 152.15Cr.

Manugraph is still struggling to report profits and recently reported that its American subsidiary "Manugraph Americas" has filed for bankruptcy protection. There is also report of Workers going on Strike..
Is there something we are missing out here??..

All those who have followed manugraph India know that its the market leader in India with about 70% market share as well as it has developed new presses with double width and speeds upto 70,000 cph(copies per hour) after purchasing DGM, Manugraph has incorporated new technologies and started manufacturing high speed presses of 60,000 to 70,000cph. Manugraph also has the distiction of always paying dividends to shareholders even when it was reporting losses..

So maybe stock price wise... the stock looks like its going nowhere, Manugraph the company is live and kicking.. what caught my eye (and the reason for suggesting a buy is the shareholding pattern for Manugraph.)

March 2016 Largest Public shareholder is : Reliance Mid-Cap Small Cap Fund: 17,09,978 shares.
Total public shareholders in March 2016: 12,369 shareholders

One year later: March 2017: Largest Public shareholder (Reliance Mid-Cap Small-Cap fund) is no longer a  shareholder in manugraph but the Total Public shareholders in March 2017: 12,243 shareholders

So even as the largest shareholder has sold manugraph shares (17 lakh shares)... Number of public shareholders has decreased by 12369-12243 = 126 shareholders.
Ideally when large shareholders dump shares in the market.. the shares should be distributed across number of small shareholders increasing the no of shareholders for manugraph..... but Surprise Surprise

So not only has the 17,09,978 shares been accumulated by strong hands.. It seems the strong hands have accumulated shares from the open market from other small shareholders

HNI(High Networth Investors) holding more than 2 lakh face value shares(1 lakh shares as manugraph is Rs 2 face value shares):
March 2016: No of shareholders: 6, No of shares:11,57,701 shares,  Percentage: 3.81%
March 2017: No of shareholders: 9, No of shares: 19,85,969 shares, Percentage:6.53%
3 people have added: 19,85,969 - 11,57,701 = 8,28,268 shares (@ 50 worth 4.14Cr)

No of small shareholders (holding less than 2 lakh face value shares):
March 2016: No of Shareholders:11,574, No of shares:69,09,845 shares, Percentage: 22.72%
March 2017: No of shareholders: 11,411, No of shares:70,32,023 shares, Percentage: 23.12%

Even in small shareholder category..as the no of shares has increased by 1,22,178 shares, number of shareholders has reduced by 163 shareholders (11,574-11,411=163) there is consolidation at  all levels..

So from what I see Big money is accumulating Manugraph shares..

If you look at the charts.. manugraph has just turned bullish after 8 long years..
200Day EMA (Exponential Moving Average) has moved Above 999 Day EMA (kind of Extra Long Golden Cross)  [Golden Cross is when 50Day EMA moves above 200Day EMA]

Conclusion: On the face of it Manugraph seems to be still in doldrums.. with losses being reported and with Manugraph Americas filing for bankruptcy.. and Workers going on a strike..

But looking at the shareholder data.. there are some big investors who have accumulated Manugraph shares and technically also the share seems to be growing stronger every day..

We as investors have to decide what does our conviction say? I would personally say Buy!!

PN: This is not a recommendation service.. I maintain this blog to review my own thought process and investment logic... Please do your own deep dive before investing