Electrosteel Casting Limited cmp Rs167-168 FV(Rs1) : Diwali Pick 2024

Electro steel casting Ltd is my Diwali pick 2024 for my blog followers. The Company is engaged in the business of manufacturing Ductile Iron (DI) Pipes, Ductile Iron Fittings (DIF) and Cast Iron (CI) Pipes. The Company is the first to set up a Ductile Iron Pipe Plant in India. Today, it is India’s leading pipeline solution provider. It has a strong brand presence around the Globe. Since 1994, the Company has maintained its edge over its competitors. Owing to the high reliability and durability of its products, the Company has always remained the distinct choice for water engineers and domain experts in Ductile Iron Pipes and Fittings. Application : 1.Raw & clear water transmission distribution network of potable water : Benificiery of growing urbanisation. 2. Sewage & waste water distribution 3.Industrial effluent disposal Industry Outlook India is witnessing an unprecedented era of economic progress and India today is competing with developed economies in the world and its growth is expected to hover around 7–8 per cent for next few years. Regarded as one of the fastest for growing major economy, India is thriving hard to achieve the ambition of becoming an $5 trillion economy. A steady growth in Gross Domestic Product has been witnessed for more than two decades, which is continuing. India, home to 16 percent of the world’s population, has only 2.5 percent of the worlds land area and 4 percent of the world’s water resources at its disposal. This is also declining in terms of quantity and quality. Drinking water was once considered safe in India, but today providing nearly 1.40 billion inhabitants with access to safe drinking water is a big challenge. The alarming rate of depleting groundwater sources and rapidly polluting surface water requires immediate and focused attention by all stake holders. The demand for water has been increasing at a high pace in the past few decades. The sustained economic growth has triggered more industrialisation and rapid urbanization all over India. With only around 31% of India’s population currently urbanized, along with high population density, India’s urbanization trends have scope to significantly accelerate and likely to be around 40% by 2030. The rural India is still remaining largely uncovered with piped water network Alongside only about one–third of the Indian homes are connected with a sewerage network. This staggering problem has pushed the Govt. of India to initiate the largest ever water supply initiative anywhere in the world, the ‘Jal Jeevan Mission’, with an aim to connect all the rural house hold with piped water. At the same time AMRUT mission has been initiated to augment the urban water supply and sewage disposal. To cater to this growing need, the Indian pipe and fittings market is growing at a fast rate for more than a decade now. Under the ‘Jal Jeevan Mission’, India has undertaken a very ambitious initiative and is already geared up for major expansion in water supply and distribution infrastructure in all the states. The total outlay of AMRUT 2.0 is Rs. 2.99 lakh crores. Further growth in pipe demand is expected from AMRUT 2.0 in the coming years. Demand for Pipes Sewerage At present only about 30% of the waste water generated in India gets treated. Meanwhile with rapid urbanisation, the sewage generation in India has witnessed an increasing trend over the past few years registering a CAGR of about 4.7%. The government has been instrumental in introducing a plethora of programmes and schemes over the past four–five years. The main aim of these programmes is to improve the wastewater and sewerage infrastructure in the country. Currently there are more than 1200 projects envisaged under different government programmes such as AMRUT 2.0, Swachh Bharat Mission, Namami Gange Programme and Smart Cities Mission. For sewerage force main DI pipe is the best choice. Even for gravity collection network, use of DI pipes with High Alumina cement lining is increasing. Demand for Water in Irrigation Precipitation in the form of rain and snowfall provide over 4,000 trillion liters of fresh water to India. Most of this freshwater, returns to the ocean via the large rivers flowing across the subcontinent. A portion of this water is absorbed by the soil and is stored in underground aquifers. A much smaller percentage is stored in inland water bodies both natural (lakes and ponds) and man–made (tanks and reservoirs). Of the 1,869 trillion litres of water reserves, only an estimated 1,122 trillion litres can be exploited due to topographic constraints and distribution effects. With a very limited storage capacity, farming activity in India is mainly sustained by irrigation. We need more water for irrigation to feed the growing population. Traditionally, irrigation in India has been mainly canal based. However, now there is a growing acceptance of piped irrigation to minimise the transmission loss due to percolation and evaporation and to avoid the complication of land acquisition. In many states a good number of Piped Irrigation Systems are coming up and other states are following. This has opened good scope for use of pipes and fittings in the irrigation sector in the last few years and the same is expected to grow. Financials

At current market cap of approximately 10500 croresit generated net profits of approximately 740 crores on FY 23-24 AT AN EPS of Rs 12.30. ROCE 19.0% & ROE 19.3%. Net Debt equity ration 0.27:1. Consistent & rising dividend paying record since last 4 yrs.Last year dividend of Rs 1.40

Investment rationae 1.continuous improvement in net debt to equity ration reduced from 0.50 to 0.27 in last 3 yrs. 2.PAT Margin percent has increased to 9.8% 3.Capacity expansion planned from existing 7.48Lakh MT to 10 Lakh MT by 2026 through internal accurals.Already spent 440 crores. 4.Expansion to contribute to revenue growth & profitability in next 2 yrs. 5.H2 Results are impressive YOY revenue growth of 4.3% 3564 crores(reported) at an EPS of 5.89 against last year H1 EPS of Rs 4.45 resulting in 32% growth in PAT . 6.Indian DI pipe mkt is expected to grow at CAGR 12.5% over next 5-7 yrs offers great oppurtunity for ECL to grow. 7.Benificiery of Jal Jeevan Mission.

At and eStimated FY24-25 EPS OF Rs 15 stock is availaible at very attractive valuations looking at growth potentiel and a unique thematic product line stock has potentiel to create new highs.

Diwali pick 2024 soon on my blog

Dear followers thanks for your continued trust Ratnaveer Precesion my 2023 Diwali pick has touched Rs200 hope you all continue to hold. My 2024 Diwali pick shall be soon shared on this blog ... Happy Deepawali Thanks Regards

2023 Diwali pick: Ratnaveer Precision Engineering Limited

Ratnaveer Precision Engineering a recently listed company is my 2023 Diwali pick for my valuable blog follower s.IPO had come at around Rs 98 price.

It is India’s leading stainless steel washers manufacturer & supplier manufacturing  around 4000MT PA.Stanless steel is becoming more popular because of its anti corrosion property and food safety in the food ,engineering 

Company has recently registered a business unit in Dubai UAE,which indicates company's Long term vision to expand.

1. Ratnaveer produce more than 2500 washers in different sizes and international standards.

Apart from special washers & nuts they also manufacture 

2. stainless steel sheets(used elevators,malls,Pharma & food packaging industries)

3. stainless Steel pipes and tubes.

4. solar mounting hooks.

Product applications:

Products find application in  escalators, conveyors, bus stands,malls, food, Pharma packaging machines, solar panels etc.

All products have rising demand for domestic & export 

 During the last five years, the company is regularly expanding its infrastructure and facilities and has achieved a decent Compound annual growth and targeting to achieve 850+crores turnover in next 2 years through capacity expansion.

Fundamentals

Current Mcap : Rs581 crores 

ROE:28%

PE : 15

Financials:

Post listing company has delivered H1 results and achieved turnover of 260 crores and earned EPS of 3.97 in H1 resulting in a 17% growth over the previous year .On an estimated basis the company should deliver revenue of Rs540 -550 crores in FY23-24 at conservative EPS estimate of 9 the stock is available at forward multiple of around 14 .

Companies which are into precision steel component manufacturing such as Rolex,Harsha, steel tube manufacturers enjoys much higher PE multiples in current scenario.

Application of products is very wide and in diversified industries makes it A proxy to engineering, industrial,solar panel(Renewables),auto, etc 

Looking at growth potential and expected margins improvement in future stock looks very attractive

Gulf oil Lubricant India limited : A consumable play in Auto & Industrial segment CMP Rs562 TP Rs 785

 

About Company 

Gulf Oil Lubricants India Limited (GOLIL), part of Hinduja Group and Gulf Oil International, is one of the leading players in the lubricant market in India and has a top 2 / 3 position in key segments amongst the private sector brands. GOLIL has a wide range of world class-leading products in the automotive and industrial lubricants space catering to B2B and B2C segments with a growing distribution network. The brand has tie-ups with around 40 OEM's and is a leader in the direct sales network to industrial, infrastructure and institutional customers, and exports to over 25 countries. 

Gulf Oil India is one of the prominent manufacturer and marketer of quality Adblue product range and is one of the preferred supplier of many automotive OEMs. Along with automotive and industrial lubricants, greases, They Have a Top 5 share in the 2-wheeler batteries replacement segment. In India, 

Gulf oil has a strong manufacturing and R&D bases with two plants in Silvassa and Ennore, Chennai. The brand is working towards being future-ready to offer additional mobility solutions and has recently tied up with Indra Technologies- UK based charger/mobility company and ElectreeFi, an EV SaaS provider to drive the change. 

Today, globally the Gulf brand is present in more than 100 countries across five continents. The Gulf Oil international Group's core business is manufacturing and marketing an extensive range of over 400 Performance lubricants and associated products for all market segments.

Gulf enjoys a strong brand recall built through association with brand ambassadors like Mahendra Singh Dhoni, hardik Pandya, Smriti Mandhana, Chennai Super Kings coupled with global sporting partnerships like Williams

AdBlue® is a diesel exhaust fluid used in vehicles with Selective Catalytic Reduction (SCR) technology to reduce harmful gases being released into the atmosphere. AdBlue® is solution of high-purity, synthetically manufactured urea in de-mineralized water. It is a safe-to-use fluid.

Financials

Gulf oil Q1: results topline grew by approximately 15% and net profit grew by 23% thanks to lower RM prices. adlube brand which is a consumable to reduce engine exhaust pollution is received by the market well and seeing good demand and contributing to the growth of company, diversifying and focussing on EV ,also industrial lubricant segment catering to,engines,compressor, bearing,marine,turbine segment will see a rise in demand due to higher domestic manufacturing activities & expansion 

Promoter holding:72%

ROE: 21%

ROCE:24%

Last Dividend: Rs 25

Face Value :Rs 2

Gulf oil  came with buy back offer last year at Rs600 current price after becoming ex dividend is less then the last buy back.Looking at trend it has potential to deliver EPS of Rs 52-55 for year 23-24 based on estimated EPS stock is available at forward PE of just 10-11.

Long term investors may accumulate on dips for one year TP of Rs 785.

DODLA DAIRY LIMITED : A Milk product company of south India A value pick at CMP Rs 495

 

Face Value : Rs 10

Current Market cap :2949 crores

ROE :15.74

ROCE:19.1%

Promoters :62.21%

Sector : Dairy(FMCG)

About Company : : Founded in 1995, Dodla Dairy Limited is an integrated dairy company based in South India. Processes and sells milk and produces dairy-based value-added products viz. Curd, ice-cream, butter, Ghee, Paneer, Youghurt, cheese, Paturised pouch milk, UHT Milk. Currently, Dodla procurement is centered in 5 states(Telangana,AP,Karnatka,TN and products are available for purchase in 13 states. Total 15 milk processing plants in India &Uganda, It has 113 milk chilling centers,1300 plus milk product distributors,2700+ distribution agents,555 Dodla retail parlours. selling value added products.

               

Dodla Dairy got listed on bourses after successful IPO in June 2021 (at IPO price of 428).Later in 20222 it acquired Sri Kisna Milk (P) Ltd,

 

Financials :

 

Rational Investment:

1.       3^RD Largest player in south India in terms of  milk procurement.

2.       The Company enjoys a debt free status and is steadily expanding its capabilities and capacities which is reflected in the growth of Non-current assets from FY19- FY22.Dodla Dairy is investing heavily in expanding its range of value-added products, a move that is anticipated to boost margins. It has invested significantly in value-added products such as Curd, Ice Creams, Flavored Milk, Lassi, Butter Milk, Yoghurt to name a few.

3.       The rapid economic growth and urbanization have resulted in a fundamental shift in consumer preferences and food preferences

4.        Consumer desire for branded, healthier, and more nutritional alternatives is growing

5.        Rising disposable incomes driving demand for value added dairy products

6.       Global presence Uganda + Kenya.

7.       Topline growth at CAGR 14% over last 10 years.

8.       Recovery &Improvement in EBIDTA margins in Q2 vs Q1(22-23)

 Market cap almost = year sale(2023E)

Target Price: FY 21-22 Revenue 2243 Crs EPS 22.24,H1FY-222-23 achieved 1412crs resulting in 31% YOY growth. FY-22-23 Estimated revenue 2900Cr ,expected EPS 24-24.5 Management is targeting 15% CAGR  for next 3 years  going forward the earnings and profitability is expected to grow proportionality ,with expansion in margin with increase in VAP ,next 3 years EPS could grow proportionately to ,28,32,37. At CMP of Rs 495 stock is available at forward PE of 20 which is low and attractive for FMCG company. .Going forward PE expansion and rising EPS could take this stock at much higher levels in next 3 years. At next year expected EPS of 28 & at a forward PE OF 25 stock has potential to touch Rs 700 in 1 year.

Recommended to accumulate(SIP) only for Long term investors on all dips with target price of Rs700

 

 

Mallcom (India) Limited cmp Rs 682 A largest manufacturer & distributor of PPE Products Target Price Rs 950

 

Face Value  : Rs 10

Equity :6.24 Crores

current Makt cap : Rs 425 crores

Sector : Industrial products

About Company: Established in 1983  Mallcom (India) Ltd. is India’s leading Personal Protective Equipment (PPE) brand has grown to become one of the largest Indian Player. Having a presence in more than 75 countries on 6 continents, Mallcom has established itself as the integrated manufacturer and distributor for head to toe protection and is a valued partner for major importers in their brand name. . Mallcom has captive test labs in each of its production units that manage standards and ensures quality. Continuous  investment in upgrading and innovation in the lab has helped Mallcom to customize and develop PPE’s faster in sync with the changing safety requirements of the workplace.

An ISO certified and government-registered star trading house, Mallcom produces numerous product categories covering head to toe such as helmets, face masks, garments, rainwear, leather gloves, nitrile gloves, and safety shoes.  Mallcom also deals in eyewear, ear protection,harnesses .

PPE Products : PPE is Personal Protection Equipment concerning occupational safety. It’s application could be in medical science, in a factory, on a road, mining  or in a kitchen. India had a very low awareness and focus on safety since it adds to the cost of operations, Thanks to growing numbers of MNC and large Indian companies which brought new focus on mandatory use of safety and related products which has resulted in growing demand of safety products across all sectors. Some of these widely used products like, hand gloves and safety shoes are subject to wear and tear hence there is always a repeated demand from the end user.

 

Manufacturing units : Mallcom has 13 manufacturing facilities spread across Bengal, Uttarakhand(Haridwar) & Gujrat(Ahmdabad)

Product Revenue Mix :            Annual Capacity

1.Saffety shoes : 35%                              3Million

2.Garments : 27%                                    2.2Million

3.Leather Gloves :24%                             12Million

4.Nitrile Gloves : 8%                                  14 Million

5.Others(Helmets,Mask) : 6%

 

Domestic Business(32%): Till 2008 Mallcom was 100% EOU in last 14 years domestic business has grown to 32% of total revenue and more awareness , focus on safety and capacity expansion by existing industrial sectors  the domestic business is set for continuous growth.Indian PPE market size is expected to grow at CAGR of 16% till 2026

Export Business(68%): Mallcom has been exporting to emerging markets in the far east,South Pacific,Africa,Middle East and Central America.It intends to expand its presence to USA,Australia and UK.Europe constitutes to  65% of export revenue.

Financials :

Mallcom has established a track record of robust financial performance with  growth in revenue from operation through backward integration and capacity expansion  With an annual turnover of about Rs357 Crores in FY 21-22

Investment Rational:

Domestic market of PPE is currently 1500 crores of size but mostly fragmented and is likely to be more than Rs 5000 crores in next  few years( as per the management estimation) and as stated Indian mkt size could grow at compounded rate of 16% in next 4-5 years resulting in huge business possibilities in India. As per management company is also witnessing early effects of China+1 policy due to increasing lock downs in China leading to their supply chain constraints as well as economic issues and lack of stable government in neighboring countries such as Sri Lanka, Pakistan and Banglasdesh.

Q-1(FY22-23)  Revenue was up  42%  from 61.5 Crs to 87.4 Crs

EBIDTA Margin improved to 13.62%

Q-1(FY22-23) PAT grew by 38%

New trade deals signed with UAE & Australia to help create new markets for Mallcom

Market cap at cmp(Rs 682) is just 425 crs on equity base of Rs 6.24Crores

Promoters Holding : 73.78% very high

Consistent Dividend paying record and almost debt free status

Fy 21-22 Revenue 357 Crs EPS 50.57 Management has given conservative revenue guidelines of Rs 410 crores for FY 22-23 which could result in EPS of Rs 55 for current year thus stock hold lot of value at forward PE of 12.5 at cmp of Rs 682.

Stock was initially discovered and recommended by me in 2019 at then price of Rs 190  in 3 years stock touched high of Rs 1079 resulted in 5x returns in 3 years

Recommended to accumulate only for Long term investors on all dips with one year target price of Rs950.

ACCUMULATE

 

 

 

India Pesticides Limited (1Rs) : Ongoing & Future expansions to take company to new highs CMP Rs 302-305 : A Potential Multibagger

 India Pesticides Limited

Face Value of Share : Rs 1

Equity : 11.52 crores

Current Market cap : 3500 crores

ROCE :45%(2021)

ROE : 34%(2021)

About Company: India Pesticides Limited is one of the fastest growing globally operating chemical manufactures in India established in 1984, India Pesticides has pioneered the manufacturing of both Technicals & Formulations in Agro-Chemicals and Active Pharma Ingredients mainly for dermal application.

IPL is Sole Indian manufacturer of five Technicals and among the leading manufacturers globally for Captan, Folpet and Thiocarbamate Herbicide, in terms of production capacity  It’s diversified portfolio of niche and quality products along with value-added services makes it  a strategic supplier for US, Australia, Europe, Africa, South America and Asia.

Technicals (62%)  : Commercial form of the relatively pure active ingredients used for manufacturing formulated agro chemicals products. Herbicides, Fungicides, Insecticides & intermediates.

Formulations(28%): Final form of crop saving pesticide, which contains one or more technical grade ingredients in definite proportion.

API(Active Pharma Ingredients (10%) : Substance or part of any medicinal drug that produces the intended effects used in a finished pharmaceutical product. Anti Fungal Drugs,Anti scabies drugs

Manufacturing units                                             Capacity

1.UPSIDC ,Lucknow :        2100 MT PA (Technicals)    3000MT(Formulations)

2.UPSIDC Sardila              18900 MT   (Technicals)       3500MT (Formulations)

 3.Hamirpur : Coming up                    30000 MT 

Domestic Business(47%): PL distributes its products through network of over 20 sales depot spread across Pan India. All the sales depots are well connected with warehouses spread across 15 states. Overall domestic market is managed by our sales force located at 20 branches offices across India. 4712 Dealers and they are working on to increase presence in more number of states because  technical are also growing. 

Export Business(53%):IPL exports its products to more than 40 countries across the globe at regulated markets in US, Australia, Europe, Africa, South America and Asia,  dedicated Business Development Team members located in Europe and the United States focuses on expansion of distribution network.

Key Clients:

1.UPL  2.Stotras  3.Syngenta  4.Sharda Crop-chem   5.AscenZa Agro  6.Conquest Corp  7. Adama

Financials:

IPL has established a track record of robust financial performance with 90.48% growth in revenue from operation between FY19 to FY21. With an annual turnover of about Rs. 650 crores (FY 20-21)

Growth Drivers:

1. Expansion of existing facility and new manufacturing plant to drive higher production in the future

2. Continuous expansion of product portfolio on an ongoing basis to ensure significant business growth

3. Backward integration to reduce dependence on import of raw materials and covering entire stage of production

4.  Growing demand across India and globally in agrochemical and agricultural industry

5. China plus one policy being adopted by companies across globe

Risks :

Rising crude oil and commodity prices may impact margins in case of inability to pass on to customers

Investment Rational :

    IPL is almost a debt free and enjoys very high margin, it has grown from 230 crore (2016) to approx 700+crores(expected 2022) in just 6 years with consistent increasing profits. IPL has major expansion plans post IPO and some planned expansions in existing units has already been completed and new facility at Hamirpur is expected to be operational in 2023.It has already achieved revenue of 538 crores in FY2022 for 9 months ending December2021 and is expected to close year with 700+ crores  with expected EPS of 16-17 .Looking at planned expansion ,very high profit margins and strong growth potential from export and domestic, management is confident of achieving 20%+ growth in next 3 years. Stock is availaible at much cheaper valuations as compared to other listed peers. From 1 year point of view it can deliver EPS of Rs 20-21 in FY22-23 and at PE multiple of 20 stock can touch Rs 410-420 in 1 year.

Long term investors may buy at cmp of Rs 302-305 and accumulate on dips.