2010VP10 SPANCO

Spanco  BSE: 508976
(16.04.2010) CMP Rs. 85.25 Market Cap Rs. 239.25 cr Book Value Rs.116.98
TTM(4Qtr) SPS Rs 364 OPS Rs. 50 EPS Rs. 17

Spanco Ltd has informed BSE that the Board of Directors of the Company at its meeting held on April 23, 2009, inter alia, has transacted the following business:
1. Board has considered and approved the proposal of raising of funds / resources up to Rs 35 Crores by offering and issue of 100,00,000 (One Crore) equity shares of Rs 10/- each at a price of Rs 35 (inclusive Share premium of Rs 25/-) per share on preferential basis to Promoters / Foreign Venture Capital Investors / Foreign Institutional Investors, in terms of provisions of Chapter XIII of the SEBI (DIP) Guidelines, 2000.
2. The Board has approved the draft notice convening an Extra-Ordinary General Meeting of the Members of the Company on May 23, 2009 for seeking members` approval for the aforesaid preferential issue of Rs 35 Crores.

The increase in stake around 71 lakh shares during May June 2009 was made by Promotors(up 3.92%), Domestic Institutional Investors(up 19.8%) and Foreign Institutional Investors (up1.9%)investing Rs 35 crore at around Rs 40 a share.
The interesting thing here is that after the overhealming pick of shares the shares moved just 100% to Rs. 86 considering only hike in stake
The improvemement in margins 5% in 2009-10 from 3% in 2008-09
the increase of over 80% in turnover (2009-10 when compared to 2008-09)
the increase of over 225% in net profit & EPS (2009-10 when compared to 2008-09)
is never built up in the stock

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Target for 2010
Tot Revenue Rs 11950 million (up 79.7%)
Op Profit Rs 1560 million (97.6%)
Net Profit Rs 601 million (300%)
NPM 5.05%
Projected EPS 21.39 Book Value 133
at CMP 91.25 M cap is 256 Cr
PE 4.3x (eps of 2010)

the stock trades at P/BV of 0.686x nd Mc/Sal 0.21x
as against peer PE 18.9x P/BV 4x of nd Mc/Sal 3x
At Projected EPS of Rs 21 for 2009-10 the share trades at Rs 86 at PE of 4.1x and below its Book Value of 133
we may expect a price target of Rs 269 by Oct 2011 at PE of 16x eps of 21 for 2009-10 considering a payout of Rs 3 per share with a bonus of 4:1

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Distribution of shareholding of Spanco 31.12.2009 Particulars Nos Qty Shares %to Cap

Indian Promoter and Promoter Group 10 105.90lakh 37.73
Freign Institutional Investors 8 35.18lakh 12.54
Foreign Venture Capital Investors 2 55.86lakh 19.90
Bodies Corporate 310 36.85lakh 13.13
Individual shareholders LT 1 lakh 6,115 17.25lakh 6.15
Individual shareholders GT 1 lakh 36 16.68lakh 5.94
Any Others (Specify) 101 12.91lakh 4.60
Non Resident Indians 78 1.84lakh 0.66
Clearing Members 21 0.11lakh 0.04
Trusts 2 10.96lakh 3.91

Total 6,661 28,065,000 100.00

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Kapil Puri to Moneycontrol

Q: Where is the growth come in from and more importantly how is your Information & Communications Technologies (ICT) business doing because that is what the analysts on the street are more gung-ho about?
A: From last couple of years, we have been focusing primarily on the government account. In the government business, the cycle is little long for getting the project as well as the execution. If you compare, last year was bad year because of all global issues. We also became little defensive in choosing the projects, especially because of the liquidity issues as well as the stretched cycle for the government accounts.
Since we worked hard on the government accounts both vertically and horizontally in different segments – that is what the results are coming now. Primarily, the focus has been the central and the state government project and largely as you all are aware that last one year government has really pushed up buying, especially in the IT segment. So that has resulted in our company getting boost.

Q: Could you give us a quantum exactly that you have got from the Orissa government account currently and also are you expecting any more orders from that front?
A: The focus was in couple of state governments. Orissa, Maharashtra, Andhra Pradesh and Haryana had been there. Orissa we have backed not only state wise area network, we are also doing their horizontal connectivity. We have also got the state data centers. We are also very close to getting state data center in states for Rajasthan and Haryana.

Q: Could you quantify this for us? How much does this sum up to exactly?
A: Each state probably would turnout to be account of Rs 150-200 crore for us whereas the numbers are concerned and then it all depends how well we do horizontally. When I say horizontally, it is moving deep into the other state government accounts, other departments in the state.

Q: What is your current order book at?
A: Current order book is quite healthy and with around 70% growth, which we have done. For the next four-five quarters we will be able to maintain that.

Q: At Rs 150-200 crore?
A: No, I am talking about the growth year-on-year (YoY).

Q: Can you throw a figure in terms of what your order book is at as of date?
A: I don’t want to comment on the numbers at this stage but our results will continue to show 60-70% of growth

2010VP09 Empee Distilleries

Empee Distilleries  BSE: 532920  NSE: EDL
CMP 127  market cap Rs 240 crore

The presently engaged into manufacturing of Indian Made Foreign Liquor (IMFL) products under our own brand portfolio as well as under various tie-up arrangements with other Companies. Have facilities to manufacture various IMFL products in our Distillery Units set up at Mevaloorkuppam, Kanchipuram District, Tamil Nadu with an installed capacity of 30.24 Lakh cases per annum and at NIDA,  Kanjikode, Palakkad District, Kerala with an installed capacity of 30.00 Lakh cases per annum.
Had gone in for raise fund through issue of 48 lakh shares in Nov 2007 for meeting requirement of
1. Setting up of 60 KLPD Grain Based Distillery Unit  at Andhra Pradesh.
2. Setting up of Blending & Bottling IMFL Plant at Nellore District
3. Setting up of 7.5 MW Bio-mass based Power Plant at Tamil Nadu
4. Development of 2.00 Lakhs sq.ft. of residential space inKancheepuram, District Tamil Nadu
5. Expansion of our Existing Distillery Unit situated at Kanchipuram by augmenting the capacity of our Extra Neutral Alcohol Plant from 20KLPD to 70KLPD
6. Expansion of our Existing Distillery Unit situated at Kanchipuram by augmenting the capacity of the said distillery to handle 5.00 Lakh cases per month from the present 3.20 Lakh cases per month.
7. Relocation of Plant & Machinery purchased from Appollo Alchobev Limited to Karnataka along with expanding the existing capacity from 0.50 Lakh cases per month to 1.00 Lakh cases per month.

Present performance
Turnover 869 cr ( 2009-10)
OpProfit 46.1 cr
NProfit 21.8cr

EPS 11.45
Dividend Rs 5 a share
Book value Rs. 123.8
MCap at CMP 124.9 Rs 237.33cr
PE 10.81
Market Value of Investment Rs 100 cr in sugar co excluding Rs 146 cr being invested

Entreprise Value 750 cr (450 cr + 300 cr investment in progress)

Considering these parameters below and the expected EPS of 16 -18 for 2010-11,  the share (127) is now ruling at about PE multiple of less than 8 of forward earnings for 2010-11


Other similar midcap distilleries companies are ruling at a PE multiple of 20, while the larger ones are ruling at a PE multiple of 35 to 40.” Upside 700 cr at expected price of 365-400

Investment rational
Distellery Investment (on going)
The company is setting up a brewery unit with a capacity of 2.5 lakh hectolitres per at Sanga Reddy in Andhra Pradesh. Empee has purchased land for the project and is in the process of finalising orders for the supply and erection of plant and machinery. The project, scalable to 5 hectolitres, is expected to be completed in Sep 2010.

The company, through Apollo Alchobev, another group company, is setting up another beer-making facility in Tamil Nadu with a capacity of 5 lakh hectolitres and expandable to 7.50 lakh hectolitres.

Meanwhile, Empee Distilleries has drawn up a Rs 200-crore investment plan in Distilleries for the current fiscal. The plan includes backward integration and setting up new projects in Karnataka and Andhra Pradesh. Funds for the expansion plan would come through debt, equity and internal accruals, according to the company’s joint managing director Nisha Purushothaman.

The distillery major is setting up a 60 kilolitre per day (klpd) grain-based distillery at Sanga Reddy in Andhra Pradesh. The company has placed orders for supply and erection of plant and machinery with Praj Industries and the project is expected to be completed by June next year, Purushothaman added.

Empee has also acquired a bottling unit in Karnataka and is relocating the plant from Whitefield, Bangalore to Kolar in Karnataka. All the necessary statutory clearances have been obtained and the relocation is expected to be completed by end of the current fiscal.

Empee Sugar (75% subsidiary)

Empee Distilleries Ltd has recently invested an amount of Rs 146.85 crore for investing in in Empee Sugars & Chemicals Ltd to part finance Rs 515-crore integrated sugar mill project coming up at Tirunelveli in Tamil Nadu.
Empee Sugars is setting up a 5,000-tonne-a-day sugar mill, 50 MW cogeneration plant and a 100-kilolitre-a-day distillery at the integrated sugar mill complex

Infrastucture

They have about 17 acres of land in Shreeperumbur, which they are developing and which in an area of about 12 lakh square feet. On that the company is hopeful of generating a cash revenue of about Rs 150 crore over next two years because the project is in advanced stage of implementation, the 150 crore cash flow is likely to come in FY11 and FY12.

Given the fresh stronghold which the company enjoys in the market and the proposed expansion in the other parts of the country with a dividend of 50%, this company has got intrinsic value of the real estate subsidiary, which is building 100 apartment complexes close to Chennai besides developing other properties in Chennai and also White Field in Bangalore and expected revenues of close to Rs 950 to Rs 1,000 crore for FY11.


Risk
The  company which has 1.9 cr outstanding shares as on 31.03.2010 came out with IPO for 48lakh shares at Rs 400 a share . The price is southbound since then (400 to 125) and as on 31.03.2010 56 lakh shares ae held by public The promotors may consider buyback of atleast 10 % shares ie 19 lakh share to boost prices

Opportunities
The Company which is valued more than Rs 450 cr (my estimate) is quoting a Market Capitalisation of only Rs 240 cr which is meagre valuation considering the value of investment in Empee sugar valued at Rs 100 cr (excluding Rs 146cr being invested ). Promotors are investing close to Rs 300 cr in Distillery business and Sugar business which will take entreprise value close to Rs 750 cr.
The promotors shall scale up prices as the total promotors investment in entity shall be Rs 560 cr and prices has to move up to Rs 365-400 by Dec 2010

2010VP08 Surya Roshni Ltd

Surya Roshni
BSE: 500336 NSE: SURYAROSNI ISIN: INE335A01012

Face Value : Rs 10.00 - CMP : Rs. 83.40 - Market Cap : Rs. 216.7 Cr - Book Value : Rs. 75.93
EPS (TTM) 8.8 - P/E 8.12 Industry P/E 12.96

Surya Roshni Ltd has emerged today as a vast conglomerate with the largest ERW pipe manufacturing plant in India, a large cold rolling strip mill at Bahadurgarh (Haryana) and two lighting units one each at Kashipur (UP) and Malanpur (MP) producing fluorescent tube lights, GLS lamps, CFL lamps, HPSV Lamps, HPMV Lamps and Metal Halide Lamps. It is the second largest seller of GLS and FTL in India. The company has manufacturing units at Bahadurgarh in Haryana, Kashipur in Uttar Pradesh and Malanpur in Madhya Pradesh. SRL has two subsidiaries abroad, i.e. Surya Roshni, USA and Surya Roshni (HK), Hong Kong. The company also markets a wide range of Luminaires and Accessories, High Mast Lighting Systems, Lighting Poles, Decorative Poles and MCBs. Surya is the only lighting company of India with 100% backward integration. It is the single largest manufacturing company of Lamps in the country.The company is a pioneer in this industry to have implemented the concept of total quality management. Both the plants have deservedly won the ISO 9001:2000, ISO 14001:1996 and OHSAS18001:1999 certifications. Surya GLS also conforms to prestigious European safety standards - "CE" & TUV Bauart. Surya exports its products to 40 countries. IOCL, OIL, Essar Projects, GAIL, EIL, Reliance Petro, ONGC and L&T are some of the major customers of the company for steel pipes.

It`s turnover ending March 2009 is around Rs.1700 crores (more than USD 360 Million)Surya possesses two state-of-the-art plants at Malanpur and Kashipur for lighting products set up in 1984 and 1992 respectively. The company has a wide marketing network with its branches and dealer and retailer outlets spread across the length and breadth of the country. Over the years, Surya has built up a strong sales network of 30 branch offices, over 1,500 dealers and more than 40,000 retailers.

Surya Roshni is a company which is broadly into two business segment, Steel and lighting. Sales for first 9-month are close to Rs 1435 crore, profit after tax is Rs 16.25 crore and cash profit is Rs 37 crore. Equity capital of the company is just about Rs 26 crore which gives it a market cap of about Rs 217 crore. This company has got a 20-year track record of uninterrupted dividend payment. Company is very rich in assets and has a huge land bank in Bahadurgarh which it is planning to develop as a real estate.The company does sales of Rs 1700 crore in last year and this year (FY10) it is going to be close to Rs 2000 crore. Market cap of the company is just about Rs 190 crore and sales to equity is just about 60 times which means even a 1% increase in net profit margin would increase its EPS by close to Rs 6-7.Company has started a new plant in Gujarat which makes spiral welded pipes and this is again going to add to the topline and bottomline of the company in FY11.

Surya Roshni has raised its steel pipe capacity from 3 lakh tonne to 4 lakh tonne. The company is putting up a steel plant in Bhuj at a total outlay of Rs 600 crore for the year. JP Agarwal, CMD, Surya Roshni, says all required funds have been tied up. “We have raised preferential shares, including internal accruals, to fund this plan.” Going forward, Agarwal expects the lighting business to clock 50% growth. He also expects the steel business to grow by 20%. “This fiscal we will touch Rs 2,100 crore revenue versus Rs 1,700 crore last year.”He says 2011 will be much better year post steel pipe units coming on-stream. “Revenues will be substantially higher than Rs 2,600 crore in FY11

Surya Roshni expects more than double growth in its turnover at Rs 5,000 crore in financial year 2011-12 from the projected turnover of Rs 2,000 crore in current fiscal. He said Surya has already invested Rs 550 crore to set up two steel pipe manufacturing plants in Gujarat and Madhya Pradesh.

Subsidiary Investments

Surya Roshini, a Gujarat based company and a lighting and steel pipe solutions provider is diversifying into Steel & cement production.The Group plans to set up a five million tonnes steel plant with an investment of Rs 20,000 crore in Karnataka. The initial proposal is on for selection of area and term of funding.

It is in advance terms for setting up a 20 lakh tpa cement plant with an investment of Rs.1100 crore and it is likely to go operational by 2012. According to sources, proximity to ports, availability of raw materials and fast track clearances made the company to foray into this sector. The company has formed a subsidiary Surya Global Cement Ltd to implement the project.

As against such big plans for the company to achieve a turnover of Rs 2600 cr for 2010-11 and Rs 5000 cr in 2011-12 as against projected turnover of Rs 2000cr for 2009-10. The projected PBDT is likely to be Rs 60 crore for 2009-10, Rs 104 cr for 2010-11 and Rs 247cr for 2011-12.

At the current market capitalisation of Rs 217 crore the P/E for various years are as follows

Year NProfit PE at Rs 84

2009-10 23.4 9.34 (shares outstanding 2.6 crore shares)

2010-11 57.2 5.73 (expects capital expanded to 3.9 crore shares)

2011-12 178.8 2.45 (expects capital expanded to 5.2 crore shares)

so it looks to be a safe investment given the fundamentals, the cash earnings and the cash flows.

Peer PE is around 13x . expecting an improvement in OPM & NPM due to availability of raw materials at cheaper price from (steel venture) and overal improvement in performance

Based on PE of around 13x one can expect upside of 120-130 % in 2010-11 and 320-330% in 2011-12 from current price of 83.4 with extremely restricted downside risk.

Trend Electronics Updates

Ashok Kumar Parmar who owned 962,486 (12.83 %) shares in Trend Electronics have almost completed exited the stock at around Rs 45 in March 2010
Institutional Investors have picked stake from Ashok Kumar Parmar (in March 2010)
31.03.2010 Evans Fraser And Company (india) Limited Bought 112000 shares at Rs 47.27 a share
25-Mar-2010 Lotus Global Investments Ltd. BUY 367500 37.00
25-Mar-2010 Joy Holdings Pvt Ltd BUY 367500

As per annual accounts the 2008-09Total Income Rs 828.6 crore (Rs. 1104.8 a share)PBIDT Rs 27.85 crore (Rs. 37.13 a share)PAT Rs.3.62 crore (Rs5.32 a share). The pledging of 25 lakh share of videcon industries limited not disclosed in accounts

Instutional Pick of around 13% shares is positive for the company