English Indian Clays Ltd:
The Co-generation Plant, Starts Operation and could further get huge benefits, under Clean Development Mechanism (CDM):
BSE Code: 526520
Face Value: Rs.10
EPS: Rs.41
Dividend: 70%
P/E: 6.61 (only)
Market Cap: Rs.122 (only)
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Introduction: English Indian Clays Ltd (EICL) was incorporated on 18th November 1963, in technical and financial collaboration with English China Clays Limited, UK (now known as ECC Group plc, UK). The collaboration with ECC ceased in the year 1992. EICL has since been actively engaged in the manufacture and processing of China Clay of different grades for use as a coating agent and filling agent.
The Company has its clay manufacturing units at Veli, Thonnakkal and Kollam located in Thiruvananthapuram, Kerala. The company's clay mining and refining operations center around Trivandrum where the processing plant produces several grades of refined Kaolin (China Clay - both Spray Dried and Rotary Dried), Metakaolin and Calcined Kaolin (clays) to cater to the Paper, Paint, Rubber, Plastic, Fiberglass, Cement and Ultramarine industries. The plant is the biggest in South East Asia.
EICL has been successful in maintaining strict quality control and consistent conformity to international standards. The company has been certified to ISO 9002:1994 since 1996 and has now been upgraded to ISO 9001 : 2000. EICL has a well-equipped R&D Center, which is recognized by the Department of Science and Technology, Govt. of India.EICL R&D has set up Application Laboratories that focuses on specific industry requirements to develop suitable grade of products and provides application support to customers to achieve best results from its products.
As pigment and extender, China Clay it is used extensively in the paper and paints industry. As filler, it is used in the manufacture of plastics, detergents, rubber goods and paper; as raw material, it is used by glass and ceramic industries for making fiberglass and porcelain respectively. As additive, it is used by the soap industry and it is also used by the paper industry for specialty coating purposes as well in order to impart strength and shine and water repellent characteristics to the paper.
EICL has marketing offices in Mumbai and Delhi and has marketing agents in Mauritius, South Africa, GCC, Yemen, Sri Lanka, Indonesia, Philippines, Jordan and New Zealand. This company is from the Brij Mohan Thapar Group.
Shareholding Pattern: The promoters' holding is a massive at 79.91% while the public holding is only 20.89 %. Among the non-promoters, Lotus Global Investment Ltd alone holds 6.69% of the shares of the company. Hence, the number of shares available for trade in the market is very less. It is also due to this factor, that the scrip had given huge returns to the share holders, in the past.
Financials: The result of the company for the quarter ending September, 2008 is absolutely fantastic and has silenced many critics. The total sales of the company for Q2FY09 came out to be whopping Rs.81.74 Cr as against Rs.68.1 Cr in the same period previous year.
The net profit of the company for the quarter ending September, 2008, became almost double at Rs.8.53 Cr as against Rs.4.8 Cr in the same period previous year (Q2FY08). Hence there is a massive jump in both the top and bottomlines. The EPS of the company for the quarter ending September, 2008 came out to be Rs.10.13 as against Rs.8.62 in the same period previous year.
The operating profit margin of the company also improved to 20.09% in Q2FY09 as against 15.85% in the same period previous year. The net profit margin of the company in Q2FY09, has also shown marked improvement at 11.23% as against 7.07% in Q2FY08.
What is more interesting is that the EPS of the company is Rs.41.45. But what makes the scrip attractive at the CMP, is the low floating stock--this further gives premium value to the shares of the company.
Triggers:
1. English Indian Clays Ltd has entered into Agreements with Wolkem Clay Pvt. Ltd. (WCPL), Kollam and Wolkem Industries Ltd. (WIL), Udaipur towards purchase of the assets of WCPL & WIL.The purchase is expected to be advantageous to the existing activities of the Company.
2. English Indian Clays Ltd earlier informed that the Board of Directors of the Company at its meeting held on January 25, 2008, has approved an issue of 7,44,830 Equity Shares of Rs.10 each at a premium of Rs.990 pre share aggregating to Rs.74.48 Cr on right basis in the ratio of 1:6 i.e. 1 (one) new equity share of Rs.10 each for every 6 (six) existing equity shares held on the record date, to part finance the upcoming starch manufacturing project at Shimoga (Karnataka). Do u remember the episode of Radhe Developers Ltd's case in this respect. In a similar move the scrip of Radhe Developers Ltd, (Which I recommended at Rs.7.5 in 2005--06 and which raised lot of eye-brows in the media), became more than 15 times in matter of some months.
3. English Indian Clays Ltd has recommended a final dividend @ 70% on paid up equity share capital of Rs.4,46,89,790 amounting to Rs.3,12,82,853, 5% on 10% Cumulative Redeemable Preference Share capital of Rs.10,00,00,000 amounting to Rs.50,00,000 and 5.5% on 11% Cumulative Redeemable Preference Share Capital of Rs.20,00,00,000 amounting to Rs.1,10,00,000 respectively for the financial year ended March 31, 2008--this is also massive considering the dividend yield. During the year the Company had paid an interim dividend of 5% on 10% Cumulative Redeemable Preference Shares and 5.5% on 11% Cumulative Redeemable Preference Shares respectively.
4. It is an ISO 9001: 2000 Company. Moreover, the company has commissioned the Co-generation Power Plant at Yamuna Nagar and the operation has started from 1st September, 2008. Hence any generation of revenue from the saving of power and from Carbon Credits would be seen in the following quarters. This is a great development in the company as the company could apply to the world body for getting mammoth revenues in the form of Carbon Credits.
5. Over the last 12 years, EICL products have established themselves in the international market. With Hydrous and Calcined Clays of quality comparable with the best grades available in the world, EICL products offer distinct techno-commercial advantage in Africa, South East Asia, Far East and Middle-East markets due to its geographical location.Two major Indian ports of Cochin & Tuticorin are 200 kms from the works. Frequent connections to all the major ports in the world are available from these ports.
6. Strong R&D with well equipped Application Laboratories are there at all the three manufacturing locations i.e Thiruvananthapuram, Yamunanagar and Puducherry.The lab has Paper, Paint, Rubber, Cement and Ceramic industry specialists, supported by the most modern equipments, who constantly thrive for offering proactive solutions to the respective industries.
7. The Company's ability to sustain a steady and time bound supply schedule coupled with its constant striving for excellence has given it that extra edge over all its competitors in the field. With its rich reserves, hi-technology, vast experience of its motivated employees and deep commitment to quality, EICL is all set to take a place of pride the twenty first century as the preferred source for the best companies in the business.
Moreover, due to depreciation of value of INR against Dollar (USD), the company will be able to generated additional revenues.
Chartically Speaking, the stock is in the Highly Oversold Territory and a bounce could be expected anytime now, which could take the stock to around Rs.450---Rs.500 (or more) by January, 2009. The two chief Chartical Indicators, MACD and Bollinger Bands shows that the scrip is BUY MODE, at present. A cross over can take the stock to above Rs.700 in the next few months.
Buy the stock at the CMP of Rs.273.85 or when the market stabilizes for some decent appreciation in the days to come. The bear markets generally bounce back with vengence, especially when the market falls NOT due to Internal Fundamentals but due to some "Ripple Effect".
In the present circumstances, one can buy the stock above Rs.270 in any case.
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KEC International Ltd:
Weak Rupee to boost its income
CMP: Rs.240.05
BSE Code: 532714
EPS: Rs.34.93
Dividend: 50%
Market Cap: Rs.1184.52 Cr
Performance: Out-performer
Target: Rs.440--Rs.525
Introduction: KEC’s expertise lies in managing complete turnkey EPC contracts. It is a global leader in Power Transmission Engineering, Procurement and Construction, (EPC) business. KEC is the flagship company in the transmision sector of the Rs.11, 500 Cr RPG Group. RPG Enterprise has major presence in core sectors like Power, Tyres, Retail, Technology and Entertainment.
KEC International Ltd's forte lies in timely and cost effective execution of turnkey EPC contracts. It undertakes projects in transmission, distribution, rural electrification, substations and telecom infrastructure segments. From erecting India's first 800 KV Compact line to developing Canada's Tallest and heaviest transmission towers, KEC International Ltd has shown unparalled technical proficiency in delivering Best-in-Class Transmission Towers meeting the discerning demands of even advanced markets. Having successfully executed substation projects in Algeria, Oman, and in India, KEC International Ltd, has the envious distinction of being one-stop-shop offering a range of value added services and end to end solutions to the complex requirement of global clients.
The company’s business areas include:
1.Power transmission EPC
2.Rural electrification & distribution networks EPC
3.Sub-stations construction
4. Telecom infrastructure EPC
5. Railway projects
6. Design & tower testing services
KEC has tower manufacturing plants at Jaipur, Nagpur and Jabalpur. The company has access to manufacturing capacity of 180,000 mtpa. Of this, 110,000 mtpa is owned and the balance 70,000 mtpa is contracted. Company has tower testing stations at Jaipur, Jabalpur and Vashi with capability to test towers up to 1,000 Kv
KEC International Ltd (KEC), an RPG group company, is among the largest global power transmission EPC contractors. KEC derives about 66% of its revenues from international operations. Going forward, the company’s geographical mix will continue to be skewed towards international business.
Shareholding Pattern: The promoters hold 41.54% of the shares of the company while total public holding is 58.46%. According to the latest shraeholing pattern, among the non-promoters' holding Banks, Insurance Companies, Mutual Funds and FIIs hold 43.92% (42.90% in Q4FY08) shares of the company. What is interesting is that FIIs' holding has almost remained unchanged at 12.80% (12.89% in Q4FY08) in the last few quarters. This assumes significance when the many stocks are down due to heavy FII selling. Moreover, the general public holding is only 11.16% according to the latest shareholding pattern----this means only about 55 lakhs shares are in the hands of general public. This gives its shares a premium value over its peers.
Life Insurance Corporation of India Ltd (5.70%), FID Funds Mauritius Ltd (3.95%), HSBC Global Investment Funds A/c HSBC Global (1.42%), HDFC Trustee Company Ltd HDFC Prudence Fund (1.82%), HDFC Trustee Company Ltd HDFC Infrastructure Fund (2.10%), Reliance Capital Trustee Company Ltd A/c (1.56%), DSP Merrill Lynch Trustee Company Pvt Ltd - A/c (1.22%), BSMA Ltd (1.26%), SBI Mutual Fund - Magnum Tax Gain (1.23%), India Fund Inc (1.03%) , Tata Trustee Company Pvt Ltd A/c Tata Mutual (1.18%), Master Trust bank of Japan Ltd A/c (1.05%) etc. holds substantial stakes in the company.
Financials: For FY08, the company came out with good set of numbers. The total income of the company for FY08 came out to be Rs.2814.73 Cr as against Rs.2093.9 Cr in the same period previous year. The operating profits of the company jumped to Rs.354.6 Cr as againts Rs.251.94 Cr in the same period previous year. The profit before tax (PBT) was almost double at Rs.261.85 Cr as against Rs.159.3 Cr in the same period previous year. The net profit of the company in FY08 came out to be whooping Rs.172.2 Cr as against Rs.104.63 Cr in the same period previous year. This gave an EPS of Rs.39.56 in FY08 as against Rs.27.76 in FY07.
For Q1FY09, the total income of the company came out to be Rs.600.2 Cr as against Rs.511.6 Cr in the same period previous year. The net profit of the company came out to be flat at Rs.25.5 Cr as against Rs.25.31 Cr in the same period previous year. However, the results for the quarter ended June 30, 2007 do not include the results of the erstwhile RPG Transmission Ltd and the erstwhile National Information Technologies Ltd, which merged with the Company with effect from October 01, 2007 and hence are not comparable with the results for the quarter ended June 30, 2008.
Triggers:
1. Strong revenue growth: In FY08, KEC International’s (KEC’s) stand alone topline grew by 27% YoY to Rs25 bn. This growth was supported by a strong order inflow and timely execution of orders in hand. KEC International Ltd is expected to grow at a CAGR of 30% FY08-10. The key drivers behind this expected robust growth are rising opportunities in international markets as well as fresh investments undertaken in the Indian power sector.
2. Interest cost to come down: KEC’s interest cost increased by a meagre 14% in FY08. This difference is due to the fact that KEC is less dependent on debt for funding its working capital requirements. Going ahead, any cut in rates will have a positive effect on the company's top and bottomlines.
3. Both domestic and international orders have their pros and cons. International orders are fixed cost-based, while domestic orders have a price variation clause (which will protect margins). International orders from new geographies could result in higher margin orders, which would not be possible in the highly competitive domestic market. Since KEC International Ltd derives more than 66% of their orders from international operations and hence the margin is good. KEC was formed with a focus on international opportunities in transmission EPC. The share of international revenues was as high as 88% till four years back. The company increased its focus on Indian operations post FY04, when the government investments in the power sector picked up.
4. KEC International Ltd has a global presence with clients in over 40 countries. It has a strong presence in India, Middle East, Africa and Central Asia.
Moreover, a Joint venture company named KEC Power India Private Limited with M/s. Power Holdings Inc., USA as a joint venture partner, has been incorporated in the state of Maharashtra in the month of March, 2008. This company would provide services like conceptualizing, designing, developing power transmission and distribution lines, sub-stations and all types of power generating projects.
5. KEC International Ltd merged group companies RPG Transmission (RPGT) and National Information Technologies Limited (NITEL) with itself in August 2007. RPGT was engaged in the business of EPC contracting in transmission, rural electrification and railway electrification, a business similar to that of KEC. NITEL was engaged in the business of setting up telecom infrastructure.. This will further strengthen the Company both top and bottomlines.
6. Since the steel and other metal prices are crashing in the international markets and this is going to give tremendous impetus to the balance sheet of KEC International Ltd, because the orders were obtained when the metal prices were at their peak. This is expected to give solid net profits going forward.
7. Besides the traditional markets of Middle East and Africa, the company is constantly on a hunt for further opportunities in Central Asia and North America. The company plans to enter new geographical locations and capture opportunities in the rural electrification and sub-station markets. There is a huge potential for telecom tower infrastructure business in India and the company plans to capture opportunities in this area.
8. The company has a healthy order book. During FY08, the company completed 21 projects in the South Asian markets and 15 projects in International markets. The company has performed well by bagging 26 orders in the South Asian markets from the State utilities and Power Grid Corporation of India Limited and 27 orders in International markets from various countries including Afghanistan, Algeria, Ethiopia, Kazakhstan, Kenya, Oman, Namibia, Nigeria, Saudi Arabia and UAE. The company has successfully embarked upon the sub-station business by bagging sub-station packages in domestic markets and from Afghanistan and Kenya in the International markets.9.The company is also executing Railway Electrification projects and has begun participating in Railway Composite projects. The company is being viewed as a quality EPC Player for telecom towers by all the major telecom operators in India. With huge investments and numerous projects envisaged in the infrastructure sector, the company, with its experience and proven competency in project management and execution is well equipped to grow further.
As the countries of the world draw up mega railway expansion plans to drive their national growth, KEC International Ltd is geared up to take the responsibility of an all-inclusive holistic EPC player in the global railway industry. And with a strong presence in over 40 countries it is well positioned to grab the lion's share.
10. For the first time in the company history, the revenues crossed Rs.600 Cr in the first quarter of 2009 (Q1FY09), which is no mean achievement. Moreover, it has a huge order book of more than Rs.5000 Cr to be executed over the next 18 months time frame. This is a sharp increase from around Rs.3250 Cr in 2007.
11. Improved industry scenario: The Union government plans to provide Electricity to all by 2012. This will require an additional power generation capacity of 100,000 MW, translating into heavy investment in generation and transmission and distribution (T&D). Power Grid Corporation of India plans to invest Rs 70,000 crore to develop and strengthen the National Grid. Projects worth over Rs 17,000 crore have been approved under the Accelerated Power Development and Reforms Programme (APDRP). Further, a rural electrification scheme – Rajiv Gandhi Grameen Vidyutikiran – involving an expenditure of Rs 16,000 crore has been unveiled. Besides, the Government has also proposed to set up a National Fund for Transmission and Distribution reform with a corpus of Rs. 1,00,000 crores.These aggressive investment plans is expected to benefit transmission companies including KEC International Ltd.
12. Emergence of a pure power player: Under a restructuring scheme that became effective in Dec 2005, investors of the erstwhile KEC International were allotted a share each in the two companies — KEC International and KEC Infrastructure — for every share they had held earlier. KEC International will carry on the core business of power transmission and distribution, while KEC Infrastructure would hold investments in group companies and non-core advances divested from the parent company. From the investor’s perspective, this move has unlocked value. The restructuring has brought in a pure player in the turnkey power solutions business under KEC International. The technical qualification and experience of the parent company in the power business has remained intact. This is resulting into significant improvement in the return ratios.
13. De-risked business model : KEC International Ltd had traditionally derived a majority of its revenues from exports. Till FY03, only 10% of KEC’s orders were from the domestic market. The company made a loss in FY02 and has since de-risked its revenue model. It now derives about 30% of its revenues from the domestic market. It expects a 70:30 revenue mix (International: Domestic), which is also reflected in its current order book. It has been able to capitalise on the power reforms in the country and has bagged contracts from Power Grid Corporation and orders for rural electrification programmes.
14. Move towards becoming a service provider: The company is also striving to move up the value chain through services such as satellite surveys and tower testing. It has received approval for a 100 % EOU Tower Testing facility and also extensively outsourced a large part of non-critical work. Outsourcing allows KEC to grow its business at a much faster rate and not get constrained by transmission tower production capacity.
15. North American JV to boost top line: In May 2006, KEC formed a 50:50 joint venture with Power Engineers Inc, USA, called KEC Power Inc. The JV bids for high-value projects in the US and North America. Apart from increasing its international presence, the move is helping KEC boost top line growth through new international orders.
Key Concerns:
1.Rise in prices of key inputs such as steel, cement and aluminum is the key concern for KEC. Costs of steel and aluminum account for about 16% and 9% of revenues respectively for the company. However, a sharp fall in the Steel and metals prices in the domestic and international markets is acting as a positive trigger for the company. Moreover most of the earlier oreders were plance when steel prices were higher 70% yoy.
2. Delays in government spending, as has been the experience in India in the past. Any Slowdown in infrastructure spending in Middle East, Africa and other regions where company derives a sizeable amount of its revenues could adversly affect its profitability.
3. In spite of de-risking the business model, the company’s export-centric revenue carries foreign exchange-related risks. Fluctuations in the currency cannot be anticipated at the tendering stage and hence the currency risk in each contract continues for considerable period. The risk is mitigated to some extent by limited hedging resorted by the company. However, at present the depreciation INR is acting as a boon for the company.
Conclusion: KEC International is well-positioned to leverage on the hig -growth domestic T&D market as well as take advantage of the huge investments in the Middle East and Africa.
As mentioned earlier, a couple of years back KEC International, which had the power business, was split into two entities, KEC Infrastructure and KEC International. KEC Infrastructure holds equity in Ceat, CESC, Harrisons Malyalam, RPG Life Science ( KEC Infrastructure, is the holding company), Philips Carbon Black etc. KEC Infrastructure thus holds investments in group companies and non-core advances divested from the parent company.
Considering the factors mentioned above it has been found that the shares of KEC International Ltd are highly undervalued and will soon go for re-rating. The stock is in oversold territory and other chartical patterns are in buy mode.
The stock could be bought at the CMP of Rs.240.05 with an immediate price target of Rs.440--Rs.525, in the next 3 to 4 months time frame. The stock is multi-bagger and will cross Rs.1000 in the next 18 months time frame. Please keep a SL of Rs.225 for any very short term trade.
Posted by SumanSpeaks

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Development Credit Bank Ltd:
Banking on SBI, HDFC Ltd and Tata Capital Ltd
BSE Code: 532772
CMP: Rs.29.75
Book Value: Rs.36.39
Market Cap: Rs.518.54
Target: Rs.55--Rs.65 in 3 to 4 months time frame
Stop Loss: Rs.22
Performance: Market Outperformer
Introduction: Development Credit Bank (DCB) is one of the emerging private sector banks in India and provides to its customers, access to over 30,000 ATMs and more than 80 state-of-the-art branches spread over ten states and two union territories. It has sought permission from the central bank to open 50 more branches. Earlier, the bank had announced plans to raise Rs.3--4 billion during the current fiscal to fund its growth plans for the next 18 months.
The wheels of change has made a positive difference and DCB is making its presence felt. The Bank has recently launched several value added initiatives and intends to become one of the country’s preferred and profitable private sector banks, providing a comprehensive suite of “best in class” products for specific market segments in chosen geographies. DCB has initiated a liability and select asset product led strategy, through a mix of owned and outsourced products and multi-channel capabilities.
Shareholding Pattern: The promoters' holding is 26.51% while among the non-promoters' holding, institutional investors hold 17.55% and the general public holds 28.25%. Among the institutional holding FIIs holding has decreased from 30.03% in Q4FY08 to mere 12.84% in Q1FY09, which is a positive sign (or we can see there are further scope of FIIs cornering the stock in future). Moreover the holding of Private Corporate Bodies has gradually increased from 10.14% in Q4FY08 to 15.49% in Q1FY09---this is a great news as far as this aggressive private sector bank is concerned.
Also, while the promoters holding has remained constant in the last few quarters, the holding of Mutual Funds/Banks/LIC/Financial Institutions, have almost doubled in the last few quarters, adding to already present positive developments. Besides this, State Bank of India, Housing Development Finance Corporation Ltd Tata Capital Ltd holds substantial stake in the company. There were rumours some months back that the bank could be taken over by any other these three entities.
Financials: For FY08, the results were simply excellent even when the interest rates peaked out and CRR rate was hiked a number of times. For FY08, the total income of the company came out to be Rs.736.7 Cr as against Rs.439.42 Cr in the same period previous year (almost doubled). Net profit of the company jumped to Rs.38.3 Cr in FY08 as against Rs.7.4 Cr in the same period previous year. The capital adequacy ratio also improved in FY08 to 13.38% as against 11.34% in FY07. Due to lot of initiatives taken during the whole fiscal of FY08, the net profit margin shot up to 6.68% as against 2.12% in the same period previous year.
In Q1FY09, the total income of the company came out to be Rs.204.2 Cr as against Rs.148.1 in the same period previous year. The profit before tax (PBT) of the company for Q1FY09, is a whooping Rs.25.1 Cr as against Rs.8.3 Cr in the same period previous year. However, the net profit for Q1FY09 came out to be Rs.5.4 Cr as against Rs.5.74 Cr in the same period previous year, due to higher (almost 6 times jump) provisioning for Contingencies. Capital Adequacy Ratio also increased considerably 13.67% in Q1FY09 as against 10.475 in the same period previous year. Thus the company is doing excellently well in the financial front.
Triggers:
1. It has a network of 80 state-of-the-art branches and extension counters spread across the states of Maharashtra, Gujarat, Andhra Pradesh, Karnataka, New Delhi, Rajasthan, Goa, Tamil Nadu, Haryana, West Bengal, Union Territories of Daman & Diu and Dadra & Nagar Haveli. It has a dedicated staff of over 1800.
2. Built on over 77 years of trust, tradition and togetherness, DCB was converted into a Scheduled Commercial Bank on May 31,1995, in the wake of India’s economic liberalisation. It was the only co-operative bank, which successfully crossed over and thrived in the face of change. The company has travelled a long route and made its presence felt in the domestic money market.
3. DCB Ltd is not just a Bank but is a Financial Supermarket. DCB Ltd offers an extensive range of products across its branches. Suitable variants of the basic products like savings and current accounts as well as innovative products such as the ‘DCB Trio’ and ‘Easy Business,’ keep DCB ahead of the pack. Demat Account and a range of investment products like mutual funds, insurance and bonds make the product offering complete.
4. Since its inception, DCB has always taken an active interest in developing low-cost customer deposit products and providing for the needs of small and medium businesses in select regions. It continues to fulfil every consumer need with great enthusiasm. The Bank is also suitably equipped with the latest versions of Finacle from Infosys and Oracle to provide seamless service to its customers.
5. Very recently this Mumbai-based Development bank, reduced its exposure to unsecured personal loans in a bid to maintain its net interest margins. According to a top source, to maintain net interest margins the bank has brought down its exposure to personal loans from 17 percent last fiscal which will be reduced to around to 12-13 percent probably by the middle of the next financial year.
The bank expects to see a growth rate of 30 percent in advances and a 35-40 percent growth in deposits in the current fiscal. The banks' net interest margin in 2007-08 was 2.9 percent and would be in the range of 2.9-3.1 percent in the current fiscal. The bank would raise the share of low-cost deposits to about 29-30 percent of its total deposits from its current share of 27 percent.
6. It was wonderful to see how the company improved post IPO. From only a profit of around Rs.66.3 lakhs in Q2FY07, the net profit has jumped to Rs.5.4 Cr in June, 2008 quarter---an almost 8 (eight) fold increase in matter of 2 (two) years. This attests to my arguments that this agresssive bank is moving at a rapid pace and therefore it was once the darling of FIIs. Now the institutions have made its their destination to lap up the shares of this company at brisk pace.
7. Now with RBI cutting the CRR by 150 basis points and further cut expected within some days, some more liquidity will be generated in system. This measure will release more funds of the banks for lending, which were locked-up in the coffers of RBI for a long period. Hence in future we could see massive jump in both the top and bottomlines of most of the banks (Private and PSU). Meanwhile there are also talks of cutting interest rates by the RBI. This is expected to suddenly give a great boost to the loan growth apart from generating a sizable treasury income for the banks in future.
8. The Bank has an active and robust treasury, managing its interest rate risks and liquidity by providing an uninterrupted flow of funds, positioning the Bank for future growth.Over the last few months DCB aggressively expanded the product portfolio in response to customer needs and feedback. Products such as DCB Privilege Banking for Savings and Current Accounts, DCB Smart Trade, DCB Advantage Credit Card, and DCB Trio account, have been very popular with customers. Customers also enjoy a host of benefits such as an international debit card, DCB Customer Care phone banking, and internet banking.
9. The company is planning to get into asset management business and with a partner but till now had to shelve the idea because of bad market conditions. Development Credit Bank will enter this space as soon as the market condition improves a bit. The bank plans to raise funds in the near future but the amount will depend on the market conditions.
Conclusion: Considering all the factors mentioned above, it will be prudent to buy DCB Ltd at the CMP of Rs.29.75 for a target of Rs.55--Rs.65 in the next 3 -4 months time frame. Please put a SL of Rs.22 for any short term trade. This aggressive bank is going to surprise most shareholders in terms of growth and creating value for the shareholders.
Posted by SumanSpeaks

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Premier Explosives Ltd :
BSE Code:526247CMP: Rs.32.5EPS: Rs.5.75Dividend: 15%Market Cap: Rs.26.41 CrPerformance: Market PerformerTarget: Rs.75--Rs.80 in 6 months time frame
Introduction: Premier Explosives Limited (PEL) is a Rs. 700 million plus company and is one of the major manufacturers of the entire range of Explosives and Accessories in India. PEL was established in 1980 and is the first manufacturer in India to deploy totally indigenous technology. PEL today has the widest range of products and technologies in the manufacture of Explosives & Accessories. These include Emulsion and Slurry explosives, LD cartridge explosives, Bulk Explosives, Small-dia non-permitted explosives, Permitted explosives, Cast Boosters, Pillow-packs for secondary blasting; Detonating Fuse of various core-loads, Plain detonators, Instantaneous Electric Detonators, Electric Delay Detonators, Permitted Detonators, Cord Relays and Amardet NoN Electirc Shock-tube Detonators.
PEL has constantly innovated and upgraded its products and technology to offer “state-of-the-art” products to its valued customers both in India and abroad. Commitment to quality, Safety, Health & Environment are the way of life at PEL.PEL’s R &D facility is recognized by the Centre for Scientific and Industrial Research (CSIR), Government of India, as an established research centre. It is also recognized as a research base for Ph.D. work by the Osmania University, Andhra Pradesh.
A wide distribution network comprising of magazines Consignment Agents, Dealers and Handling Agents, located across the country, ensure ready stock and prompt delivery to customers even in remote locations.Shareholding Pattern: The Promoters' holding is 35.42% while the general public holds 64.58%. Among the public an individual in the name of Mr.Atim Kabra have around 6.16% shares of the company. This gentleman has constantly increased stake in the company in the last few months.Financials: For Q3FY08, the results were quite impressive considering that there were NO Revenues coming from the Mushroom Division. Mushroom Division was sold last year for a considerable sum which were used to clear off some old debts.For Q3FY08, the total income of the company was Rs.15.40 Cr as against Rs.16.6 Cr. The Net profits of the company for Q3FY08, without the inputs from the mushroom division is also impressive at Rs.77.3 lakhs against Rs.79.4 laksh in Q3FY07. The EPS of the company for the the 9 (nine) months ending 31st December, 2008 is Rs.5.67 which gives a natural target of Rs.75--Rs.80 on the scrip. The total EPS of the company for FY08 would be around Rs.7-Rs.8, which is quite high if we consider its nearest peer Solar Explosives Ltd.Triggers:1. It has reduced its debt burden with the money from the selling of the Mushroom division last year. The company striving to achieve a zero debt company in the near future.2. Special Product Division dedicated for defence sector for production of Solid Propellants was completed during the year and was commissioned on 16th September, 2006. The Company is now mainly focussed on the Lucrative Defence Sector.3. The Company has established two Joint Ventures (JV) abroad for manufacture of explosives and accessories. At one JV the production has commenced in April 2007. The second JV commenced production during July / August 2007. Both JVs making good good contribution during this financial year, FY08.3. The Comapny earlier signed a 10 years (renewable for another 10 years) prestigious contract with Satish Dhawan Space Centre, SHAR, Indian Space Research Organisation (ISRO). The contract is for operation and maintenance of Second Propellant Plant at an annual value of about Rs. 70 million with price escalation on annual basis. The total value of contract would be around Rs. 700 millions. The operations have commenced from 18th January, 2007.4. In the last fiscal the Premier Explosives Ltd got the following awards:a) The Company has been awarded Appreciation Certificate by Andhra Pradesh Pollution Control Board in the category of Best Greenbelt Industries.b) It has also received award of achieving highest rating in the ranking of India's Top 500Manufacturing Small and Mid Sized companies during August, 2006.c) Naval Science & Technological Laboratory, D.R.D.O., Visakhapatnam, has presented Appreciation Award to the Company in recognition of its valuable contribution to them in the development of various specialized products.d) Premier Explosives Ltd has also received Certificate of Appreciation by Rotary Club in appreciation of company's service and support for Drinking Water Project and organization of medical camps in remote villages around twin cities.5. The Indian explosive industry is one of the few highly developed ones in the world. The total consumption of explosives in India is amongst the first five in the world.The total market had been increasing steadily due to infrastructure development and more demand of key minerals and power. This increases the chance of this well established player to improve both on the top and the bottomlines. The company is moving at a rapid pace.6. Explosives production in some of the countries had been monopolised by global giants like Orica, Dyno, UEE etc. This Company has established two joint ventures abroad to take advantage of better margins. Production has already commenced in one Joint Venture from 17th April, 2007. The production at second Joint Venture is has started during July, 200. Major contribution is coming from special products division, overseas ventures and operations and maintenance contracts during the financial year 2007-08. So there are multiple revenue streams of the company. Hence the scrip is expected to cross Rs.100 this time.7. The company, one of the three in the country manufacturing the entire range of explosives and accessories for the civil/industrial requirement, is poised to become a defence/strategic industry supplier through capacity expansion, including missile fuel. Premier Explosives, which already produces the fuel, would double its capacity in about 12 months time frame. For the new project, it has already bought 150 acres of land off Hyderabad, near its existing plant, The complete capex plan is almost ready.8. Q3FY08 results were good considering that there was not income from the Mushroom Division in view of it being sold in the last Fiscal. Both the toplines and the bottomlines were flat, speaking Q-o-Q. This a GREAT ACHIEVEMENT as this was achieved only from the income from its core divisions, i.e. manufacture of explosives. The net profits margins have also increased marginally. This is going to improve going forward as the incomes from the overseas subsidiaries adds up to the total income of the company.
Conclusion: Considering the above mentioned factors it has been found that the stock is trading cheap as compared to its peers. This is is one of the most inflation Neutral sector as the Company gets substantial orders from Defence Departments, where the demand is inelastic. The fact that the Company's revenues have started to come from overseas subsidiaries is a good point as compared to its peer Solar Explosives. In the daily Charts also the scrip looks good for investment. Buy with a Price Target of Rs.75--Rs.80 in the short to medium terms perspective.
Posted by SumanSpeaks