Multibagger: Sah Petroleums

Sah Petroleums Limited is a manufacturer of industrial lubricants in India and manufacturing wide range of industrial and automotive lubricants, specialties and process oils etc., under the brand name of "IPOL". The company started in 1973 as a private limited company and became listed in 2004. The company has its plants located at Vasai near Mumbai and at Daman. The plants at Vasai and Daman are equipped with High-Tech blending facilities, quality control labs and automatic filling and packing stations. The company also has one of the largest in-house storage farms in the private sector in India for storing oil sourced from all over the world.

Besides, the company has an all India sales and service network with offices / depots / CFAs located in Mumbai, Pune, Vadodara, Indore, Jabalpur, Jaipur, Delhi, Ghaziabad, Faridabad, Kaithal, Chandigarh, Patiala, Kolkata, Jamshedpur, Hyderabad, Bangalore and Chennai.

Financials:
The latest financials of the company are given as under:-

Particulars	Quarter Ended	Quarter Ended	Quarter Ended	Year Ended	Year Ended	Year Ended
	(Jun 08)	(Jun 07)	(% Var)	(Mar 08)(12)	(Mar 07) (12)	(%Var)
Sales	60.31	44.14	36.6	205.51	179.67	14.4
Other Income	0.76	0.51	49	6.7	3.96	69.2
PBIDT	5.43	4.01	35.4	22.67	15.38	47.4
Interest	0.66	0.48	37.5	2.72	2.93	-7.2
PBDT	4.77	3.53	35.1	19.95	12.45	60.2
Depreciation	0.29	0.21	38.1	1.01	0.74	36.5
PBT	4.48	3.32	34.9	18.94	11.71	61.7
Tax	0.83	0.32	159.4	0.28	1.45	-80.7
Deferred Tax	0	0	-	0.22	0.18	22.2
PAT	3.65	3	21.7	18.44	10.08	82.9

(Rs Crore)

Latest Data As On 20/10/2008
Latest Equity(Subscribed)–Rs. Cr	16
Latest Reserve –Rs. Cr.	67.58
Latest Bookvalue -Unit Curr.(Rs.)	26.12
Latest EPS -Unit Curr.(Rs.)	6.83
Latest Market Price -Unit Curr.(Rs.)	14.4
Latest P/E Ratio	2.11
52 Week High -Unit Curr.(Rs.)	29.3
52 Week High-Date	1/3/2008
52 Week Low -Unit Curr.(Rs.)	8
52 Week Low-Date	10/10/2008
Market Capitalisation (Rs.cr.)	46.08
Stock Exchange	BSE
Dividend Yield -%	1.74

Conclusion:
Sah Petroleums has a current Equity Capital of Rs.16 crores comprising of 3.2 crore Equity Shares of Rs.5 each. The current promoters of the company hold 1.74 crore shares comprising 54.47% of the equity while the Non-Promoter shareholding is 45.53%. 

The Board of Sah Petroleums in their Board Meeting on October 17, 2008 has resolved to issue 1.2 Crore Equity Shares of the company to NAF India Holdings Pvt. Ltd. at a price of Rs 26.65 per equity share on preferential basis, which comprises. This is roughly 27.27% of the diluted equity of the company. Since this investment constitutes acquisition of more than 15% Equity of the company, the transaction will necessitate a public announcement in compliance with the takeover regulations of SEBI. The acquirers alongwith persons acting in concert have made a Public Announcement for acquiring 88 Lakh shares, comprising 20% of the diluted equity at a price of Rs 48.50 per share. In all probability, the current promoters of the company would not be allowed to participate in the open offer. The current public shareholding is roughly 1.46 crore shares. Assuming all non promoter shareholders opt for the open offer and tender their shares, the acceptance ratio would be 60%, which means any shareholder tendering 100 shares in the open offer, will have 60 shares accepted by the acquirer at a price of Rs.48.50 per share. In reality, the acceptance ratio can be higher.

The stock of Sah Petroleums offer an attractive arbitrage with significant upside from the current levels, in these uncertain times.The caution here is that the time schedule for the open offer (December 4, 2008 as date of opening of offer) may get delayed, as has been seen in numerous other cases of open offer, due to delays in approvals & compliances.

Pick of the Week: Hindalco

FOR MEDIUM TERM BUY BUY HINDALCO

Equity: 175.32 Cr., BSE Code: 500440 (Rs. 64.20)


Buy: HINDALCO @ 64 to 65 Target 72 to 74

Hindalco Industries Limited, a flagship company of the Aditya Birla Group, is structured into two strategic businesses Aluminum and Copper and is an industry leader in both. A metals powerhouse with a turnover of US$ 14 billion, Hindalco is the world's largest aluminum rolling company and one of the biggest producers of primary aluminum in Asia. Its copper smelter is today the world's largest custom smelter at a single location. Established in 1958, Hindalco commissioned its aluminum facility at Renukoot in eastern U.P. in 1962 and has today grown to become the country's largest integrated aluminum producer and ranks among the top quartile of low cost producers in the world. With a strategic intent to achieve vertical integration in the copper business, Hindalco acquired two captive copper mines in Australia Nifty and Mt. Gordon through Aditya Birla Minerals Limited. The aluminum division's product range includes alumina chemicals, primary aluminum ingots, billets, wire rods, rolled products, extrusions, foils and alloy wheels. The company's copper product range includes copper cathodes and continuous cast copper rods. It also produces precious metals, sulphuric acid, phosphoric acid, dominium phosphate (DAP) and other phosphoric fertilizers, and phosphor-gypsum. In May 2007, Novelis became a Hindalco subsidiary with the completion of the acquisition process. The transaction makes Hindalco the world's largest aluminum rolling company and one of the biggest producers of primary aluminum in Asia, as well as being India's leading copper producer. The stock has come down from over 200 levels to around 160 to 170. One can buy at current levels for a gain of 30-40 % upside in 6-8 months. Sales and NP for year ended 07-08 were 18982.6 Cr & 2812.9Cr. Sales and NP for latest Quarter 4647.5Cr & 696.8Cr. On YOY basis NP has increased by 11% & based on quarter latest its increased by 16% Dividend during year ended 07-08 was 185%

Multibagger: Sintex Industries

BUY

Sintex Industries
Cluster: Apple Green
Recommendation: Buy
Price target: Rs400
Current market price: 259

Sintex back on the buying list

Key points

* Monolithic business to drive revenue growth: Sintex Industries (Sintex), known for its water tanks, has pioneered the concept of monolithic construction in India and is the market leader in this segment. The business of monolithic structures, used in low-cost housing, is expected to drive Sintex’ revenue growth in future, on the back of the rising need for affordable and mass housing in India. This business division currently has orders of close to Rs1,400 crore and its revenues are estimated to grow at a CAGR of 98% over FY2008-10E.

* Acquisitions strengthen portfolio of plastic products: Sintex has acquired five companies since May 2006, spread across geographies and catering to niche markets. These acquisitions have been timely and would help Sintex to absorb latest technologies as well as expand its reach and customer base in the composite plastic business. The integration of all these companies can lead to substantial benefits in terms of leveraging of the acquired assets and expansion of the client base.

* Prefabs, another feather in the cap: Sintex’ pre-fabricated products are gaining fast acceptance in the country. There is a huge demand for these products which are increasingly finding use in primary school buildings, toilets and telecom tower shelters. Logistics remain a key to success here. Sintex is also increasing its prefabs capacity to 100,000 sq ft per day. The business is expected to grow at a CAGR of 45% over FY2008-10E.

* We re-initiate a Buy: We are re-initiating coverage on Sintex because at the current market price the stock is attractive, given that the company’s earnings per share (EPS) are estimated to grow at a CAGR of 34.7% over FY2008-10. Our price target of Rs400 for the stock is based on the average of our DCF and SOTP valuations. At our target price the stock would discount its fully diluted FY2010 EPS by 12.9x and quote at an EV/EBIDTA of 6.9x.

Pick of the Week: Praj Industries

FOR SHORT TERM MEDIUM TERM

BUY : PRAJ IND

Equity : 36.67 Cr, BSE Code : 522205, CMP : 115.50

PRAJ was established in 1984 with the objective of providing cutting edge solutions to the DISTILLERY INDUSTRY. India was the starting point. Sugar industry in India is the backbone of the rural economy. And, the future of this industry lay in value addition by way of co-products like Alcohol. Quality of Alcohol was the keyword. Praj focused on quality of spirit with the introduction of innovative technologies in fermentation, distillation and wastewater treatment.

Praj applied classical mass and heat transfer theory for more efficient separation of impurities during distillation with the introduction of Bubble cap trays and Hyper stat Grid Trays. In 1991, Praj established an R & D Center. Many new systems have been developed in this R & D Center, resulting in to seven patents. Praj's expertise in fermentation and distillation was complemented by its expertise in wastewater treatment solutions. In 1992 Praj's Sprannihilator System was given an award by the Govt. of India, Ministry of Chemicals & Fertilizers. In 1993, Praj also introduced Brewery Engineering, Plant & Equipment. In 1994, Praj went public. Its maiden IPO was oversubscribed seven times. Praj is listed on the BSE and NSE in India. Around this time, Praj also branched out in the international market with orders from Indonesia and Philippines

Today, Praj offers many more solutions for distillery and brewery wastewater treatment and utilization. PRAJ has also spread it's reach beyond India to over 35 countries ... across 5 continents... with over 350 references. Praj is perhaps the world's single largest supplier of molasses based distillery technology, plant and equipment. Praj has also diversified its range of solutions. Fermentation systems include technology packages for multiple feedstock including cane-molasses, cane juice and filtrate, starch based raw material like corn, sorghum , wheat, tapioca, tropical sugar-beet and many more. Today, Praj's operations cover three continents including Asia, Africa and South America through its own offices and to other alcohol/beer producing countries through its international operations out of India. Praj manufacturing facility is accredited with ISO 9001-2000 and ASME 'U' & 'H' stamp for pressure vessels and heating boilers. Facility for metalworking in Stainless Steel, Copper, Hostelry and higher alloys to international standards including TEMA, DIN, Ad Merk Blotter, BS and IS. The Quality Assurance cell pursues stringent testing at various stages of procurement and production. For every job, a Quality Assurance Plan is drawn up and all inspection is carried out in accordance with this plan. Approved by most leading Engineering Consultancies, the manufacturing facility is well connected by 'all-weather' roads and is located 180 kms from the Port of Mumbai. Sales and NP for year ended 07-08 were 701.6 Cr & 148.1Cr. Sales and NP for latest Quarter 154.8Cr & 24.8Cr. On YOY basis NP has increased by 71% Dividend during year ended 07 08 was 99%