Multibagger Series - a cooling stock

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Dear Readers,

Markets are witnessing outrageous bleeding on collective sentiments related to various national and international issues. Some good stocks even fell more than 50% from their year high and offering a wonderful opportunity for patient investors. But considering the dense of ongoing negative pulses and associated sentiments, we should be very careful on any investment decisions related to equities. I hope market may provide better discounts in recent future, probably with in the first half of year. There are no visible serious fret factors for long term investors and whatever happening is a cycle of provisional actions, based on sentiments derived from series of negative cues.

It seems the level of crashes were not corresponding to the depth of sentiments or its at the lesser side. The overall impacts on the recent series of negative reports were strong enough to bring our indices down to some 25-30% but it was just below 20%. Even after a flood of negative issues and unparallel corruption revelations in the recent past, people are still buying our stocks and keeping faith on the market, FII's are still pouring money to our market even smaller in size. Remember, there is a buy for every sell. Just list out the chain of scary issues occurred in last couple of months; Alarming figures on inflation, negative IIP data, negative bank rates, increasing fuel price, spreading middle east anarchy, gigantic corruption revelations including Adarsh Flat, commonwealth games, 2G Spectrum, S-Band, harassing Radia tapes and now the obscurity raised by DMK on Govt’s existence..

There is some sure and different charm exists with our market/economy; otherwise the above reasons were more than enough to bring our indices to another historic lows. But there is some stubborn strength is underlying somewhere with our economy. The main pillars are still strong, which affirms my confidence or makes me more positive on our market. Market is really struggling to regain the charm, I would like to suggest you all, keep your faith on good companies headed by genuine management, which will surely bestow you good returns in the long run. Putting entire money in few stocks or having big numbers in certain stocks at a go, will not exactly the smart side in view of the ongoing scenario. This tact may prove hazardous considering the dynamic response of market to even trivial negative news threads. Accumulation in small batches at possible lower levels, the only strategy which will be beneficial or at the safer side in future. Because market is started responding quicker than ever and like anything corresponding to the tempo of our times.

I would like to place few inputs on an outstanding company as promised earlier. First of all, let me thank to Mr Mahesh, Bangalore, who grabbed my attention to this company in last year, reminded as well encouraged me to talk on the scrip. After a close scrutiny, I hope this company can provide superior returns in the long run for patient investors. Myself, already been analyzed and firm to consider it as a multibagger on the basis of differentiation and sensible monopoly in the segment. Moreover, I am confident on this company and the products/services they are configuring as an essential service to the vibrant Power/Energy/Oil sectors. Subsequent lines are plain personal conclusions, compilations or convictions to have this stock, I am satisfied with the horizon developing by this company considering the available data and feels the path ahead is promising. I have good faith on this company, their business model as well on its proficient management.

BSE Code - 530743

Scrip - GEI Industrial Systems Ltd

CMP – 170.55 (07/03/2011)

EPS – 15.34

PE – 11.12

BV – 52.57

FV - 10

52 Week L/H – 91.10/238.90

Promoter’s holdings – 41.41%

Chairman/MD – Mr. C E Fernandes

GEI Industrial Systems Ltd, an ISO 9001-2000 certified company with ASME’ "U" Stamp engaged in design, engineering, manufacturing, installation, commissioning and maintenance of extended surface heat transfer technology mainly for Power, Oil and Gas industries. The company is specialized in Heat Transfer Technology, an obligatory element for entire engineering processes irrespective of nature and size. It offers a wide range of equipments/installations including air cooled vacuum steam condensers, air cooled heat exchangers, process gas coolers, cooling water systems, transformer oil coolers etc. The company provides its products/services to a vast range of engineering installations such as power plants, crude oil/Petroleum refineries, CNG/LNG terminals, petrochemical/chemical plants, Oil and Gas fields, off shore gas processing platforms, fertilizer plants, metallurgical industry, electrical locomotives, cement plants, Sugar industry etc.

GEI have clear domination in the segment as well there is no Indian or listed Indian entities as competitors except a couple of foreign players. The company holding a market share of 45% in Air Cooled Heat Exchangers in the Oil & Gas Sector and about 70% in the Power segment. It has an admirable track record in the Oil, Gas and Power sector installations in both American continents, Europe, Africa, Asia and Australia. GEI has also entered into marketing agreement with X-Wire, an American company, to tap the US market and to meet up its outsourcing requirements in the heat exchange platform. GEI is also engaged as a major contractor to the massive Rural Electrification schemes of Govt. of India, targeting electrification of more than 1 lakh villages in different provinces of our nation, to be completed over the next 3-4 years.

GEI having the essential expertise and proved experience in the air cooling space is likely to be the key advantage to their rising demand. The conventional water cooling system depends on constant water availability and the paucity of water is the main obstacle for cooling processes at certain engineering sites. Water shortage has been detected as one of the prime reasons for many recent disorders/shutdowns in power plants all over India. GEI’s indigenously designed air-cooling concept work on freely available air, instead of diminishing water for cooling processes.

In a survey of India’s water situation, about 21 million wells drilled are lowering water levels in most of the country. In North Gujarat, the water level is falling by 6 meters (20 feet) per year. In Tamil Nadu, wells are drying almost everywhere and falling water tables have dried up 95% of the wells owned by small farmers. And the story is same or more worsen in other states. You can estimate the future business potential of this company by connecting the above stunning facts on water scarcity; moreover 70% of our planned power additions are setting up in water-scarce areas. The company will surely benefits from the rising demand for its air-based cooling systems from power/energy and petroleum industries, since accessibility of water is drastically retreats. In India, these two industries are highly reliant on water for their cooling requirements and are facing operational troubles at times when sufficient water is not available.

GEI is prepared to gain from the anticipated massive power projects by providing air-cooled solutions that offers remarkable benefits over conventional water-cooling systems. The company is undergoing a 100cr expansion plan, which will greatly enhance its capacity by end of this year. The expansion will allow GEI to double it’s order intake capacity to Rs. 1000cr from the current 500-600cr levels. It is estimated that, on the completion of proposed expansion plan, the company will emerge as one of the top three players in the segment globally.

Any threat of new entries in the segment is limited because the entries in such businesses are purely related to proved expertise/experience. Conglomerates who make considerable investments on large projects must verify the technical expertise, competence and capability on prompt deliveries from the partner. I don’t feel any fresh player’s entry as a threat in recent future, because the experience or past performance is appreciated largely in such service segments and that’s the lone eligibility condition to adopt such a partner. Normally, our power players will hardly try their luck with any newbie in the sector to play on their huge investments. .

There will be a huge investment in the power transmission and distribution area which is estimated to be around Rs. 4500 bn .Considering the vast prospective in this field, GEI has also stepped in to the power transmission business. A separate group, GEI- Power Transmission Business Group has been shaped in the company itself and experts in these fields have been recruited recently. The company also prepared to enter in to the area of Power Generator components, heavy fabrication and machining of generator components etc. GEI is planning to expand this potential business to the tune of around Rs. 2.5bn by next 3-4 years.

The dominant client base including established players and the probable demand on their products/services are indicating a clear horizon for the company in the future. I have listed few selected domestic and international players who are constantly getting cooled by GEI:-

ABB Ltd
Bharat Oman Refineries Ltd
Bharat Pumps and Compressors
BHEL
BPCL
Cairn India Ltd
Chennai Petroleum Corporation Ltd
Crompton Greaves Ltd
Davy Power Gas
Dresser Rand, USA
Engineers India Ltd
Essar Oil Ltd
G.S. Engineering, Dubai
General Electric, USA
Hanover Middle East, Oman
HPCL
IOC
IPCL
Kirloskar Pneumatics Co. Ltd
Larsen & Toubro Ltd
MRPL
ONGC
Oil India Ltd
Oman Refinery Co, Oman
Petronet LNG Ltd
Punj Lloyd Ltd
Reliance Industries Ltd
Samsung Engineering Co. Ltd
Sarda Energy
Shell LNG
Shree Cement Ltd
Shree Renuka Sugar
Solar Turbine, USA
Sri Ram EPC
Tata Electric Co. Ltd
Tharmax India Ltd
Thyssen Krupp
Toyo Engineering
Transturbo Engineering Sdn Bhd, Malaysia
Veco Engineering, Abudhabi
Walchandnagar Industries

The company also grown in a consistent manner, profits in the past 5 years grew at a CAGR of around 50%. I would not like to talk much on the technical side as it is easily available. With the outstanding track record in engineering expertise, manufacturing capacity, product innovation and global cost competitiveness, GEI remains solid to work out the best business with in the sphere.

Let me conclude, the majority is confident on the power sector and its a fact that power/energy is one of the most demanding business of the time. Ample funds have been committed by Govt as well private players in the Power/Energy sector as its the key to economic growth of any developing nation. A rough statistics, India is likely to commission 50000MW in the 11th 5 year plan and an anticipated 100000MW in the 12th Plan. Its sure that, increased investment in the Power & Oil sector by the Govt as well private players will provide enormous business opportunities to the company. I think, it will be a wise decision to accumulate GEI in small batches, who cools the head of power/energy/oil sectors, it will surely cool us too in the long run.

Comment please…..

Regards

Shabu Thachat – sthachat@gmail.com

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Alert on Parekh

Dear Readers,

Please refer the SEBI order at following link and have a full read with patience, Its informative.

http://www.sebi.gov.in/cmorder/SanjayDangi.pdf

SEBI has banned promoters and promoters group of certain companies on further buy/sell in their own companies cause of some violations of rules/regulations noticed. The name of the companies revealed in the above order is nothing related to us, but name of one entity who is under suspicion, Pacific Corporate Services Ltd has considerable stake in Parekh Aluminex. (Check the following link)

http://www.equityintelligence.com/profile/ShareHPMoreOne.aspx?code=7902

Parekh Aluminex has already crashed by almost 20% (LC) on yesterday (03 December 2010) by when the news spread and I hope the blind sentiment may bring down the stock bit more. There is nothing fundamentally changed with the company/stock/business but there is a chance of possible illegal trades might have revealed in the future on Parekh Aluminex too by Sanjay Dangi group or Pacific people.

I hope its better to exit from Parekh Aluminex, whether lose or profit. Another possible strategy can be take out the Capital or Profit which ever is greater. The stock is fundamentally strong and we can think a re-entry at lower levels once the issues settled.

Check the following link too on revealed insiders...

http://www.moneylife.in/article/72/12111.html

regards

Shabu Thachat – sthachat@gmail.com

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Multibagger series – A muscular one

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Dear Readers,

As promised in the previous post, I wish to light on a probable multibagger stock from my list as belated Onam gift to readers. The stock has made a pretty jump during this period due to increasing demand shaped by the known fundamentals as well the support of on going market sentiments. I have already suggested this scrip to most of my clients well in advance and hope, all of you are positioned.

Following lines are my plain personal conclusions, compilations or suppositions to have and hold this stock for a long time or collectively inspiring me to act on the same. I feel comfortable on the horizon developing by this company or when I search for good scrips to invest, it is one of them I found with appealing rationales and hope the path ahead is promising. If you feel comfy, go ahead.

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As we know, a healthy body can merely clinch a brilliant mind. Every one of us keeps a desire to shape or having a healthy and masculine physique or an elegant feminine figure. The wellness service industry is an emerging sector in India with vast opportunities ahead and it covers a large number of services/products related to health, beauty, fitness & rejuvenation line up (yoga, spa, massage etc.). We are going to discuss on a fuel filled business under the wellness service sector, innovative and efficient to tap the essence of health/fitness market.

The Indian equity market has witnessed an IPO, first in it’s kind in April 2010, nothing else but entry of a promising brand from the fitness industry. Talwalkars Better Value Fitness Limited (TBVF) is the leading, reputed as well experienced fitness chain service in India rather an established name in the industry. The company is already a distinguished name in the sector and I was eagerly waiting this listing by a couple of years. I think, the management has delayed the listing process till April this year, maybe cause of negative atmosphere linked with recession clutter or so. Here, I wish to disclose about one another company from my hot waiting list(ing), possible in a year or two, the “Unitek Power Solutions India Ltd”. Hope you will keep an eye on it.

Company : Talwalkars Better value Fitness Ltd

CMP : 239.35 (BSE-17-09-2010)

BV : 49.54

FV : 10.00

EPS : 3.91

PE : 61.21

52 Wk High/Low : 259.90/132.00

Promoter’s holding: 59.49

The fitness industry is growing at a fastest pace with support of various positive factors in conjunction with the promising Indian scenario. Average Indian’s rising disposable income, increasing numbers of young population and growing awareness on fitness/health concept are few of the supporting factors. There were 5mn people in India had annual income of more than Rs.6 lakh in 2005-06. The figure is expected to go up by 20mn by year 2014. I hope this portion of the population must provide a superior market for the fitness industry in the days to come.

We have more than 83 towns which have a population of around five lakhs, offers a massive opportunity ahead in the concept. There is a significant pent-up demand exists in most of the Tier I & II cities for a stylish health/fitness experience, only if, someone provide in an adequate manner with affordable pricing. However, in India, the age group of 20-45 can largely be identified as the key client group for fitness clubs. A study reveals, the proportion of people in that age group is estimated to go up from 37% in 2006 to 40% by year 2016.

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Indian fitness industry is very much under-penetrated compared to several develop(ed, ing) countries in the world. Statistics says, about 22% of the US population have fitness club memberships, China has around 3% and we are at less than 0.4%. (Our count is even limited to Metro/Cosmo cities). According to International Health, Racquet & Sportsclub Association (IHRSA), about 30% of America’s larger firms sponsored health club memberships for their workforce. The number of companies providing such subsidies has increased significantly in the past few years. It’s a pure business strategy proven by researches and related to productivity issues, rather concerns on the fitness/health of employees. I hope our companies must follow this practice as usual. Shortly, genuine fitness companies have limitless opportunities ahead, cause of the huge supply-demand gap in the industry. Or, there is a visible unexpressed demand for value health & fitness services at average Indian’s affordable price where the term affordable is in a steady uptrend.

The Talwalkar story started in the year 1932 by late Mr. Vishnu Talwalkar in Mumbai and the long existence of the brand equity enables them to stay ahead of the competition. We must value this rich and long-standing experience (almost 8 decades) in the industry as one of the most significant advantage. Recall an ad word, “If you do something by long years, you will be master in it”. Today the company has enhanced their goodwill and clutched a pan-India presence, operating around 70 health clubs in 30 cities belonging to 12 states of the country, serving around 60000 members. By statistics, all these numbers are mounting at an amazing pace too.

TBVF offers a network of complete health clubs to achieve the goals in health, fitness or figure by providing a band of skilled specialists equipped with world class gym gadgets, ready to supply the top-notch fitness experience available in the country. The company offers a diversified suite of services including gyms, spas, aerobics and health counseling under the brand of Talwalkars. I think, they can attach the beauty salon/parlor facilities too for both the genders which will augment their business by availing full set of craze to the generation under a single roof. It seems, they are planning the same with "Star and Sitara" project and no doubt, our youngsters will throw money. The company also have a JV with Pantaloon Retail (India) Ltd, named as TPFPL ( Talwalkars Pantaloon Fitness Pvt. Ltd). The joint venture is focusing in the business to set up health/fitness clubs or similar services especially in reputed malls under the sub brand "Fit & Active".

Talwalkars seriously focusing on the modern marketing strategies including event promotional programs, ads in cleverly selected media platforms etc..(Please watch the appealing ad at HBO). They usually runs several promotional schemes as part of the marketing strategy linked with elating occasions like New Year, Valentines day, Women’s day, Summer, August, and Christmas etc.. In addition, TBVF joins with various reputed national events focusing the brand building. Talwalkars were the Official Trainer” for “Standard Chartered Mumbai Marathon” for the year 2008-10 as well Official Fitness Partner” for “Femina Miss India Contest” 2009.

There are no existing listed peers in India which are purely into the fitness industry. The business model is proficient to unearth the primacy due to factors like strong sector fundamentals including increased demand. In addition, sturdy growth in income from operations as CAGR of 80% and PAT has grown at a CAGR of 100% in last three years. Talwalkars has been achieved a nationwide foot print in a fragmented health and fitness industry which is difficult to replicate. The continuous expansion plans will boost their brand presence on pan-India basis. TBVF has almost tripled the number of health clubs in the last 3 years. The company is continuously explores attractive and innovative business opportunities with reputed brands.

My View on the scrip

I had casual visits at couple of their locations in different cities. Yesterday only, I am visited my nearest branch at Calicut and honestly, I was thinking to set up such a business as my own, by return. I had a talk with few of their trainers and it was an impressive experience to assess the fundamentals of the company/business. The branch is just 3 month old, operating with more than 350 members, average 3-4 add ups in last 90 days in a Tier II city like Calicut!. The list of customers is compelling me to think like, the membership in Talwalkars gradually becoming a symbol of status by the time, the basic symptom I was searching and to confirm.

They are smartly arranged most of the must have things at their alluring centers. Glamorous club atmosphere, smartly selected location/premise, vast range of innovative add-on facilities, modern/quality gym gadgets from reputed brands; smart, structured, cool as well skilled set of gym staff, rare standard of customer care crew band, genuine membership pricing, flexible time scheduling etc.. It is a different world, where you can see few celebrities as your co-exercisers. Shortly, if you are subscribed for a good physique, health or for whatever, Talwalkars will induce you to reach them, every next day the time scheduled for you.

Youngsters are indeed in search to develop a six pack body structure, like our heroes. I too, wished to have such rolling balls on my arms/chest under tight fabrics, but in vain. Any way, fitness, figure and style are the blazing crazes of the generation, Talwalkars required to ignite all these passions properly. The busiest modern lifestyle compelled us or we are more interested to adopt paid exercises than the conventional ways. In other words, we are even ready to drive 10kms for a 10 minute tread mill walk instead of half an hour jog at out doors.

People, especially youngsters, who have such an affordable facility available in his/her surroundings will ready to take a membership in any compact/luxury fitness centre, whether intended to the fitness goal or as a status symbol. I do believe, this company will do miracles for investors and will endow with decent returns in next 4-5 years. The revenue growth of this company is sustainable and the business model is outstanding. The experienced management has set few practical goals which are likely to achieve in near future. The stock has very low downside risk and the upper side is unlimited.

Comment please..

“Twenty years from now you will be more disappointed by the things that you didn't do than by the ones you did do” - Mark Twain

Regards & happy investing

sthachat@gmail.com

Multibagger Series – A front runner

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Dear Readers,

As promised in the previous post, I wish to light on an outstanding scrip in this new fiscal year. The following lines are my plain conclusions, compilations or suppositions to have this stock or all of the following grounds are collectively compelled me to hold this stock even in extreme provocative times. I am watching this scrip by a couple of years and day by day feeling more comfortable on the horizon developing by this company. When I search for good scrips to invest, it is one of them I found with alluring rationales and feels the path ahead is promising. If you feel comfy after a read, go ahead.

BSE Code---------------------------532606
CMP (13/04/2010)---------------- 153.65
EPS-----------------------------------32.98
PE -------------------------------------4.66
BV-----------------------------------205.18
FV-------------------------------------10.00
52 Week Low/High------------------ 53.15/166.90
Ever high since inception ---------301.00(Nov 2007)
Market Cap--------------------------198.82
Chairman/MD-----------------------Amitabh Parekh
Promoter’s holdings----------------33.91%

Parekh Aluminex Limited (PAL) is the leading conglomerate and exporter of Aluminium Foil Containers (AFCs), Aluminium Foil Rolls (AFRs) and Aluminium Lids. PAL is the single largest player in the organized sector in India with more than 75% market share in the business of supplying Aluminium packaging stuffs to Airways, Railways, Reputed Hotel networks and major caterers who serve food on travels/parcels. The ISO 9001:2000 and ISO 22000:2005 certified company is an apex name in AFCs in the globe and especially in the sub-continent.

AFCs are the most versatile, eco-friendly and attractive solutions for punters in this fast-food era. The compliance level and versatile features of these products are making PAL the leader in the segment and their products are utilized in domestic, industrial and commercial sectors globally. It leads the domestic market with sales to institutional/corporate customers including Air India, Indian Airlines, Indian Railways(IRCTC), various flight kitchens including Taj Air Caterers, leading hotel networks, Jet Airways, Kingfisher etc...

The flexibility and recyclable nature of Aluminium Foil Containers makes them the most appropriate packing/serving solution of the time and to the fore. AFCs are 100% recyclable and are far better for the environment than plastic or other alternatives. AFCs can be easily made as per specific requirements to suits user choices on temper, gauge and styles. These are defensive to extreme temperatures; idle from freezer to oven without trouble or damage. An AFC puts a resistant metal wall around the content, which assures product freshness and increased shelf life as well as capable to counter infections/micro-organisms.

Parekh Aluminex Ltd has around 80 avant-garde varieties of molds to form products that can pack every kind of solid, semi-solid and liquid eatable products in a hygienic, standardized and practical way. The company lead the market in the AFR segment with their ME brand of aluminium rolls and are also manufacturing the same on a job-work basis for Hindalco, the largest manufacturer of aluminium in the country, which markets it under the Fresh Wrap brand. The strategic three-year liaison with Hindalco gives the advantage of sourcing raw materials at privileged rates. It has an agreement with ALCAN, one of the established producers of aluminum in the world, to market AFCs and AFRs in Germany; and an agreement with the Danone group for supply of AFC.

The two production units are located in the Union Territory of Tax safe Dadra and Nagar Haveli with high-end production bases. PAL exports products to the United Kingdom, Bahrain, Turkey, Greece, US, South Africa, Dubai and Germany. It has acquired a Singapore-based company DES along with its customer base and has added Etihad Airways, Emirates Flight Catering, Gulf Airways, Thai Airways, and Singapore Airlines along with others as its customers. With over a decade of presence in international markets PAL has established a good name with international buyers for quality, variety and for punctual supplies. PAL has also in endeavor to trial exports to fresh markets like Nigeria, Yemen and Sri-Lanka with positive outcomes.

PAL is the first company in its category to receive the prestigious ISO 9001:2000 certification from BVQI, UK and the only company from India shining in the highly quality conscious European markets. The company assures a zero human touch to the end-product in their whole manufacturing process to preserve strict quality standards and drugs-related hygienic requirements set by international standard setters. By focusing on R&D, Parekh Aluminex is in endeavor to introduce innovative product variants which have not yet been familiar with the global markets. The promoter holding has been steadily increasing in the last few years. The company is under finishing of a 250Cr expansion project and it will boost their production in a great way.

The financial result of PAL for the current year and past 5 years are showing an increase of more than 35% CAGR on both sales and profit. In its first year of operation (1994-95) the company registered sales of Rs.4.40 million, rocketed to Rs.4212.60 million in 2008-09 and expect around Rs. 5400 million in FY 2009-10(It is one of the very few companies on which I usually sit with a calculator after every qtrly results). I hardly consider the transitory technicals while suggesting any stocks but here, having a book value of RS.205.18/- per share, and with Rs.32.98 trailing 12 month EPS, CMP around Rs. 150/- I think it will be a great buy even at current levels. Net Sales, PAT, EPS and BVPS all denotes, this business is heading to the right direction with a right pace. I think the following quote by Buffet, suits best for such scrips. “If a business does well, the stock eventually follows”..

My View on the scrip

I hope multiple fold returns from this scrip if you have patience. The revenue growth of this company is sustainable and the business model is outstanding. The gifted management has set few realistic goals which are likely to achieve in very near future, considering the history and current growth pace. The business has huge growth potential in the future and their products sell like FMCGs where the demand will keep increasing. The company has made big moves to penetrate the foreign markets. In addition, the booming retail spectrum, fast changing consumer trends, involvement of starred or reputed hotel chains, increasing fast food outlets, escalating Air & Rail traffic numbers and sizzling tourism scenarios will surely bless us in the long run. The stock has very low downside risk and the upper side is unimaginable. We will talk about this scrip after 2 more Aprils and hope you may secure your positions well before..

Dear clients , An anticipated ban on plastic is ahead and we may say “bye” to Manjushree at the right time and I hope PAL is the most appropriate substitute. Accumulate till that time and don’t skip the following link.

http://www.forbes.com/lists/2009/24/best-under-billion-09_Asias-200-Best-Under-A-Billion_Company_6.html

Comment please...

Happy investing & Regards

Shabu Thachat

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Multibagger series - a solid player

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Dear Readers,

The following is a guest post by Mr Jagadeesh Reddy Yaramada, one of my esteemed clients and a young, fervent investor from Hyderabad. He has prepared an admirable research on an emerging company involved in the niche, LED Lighting and Display sector. The article is with ample statistics and he has concluded with his viewpoint on the business model and the future potentials of the product range with logical means. I am publishing this article with pleasure. Request my readers/clients to have a close read and comment…

MIC Electronics

With current numbers there is a huge gap between the demand and supply of electricity in India and this gap is expected to widen in future, with only so much of electricity available and though new power projects are being built, but the demand is also expected to rise at the same pace. So it is very critical to use the electricity produced efficiently and the company we are talking about operates in the area of LED Lighting and displays, which are 10 times more efficient.

It is estimated that electricity for lighting costs about $185 billions annually, the globe consumes 2300 TW.h of power and generates about 2bn tones of toxics annually. Since LEDs are about 10 times more efficient and since Governments all over the world are looking to reduce carbon emissions, I think MIC stand to gain from this.

Company Snapshot

BSE Code: 532850

Market Cap: 443.87 Cr

CMP: 43.75(09/02/2010)

EPS: 5.72

P/E: 7.65

52Wk High/Low - 59.90/14.35

Book value: 28.80

Face Value: 2.00

Chairman: Dr. M V Ramana Rao

LED Lighting

MIC has a vast range of LED lighting solutions available to cater from homes to large industries. The application potentials of the LED lights are enormous. The lighting gamut covers Architectural lighting, Channel letter/contour lighting, Consumer portable lights, Residential lighting, Retail Display lighting, Entertainment lighting, Safety/Security lighting, Outdoor lighting, Off-grid lighting(solar powered and others), Commercial / Industrial lighting and Automotive applications.

Indian Railways planning to modernize over 599 railway stations across the nation and decided to replace the single color LED displays with the multi color LED displays. MIC being the only Indian company approved by the RDSO and there is a noteworthy business break of more than Rs.700 cr over the next four to five years.

MIC has secured an order for transforming 10000 street lights of various kinds to LED lights in the city of Rajahmundry (Andhra Pradesh). More cities from in and out of India are expected to transform to the high efficient LED solar lighting systems as a better power saving option. City of Pittsburgh (USA) and Campbell (Australia) has been selected MIC's street lights for evaluation and the lights are undergoing trials. Is the beginning?

The portable Solar Rechargeable LED Lantern has been recognized by The Energy Resources Institute (TERI) and they have declared the adoption of MIC’s solar lanterns for their prestigious 'Light a Billion Lives' (LaBL) program. It is expected that, each Lantern is expected to replace 500-600 liters of Kerosene in general, thus mitigating about 1.5 tons of Carbon Dioxide emissions.

LED Displays

MIC's flagship products, LED Video Displays (indoor/outdoor/mobile) have become an integral part of Sports Stadiums, Transportation Hubs, Digital Theatres and Theme Parks, Advertisements and Public Information Displays in Railways and Airports. MIC has already partnered with IPL for providing LED displays. The company is mastered in following range of LED displays.

Indoor Video Screens
Digital Posters
Outdoor Video Walls
Mobile Video Displays
Digital Billboards
Digital Posters
Ticker Displays
Perimeter Displays
Variable Signage Displays
Networked Displays
Interactive Displays
Passenger Information Displays
Digital Theme Parks
3-D Displays


Recognitions

ISO 9001: 2008 certification.

Approval from MNRE for Solar LED Lantern.

Selected for "Best Under 1 billion" by Forbes Asia, one of the 22 Indian companies among 200 of Asia Pacific region.

RDSO Approval for True Colour Passenger Information Display System.

Only Indian company having ‘Design-to-Display’ capabilities in True colour LED video display Segment.

The first company to introduce LED Mobile Video Display in India, Middle East & South Africa

My View:-

Over 1.6 billion people in the world lack access to electricity and 25% of them live in India. I am expecting these solar lanterns to find more demand in future. Governments have already started talking about reducing emission and saving energy, the LED lighting developed by MIC would find usage in more and more cities across the globe in coming years. Few cities have already started the transformation process. With India’s focus on improving Infrastructure, MIC Electronics appliances like LED sign boards, advertising screens would find a good demand in areas like Expressways, new Highways, Airports or in such public venues.

MIC’s LED Displays have already been deployed at a number of sports stadiums across the world and many more stadiums would soon be follow the suit. There is around 1000 cr marketplace with Indian Railways itself for supplying coach lights, signal lights, emergency lights and for coloured display boards, sign boards and advertising screens. MIC as the only company approved by Research Design and Standards Organization (RDSO) has set to gain good business from the world’s largest Railways.

I am expecting, much more organizations will transform their Industrial and Outdoor lighting systems to more efficient and renewable solar LED lighting systems, which could provide a very good opportunity to MIC. LED lights with their long life span and less maintenance costs are expected to find use in Refrigerators, Traffic lights, Petrol pumps, mobile phones and for a lot others in the 24x7 category.

by Mr Jagadeesh Reddy Yaramada, Hyderabad

Thanks a lot Jagadeesh. I too believe that MIC is in the path of making a multibagger, but we have to offer adequate time to the management. The appealing range of products is compelling me to think vibrant on this scrip. Like all the other products, the fast growing advertising industry will undeniably boost the MIC business in very near future. It seems the flex board advertising trend may shift to the MIC LED displays in short span of time which will illuminate our malls, cities and highways.

Thanks again and keep it up...

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A Multibagger again...

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Dear friends,

I would like to recommend a scrip to readers as my gift on this new year 2010. My sense have already been diagnosed and decided this scrip to consider as a multibagger on the basis of their history as well as future growth prospects of the business model. This gem stock, I have already been recommended to my certain clients and most of them enjoying tremendous returns in a very short span of time. Hope they will comment their own about their experiences, gains and views. I am still confident on this company, it’s management and the business model they involved. Decide if you are convinced after a close scan on the following lines.

BSE Code - 532950
Scrip - Manjushree Technopack Ltd
Sector - Packaging (Plastic)
CMP - 52.55 (08/01/2010)
EPS - 6.60
PE - 7.96
BV - 43.88
FV - 10
52 Week L/H - 10.05/53.80
Buy Range - 40-55 (Accumulate in every falls before 55, reasonable in SIP manner even before 60)
Ever High post 2000 - 66.00(Feb 2008)
Market Cap - 71.21
MD - Vimal Kedia
Promoter’s holdings - 55%

Highlights

a) Recession proof - MTL kept an average of more than 60% growth in PAT (Last 7 quarters).

b) The fast changing and innovative packing trends from conventional to compact with unique styles.

c) The dominant client base including established FMCG/Pharma giants.

d) Stable demand on packaging products ahead.

e) The growing retail industry and increasing power of purchase.

f) Efficient Management.

Bangalore based plastic packaging major; Manjushree Technopack Ltd (MTL) is a public limited company, with over 25 years of packaging experience. MTL has build expertise in entire variety of nonflexible packaging solutions including PET Containers, Multilayer PP Containers and PET Preforms which make use of the European, Japanese and Canadian technologies.

The variety of plastic packaging products of MTL for domestic as well as exports caters leading players in evergreen FMCG, Pharma and Food Processing segments including giants like Unilever, GlaxoSmithkline, P&G, Cadbury and Nestle etc. MTL is providing packaging solutions for a vast range of products such as Confectioneries, Tea/Coffee, Personal Care products, Pharmaceuticals, Food products, Sales promotional stuffs, iced tea, Ready-to-drink beverages, Fruit juices, Jams, Ketchups, Mayonnaise, Sauces, Milk & Dairy products, Infant foods, Soups, Agro-chemicals, Gherkins, Aerated Beverages, Household cleaners, Pickles, Health Supplements, Mineral water, and liquors etc.

A rough calculation of my own says, I buys more than 8-12 products indirectly of Manjushree in a month. This observation is factual and, I have accumulated their empty containers to count, for this purpose for more than three months. Funny, but in worth… Now, what about you? Observe and comment.

The 200,000 sq ft. facility of MTL includes two high-tech production plants that comply with European Food-Grade Manufacturing Standards, a 'Class 10,000 Clean Room' (The Hygienic standard specified for pharmaceutical containers). The company is capable to produce anything from 5 ml to 15L in various neck sizes and designs, with a wide range of closures & sealing options. To the entrepreneurs.., go ahead free with your products/business, the packaging solutions are ready. I am not neglecting the proposals to a possible ban on plastic products, but it will take time, because we are in India.

The company has won Asia Star and India Star awards on various packaging designs and innovations. The major clients includes Coca Cola, Pepsi, Kraft, Hindustan Lever, Nestle, Britannia, Glaxo Smith Kline, Procter&Gamble, Tata, Goodricke Group, Cadbury, McLeod, Godrej, Nutrine, Orbit Wrigley`s, Perfetti, Wipro, Parry`s, Kellogg’s, Henkel, Pfizer, MTR, Heinz and several other leading players in FMCG/Pharma segment. Marketing offices at the major metros/cosmos including Mumbai, Chennai and Bangalore effectively coordinating and liaise with clients across the country.

Mr. Vimal Kedia, Managing Director, under his impressive leadership, Manjushree has grown from being just a plastic product company to the today’s muscular stature. He has been felicitated with the “Best Entrepreneur Award” from the President of India. The company has ranked amongst Top 500 SMEs (Small and Medium Enterprises) in “India’s 1st SME Top 500 Awards”.

My View on the scrip

I strongly believe, this company will do miracles for you in long term. The packaging sector has not been greatly affected by recession. In fact they have registered growth in most of the cases. Coca Cola and Pepsi have even registered about 30% growth in the peak recession era.

The overall packaging (Packing/styles/dimensions/labeling) is increasingly becoming a differentiator for products in every FMCG categories. As you aware, the sectors, FMCG, Pharma and Liquor has been growing at a consistent pace, and the packaging sector has a constant demand simultaneously. These industries will continue to drive the growth of packaging industry, and at the same time modern retail spectrum is growing at a fast pace. The entry of payers like Walmart, Spencer etc… will surely accelerate this growth as well as leading home players like Reliance & Birla. Many FMCG companies have changed their formats of packaging from ordinary paper boxes, metal and glass containers to a variety of fancy plastic containers (baby foods/nutrition drinks etc) with varied options of closure systems, labeling and decorations and the process is ongoing.

Let me tell the most solid and positive point which established my faith on this company. The branded and popular packaging styles/patterns of leading products can not be easily changeable/modifiable by manufacturers especially in case of Consumer goods, Pharma & Edibles. The recognized brand or goodwill concept of products in certain shapes which carved in our brains is not easily changeable. In essence, the shape of Junior Horlicks container is established in your kids’ brain, you will strive hard to convince him/her with another container as Junior Horlicks. In simple words, companies have to spend millions again to market an existing product in new pack, will they?

Plus, the ongoing fully automatic filling processes designed in compatible with existing container patterns may restrict companies from frequent changes in packing. Both the above reasons are specific to packaging industry and moreover I hope, it will keep the clients with MTL for long term which will ensure stable demand for their products.

Manjushree Technopack Ltd comes under a unique class in the sector in all respects and keeping a superior reputation in the field. Accumulate!..

We will talk about this scrip again ...after 3 years….

Comment please…

Shabu Thachat – sthachat@gmail.com

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Hanung - A serious toy?

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Dear Readers,

With out much introductory notes, I would like to talk about one of my favorite stocks. This post dedicated to unknown readers (other than my clients) who donated their own, from their gains on my previous recommendations. The company we going to discuss, is not comes under any established or conventional emerging sectors, but still I have good faith on this company, their business as well as on its able management.

In 1990, Ashok Kumar Bansal, a chartered accountant felt, he have tired of helping others to get rich, decided to strive something own with his own ideas. In search of a new "export item” he chosen two, liquid mosquito repellent and soft toys. Mr Bansal realized that the exports of the mosquito repellent would be restricted to Asia as “the lack of mosquitoes in the developed countries". That realistic thinking made the soft toys as the logical choice. It is important to mention that, there was no quota for soft toys at that time, since the category hardly existed in Indian market. (The vision)

With Rs 25 lakh borrowed from his father, Bansal set himself up in business. He has arranged a technical collaboration with Korea's Hanung Industrial Co. He also took up the Korean company's name for a simple, practical, but clever reason. "India was not associated with quality products then," he states. "We were seen more as a Korean company than Indian. That helped in getting orders." (Survival Technique)

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Company Snapshot

BSE Code - 532770

Sector - Misc (Soft Toys & Home Furnishings)

CMP - 115.45(13/11/2009)

EPS - 24.57

PE - 4.70

BV - 121.29

FV - 10

52 Week L/H - 24.25/132.30

Buy Range - 85-110(Accumulate in every fall/SIP )

Ever High post 2000 - 300(Jan 2008)

Market Cap - 290.82

Chairman - Ashok Kumar Bansal

Promoter(s)’s holdings- 63.25%

HTTL is engaged in the manufacturing & exporting of stuff toys & home furnishing products. The business consists of soft toys manufacturing facility, home furnishing production facility and textile processing facility. The company is treated as largest producer and exporter of Soft Toys, Decorative Cushions and Room Furnishings in India. The company also launched a wide range of home furnishing with attractive colours, designs and fabrics. Hanung is the largest manufacturer and exporter of Non- Toxic, child safe stuffed toys in India.

HTTL has more than 100 distributors, more than 3,000 retail stores and multi brand outlets. The company has signed an export order tie-up with a leading US buyer for exporting home furnishing to the extent of USD 50 Million (about Rs 2,000 million) to be completed by December 2009. Further, the company has so far signed long term export contracts worth of $265 Million (about Rs 10,600 million). In April 2008, HTTL signed a MOU to acquire 100% stake in a Chinese soft toy manufacturing unit, having an annual installed capacity of 10mn pieces. This unit is said to have infrastructure to double Hanung's toy competency in the long run. It is expected that, this acquisition could further strengthen HTTL's international presence, improve its overall market share in the toys segment and will help to expand the overall margins.

HTTL continues to record sturdy order flows even in the midst of an uncertain export environment. Entering in long-term contracts with organized clients is not a common practice in the textile industry, as international retailers lean to alter their sources of supply based on fast changing fashion trends. HTTL has managed to enter into 2-3 year contracts with its clients. In milieu of concerns of a slowdown in the US imports, the long-term mode of such contracts provided greater visibility to Hanung's revenue flow. At present, HTTL has a healthy order build up of Rs. 1350 cr. of which Rs. 1060 cr. are long term orders, which are executable over a period of 2-3 years (be patient)

Recognitions

The ISO 9001-2000 certification

International Standards like EN-71, ASTM and BS-5665.

IKEA has certified as I-WAY and 4-SIP vendor.

Target Group USA’s approved vendors.

Wal-mart certified factory and their approved vendor.

JC Penny USA certified factory and their approved vendor.

CHF Industries USA client.

The Metro Group of Germany’s ‘Approved Manufacturing Practice Certificate'.

Lillian Vernon Corporation of USA’s 'Certificate of Appreciation'.

SPLASH, the brand for domestic furnishings, was started in 2004. Mr Bansal says. "What took the toys business 17 years to achieve, the furnishings business has given us in just three years" . In very short time, HTTL has managed to export 90% of its production of Home Furnishings to all major markets including, USA, Europe & Latin America.

Client Base

India

Lifestyle
Shopper’s Stop
Westside
Big Bazar (Pantaloon group)
Pyramid
Globus
Landmark.

USA

America Pacific
Springs Global
Britanica Home Fashions
CHF industries
Kojo Worldwide

Europe

Ikea Sweden
Debenhams UK
Wal-Mart ASDA UK
Metro Group Germany /Italy
Marko Group - Poland
Francodim France
Carpenter Sweden
Loja do Gato preto Portugal

Latin America

Sodimac Home Centre Chile

Right now, Hanung is preparing Christmas-themed toys and shaped cushions (Santa Claus, snowmen and reindeer) for Europe and North America. In India, on the other hand, while big cats are a perennial favorite, the current craze is cartoon and animation characters. The company has also discovered the potential of film merchandise, apart from becoming a licensee for Disney characters, the company tied up with Percept Picture Co to manufacture Hanuman toys based on the recent hit animation movie.

One of the biggest reasons for Hanung's success is its cost management strategy. It saves on raw material by entering into long-term contracts with suppliers. Its plants are located in tax-free and special economic zones, leading to substantial tax savings. "Competition is growing. But we hope to be a Rs 1,000 crore (Rs 10 billion) company by March 2010," says Bansal. (The sheer Confidence)

My View on the scrip

I am very much confident on this company and it is one of the “possible multibagger” scrip from my hot list due to following reasons:-

a) A company which have order book value is several multiples of it’s market Cap.

b) The consistent growth rate.

c) Monopoly in domestic market.

d) Attractive current valuation

e) The reputed high net worth foreign/domestic client base

f) The efficient, intellectual and visionary management like Ashok Kumar Bansal.

g) The company which most responsive to trends

Mr Ashok Kumar Bansal is an innovative and one of the intelligent entrepreneurs in our country. I strongly believe that he will keep additions and deletions with his business according to the changes of his surroundings as well as trends. The goodwill and reputation of the company/products in domestic and international market is really envious.

A bit personal and about the realaiability of their product, I have bought a Teddy Bear some seven years back for my son is still with us unharmed.... and his younger sister plays that....It is glad to have some shares of HTTL next time, while you buy a teddy bear for your kids from Hanung's range.. In my view, this scrip has all that vital characteristics to be a multibagger!.. minimum 4-5 times…Lets see....

It seems, Mr Ashok Kumar Bansal is fully aware about the following famous qoute of Charles Darwin:-

"It is not the strongest of the species that survives, nor the most intelligent, but the one who most responsive to change"

Comment please..........

Shabu Thachat

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Patience - Pays

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Dear Readers,

What are the essential traits for a smart investor? Let me answer this question in my own way.

In my view, the first and foremost quality of an investor is having good knowledge. Generally, he must have sound knowledge on his entire investment stratum. Here, the word knowledge is pervasive from the updated information on the intact subjects to the expertise he attained by experiences which may useful to him as an investor. Broadly, he or she should have updated wisdom with in the sphere.

The second aspect as well as the true subject of this post is “Patience”. I wish to discuss about this key topic with an investor’s angle. Patience is one of the most indispensable and must have element for any investor. Please relate the following lines with an investment angle rather than the logical harmonizing of the word “Patience”

The Dictionary (Webster’s) defines “being patient” as follows:-

(a) Enduring pain, trouble, etc. without complaint
(b) Calmly tolerating insult, delay, confusion, etc.
(c) Showing calm endurance
(d) Diligent, Persevering

Patience can be described as a state of endurance under intricate circumstances. In other words, keep yourself stubborn towards delay or provocation without being bothered or distressed. The word “Patience” can also interpret as a decision making quandary which involves both the options of either a small remuneration in a short term, or a more precious return after a long period of time, pointing to the worth of waiting, You can realize with in nearly all of the investment options, delayed rewards are persistently on the higher side than the price of immediate gains.

When come to the stock market investments, the big money is not laying in the buying or selling but it is veiled in the waiting, or we call this patience. Turning a scrip in to multibagger is also not a process of some few weeks. In other words, we have to give enough time to the management whome you selected after a strict and an exhaustive process. The concept is closely related to high end of patience and the reward must be fruitful. I think, majority of the investors are aware about this fact, but a very few or rare percentage practicing it in the real life. It is hard to stay consistent with your beliefs between the frenzied and provocative crowd of experts. But you have to!.. It is not an easy exercise to keep you idle, between the extensive internal or external provocations. The internal emotions also play a big role in the decision making like greed etc.. If you controlled yourself, the hardest part is over. Here I wish to list the third important quality of a smart investor, `faith’ or we call the confidence.

Let us see how these three essential elements related to each other. The word “patience” is very much synonymous with the “faith”. You have good faith in you, that is the reason you are keeping good patience towards your decisions. The sheer faith probably restricts you to act against provocations. The faith again closely associated with your “knowledge”. To have patience means to have faith in your selections, decisions, knowledge and above all in yourselves. Again, the faith or sheer self-confidence is a distilled product of true knowledge you attained. You can see, how these three terms are related to each other, the Patience, Knowledge and the Faith. Please read the para again, if you wish to take it as a serious note.

I wish to compare the investment in stocks with growing a seed. You have to let the seed to sprout, gradually to a plant on the way to become a huge tree. As you know, the tree has much higher value than the seed or the early plant. Certain trees bestows you delicious fruits through out its life as dividends. If you can grow a forest or a farm in this sense, it will endow with an unmatched returns or it may change the life of your coming generations.

Following are the very few worthy examples of the fruits of patience in recent past. I have placed the turn around value of Rs. 10000/- at the bottom of each scrip.

Sesagoa

Price in Oct 2001 - Rs. 41.70
Price in May 2008 -Rs. 4390.00
Returns - 10427.58% (7 Yrs)

Rs. 1052758.00

Bharati Airtel

Price in Nov 2002 -Rs. 21.50
Price in Jan 2008 -Rs.1010.00
Returns - 4597.67%(5 Yrs)

Rs. 469767.00

Electrothem India

Price in Jun 2003- Rs. 2.45
Price in Jan 2008 -Rs. 619.00
Returns - 25165% (5 Yrs)
Rs. 2526500.00

Bajaj Electricals

Price in April 2003 - Rs. 20.00
Price in Oct 2009 -Rs. 835.90
Returns - 4079.50 (7 Yrs)

Rs. 417950.00

Crompton Greaves Ltd

Price in Sep 2001 - Rs. 18.10
Price in May 2006 -Rs 1225.00
Returns - 6667.96%(5 Yrs)
Rs. 676796.00

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Axis Bank

Price in Jan 2002 -Rs. 25.70
Price Jan 2008 -Rs. 1291.00
Returns - 4923.35% (6 Yrs)

Rs. 502335.00

Data courtesy : http://www.bseindia.com/

There are hundreds of scrips in this category and it is not possible to list the entire. I am not disregarding the complexity on decision making on the entry or exit point in such stocks rather wish to illustrate the power of patience.

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Do you believe, you have such diligence in you to devour the fruits of patience?

Learn the art of patience. Apply discipline to your thoughts when they become anxious over the outcome of a goal. Impatience breeds anxiety, fear, discouragement and failure. Patience creates confidence, decisiveness, and a rational outlook, which eventually leads to success - (Brian Adams)

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Comment please...

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