Cals Refineries Annual Report

Cals refineries is in the process of setting up a petroleum refinery.
It has bought second hand refinery equipment in Germany and Canada and is in the
process of assembling it in Haldia, WestBengal. The location of the refinery on the East Coast would add $2 per barrel in Shipping costs.
Negligible profits at present, and money would start flowing only after 2010.
The board of directors looks impressive, but I'd like to wait till I get more information on this company. This could be a turnaround story.

I mailed the company requesting the annual report and received it promptly.
Nothing interesting in the Annual Report, but I am uploading it here for record.

Company watch #5

It is difficult to find good companies trading at a price that fit my criteria. Nevertheless, here are a few companies I looked at:

grindwell Norton - Apparent PE = 4, (Effective PE = 10) zero debt (CMP = 99)
This company is into making abrasive products used in industry for machining / grinding operations. It is also into the manufacture of indistrial ceramics. It ranks 2nd in the domestic abrasive market (Carborundum PE = 12 is the market leader)

+ Abrasive is a consumable
+ Second Leader in the Abrasive markt (Carborundum, Grindwell, Orient)
+ close to 0 debt
+ promoter Holding 70%
+ MF's increased holdings in June

- industry slowdown ==> lower sales
- chinese competitors ?
- One of the promoters sold around 3 lac shares recently

more info:
http://groups.google.com/group/dpstock/browse_thread/thread/900e929458b63796
I need to research the company in more detail. Need to get hold of some analyst report

Update : Rohit pointed out that the PE is apparently low due to one time income in the Sep 07 Quarter. Excluding this one time income, the effective PE comes to 10. One can see that the Sep 07 EPS is an outlier. Not too cheap!

June 07 2.26

Sep 07 16.48

Dec 07 2.80

Mar 07 2.27

Jun 07 2.66

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CHI Investments (dump)

http://www.capitalideasclub.com/ideas/article-full-90.php?id=74
*NBFC : Holds investments of many companies
+ summation of holdings is 80 Rs per Share

- low market cap - 36 Cr, possibility of manipulation

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Can Fin Homes Limited (CMP : 72) (dig further)
http://www.capitalideasclub.com/ideas/article-full-90.php?id=51
+ PE : 4.84
+ BV : 105, trading at 30% discount to book value

- Housing Sector slowdown / high interest rates will lower sales and margins

note: look for cheaper housing finance companies (LIC housing finance, etc) and wait
for interest rates to come down.

===
Tata Elxsi (I want it cheaper)
http://www.capitalideasclub.com/ideas/article-full-90.php?id=32

Into product development outsourcing
+ PEG = 10/20 = 0.5

- PE = 10
- finding talent in India ..

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Cals Refineries (CMP : 3.36) ??
In the process of setting up a second hand refinery. Plant to operate from 2010.
So I guess that there would be no earnings till 2010. Paucity of information on this company, did not find annual reports. The Board of directors looks impressive.
A possible turnaround ?

I'd like to be on the lookout for more information on this company

Note : These posts are for my own record, these should, in no way be considered as recommendations. I can change my mind and views without notice.

Company Watch #4

Patel Airtemp
+point
low PE
-point
but in the business of Manufacturing Air conditioning. highly competitive industry with a lot of players

HDIL
moderate PE = 8

Orbit Corp
moderate PE = 8

Both HDIL and Orbit Corp are infrastructure / construction companies. I'd like to look at them when they become cheaper in the coming 2 quarters.

Jindal Saw
+points
low PE, into the business of manufacturing steel pipes.
Low Debt/Equity ratio (0.52)
set a price alert at 400 (PE=2.5)

Kavveri Telecom ( CMP: 120)
Into the business of manufacturing telecom equipment.
Low Pe : 6.34
Debt/Equity = 0.45
Negligible FII/MF holdings (Why)
set a price alert at 80 (PE=4)

SPEL Semiconductor (CMP = 23)
High YoY growth, but a high PE (12)
Into the business of semiconductor testing / outsouorcing.
I do not have much knowledge of this industry, but I feel that Chinese / Japanese would be better than India in terms of technology and technical knowledge.
I'll look at this company when I have time. Set and Alert at 16.

At present, Eastern silk looks attractive for me. Since I did not have a large amount of funds, the present round of investment has gone into accumulating Eastern Silk. I'd I would also like to add Compact Disc in case the price falls back to 55 - 60 levels. Kavveri Telecom and Jindal Saw are on my radar at present and I would analyse them in more detail in the next round of investment. Both companies look good, but I would like to buy them at a cheaper valuation. As Warren Buffet says - "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

Banks

Personally, I feel that money lending is a good business as it gives a steady source of income (in the form of interest from borrowers). This is one of the reasons I am planning to include one of the banks into my portfolio. With inflation showing no signs of cooling, it is possible that the RBI would continue to tighten it's monetary policy, Banks would have to raise the interest rates and the amount of loans disbursed would fall. This would affect the Sales and Toplines adversely. Margins are also bound to be affected. One of the reports I was reading mentioned that the profits of banks can be impacted 5-20% over the coming 3-4 quarters. The report had listed the following banking institutions:

I am planning to wait for another 6-9 months for inflation to cool down and the RBI to ease the monetary policy. I'd also look at real estate sector around November for similar reasons . Meanwhile, I'll go look for some other yummy company to embellish my basket with ;)

Company Watch # 3

I found the following compnies listed in the Economic Times as good Mid and Small cap stocks. I noted them down and my take is that the PE's of many companies is too high to pass down my filter.

- gsk consumer (PE = 14)
- PVR - (PE = 20)
- Bartronics - (PE = 11)
- Jain Irrigation - (PE = 27)
- Piramal - (PE = 21 )
- IPCA - (PE = 10.52)

- Numeric Power Systems - PE = 7.56, but I feel the UPS industry would have low entry barrier

- Indian Overseas Bank (CMP = 83, PE = 3.87, PBV = 1) -
Looks attractive, but I feel that the banks are still not going to interesting
to investors for some more time, say 5-6 months till the RBI eases the repo rate and the Interest rates. Reduction in Sales (i.e amount of loans) is possible for some time from now due to higher interest rates. Revisit after some more months.

LIC Housing Finance ( PE = 6.13 )
Will wait for a fall for the reasons same as Indian Overseas Bank

Bharath Electronics (PE = 10.48)

A closing note:
In his book, "One up on wall street", Peter Lynch mentions that high growth companies need to be treated differently. You look at the PE Growth instead of PE. i.e PE / (expected growth). He recommends a value of PEG which is less that 0.5
Bartronics, which specializes in RFID and biometrics technology solutions looks like a growth company, but I am not looking at growth stocks at present due to uncertain economic conditions.

Company Watch # 2

Steel Sector : Price controls lifted. Possible opportunity.
SAIL (CMP: 127):

India Bulls Analyst Report Dated June 1 [buy recommendation at 137]
http://www.business-standard.com/pdf/TU556%20SAIL%20080701.pdf

+points
Debt Equity : 0.22
PE : 6
07 - 08 PAT growth : around 16 %
Steel Prices rising
85% promoter holding

-points
Government Control
5.41 % FII holding - could lead to a further call
Expansion Project overruns
Higher Raw material prices eating into margins

Conclusion : I am not very comfortable with capital intensive industries. Could wait for a further fall. Will take a look at this if I do not find better companies.

Company Watch #1

Company watch is a series of posts on the companies that I scan through when I scout for investment opportunities. Maintaining a record helps me save time in the future as that I can quickly refer to the recorded information when I come across a stock that I had already looked at.

Gayatri Projects : (CMP : 203) - buy at 150
Construction, Infrastructure projects.
+ points
PE : 5, BV 180, 07 - 08 growth = 50 % .
promoter holding 56 percent (increased by 1 % YoY)

- points
debt / equity = 2

Could look good, but wait for a further fall due to high interest rates which lower margins
FII hold 17%, their sell off will give rise to a further fall

Conclusion : Will buy(look) at 150

Kilitch Drugs : (CMP : 108) [look at 40]
Manufacture of Injection Medicines, biggest player in this space(?)

+points
no MF Holding
high YoY growth as compared to previous years., could be a turnaround
promoter holding : 64 % (reduced from 66%)

-points
PE 13.51
USFDA approval this year, could wait for a fall if this does not happen
debt / equity = 1.46

Conclusion : PE is high, Debt is high. Look at 40.

--
Facor Alloys (CMP : 10.16) [can buy provided company is clean]

+points
PE = 2.81
promoter holding = 48.68 (reduced from 50.9)
high YoY growth. Looks like a turnaround

-points
retained earnings are negative ( -306.56 crores). Not sure what this is
owners fund as % of total soource : -37.6%

Conclusion: Something goofy. Look at this in detail.
--
Neha International
Flowers.
PE 66 - forget it.