Asian Granito long term pick with rising operating margins and greater returns

 Asian Granito has “ample levers & catalysts” to spur operating margins and outperformance: Edelweiss

Asian Granito India Ltd., incorporated in the year 1995, is a Small Cap company (having

a market cap of Rs 1473.23 Crore) operating in Construction sector. Asian Granito

India Limited is engaged in the business of manufacturing of tiles. The Company offers

tiles, such as wall and ceramics, and marble and quartz. The Company manufactures

various types of vitrified tiles, including glazed and polished in over 1,200 designs. The Company also exports tiles to approximately 50 countries.

For the quarter ended 30-09-2017, the company has reported consolidated sales of Rs 273.01

Crore, and has reported net profit after tax of Rs 13.97 Crore in latest quarter.

Stock is in uptrend - Buy at 493, Target - 550 to 650, Time Frame - 1 to 6 Months, SL- 450

Edelweiss has recommended a buy of Asian Granito.

As expected, the rationale is flawless:
“Beneficiary of GST + Product mix driving profitability
Asian Granito India (AGL) is the fourth largest tiles manufacturer in India, with ~33MSM capacity and accounts for ~8% of the organised tiles market. AGL produces ceramic wall & floor tiles and digital, polished/glazed vitrified tiles. It is also engaged in marble and quartz manufacturing with an annual installed capacity of 1.3MSM. The company has a wide range of tiles portfolio offering 1,200 plus designs across the INR 30 to INR 165 per sq ft price range. A vibrant product range, aggressively expanding distribution network, sustained capacity expansion and potential benefits of shift of market share to organised players are expected to aid AGL outperform peers. We estimate AGL to clock revenue/PAT CAGR of ~19%/45.7% over FY17‐19E, respectively, with healthy RoCE of ~20%. Initiate coverage with ‘BUY’ and target price of INR 640.



Ample catalysts to spur outperformance
AGL’s is expected to clock revenue CAGR of ~19% over FY17-19E primarily driven by increase in tiles sales volume CAGR by 16.7%, improvement in utilization, introduction of new products and increase in distribution reach to 5,500 sales points. AGL is targeting INR 2,000 cr sales over FY17- 21E. GST implementation is expected to lead to market share gains for organised players as Morbi players: a) may convert into organised players as it will be difficult to bypass GST; b) may shift focus to export markets to replace anti-dumping duty hit China, thus helping organised players like AGL gain domestic market share; or c) could outsource their facilities to organised players.

Ample levers to spur operating margin
We estimate AGL’s operating margin to catapult 180bps over FY17-19E on account of: (a) increased contribution of VAPs; (b) higher B2C sales (from 35% to 50%); c) lower gas prices; d) sharpening focus on branding; and e) expansion of dealers’ network— planning to add another 90; targeting 1,200 dealers by FY19. Ergo, we estimate the company’s EBITDA margin to jump to 13.4% by FY19E.

Outlook and valuations: On strong turf; initiate with ‘BUY’

The key drivers that will spur AGL’s surge are: 1) rising capacity; 2) focused vertical for value-added products; 3) aggressive launch of new products; 4) expanding network; and 5) demand recovery. These, we believe, will boost the company’s profitability in coming years, which is likely to lead to re-rating of valuation multiple. We initiate coverage on the stock with ‘BUY’ recommendation and target price of INR 640 based on 25x FY19E earnings (12% discount to Kajaria’s target multiple). The stock is currently trading at 24x/16x FY18E and FY19E earnings, respectively.”

 Asian Granito has “Multiple growth levers” and is well placed to reap the benefits of the favorable outlook for the tile and quartz industry: Religare

Religare has also recommended a buy of Asian Granito on similar logic:

“Multiple growth levers
Established in 2000, Asian Granito India Ltd. (AGIL) is the fourth largest ceramic company in India with a global footprint across 53 countries. AGIL manufactures and markets interior & infrastructure products like vitrified wall & floor tiles, porcelain, natural marble composite and quartz. It has 8 state of the art manufacturing units spread across Gujarat and has 196 exclusive showrooms across lndia.

• Investment rationale
• Given India’s consumption potential, demand from retail is expected to remain robust in the next few years. Thus, the management is focused on increasing the number of its exclusive outlets from 196 currently to 500 by FY21E. It is targeting revenue mix of 50:50 (retail:institutional) in the next 3-4 years from (35:65) currently.
• GST implementation will help the organized players, including AGIL, to gain market share in the coming years. To encourage domestic manufacturers, the government has imposed an anti-dumping duty between USD 0.79 per sq mt and USD 1.87 per sq mt on all vitrified tiles imported from China in April 2017 for a period of five years (valid till 2022), which is expected to provide some relief to domestic tile players.
• The management is planning to increase its capacity utilization to 85% in the next 3-4 years from 65% in FY17, while selectively outsourcing the production of non-value added tiles. It is focusing on going through JVs and outsourcing model to expand its tiles capacity, which will help it to create an asset light business structure.
• The market for quartz stone in India is estimated at around Rs. 450 cr, which is growing at ~30% every year. Further, the export market for quartz stone is huge and it is targeting exports to US, Canada, EU and other Middle East Asian countries. The management is targeting to triple its quartz revenue in the next 2-3 years.
• The proportion of revenues from value added products is expected to increase from ~35% to ~60-65% over the next 3-4 years. AGIL also benefitted from falling natural gas prices in the last 3 years and favorable long term gas supply contracts with some of the major gas suppliers, which we expect to continue in the coming years as well.

Outlook & Valuation

AGIL is well placed to reap the benefits of the favorable outlook for the tile and quartz industry. The management has an ambitious target of reaching Rs. 2,000 cr revenue by FY21E from Rs. 1,066 cr in FY17. Factors like rising disposable income, lower per capita consumption of tiles in India, pick up in real estate sector; rapid urbanization and improvement in rural economy augur well for the tile industry. The company has been launching new and latest products to increase its offerings and providing value addition to its customers. We expect it’s operational and profit margins to improve on back of better product mix, focus on B2C sales, higher capacity utilization and asset light JV expansion plan. We expect revenue and PAT to increase at CAGR of 16.3% and 32% respectively over FY17-20E. We recommend a Buy on the stock with a target price of Rs. 642.”

Next Read : Balaji Amines: A high growth rider
Next Read : Very important financial tips for individuals
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Very important financial tips for individuals

Some very important financial tips that everyone should know ....

1. Avoid buying property on loans as it eats most of your earnings unless you have a clear plan for its repayment. It's important to monitor cash flow. Though, the house will be your asset, your liability will be much more.

2. Start a SIP at a very young age. Try to save atleast 15–25 % of your earnings.

3. Avoid buying a car unless you use it everyday.
.
4. Do not let this sentence scare you. “Mutual fund investment are subject to market risk. Please read the offer documents carefully before investing”. Most people avoid investing in mutual funds just because of this one warning. Yes, there is a market risk, but look at the history and growth of mutual funds.

5. Try having a simple wedding.

6. Atleast 20% of your wealth should be liquid so you can utilize it when necessary.

7. Considering inflation, you are actually losing money if it is in savings bank account. Do not keep huge money in savings bank account.

8. If you invest in stocks, pay due attention.

9. If you invest in stocks have a separate account for delivery investment and Intraday investment. It is easy to monitor this way and also makes tax calculation easy

10. Do not have a belief that property and car make you rich. Its what you save and invest, that is important.

11. Never invest in insurance for returns. Insurance is not an investment option. It is a risk management tool.

12. Never use credit cards for lavish spending. Use credit cards intelligently and for needs not for wants.

13. Cancel all credit cards before you die. Or inform family about all your accounts, credit cards, loans and saving now itself. Even a small residue will cost your family much.

14. Invest on yourself and then on other investments.

15. Always try to balance your earnings with your savings first, then on spending and loans. Never take unnecessary loans. Always have reserve and utilise them and unless no other go never take loan.

16. Always have a plan for future events on your career, life, spending and finance.

17. Always have a reserve on your savings for contingency and urgent situations.

18. Your personal life and health are the most important investment. Do have a regular health check and do healthy workout every day. Stay healthy and live happily.

Next Read : Balaji Amines: A high growth rider
Next Read : Royal Orchid Hotels: On The Cusp of Graduation
Previous Read: Asian Granito a long term stock pick

Royal Orchid Hotels : Turned around, now ready for take off!

Royal Orchid Hotel Limited (ROHL) is the flagship company of the Royal Orchid Group of Hotels. The hotel chain has been in the business since the past 30 years, it comprises 5 and 4 star properties for business and leisure travellers and has an inventory of 3,159 rooms spread across 38 operational properties pan India. The asset value of the current hotels including (joint ventures) stands at INR500 Crore approximately.

The company operates through mix of owned & leased properties,management contracts and JVs with recently focus more shifting towards asset light management contract model.
It is present across all the major business destinations in the country and has strategy to explore tier II and pilgrimage destinations.
It operates under two brands: Royal Orchid and Regenta with presence across categories of 5-star business and leisure hotels, 4-star and long stay hotels, resorts and heritage hotels etc.
The Company’s sales offices are spread across India and the pan India sales team comprises of 100 executives.  ROHL also provides training to its employees through its school of hotel management.
Thereby ensuring quality service throughout its properties

Shares of Royal Orchid Hotels touched 52-week high of as it has announced partnership with UK-based Bespoke Hotels.

With this strategic partnership, Bespoke and Royal Orchid shall work together to enhance each other’s revenues and brand presence in their respective markets, as per company release.
Bespoke Hotels has grown to represent and manage over 200 properties worldwide, with over 50 represented hotels in India, and stands as the UK’s Largest Independent Hotel Group.
Chender Baljee, founder of Royal Orchid Hotels, said, "We are thrilled to have Bespoke Hotels on board, to offer our guests 100’s of hotels abroad, and to market our hotels to inbound International travellers."

Stewart & Mackertich has initiated  coverage on Royal Orchid Hotels (ROHL) with a Strong Buy rating. Their rating underpins the company’s rapid expansion in the hospitality space, its rich property portfolio, new hotel launches and strong management bandwidth.

Investment highlights
Diversified portfolio across categories and locations:
The Company has 42 operational properties with a collective inventory of 3,159 rooms spread over 28 cities. The properties are spread across wide price categories ranging from 5-star to budget category rooms targeting leisure as well as business travelers. ROHL is all set to reach to 50 properties by the end of FY18.

Clear focus on management contracts implying asset light strategy:
The Company started its operations through the ownership model by setting up two hotels in Bangalore. However, over the past 3-4 years, it is increasingly focusing on expanding operations through management contracts and leasing rather than owning the properties. Under management contract, the company charges 2-3% of the revenue as management fees and an incentive fee which varies from 6%-8% of the gross operating profit. ROHL bears no expenses and even the onus of renovation of the property is on the property owner. Out of the 3,159 room keys, 2,112 rooms are under management contracts.

Reduction in GST rate to positively impact the Company:
Royal Orchid Hotels used to pay 21% tax under the pre-GST regime. The GST council has reduced the GST rate on restaurants in five-star and luxury hotels (room rent up to INR7,500) from 28% to 18%, bringing it on par with standalone air-conditioned restaurants. This move is expected to benefit the Company as a majority of Royal Orchid’s rooms fall under this bracket.
The business is expected to perk up from FY18

Asset Light Business Model (insignificant Capex): The Company started its operations through the ownership model by setting up two hotels in Bangalore. However, over the past 3-4 years, it is increasingly focusing on expanding operations through management contracts and leasing rather than owning the properties. Under management con-tract, the company charges 2-3% of the revenue as management fees and an incentive fee which varies from 6%-8% of the gross operating profit. Out of the 3,159 room keys 2,112 rooms are under manage-ment contracts.

Under this model, ROHL bears no expenses and even the onus of renovation of the property is on the property owner. In FY17, its consolidated revenues stood at INR162 Crores, apart from this, its revenues from managed properties stood at INR128 Crore. This is expected to go up significantly in the near future as all the 12 properties which it plans to add this fiscal would be under manage-ment contracts.

Improving Occupancy: Currently, ROHL is sitting at an occupancy of 69% across all of its hotels. However, some of its hotels such as Royal Orchid Central Pune and Royal Orchid Central Grazia, Navi Mumbai, the occupancy is close to 85%. Some of the new properties which have been added during the past two years haven’t achieved high occupan-cy which is averaging out the total group occupancies. This is poised to turnaround in the coming year when the occupancy goes up and reaches an optimum level. The company is planning to develop its land in Powai (Mumbai) under a joint development model (no upfront capex). Looking at the current occupancy rate of its property in Mum-bai, this seems to be a prudent decision, especially considering the fact that the hospitality industry is going through an up cycle.


Lower Finance Costs: The management’s efforts to reorganize the Company’s debt are paying off. ROHL’s debt have gone from a five-year to 10-year repayment period. The interest rates have also come down from about 16% to 13.50%, as a result the interest expense has come down from INR14.92 Crore in 2015 to INR12.15 Crore in 2016

Asset light business model, rapid expansion of properties, favorable taxation structure under GST, turnaround in business operations
coupled with ever increasing foreign tourist arrival and robust air passenger traffic bodes well for the company. We take into consideration the fact that the asset value of the current properties including (joint ventures) stands at INR500 Crore approximately.
We estimate that ROHL would generate a cash flow from operations of INR40 Crores by FY19. We value the company based on the above two facts and arrive at a target price of INR200 i.e of 30 % upside from the CMP of INR 160.

Next Read : Balaji Amines a high growth rider stock
Previous Read : Very important financial tips for individuals

Balaji Amines:High growth rider in the oligopolistic amines industry

This Maharashtra-based company is active in Methylamines, Ethylamines, Derivatives and specialty chemicals. 

It has two plants at Solapur and one plant at Hyderabad. It supplies various products to pharmaceuticals and agrochemical industries along with chemicals and FMCG sector. 

The company's equity is Rs6.5 crore. In the second quarter, the company's sales increased by 16.88% to Rs201.19 crore, while net profit increasedby 39.81% to Rs29.16 crore. 

The export increased by 44.82% to Rs39.81 crore. Recently it has invested Rs66 crore in Balaji Specialty Chemicals. The fancy is increasing on counter due to big investors like Mohnish Pabrai, Porinju Veliyath and others. The stock can be considered on downward movement in prices. The company's profit may cross Rs100 crore this year.

Research report by Edelweiss

High growth rider in the oligopolistic aliphatic amines industry

Strong demand-led volume growth coupled with steady margins
BAL has steadily built up capacity in methylamines and other specialty chemicals between FY10-FY14 riding on the strong demand potential from its key end-user industries — pharmaceuticals and agrochemicals. With limited competition (duopoly) and ability to substitute imports via competitive pricing, BAL is rapidly increasing utilisation levels and gaining operating efficiencies. While its methylamines and derivatives capacity is operating at blended 80% utilisation levels, its remaining portfolio is operating at near 65-70% levels. Methanol being a key raw material for methylamines, a substantial portion of revenues is from price-linked contracts that allow BAL to pass on the methanol price volatility without significantly impacting its gross margins.

Brownfield capacity expansion to add substantially to shareholders’ returns and cash flows
The company is adding production capacity for DMA HCL, morpholine and acetonitrile in its existing facility, Unit III, from internal accruals. Whilst BAL’s existing capacities in DMA HCL and morpholine are nearly fully utilised, the expansion is on account of strong: i) domestic demand for DMA HCL, and ii) potential for import substitution in morpholine. Further, acetonitrile will be a new addition to BAL’s portfolio with healthy demand potential from exports and domestic markets. The additional infusion of INR 60 crore for the three products should add nearly INR 170 crore in incremental revenues by FY19 and up to INR 280 crore at the peak utilisation level. Resultantly, the company is expected to generate cumulative free cash flows of nearly INR 180 crore in FY18 and FY19 with higher asset turns and profitability sans any new investment allocation.

Inexpensive valuation makes it a compelling BUY
In our view, BAL is all set to benefit immensely from its capacities and client base built up historically coupled with incremental expansions. Ergo, we expect strong growth in revenues, improving margins with higher utilisation levels and product expansions. Our earnings estimates per share for FY18 and FY19 are INR35.1 and INR42.4 respectively. We value the company at 18x FY19 earnings estimate of INR42.4/share and initiate our ‘BUY’ recommendation with a target of INR764/share.

Research report by GEPL

Unique business structure provides an edge over its peer
Balaji Amines has unique business structure. It is one of the leading manufacturers of Aliphatic Amines. It specialized in manufacturing Methylamines, Ethylamines and derivatives of them. The company enjoys leadership position in many of its products like Monomethylamine (MMA), Dimethyl amine (DMA), Trimethylamine (TMA), Dimethyl Amino Ethanol (DMAE), Mono Methyl Amino Ethanol etc. It caters to host of industries like Pharma (51% of revenues), Agro Chemicals (26%), Paint Stripping & Resins, Rubber cleaning etc. The company has three state of the art units – two near Solapur and one near Hyderabad. In addition Balaji possess a fully furnished Laboratory which helps the company in development of newer products. It also operates a 5 start hotel in Solapur – Balaji Sarovar, the only 5 star properties in the city.

Niche play provides high growth momentum in the upcoming period
Worldwide Amines technology is a closely guarded process with only few handful companies having access to such technology. For the first time in India, Balaji tests on a indigenously developed products and over the years has become a leading player in the segment and commands healthy market share of 60-70% in domestic region for various products. Balaji has mastered the complex process which we believe, would act as a major entry barrier for domestic competitors and would provide revenue visibility and stable profitability.

Robust Financials makes Balaji Amines lucrative
Consistent growth in the top line also backed by operating margin improvement makes Balaji Amines more lucrative. Consolidated EBITDA margins have improved to 20.9% in FY17 from 16.4% in FY13. This shows that company has improved in operating efficiency. A net profit margin has also improved to 12.8% in FY17 from 6.1% in FY13. Return on equity has improved from 18.3% in FY13 to 23% in FY 17. ROCE has shown strong growth of 9.6% in FY13 to 19.1% in FY17. This makes Balaji Amines a safer bet as compared to others. We believe that this will create a great opportunity for the investor for longer term horizon.

Valuation

At CMP of Rs. 630, Balaji Amines Ltd. is trading at approx 24.5x at its FY17 earnings of Rs. 25.4. With strong margin improvement and strong Business perspectives; We expect stock to trade at 21.4x its FY19E earnings of Rs. 33.9. We assign a BUY rating on the stock with a price target of Rs. 725 which is more than 15% upside from current levels.

Next Read : Sunteck Realty a rising name with 300% return p.a. in organized real estate business

Sunteck Realty: a rising name with 300% return in organized real estate business

Mumbai-based real estate development company Sunteck Realty Ltd. sees organised players benefiting from reforms like the Goods and Services Tax, Real Estate Act and demonetisation going forward. The company expects its debt to reduce to negligible level following a preferential allotment of shares with strong sales in its Odyssey project at Oshiwara, said Chairman and Managing Director Kamal Khetan told BloombergQuint.

Sunteck Realty reported a 35 percent decline in its net profit at Rs 62.12 crore for the quarter ended September on higher expenditure, the company said in a regulatory filing. Total income, however, rose to Rs 351.07 crore in the second quarter of the 2017-18 fiscal from Rs 211.68 crore in the corresponding period of the previous year.

Sunteck Realty to invest Rs1,500 crore in commercial leasing portfolio.it is looking to build a rental portfolio of about 2.6 million sq. ft of office and retail space in Goregoan, Mumbai, and is also aiming for an REIT in the future, says chairman Kamal Khetan.

To cater to the rising demand for commercial real estate, realty firm Sunteck Realty Ltd, having so far focused on building luxury homes, is chalking out plans to ramp up its commercial property business.

Aiming for a REIT (real estate investment trust) listing in the future, the Mumbai-based firm is looking at investing around Rs1,500 crore in the next three to four years on building a rental portfolio of about 2.6 million sq. ft of office and retail space in the Goregoan area, Kamal Khetan, chairman, Sunteck Realty, said in an interview.
Khetan said the investment would be funded through a mix of debt and internal accruals. Last month, the company raised Rs650 crore via a qualified institutional placement (QIP) and promoter capital infusion. A portion of the funds would also be deployed towards construction of new commercial buildings, he added.
At present, Sunteck Realty manages around 200,000 sq. ft of office space, generating a rental income of about Rs20 crore per annum. The company expects that the upcoming commercial developement has the potential to push the rental income to Rs500 crore annually.
“We want to build a huge rental portfolio which is currently missing. The top global funds are aggressively for quality commercial assets. There is a huge demand for commercial office buildings and we may decide to REIT from that portfolio,” Khetan said.

The new commercial complex, which would comprise around five towers, is part of an ongoing mixed-used development called Sunteck City that is currently being built over 23 acre land area. Located within the 15O-acre Oshiware District Centre (ODC), the company had acquired the land in phases between 2010-2012 with a total investment of around Rs 450 crore. The company expects to start construction of the commercial buildings in the next six months and plans to deliver the entire complex by 2021-2022.
“We are looking to investing another Rs 1500 crore. We would need this over a period of 3-4 years. We have enough cash flow and if required we can even raise fund through LRD (lease rental discounting loans),” he said.
The company’s strategy to focus on ramping its commercial lease business comes at a time when many other premium developers including Lodha Developers Pvt Ltd, Rustomjee Group and Kanakia Spaces Realty Ltd are rushing to capitalise on the growing demand for prime office space.
In a report released on Thursday, brokerage firm Axis Capital said that Leasing traction of Sunteck’s commercial property would be aided by further improvement to infrastructure in the ODC area, which is expected to be ready by the time the asset is ready.
Mint reported on September 13, that more than $2 billion worth foreign investment deals in commercial real estate have been closed so far in 2017, mainly to acquire stakes in projects and companies. While Rs3,200 crore (approx $493 million) is being raised by domestic funds to buy office projects, around $1.4 billion of foreign investment is expected to come in to build and acquire office assets.

Next read :  Karnataka Bank-Another Vijay Kedia stock pick

Karnataka Bank: This Vijay Kedia smallcap stock is HDFC Securities’ pick of the week

With an experience of nearly three decades in the stock market, Vijay Kedia is known for his ability to pick multi-baggers. His early picks include names such as ABC Bearings, Punjab Tractors, Cera Sanitaryware and Atul Auto which have multiplied many times over since he invested. In fact, last month Aries Agro Ltd, surged more than 40% in two trading sessions to hit 52-week high of Rs 244, after Vijay Kedia picked up 2% stake in the company. The ace investor is bullish on the shares of Karnataka Bank. As at the end of September-17, he held 2% stake in the company.
Vijay Kedia is not the only one rooting for Karnataka Bank shares. HDFC Securities has a buy rating on the shares with a target price of Rs 210. Karnataka Bank shares closed at Rs 156.3, up by more than 1.1%. HDFC Securities says that Karnataka bank is targeting to double its business to Rs 1,80,000 crore by FY-20, to become a preferred banker to at least 1% of India’s population. Further, the research report observes that the bank expects to increase the number of touchpoints to 3,500 with 1,000 branches and 2,500 ATMs.

In fact Vijay Kedia believes that the stock could be a multibagger. “I’m buying Karnataka Bank.  All my stocks are very simple to explain. The bank has projected to double its turnover by 2020 and simple yardstick which is going on in the banking industry is if a bank has and it is a private sector bank,” he explained in an interview to ET Now last year, adding, “I am expecting it to be a three bagger or four bagger.” Karnataka Bank shares have returned more than 35% in the year so far, as compared to BSE Bankex returns of 40% in the same period.


Net read : Very important financial tips for individuals

Orient Paper & Industries gets NCLT's nod for scheme of demerger

Orient Paper & Industries (OPIL) has received the National Company Law Tribunal's (NCLT) approval for the Scheme of Demerger of the Consumer Electric Business of the company into its wholly owned subsidiary, Orient Electric (OEL). The Kolkata Bench of the National Company Law Tribunal has on November 8, 2017 approved the same.

Upon the effective implementation of the Scheme, OEL will issue and allot to the shareholders of OPIL as on the record date to be fixed, 1 equity share of Rs 1 each of OEL credited as fully paid up for every 1 equity share of Rs 1 each held by such shareholder in OPIL.

The Scheme shall be effective from the Appointed Date i.e. March 1, 2017, upon filing of the Certified Copy of the Order of the National Company Law Tribunal, sanctioning the Scheme, with the Registrar of Companies.

Orient Paper & Industries is part of the C K Birla Group has emerged as a multi-product, multi-location company. The company manufactures and markets range of fans under the name Orient Fans. It manufactures ceiling fans, desk fans, wall-mounted fans, pedestal fans, exhaust fans and multi-utility fans.


Next read : Arvind shareholders will eventually own 3 companies.

Buy 1 Get 2 Free : Arvind shareholders will eventually own three separate listed entities

Nov 9, 2017, 04:00 IST The Sanjay Lalbhai-led Arvind Ltd, the country's largest textile and branded apparel manufacturer, said on Wednesday that it would split into three separate listed entities. 

The move involves demerging the branded apparel and engineering arms into separate entities, Arvind Fashions and Anup Engineering. After the demerger, Arvind Ltd will continue to run the textile manufacturing business. Interestingly, the company started as a textile manufacturer in the 1990s.

Shareholders of Arvind Ltd will get one equity share of Arvind Fashions for every five shares held by them, while they will get one share of Anup Engineering for every 27 shares held by them. The demerger of the parent, with a consolidated total income of over Rs 9,300 crore in fiscal 2017, is expected to be completed in eight-nine months, company officials said. The current demerger comes two years after Arvind Ltd hived off its real estate business into a listed entity, Arvind Smart Space.

On Wednesday, Arvind Ltd's stock price on the BSE closed more than 9% lower. Though company officials said that investors were not able to appreciate the full potential of the value-unlocking process that the group has embarked on, some dealers said the slide in the stock price was mainly due to a drop in its quarterly numbers.

On Tuesday, the company reported a 16% drop in consolidated net profit for the July-September quarter to Rs 65 crore, from Rs 77 crore, mainly due to the impact of implementation of GST in the country. The company, however, said effective April 1, 2017, it has consolidated Tommy Hilfiger Arvind Fashion and Calvin Klein Arvind Fashion as subsidiaries and, therefore, the second quarter results were not comparable. Total income during the quarter under review was at Rs 2,654 crore — up nearly 13% from Rs 2,353 crore during the same quarter of fiscal 2016. 
Next read : Balkrishna industries runs fast post q2 results and bonus issue

Vakrangee to announce Q2 results and consider bonus issue

November 9, 2017:Vakrangee rallied to Rs 592, ahead of its board meeting next week to consider bonus issue and Q2 results. In past four trading sessions, the stock gained 11% after the company said that its board will meet on November 13, 2017 to consider issue of bonus shares.

Earlier in 2012, the company had issued bonus shares in the ratio of 1:1 i.e. 1 (one) bonus equity share for every 1(one) existing equity share held by the shareholders as on the "Record date".

Vakrangee  has moved higher after the company said that its board will meet on November 13, 2017 to consider issue of bonus shares. The stock was trading close to its record high of Rs 586 touched on November 1, 2017 on the BSE in intra-day trade.

“A board meeting is scheduled to be held on November 13, 2017, to consider and approve un-audited financial results for the quarter and half year ended September 30, 2017 (Q2),” Vakrangee said in a BSE filing.

The board will also consider and approve issue of bonus shares and to fix the record date for the same, it added
Earlier in April 2017,Vakrangee had hit a new high of Rs 354 after the company said its board has approved to provide the services of GST (Goods and Service Tax) registration, filing of returns, payment and other value added services through Vakrangee Kendra outlets. The company said it now plans to setup and manage a total of 75,000 “Vakrangee Kendra” outlets across India by 2020, covering the presence in all Postal codes across the country. It has now decided to provide the services of GST registration, filing of returns, payment and other Value added services.

Over the past few years Vakrangee has evolved, from a sub-contractor and information technology (IT)-enabler for e-governance projects, to a company taking on projects on its own. Rising revenue contribution from its retail network, Vakrangee Kendras, has enabled it to move away from capital-intensive and low return ratios e-governance projects to an asset-light business model, with high return ratios.
Earlier in 2012, the company had issued bonus shares in the ratio of 1:1 i.e. 1 (one) bonus equity share for every 1(one) existing equity share held by the shareholders as on the "Record date".

Since July 31, post April-June quarter (Q1FY18) results, the stock outperformed the market by gaining 26% against 4% rise in the S&P BSE Sensex.

Vakrangee had posted 38.5% year on year (YoY) growth in its net profit at Rs 168 crore in Q1FY18, while revenues grew 42% YoY at Rs 1,302 crore over the previous year quarter. EBITDA (earnings before interest, taxes, depreciation and amortization) margins in Q1FY18 however declined to 20.4% from 24.2% in year ago quarter.

Analyst at Karvy Stock Broking expect EBITDA margins to stabilize at 17%-18% as the commission sharing ratio with franchisees changes between 65% to 80% based on the milestone revenue targets.

Next Read : Malabar funds and Vijay kedia's latest buy

Balkrishna Industries runs fast post Q2 results and 1:1 bonus issue

Balkrishna Industries hit a record high of Rs 1,974, up 8%, extending its Thursday’s 2% gain on the BSE in an otherwise subdued market after the board recommended 1:1 bonus share.

“The board has recommended for issue of bonus shares to the members of the company by capitalization of free reserves in the ratio of 1 (one) bonus equity share of Rs 2 each fully paid up for every 1 (one) existing equity share of Rs 2 each fully paid up (i.e. in the ratio 1:1),” Balkrishna Industries said in a statement.

The board also declared 2nd interim dividend of 

Rs 2.50 per equity share in addition to Rs 2.50 per equity share declared in Q1FY18.


Balkrishna Industries reported a better-than-expected net profit at Rs 203 and revenue of Rs 1,114 crore for the quarter ended September 2017 (Q2FY18). The company has recorded highest ever quarterly volume at 49,331 MT, a growth of 15.9% YoY, against analyst estimate of 11%.

“The management has raised both lower and upper end of volume guidance by 5K MT to 190-195k MT for FY18e, implying a quarterly run-rate of around 49,700 MT/quarter in 2HFY18 at upper end of guidance. Foray into newer geographies, new product launches and superior after-sales services are expected to be triggers for BIL as it is continuing to outpace global OTR market growth of around 6%,” analysts at Antique Stock Broking said in result review.
At 12:02 PM; the stock was trading 6% higher at Rs 1,938 on the BSE, as compared to 0.05% decline in the S&P BSE Sensex. The trading volumes on the counter more than doubled with a combined 354,318 shares changed hands on the BSE and NSE.

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Malabar funds and Vijay kedia's latest buy

The Board of Directors of REPRO India Ltd vide their circular resolution effective 9/11/2017, have approved the allotment of 592,592 Equity Shares of Rs. 10/- each at a price of Rs. 675/- per share on preferential basis to Malabar India Fund Limited, Malabar Value Fund and Kedia Securities Pvt. Ltd.

Enclose herewith copy of the Minutes of the Extraordinary Meeting held on November 2, 2017.

The Board also approved the allotment of 592,592 Warrants of Rs. 10/- each at a price of Rs. 675/- per share from whom the Company has received 25% upfront share application money on preferential basis from Malabar India Fund Limited, Malabar Value Fund and Kedia Securities Pvt. Ltd.
Repro India board approves preferential share allotment 

Consequent to the said allotment, the paid up equity share capital of the Company stands increased from 10,903,759 Equity Shares of Rs. 10/- each to 11,496,351 Equity Shares of Rs. 10/- each.

Shares of REPRO INDIA LTD. was last trading in BSE at Rs.762.05 as compared to the previous close of Rs. 773.55. The total number of shares traded during the day was 2250 in over 195 trades.

The stock hit an intraday high of Rs. 789.6 and intraday low of 762.05. The net turnover during the day was Rs. 1739718.

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Why Internet Companies and Startups are not ready to face the stock markets

It has been observed that the internet companies and startups in India are not too keen to be part of stock markets and are not open to the investors of the country. Since the year 2006, the country has witnessed a giant leap in the number of start-ups or the internet companies. This has made India as the 3^rd largest startup hub in the whole world. But out of these, only five companies have listed themselves on the stock exchanges.

These five companies are Infibeam Incorporation which was set up in the year 2007 and is listed both on NSE and BSE, Intellect Design Arena which was set up in the year 2011 and is listed on both NSE and BSE, Koovs which was set up in 2010 and is listed on LSE, 7Seas Entertainment Ltd which was set up in the year 2005 and is listed on BSE, and lastly Yatra Online Inc which was set up in the year 2006 and is listed on NASDAQ.

The experts believe that though there have been many discussions happening on this topic lately, but the share market is not expecting any other listing by any other internet start-up in the near future. They say that there is no upcoming IPO as of now as most of the start-ups are not ready and they need some more time and preparation to come up with IPO.
Though in the current scenario, we have been witnessing a magical increase in the number of IPO’s. While as many as 7 silicon valley companies have gone public in the initial three months of this year, but only a handful companies like e-commerce Shopclues and online furniture company Pepperfry have declared their plans.

One of the prime reasons cited is the inconsistent finances. Recently both Flipkart and Snapdeal have recorded major losses. Though there have been many private investors and world’s biggest investors like IDG and DST who have invested in the Indian startups in past, but raising funds from IPO is quite a challenge. The investors do not invest unless they see soaring revenues and profitability.
Another reason is the lack of innovating new business models. Many new start-ups go with the same age-old model or their competitor’s business models. The retail investors demand for the creativity from the start-ups so that they have better chances of getting success in the long-term. Sometimes, the investors are also found to be hesitant in investing in a high-risk young business that are first or new in the market.

Also, what leads to the failure of a startup IPOs in India is the negative regulations. The startups are measured on the same parameters as the established firms having a completely different business models and growth paths. Though in the last few years, the government of India and also the stock market regulator Securities and Exchange Board of India (SEBI) have tried making the situation less cumbersome for the start-ups.

Next Read : Hdfc Standard Life Insurance Company IPO

HDFC Standard Life Insurance Company IPO Review

HDFC Standard Life Insurance Company Ltd is Mumbai based life insurance provider in India. It offers a wide range of individual and group insurance solutions including Protection, Pension, Savings & Investment and Health, along with Children’s and Women’s Plan. HDFC Standard Life Insurance is considered to be the most profitable life insurance company, calculated on Value Of New Business or VNB, amongst the top 5 private life insurance companies in India. They are launching their first ever initial public offering in November 2017. Let us discuss the HDFC Standard Life IPO review in this post with discussing the issue date, issue price, issue prospectus and issue GMP.
About HDFC Standard Life Insurance Company Ltd IPO :

• IPO opens on – November 7, 2017.
• IPO closes on – November 9, 2017.
• Face value – Rs 10 Per Equity Share.
• Issue price – Rs. 275 – Rs. 290 Per Equity Share .
• Issue type – Book Built Issue IPO.
• Offer For Sale – 299,827,818 shares.
• Minimum lot – Nil.
• Minimum order quantity – Nil.
• Retail Allocation – 35%
• Issue size – Rs. 8245.26 crores – Rs. 8695.01 crores.
• Listing exchange – BSE, NSE.
• Draft prospectus – Download.

Objectives of the issue:

• The benefits of listing achieve the Equity Shares on the Stock Exchanges.
• The sale of Offered to carry out Shares by the Selling Shareholders.

About The Company –

• HDFC Standard Life Insurance Company Ltd has been incorporated in 2000.
• This is a joint venture between HDFC and Standard Life Aberdeen plc.
• HDFC Standard Life Insurance Company Ltd is a leading financial service provider in India offering finance for housing, banking, life and general insurance, asset management, venture capital and education loans.
• Standard Life is an Edinburgh based investment company offering a wide range of financial services across the globe. It is a public company established in 1825.
• This company sells policies through a multi-channel network. Like direct sales through own branches, Insurance agents, Partner Banks and through other financial institutions.
• HDFC Life is present in all over India. They have 414 branches and spoke branches and over 11200 bancassurance branches all over India through their top fifteen bancassurance partners. They also have more than 15000 full-time employees all over India. The company also has around 60000 individual insurance advisors.

Promoters of the company :

• Housing Development Finance Corporation Limited (“HDFC”).
• Standard Life (Mauritius Holdings) 2006 Limited (“Standard Life Mauritius”).
• Standard Life Aberdeen plc (“Standard Life Aberdeen”).

Company Financials:

VALUATION AND RECOMMENDATION

The embedded value (EmV) of a life insurance company tends to capture the longterm profitability of the existing business.Based on this parameter, the IPO is valued at 4.2 times the EmV at the end of September 2017, which is steeper compared with the multiple of 3.3 for ICICI Pru and 3.6 for SBI Life. The IPO is expensive even on the conventional valuation parameters including price earnings (PE) and price-book (PB) multiples. HDFC Standard Life has been growing new business faster with better mix, which may partially justify the premium valuation. Given these factors, the issue is more suitable for investors with  .

Based on this parameter, the IPO is valued at 4.2 times the EmV at the end of September 2017, which is steeper compared with the multiple of 3.3 for ICICI Pru and 3.6 for SBI Life. The IPO is expensive even on the conventional valuation parameters including price earnings (PE) and price-book (PB) multiples. HDFC Standard Life has been growing new business faster with better mix, which may partially justify the premium valuation. Given these factors, the issue is more suitable for investors with  ..

HDFC Standard Life IPO Review:
This year this is the second life insurance company to get listed on the stock exchanges after SBI Life Insurance IPO. The other private life insurer ICICI Prudential Life Insurance Company Limited has already clocked a high of above Rs. 500 from its issue price of Rs. 330. So its time for HDFC Standard Life to join the same club. But the grey market premium is mere 18-20 rupees. The insurance industry is quite competitive and the real growth is available only in the long term. We believe some mergers will happen in this industry. Hence our HDFC Standard Life IPO review has a NEUTRAL view on this issue. Long-term investors can think to invest. We don’t expect a dramatic listing gain.

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