Anil Ambani Companies - Reliance Power/ Reliance Infra

Maintains an observer of the stock market, operators are active on the Anil Ambani group companies and retail investors have started showing keen interest in these stocks. There are rumours that the family will try to save Reliance Power and Reliance Infrastructure. However operators are active also in Reliance Communications and Reliance Capital. The observer points out that even if there is an element of truth in these rumours, innocent investors should be extra careful in investing their hard earned money as even if some companies are saved, they may not be in a position to give adequate rturns to their investors as the debt burden is too high. Prices of some of these shares may go up on account of widespread scattered buying, but there will be limitations to the price rise. Quips the observer there are many operators who are ready to unload their holdings in the rising market and innocent retail investors should not be trapped in this game of operators.

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Ultratech Cement(BSE Code 532538)

A research analyst working with a leading brokerage house is bullish on Ultratech Cement maintaining that as the Covid-led impact on volumes is over in the very near future, Ultratech will chart an upward course, as structural growth drivers for a bounce back are intact. The company – in fact, the cement industry in general, has very weak demand for cement during the last few months as some key states had imposed lockdown. But slowly and gradually the restrictions are being lifted and within a couple of months, cement will be in demand which would led to an uptick in cement prices. In fact, cement companies had effected a price rise in the first fortnight of April and the higher prices have been well accepted in the market particularly in southern and eastern regions. Though in a few micro-markets in northern and western regions there was some resistance but there was only a correction of just Rs. 10 to Rs. 20 per bag.

Experts expect a further rise in coming months on account of sizeable pent-up demand as the infrastructure and real estate sectors have been much better prepared this time with measures taken to retain labour at sites by providing time structural growth drivers for the cement industry remain intact in terms of government’s focus on infrastructure investments (especially roads), affordable housing and improving residential real estate segment. What is more Ultratech has taken up a Rs. 6527-crore capex to expand the cement capacity by 19.5 mtpa which will ensure sustained growth during the next 4-5 years. Ultratech is being rated as a key beneficiary of the upsurge in pent-up demand for cement in the post-covid era.

(CMP Rs. 6720.00, 52 week H/L Rs. 7056/3735, FV Rs. 10)

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Bajaj Steel Industries(BSE Code 507944)

(CMP Rs. 6720.00, 52 week H/L Rs. 7056/3735, FV Rs. 10)

A high networth investor (HNI), known for accumulating little known small shares is advising accumulation of Bajaj Steel Industries, a little known (not related to the Bajaj group of Pune) Nagpur-based manufacturer of cotton ginning and pressing machinery. Interestingly, it is the country’s largest and modern machine manufacturer of delinting and decotticating machinery and world class machinging of components and parts for various applications.

Though it is six decade old, the company has started doing well on the financial front only very recently. During the last five years, its sales turnover has steadily advanced from Rs. 285 crore in the fiscal 2016 to Rs. 390 crore in the fiscal 2020 in which year it has earned a net profit of Rs. 19.16 crore in striking contrast to a loss of Rs. 3 crore in the fiscal 2016 and that of Rs. 13 crore in the fiscal 2013. This is a dividend paying company and has paid 40 per cent dividend for the fiscal 2020.

Of late shares of this company are being accumulated by HNI and knowledgeable investors. Prospects ahead are quite promising as this is the only company in the world producing machineries for all cotton ginning technologies. Thus there is no competitor to the company and is the only supplier to cotton ginning and pressing segment in the world.

(CMP Rs. 1056.30, 52 week H/L Rs. 1112/102, FV Rs. 05)

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VST Industries(BSE Code 509966)

A research analyst working with a leading mutual fund advises not to get disturb on account of the adverse impact of the Pandemic Covid-19 particularly on supply chain disruption. The company has a fundamentally sound balance sheet and is on the path of sustained growth. The company registered a 17 per cent decline in the fiscal 2021 on the back of supply problems due to lockdown in Q1FY2021 and subsequent demand destruction due to reduced out-of-home activity. The situation on the Pandemic front is still uncertain but if the virus does not worsen, there can be around 5 per cent volume growth in the fiscal 2022 and 2023.

On the major plus point there has been a strong free cash flows. Despite the fiscal 2021 being a beleaguered year, the company was able to generate Rs. 286.25 crore of operating cash flow. In fact, for the last four years, it has been generating cash flow of around Rs. 300 crore every year. On the strength of this cash flow, the copany has declared a dividend of 114 per cent, suggesting a dividend payout of 56 per cent. Today, the company has beenm holding more than Rs. 1800 crore of cash and equivalent and does not have any capex requirement in the near future. This means that the company can easily increase its dividend payout to 65-70 per cent for the coming few years. What is more the fact that VST is a debt-free company makes it more investment bet.

(CMP Rs. 3625.00, 52 week H/L Rs. 4538/3120, FV Rs. 10)

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Thyrocare Technologies(BSE Code 539871)

An investment manager of a bank favours investment in Thyrocare Technologies. The company offers wider range of biochemistry-based and preventive health care tests – in fact over 600 tests and 130 profiles of tests which help to detect several disorders. The company offers radiology tests, which involves imaging procedures such as x-rays ultrasounds, CT scan, MRIs and highly specialized PET. CT scans. Though the company’s image was damaged during the first wave of the Pandemic Covid19 but subsequently the company has made concerted efforts to restore its image. The company has emerged a highly beneficial from the boom for medical tests generated by Covid-19.

Recently, PharmEAsy an online pharmacy has acquired 66.14 per cent equity stake in Thyrocare at a price of Rs. 1300 a piece. This acquisition may put Thyrocare in a different league against its diagnostic as the company now gets access to traditional as well as online channels it is said. But this will not lead to any significant uptick to the Thyrocare stock price which has rallied 167 per cent in the last one year.

(CMP Rs. 1332.00, 52 week H/L Rs. 1465/510, FV Rs. 10)

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Balkrishna Industries(BSE Code 502355)

A leading equity investor is reported to be accumulating Balkrishna Industries, a large cap (with market capitalization of over Rs. 37,000 crore) operating in tyres sector and specializing in special tyres for agriculture, off-highway tyres used in specialist segments like mining, earthmoving, aquaculture and gardening. The company is enjoying robust export demand and is doing extreremly well on the financial feront. During the last five years, its sales turnover has steadily increased from Rs. 3788 crore in the fiscal 2017 to Rs. 5758 crore in the fiscal 2021 with the profit at net level shooting up from Rs. 715.14 crore to Rs. 1155.38 crore during this period. The company's financial position is extremely strong with reserves standing around Rs. 6000 crore against a small capital of Rs. 38 crore that too after as many as six bonus issues (five of them in the ratio of 1:1 and one in 1:2). The company has been paying dividend at a very handsome rate, the rate for the last two years being 250 per cent.

Prospects for the company going ahead are all the more promising as the company is an OEM vendor for heavy equipment manufacturers like JCB, John Deere and CNH Industrial. It enjoys at present more than 6 per cent market share of the global off-the-road tyre segment. For FY22, the company is guiding sales volume between 250,000-265,000 MT and this demand trend is likely to continue in FY22 and years to come. However, there may be covid 19 related softness in demand leading us to give a wider range for annual guidance. Again the floating stock is not much with promoters holding 58.3 per cent, FIIs 14.4 per cent and DIIs 14.6 per cent.

(CMP Rs. 2292.00, 52 week H/L Rs. 2337/1230, FV Rs. 02)

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Caplin Point Laboratories(BSE Code 524742)

A research analyst working with a broker house is bullish on Caplin Point Laboratories a pharma company set up in 1990 to manufacture a range of ointments, creams and other products for external applications. After four years it went public and its issue was oversubscribed 117 times up a modern state-ofthe-art manufacturing facility at Pondicherry and expanded its product range and increased its production capacities.

The company has been steadily growing though the Pandemic Covid-19 came at a stumbling block to its pace of growth. During the last five years its sales turnover advanced from Rs. 482.68 crore in the fiscal 2017 to Rs. 527.85 crore in 2017 to Rs. 527 .83 crore in the 2020 but declined modestly to Rs. 347.72 crore on account of supply chain disruptions. Likewise the net profit also risen from Rs. 70.86 crore in 2017 to Rs. 197.84 crore in 2020 before reacting to Rs. 156.23 crore. Prospects ahead are highly encouraging as the company is doing very well on the export front. So far, the company has focuses on the emerging markets of Latin America, Caribbean Francophone and Southern Africa and has emerged as one of the leading suppliers of pharmaceuticals in these regions with over 2800 proudcts licenses across the globe. Now it is entering into regulated markets for injectables through its state-of-the-art manufacturing, capable of handling liquid injectables vials, ampoules, Lyophilized vials and ophthalmic dosages. The Pondicheery facility is already approved by US FDA, Eu-GMP, Anvisa-Braizl and Invima-Columbia.

With steady demand for the company's shares, the stock price has already crossed Rs. 660 per stock of the face value of Rs. 2. Analysts expect the price to enter four-figure space in within a year or so.

(CMP Rs. 686.00, 52 week H/L Rs. 722/305, FV Rs. 02)

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