PREMIER EXPLOSIVES :DARK HORSE

(NSE CODE: PREMEXPLN, BSE Code: 526247) 

COMPANY PROFILE

Premier Explosives Ltd (PEL) manufactures the entire range of commercial explosives and accessories for civil requirement. It is a leading manufacturer of explosives for industrial and defence applications. Currently, it is the only Indian private entity that designs, develops and manufactures solid propellants for Indian missiles such as Akash, Astra, etc. It is also the first company in the world to produce safer and greener NHN (Nickel Hydrazine Nitrate) detonators on a commercial scale replacing ASA (Lead Azide, Lead Styphnate and Aluminum Powder) detonators.

PEL’s products and services include commercial explosives & accessories for mining and infrastructure; igniters and pyro devices; explosives for defence use – solid propellants, igniters and pyro devices; operations and maintenance services – on Government Owned Company Operated (GOCO) basis and Wind Power industry. It supplies its products to the government for defence, Coal India, Singareni Collieries, Neyveli Lignite, etc. It exports to Greece, Jordan, Egypt, Philippines, Thailand, etc. Exports constitute 8% of its revenues.

Recently it received new order From Coal India Is 20% Higher In Valuation As Compared To Last Years; Company has to Execute The CIL Order In Next 3 Years

PEL is the 6th largest manufacturer of explosives in India and caters to all mining sectors like coal, iron ore, limestone as well as the infrastructure sector. It also produces speciality products like Explosive Bolts, Pyro Actuators, Smoke Markers, Cable Cutters, Blazer Plates, etc. for the Indian defence services. It is the only private entity that produces oleoresin based tear gas grenades used for mob control by law enforcement departments. In the defence segment, it caters to the needs of tactical missiles like the Astra, Akash and LRSAM (Long-Range Surface-to-Air Missile).

Negotiations are almost over between BEL and IAI for LRSAM. BEL may obtain a huge order of ~Rs.12000 crore for LRSAM. PEL will be the major supplier for the LRSAM that BEL manufactures. Out of the total cost of any missile, the elements of propellant are approximately 2-5% or Rs.240-Rs 600 crore.

Its investments in knowledge and equipment with respect to solid propellants have yielded better results with volume growth in Akash missile systems. It is creating additional facilities for expansion and backward integration besides establishing an insulation plant. It has planned capex of ~Rs.30 crore, which includes a greenfield project at a new site and expansions at the current site. These projects are expected to be implemented over FY18 and will be funded by internal accruals and a term loan of Rs.23 crore, which has already been sanctioned.

Achievements:

• Successful test fire of the Long Range Surface to Air Missile (LRSAM) by the Indian Navy for which Premier Explosives Limited supplies the solid propellants.
• Delivery of the 100th Akash Missile Booster Grain to Bharat Dynamics Limited.
• Service contract with Solid Fuel Complex (SFC) of Advanced Systems Laboratory at Jagdalpur renewed for another five years from 2015-16.

PEL is focused on high energy materials for defence use. It has obtained Industrial Licenses for ammunition, warheads and other defence products. It is also negotiating with foreign defence companies for technology to manufacture ammunition including Bi-Modular Charge Systems (BMCS) and Armour-piercing fin-stabilized discarding-sabot (APFSDS). Its new subsidiary, Pelnext Defence Systems Pvt Ltd, may be converted as a special purpose vehicle (SPV) or as a joint venture (JV) depending on the outcome of the negotiations.

Expansion:

PEL has accepted APIIC’s (Andhra Pradesh Industrial Infrastructure Corporation) offer to establish a unit over a plot of 202 acre (provisionally offered by APIIC) to manufacture Solid Propellants. It is taking the necessary steps required for firm allotment of land and setting up the unit. It is expected to seek technical collaboration or JV for this new project.

Segments

Solid propellants

With investments in solid propellants, Premier has witnessed volume growth in Akash missile systems along with Sustainer grains for Akash missile systems. At a further advanced stage is the induction of Astra and other missiles range.

Ammunition

With the ammunition license in its kitty, Premier is looking to manufacture ammunition including Bi-Modular Charge Systems (BMCS) and Armour-piercing fin-stabilized discarding-sabot (APFSDS).

Offset Order

In relation to the DIPP regulations, Premier received its first offset order from a US-company. With successful designs and trials, Premier has been able to make the supplies in 2016-17.

Commercial Explosives

The bread butter business of Premier, explosives. This explosive market in India has been pegged at 800,000 tonnes. Including accessories, the total market size of explosives is expected at about Rs. 3,000 to Rs. 3,500 crores annually [Premier is the not the lone wolf in this business. Companies like GOCL and Solar Industries also share a part of the explosives and detonator market].

PEL has undertaken capex to enhance production capacities of bulk explosives and detonating fuses. During FY17, it obtained orders from Singareni Collieries and we expect further improvement in the performance assuming that the imported raw material continues to be favourable. Demand de-growth experienced during the last couple of years is now turning for the better. The Company has signed a MOU with Israel Aerospace Industries for exploring potential business opportunities. It has also signed a MOU with BITS Pilani for collaborative and joint R&D activities especially pertaining to high energy materials.

On 13 April 2017, the management confirmed that it had received the Management System Certificate from DNV GL Business Assurance, USA, after the Company was found to conform to the Quality Management System Standards – ISO 9001:2008 and AS 9100c. This certificate is valid for development, manufacture and supply of High Energy Materials (Propellants, Pyrotechnics, Special Devices and other Chemicals) for Aerospace and Defence applications.

Future:

With the Government’s initiative i.e. Ujwal DISCOM Assurance Yojana (UDAY) which will financial assist the turnaround of many electricity distribution companies, this will lead to a large demand-driven requirement for industrial explosives. This clubbed with the liberalization of the mining industry, the explosive market is looking at a big demand explosion.

INDUSTRY OUTLOOK

Macro factors will expedite Indian defence indigenisation and PEL will benefit from initiatives like the Revised Defence Procurement Policy 2016, liberal FDI in defence up to 100% and India's entry into the Missile Technology Control Regime.

The ~Rs.3000 crore Indian explosives industry is considered among the top five in the world. ~70% of the industry’s output is consumed by the coal mining sector which primarily consists of Coal India Ltd and its subsidiaries. Orders for explosives from coal companies have been higher than the previously executed amounts.

With the government targeting a production of 1.5 billion tonnes of coal by 2019-20 of which 1 billion tonnes will come from Coal India and 500 million tonnes from private sector coal miners, Premier is looking at a healthy order book for the next 3 years [Order book for Explosives stood at Rs. 90 crore at of March, 2017].

PEL has been receiving orders/enquiries for export of detonating fuse and other accessories. It expects the solid propellants opportunity to grow in view of the induction of various missiles into defence.

FINANCIAL SNAPSHOT

For FY17, PEL’s net profit rose 159.7% to Rs.14.75 crore on 25% higher sales of Rs.253.56 crore fetching an EPS of Rs.16.65 and a dividend of 30% was paid. It has  an equity capital of Rs.8.86 crore and reserves of Rs.128.39 crore, Net debt of Rs.38.21crore gives it a DER of 0.28:1.

The promoters hold 40.41% of the equity capital, Mutual Funds hold 18.46%, HNIs hold 5.57% and Corporates hold 5.21%, which leaves 30% stake with the investing public.

Company is available very cheap compared to peers as it is trading at PE of just 30.50 compared to Industry PE of 73.42

Note: This article is for education purpose only and all the information is taken from public domain and from company’s presentations.

IOL CHEMICALS & PHARMA

(BSE CODE: 524164) (CMP: Rs.71)

COMPANY PROFILE

Company was established in 1986, IOLCP is India's one of the leading generic

Pharmaceutical company, and is significant player in the Organic chemicals space. IOLCP has wide presence across various therapeutic categories like, Pain Management, Anti-diabetic, Anti hypertensive, Anti Convulsants, etc.

It operates through Chemicals and Pharmaceuticals segments.

* Chemicals Segment

The Chemicals segment offers ethyl acetate, acetic anhydride, acetyl chloride, mono chloro acetic acid, and iso butyl benzene chemical products for use in flexible packaging, pharmaceuticals, textiles, food processing, pesticides, and paint industries. It is india’s leading ethyl acetate manufacturer and exported with capacity of 87,000 TPA. It is second largest manufacturer of ISO BUTYL BENZENE (key starting material for IBUPROFEN) after VINATI ORGANICS

* Pharmaceuticals Segment

The Drugs segment provides various active pharmaceutical ingredients for use in various thera- peutic categories, including pain management, anti-diabetic, anti-hypertensive, anti-convulsants, anti-ulcer, anti-cholesterol, anti-histaminic, anti-fungal, anti-platlet, analgesic, and diuretic. Company has completed its de-bottlenecking/re-engineering project of its IBUPROFEN plant by which

Capacity of IBUPROFEN plant increase to 6200 TPA. It is world’s only largest backward integrated IBUPROFEN producer with install capacity of 6200 TPA. In india only 2 companies are manufacturing IBUPROFEN. One is IOLCP & second is SHASUN CHEM

IOLCP is expanding its API product portfolio and improving cost competitiveness through efficient manufacturing processes and systems and growing relationships with major Indian and foreign generic companies for the sale of APIs. Its APIs are exported worldwide and key markets include Europe, Latin America, Africa and the Middle East. Ethyl Acetate has varied uses in different industries like pharmaceuticals, flexible packaging and printing ink manufacturing, paints and adhesives, etc. Its key markets in chemicals are African countries, Middle East, SAARC countries and Russia. All its products are in demand. To meet the rising demand in the market, IOLCP is increasing its capacity utilization by streamlining its production processes.

INDUSTRY OVERVIEW

The Indian chemical industry is the 3rd largest in Asia and 6th by volume in the world. By 2025, the industry is projected to reach $403 bn. The Indian pharmaceuticals market is the 3rd largest in terms of volume and 13th largest in terms of value. India is the largest provider of generic drugs globally with Indian generics accounting for 20% of the global exports in terms of volume. The Indian pharma industry, which is expected to grow over 15% per annum between 2015 and 2020, will outperform the global pharma industry.

FINANCIAL SNAPSHOT

During FY16, company has received US FDA approval for its IBUPROFEN

manufacturing facility & company is also having approval from WHO & EDQM. With the  approval from USFDA, the company is exploring its business in USA. It has commissioned multipurpose plant in 2014.It has 17MWpower generation plant for captive consumption with adequate backups for trouble free operations.

After Q4FY16, company has posted turn-around numbers in second straight quarter. During Q1FY17, IOLCP’s revenue rose 18% to Rs.162.25crore against Rs.137.23crore during the previous quarter ended June 2016. Q1FY17, EBITDA stood at Rs.26crore against Rs.2crore. It has reported net profit of Rs.0.73crore in Q1FY17 as against loss of Rs.17.94crore which indicates that its bottom line has improved substantially.

Bumper Results In Q2FY18 and to invest Rs 200 crore in expanding its existing manufacturing Capacities including its flagship product, Ibuprofen

•  BIG EXPANSION (GROWTH ORINTED)

• OUT STANDING RESULT

• MANAGEMENT OPTIMISTIC FOR GROWTH OF COMPANY

CONART ENGINEERS LTD.- Debt free, Cash Rich Infrastructure Company

CONART ENGINEERS LTD.

(BSE Code: 502175) (CMP: Rs.54.50)

COMPANY PROFILE

Incorporated in 1973 in Mumbai, Conart Engineers Ltd (formerly known as Conart Builders Pvt Ltd) provides general contracting and project management services for industrial, commercial and residential construction projects. It offers general contracting services such as cost monitoring and control, schedule development and control, subcontractor management, field engineering and site management, safety assurance, project accounting, change management, shop drawings and material submittal review and quality control. It also undertakes design-build and turnkey projects. In addition, it provides construction project management services (i.e. material planning, concept design, rough estimate, constructability review and construction bidding), cost estimating, CPM scheduling, change order evaluation, project cost controls, safety, quality management/field inspections, technology services and constructability review services. It serves the heavy manufacturing, chemical and petrochemicals, pharmaceuticals, residential and commercial, textiles, research and development, heavy engineering, electronics and computer markets.  

SERVICES

GENERAL CONTRACTING

Conart, a diversified full-service contractor has been providing its clients with general contracting services for more than four decades. The demand for quality contractors skilled at planning, building, and commissioning schedule driven, fast-tracked projects has brought them to the forefront. They are capable of performing a variety of work with our own forces including: Structural and miscellaneous steel fabrication, multi-storey concrete forming and placement, heavy foundations, specialized concrete floors, roads, ETP tanks, concrete repairs and restoration, demolition and much more.

DESIGN BUILT

The design-build process is one that can potentially bring great value to an owner – so long as it is done right.

Fortunately, Conart is one of the country’s most experienced design-build contractors.

Our collaborative approach with construction professionals fulfills multiple parallel objectives to the design process by providing input on functionality, constructability, aesthetics, cost control, and schedule management.

PROJECT MANAGEMENT (PM)

Their Construction PM services functions as an agent to improve and control the quality, cost and schedule of a project for the Owner's benefit. They represent the interests of Owners and Developers by managing a timely, cost-efficient, and high quality construction project including procedures and policies for a multi-project building program.

  

ONGOING PROJECTS

COMPLETED PROJECTS

 CLIENTS FROM VARIOUS FIELDS AND INDUSTRIES

INDUSTRY GROWING OPPORTUNITIES

Minister of Road Transport & Highways and Shipping, announced the target of Rs.25 tn ($370.6 bn) for investment in infrastructure over the next three years including Rs.8 tn ($118.6 bn) for developing 27 industrial clusters and an additional Rs.5 tn ($74.11 bn) for road, railway and port connectivity projects. India’s 2016-17 Union Budget has budgeted nearly Rs.2.2 lakh crore ($32 bn) for the infrastructure sector, which is expected to boost India’s GDP to 9%. The total length of National Highways is expected to cross ~2,00,000 km in the next 5 years thereby offering significant opportunities in the State/National Highway segment. States like Bihar, Gujarat, Madhya Pradesh, Maharashtra, Karnataka, Rajasthan, Uttar Pradesh and West Bengal have planned several projects both on EPC and PPP basis. The Central and State Governments have granted infrastructure status to affordable housing for urban and rural housing projects in the current Budget. The Central Government aims to complete 1 crore houses by 2019 under various schemes.

 Conart Engineers is working very intensively in Infrastructure Space, it is the space where India will invest as much as Rs 3,96,135 crore in creating and upgrading infrastructure in this financial year, and this will increase year on year as India is a Developing Country and will remain so for many years to come. Infrastructure will play a very vital role in India's Growth Story and Conart has the potential to make the most of this massive opportunity.

FINANCIAL SNAPSHOT

Conart Engineers has equity capital of just Rs.3 crore supported by reserves of around Rs.12.96 crore and Debt is only 12 lacs so virtually it is a DEBT FREE COMPANY.  For FY17, Conart Engineers has posted PAT of Rs.1.30 against PAT of Rs 1.12Cr in FY16. For Q1FY18 company has posted  PAT at Rs.50 lacs on sales of Rs.7.63 crore against PAT of 20 lacs in Q4FY17 on sales of 9.28cr which signifies significant increase in margins. PAT on QoQ basis surged 150%.

Currently, the stock trades at a P/E of 12.04 while the industry PE is 35.80

Share book value works out to Rs. 53.19, so it is trading at Price to Book. Debt free, Cash Rich Infrastructure 

FLEX FOODS : PORINJU BETTING ON IT

FLEX FOODS

(BSE Code:523672) (CMP: Rs.135.2)

Flex Foods Limited, part of Uflex Group of companies, started its operations in 1992 as an 100% Export Oriented Unit. Its state of the art processing facilities are situated at the foothills of the Himalayas in the northern Indian city of Dehradun and their products are exported to the highly conscious markets of the Europe, USA, Canada, Middle East, Australia, Israel, UK, Germany, Belgium, etc.

 Its is engaged in Freeze Drying, Air Drying, Individually Quick Frozen(IQF) and Canning of white button mushrooms, fruits & vegetables, culinary herbs and green pepper corns catering to European, US, Canadian, Australian and Domestic market. The company has its own captive state of art mushroom growing facility with fully equipped mushroom spawn and compost preparation facilities.

The company started its commercial operations in 1992 by establishing an 100% EOU for vacuum freeze dried vegetables mainly mushroom and culinary herbs with a total processing capacity of 2000 MTs per annum.

Flex Foods monitors pesticide residues on crops through the use of Maximum Residue Limits (MRL) and the farmers are provided with the high quality seeds and best farm practices to ensure that each and every thing that we grow is totally NATURAL. They have received many awards for our excellence in quality from the Government of India and its various agencies.

 Please find below a glimpse of FFL’s product portfolio:-

•  Freeze Dried (FD) Culinary Herbs – Basil, Chervil, Dill, Green

• Pepper Corn, Marjoram, Mint, Lemon Grass, Parsley, Oregano, Sage, Chives, Savory, Thyme, Onion, Spring Onion, Garlic, etc.  IQF Culinary Herbs – Basil, Coriander, Chervil, Curry Leaf

• Parsley, Basil, Thyme, Oregano, Marjoram, Sage, Mint, Chives, Savory, Lemon Grass, etc.  Air Dried (AD) Culinary Herbs - Parsley, Dill, Basil, Coriander

• Thyme, Oregano, Marjoram, Sage, Mint, Chives, Savory, Lemon Grass, Coriander etc.  White Button Mushrooms (Freeze Dried and Canned) – Dices

• Slices, Quarters in all four processed forms. Vegetables (Air Dried, Freeze Dried, IQF and Canned) -Carrot, Green Peas, French Beans, Cauliflower, Cabbage and a wide range of ethnic Indian as well as main stream vegetables.  Fruits- (Air Dried, Freeze Dried, IQF and Canned)-Apple, Pine

• Apple, Banana, Mango, Cheeku. FFL is also open to other fruits and vegetables, processed as per the requirement of the buyer.

Flex Foods offers a wide range of Vacuum Freeze Dried, Air-Dried, Frozen and IQF (Individually Quick Frozen) product range of mushrooms, herbs, spices and fruits/vegetables, meeting strict quality & hygiene standards. Canned button mushroom in various shapes and sizes is also available as per the customer requirement. Flex Foods Limited is a single point source of supplier of Frozen / IQF (Individually Quick Frozen), Air Dried, Canned as well as Freeze Dried products to the customers as per their requirements. A tempting food i.e. retail packs of Culinary Herbs for Indian customers are also available in four varieties in Flex Foods.

Recently added various new Products:

• Air Dried & IOF – Stevia

• Air Dried – Sugar Beat

• Freeze Dried – Jalepeno Pepper – Red

• Freeze Dried – Jalepeno Pepper – Green

• Freeze Dried – Banana

• Freeze Dried – Green Capsicum10

Flex Foods Limited has an equity capital of just Rs.12.45 crore supported by reserves of around Rs.63.66 crore. Market Cap of the company is just 168 Cr. The promoters hold 59.6% of the equity capital, HNI’s hold 7.02%, ace investor Subramanian P also hold big chunk in the company. The company is trading at PE of 21.24 whereas industry PE is 55.76. It is a regular dividend paying company. In Q4FY17 it posted a profit of Rs 4.31 cr against 2.34 cr in Q4FY16 showing more than 90% rise in profits.

Technically also it is looking good and is on verge of a breakout.

EON ELECTRIC

(532658 & NSE) (70) (FV.5)

Eon Electric started operation in 1958 with LT switchgear as Indo Asian Fusegear. The company name was changed to “Eon Electric Limited” in 2011. After the sale of switchgear division, company acquired two factories at Haridwar for setting up plants for LED lighting, mobile phone accessories, lithium – ion batteries, electrical fans and Geysers. 

COMPANY PROFILE

Eon Electric Limited manufactures, markets, and sells electrical products used for the distribution, protection, control, and conservation of electrical energy in India. It operates through Cable and Wires, Lighting, Electrical Consumer Durables, and Others segments. The company offers cables and wires, including co-axial TV, telephone switch board, PVC insulated, three core flat, and PVC insulated multicore cables; and lighting products, such as compact fluorescent lamps, fluorescent tube lights, LEDs, retrofit and non-retrofit products, HID-lamps, consumer luminaries, halogen lamps, and accessories. It also provides fans comprising ceiling fans, domestic exhaust fans, and portable fans/TPW; mobile phone accessories, including USB data cards, handsfree products, card readers, Bluetooth headsets, chargers, platinum batteries, and power banks; water heaters, such as stationary storage and instant water heaters; and lithium ion batteries.

PRODUCT PORTFOLIO

It has state-of-the-art manufacturing plants in Haridwar, using world-class technology and quality checks. With a deep understanding of economic stimuli and customer needs, EON is determined to not only repeat its history of achievements. But also scale new heights of growth to become the nation's most preferred brand. And the energy behind people's smile.

ORDER BOOK OF EON ELECTRIC IS VERY ROBUST

Eon was successful in securing government orders to replace conventional street lights in Aligarh and Jodhpur worth Rs.51 Crores. Further to completion of these orders EON got extended orders for 33K street lights in Jodhpur and also in Aligarh. Besides this, EON has also won the contract in Varanasi. The latest order they have got from the Rajasthan Governement which is worth Rs.40 crores to install LED street lights in other cities including Gangapur, Jaisalmer, Sri Ganga Nagar etc. Another order of 22cr was won by the company very recently in LED segment.

As per the management, in next 5 years, there will be government contracts to replace 20 million street lights and Eon is expecting a bigger pie of that.

TRIGGERS

Maharashtra Government has recently taken a decision that all buildings coming up in urban and rural areas will have to use only LED lights, according to the State government's Energy Conservation Policy which was cleared last week. This policy will be followed by all the states one after the other as this is the necessary step to promote energy saving and hence protect the environment. The other policy of replacement the traditional lights by LED lights in Government and Semi Government buildings is also underway by Govt. of India and many State Governments.

http://economictimes.indiatimes.com/wealth/personal-finance-news/new-buildings-must-comply-with-energy-efficiency-guidelines-maharashtra-government/articleshow/58940641.cms

http://www.thehindu.com/news/cities/mumbai/led-lights-a-must-for-new-buildings-govt/article18662569.ece

RETAIL BUSINESS

·        Eon’s retail business is also doing very well. They have dealers and retails outlets in every state of India.

·        It has retail partners 1.25 lac +, and channel partners more than 900.

·        EON has tied up with Flipkart, Snapdeal, Amazon etc. for selling their products online. Retail LED business is also doing exceptionally well.

EXPORTS

Eon has tied up with European LED makers OMS with whom they have also started a company in India which manufactures high quality light fixtures in India and other Asian countries. If management commentary to be believed Eon is going to start exporting their LED lights in Europe through their partner

MEDIA COVERAGE  

ADVERTISING CAMPAIGNS

FINANCIAL SNAPSHOT

It has an equity capital of just Rs.8.03crore supported by reserves of around Rs.105 crore.  Market Cap of the company is 112 Cr. The promoters hold 59.74% of the equity capital, which leaves 40.26% stake with the investing public. It has a share book value of Rs.72.7 & price to book value ratio is just 1 which is impressive. Company has investment of 62 cr in mutual funds. If we calculate reserves and Mutual funds comes to 167 cr, so this means you are getting electrical business free of cost at current valuations. Recently promoters have allotted convertible warrents (~ 8 lakh shares) to themselves at exercise price of Rs 66.5.

On consolidated basis company has given a turnaround in FY17 from loss to profit as the company has posted a PAT of Rs 4 cr on sales of 189.28 Cr which leads to an EPS of Rs 2.5 against the loss of 4.02 Cr on sales of 174.67 Cr and a negative EPS of Rs -2.5 in FY16 as the margins have improved significantly.

During Q4FY17, EON posted PAT of Rs.1.05 crore against sales of Rs.47.66 crore fetching an EPS of Rs.0.65. During Q3FY17, EON posted PAT of Rs.0.97 crore against sales of Rs.47.38 crore fetching an EPS of Rs.0.60.During Q2FY17, EON posted PAT of Rs.0.91 crore against loss of Rs.2.49 crore on higher sales of Rs.43.69 crore fetching an EPS of Rs.0.57.