10stocksanalystsforgottorecommend

CrystalBarretto&KiranKabttaSomvanshi,ETBureau Takingacallonwhetherastockshouldorshouldnotbepartofyourportfolioisatoughone. ThatswhymostofusleavethejobtobigwigsofDalalStreet,theover1,500brokeragesin Mumbaicollectivelytrackingathousandstocks.Thesebrokersofferathoroughanalysisofhow companiesperformonaquarterlybasis,therebyaidingyourinvestmentdecisions. However,mostofthemhavefailedtodetectafewstocksasthesecompaniesareeithertoosmall insizeforanalyststotrackortheydontbelongtomainstreamsectors.Managementsofsome companiesremainlowprofileandarelessmediasavvy.Insuchcases,analystsdonottrackthese companiesduetolackofadequateinformation. ETIntelligenceGrouptakesathoroughlookattheuniverseofstockstofindsuchcompaniesthat haveagoodvalueandapromisinggrowthbutremainedinvisibleontheanalystsradar. Weanalysedalistofalmost300Bgroupshares,whichwerelesstracked,andpicked10stocks usingcertainvaluationparameters.Theseparametersincludeddebtequityratiolessthan1,return oncapitalhigherthan20%,priceearningsmultiplenotmorethan15andnetsalesandmarket capitalisationexceedingRs100crore.Thecompaniesthatfinallymadeittoourlisthaveaverage dailytradingvolumes(overthepastsixmonths)ofmorethan5,000sharesandtheirfreefloat(the percentageofsharesavailabletothepublicfortrading)rangedbetween20%and80%.Allofthe stocks,exceptone,outperformedtheSensexoverthepastoneyearandallbutthree outperformedtheirpeers. 1

AdityaBirlaChemicals
AdityaBirlaChemicalsisa51%armof HindalcoIndustrieswitha5%stakeheldby otherpromotergroupentities.Itisaleading producerofinorganicchemicals,suchas causticsoda,chlorine,hydrogenandtheir derivatives.Ithasahistoryofgenerating strongcashflowsresultinginadebtfree positionbyMarch2010end. DuringFY05FY10period,itssalesgrewata CAGRof15.5%whileprofitsgrewat18.1%. Thefirmsresultsinthefourquartersof2010 wereexceptionallysuperiortotheyearago periodbecauseofwritebackstotheextent ofRs14crore,whichmaynotbeavailablein future. ProgressCard: CMP:Rs127,upby80%yoyNetsales:Rs 235.2crore,upby6%yoyNetprofit:Rs 69.5crore,upby48%yoy

ClariantChemicals ClariantChemicals,a63%armofGermanys Clariant,isIndiasleaderinspecialty

chemicals.Ithasdivestedafewofits noncorebusinesses.In2009,itsoldflexible laminatingadhesivesbusinessfollowedby disposingofitsdiketeneandintermediate businessesin2010. InAugust2010,ithasapprovedthesaleof itslandatBalkum,Thane,foratotal considerationofRs240crore.In2010,it seemstohaverunintoaphaseofstagnation, duetothesaleofbusinesses.Itsrevenues grew5.8%andnetprofitrose3.9%in2010. IthasraiseddividendstoRs30persharein 2010,whichis5%dividendyieldonits currentmarketprice.ProgressCard: CMP:Rs627.6,downby37%yoyNetsales: Rs1,006.6crore,downby11%yoyNet profit:Rs133.85crore,upby43%yoyD/E Ratio:0.01,ROCE:56.01%,P/E:14.17Div Yield:3.98%,Marketcap:Rs1,673.1crore

ExcelCropCare

ExcelCropCareisanagrochemicalscompany.Over thepastfivequartersendedDecember2010,ithas postedadecentgrowthinitsfinancialswith September2010quarterbeingthestrongest, showingthemaximumgrowth.InFY10,Excel witnesseda6%fallinannualrevenueatRs620 croreonslackeningexportsduetounfavorable climaticconditionsinthegeographiesitoperatesin. However,thecompanyholdsapositiveoutlookfor thecurrentfiscal.Duringthefirstthreequartersof FY11,ExcelCropCarehasalreadyachieveda turnoverofRs564crorethatindicatesthecompany willpostdoubledigitgrowthforthecurrentfiscal (FY11)againstthepreviousyear. D/ERatio:0.17,ROCE:24.12%,P/E:4.3DivYield: 1.17%,Marketcap:Rs299.04crore ProgressCard: CMP:Rs299,upby65%yoyNetsales:Rs737.7 crore,upby17%yoyNetprofit:Rs52crore,upby 45%yoyD/ERatio:0.95,ROCE:21.8%,P/E:4.8Div Yield:2.7%,Marketcap:Rs252.5crore

HondaSielPowerProducts
HondaSielPowerProducts,apartoftheHonda MotorCompany,makesportablegeneratorsets, generalpurposeengines,waterpumps,lawn mowersandbrushcutters.Itssaleshavegrownata CAGRof8.2%overthepastfiveyearsandithas givenareturnoncapitalof20%forFY10. HondaSielisdebtfreeandhasadequatecashfor anyfurtherexpansion.Giventhepowershortagein India,especiallyintheruralareas,thedemandfor generatorsremainsrobust.Thecompany,however, facescompetitionfromcheaperChineseproducts inthemarket.BirlaPowerSolutionsisitsclosest competitoramongestablishedplayers,thoughfrom aninvestmentperspective,HondaSieloffersmore value. ProgressCard: CMP:Rs350,nochangeyoyNetsales:Rs413 crore,upby36%yoyNetprofit:Rs36crore,upby 42%yoyD/ERatio:0,ROCE:20%,P/E:9DivYield: 1.14%,Marketcap:Rs355crore

IneosABSIndia

IneosABSIndia,whichisan83%subsidiaryofIneos GlobalGroup,isIndiasleadingmakerofan engineeringplasticnamedacrylonitrilebutadiene styrene(ABS).Itisahighperformanceplastic,used predominantlyinautomobilesandconsumer durables.Afterstagnatingatthetoplineforfour consecutiveyearsthecompanyachieveda33% growthin2010. Inthemeantime,itsprofithasbeengrowing steadilyyearafteryearwiththeonlyexceptionof 2008.Asaresult,the5yearCAGRinnetsalesisat 13%against34%inprofit.IthasincreaseditsABS capacitytomatchrisingdomesticdemand.During 2010,IneosABSIndiaexpandeditsABScapacityby 33%to80,000tonneperannum.Thecompany remainsadebtfreeandcashrichwithaconsistent dividendpayinghistory. ProgressCard: CMP:Rs350,upby98%yoyNetsales:Rs743.1 crore,upby33%yoyNetprofit:Rs70crore,upby 43%yoyD/ERatio:0,ROCE:30.3%,P/E:8.8Div Yield:1%,Marketcap:Rs617.23crore

KabraExtrusiontechnik
KabraExtrusiontechnikismakerofmachineryused forproducingplasticpipes,packagingfilms,window anddoorprofiles.Ithasaugmenteditsofferingwith anewplantthatmakesdripirrigationsystems.To benefitfromgrowingdomesticdemandofplastic products,ithasembarkedonaprojectinvestingRs 85crore,whichwilldoubleitsgrossblockbyFY12. Underthis,thecompanyhasalreadyaddedone assemblyshopinDamanandanother manufacturingunitisbeingsetupbyend2011. KETLisacashrich,debtfreecompanywithahistory ofstrongoperatingcashflows.Itscashand equivalentinvestmentshavegrownataCAGRof 58%inthepastfiveyearstoRs46.3croreason March31,2010. ProgressCard: CMP:Rs52,upby23%yoyNetsales:Rs215.23 crore,upby27%yoyNetprofit:Rs23.72crore,up by35%yoyD/ERatio:0.1,ROCE:36.47%,P/E: 7.09DivYield:3.32%,Marketcap:Rs168.27crore

FDC

FDC(Foods,Drugs&Chemicals)isaplayerinoral rehydrationsalts,opthalmicsandpaediatrics.It earnsover90%ofitsrevenuesfromthedomestic market.Ithaslaunchedproductsinvarious therapeuticareasandhasopnedcommissioneda noveldrugdeliveryresearchlaboratorytofocuson researchinareaslikeantiinfectives,respiratoryand antiinflammatoryagents. Itgeneratesapositivecashflowandhasastrong balancesheet.Itsrevenuesandprofitshave doubledinthepastfivefiscalyears.Valuedatover threetimesitssales,thecompanysstockis commandingfairvaluationsonthebourses.The companyhasannouncedabuybackofupto9.8%of itsequityandfreereservesatapricenotexceeding Rs135. ProgressCard: CMP:Rs104,upby45%yoyNetsales:Rs684 crore,upby9%yoyNetprofit:Rs151crore,upby 23%yoyD/ERatio:0.01,ROCE:38.2%,P/E:12Div Yield:1.7%,Marketcap:Rs1,960.92crore

IFBIndustries

IFBIndustriesisaconsumergoodscompany.Its moreprofitableengineeringsegmentcontributes nearly20%toitstotalrevenues.Itshome appliancesbusinessofwashingmachines,dryers, microwaveovensanddishwashersissteadily gainingmomentuminrevenuesandprofits.A strongbrandequity,highproductqualityandlatest technicalknowhowareitsstrengths. TheRs650crorecompanyisinvestinginto modernisingandexpandingitscapacitiesin appliancesandengineeringsegments.Duetothis, theappliancesdivisionisexpectedtoachievea20% growthinsalesandsalesoftheengineeringdivision arelikelytodoublebytheendofFY12.Atamarket capof`377crore,thecompanyisvaluedatalittle overhalfitssales. ProgressCard: CMP:Rs100,upby27%yoyNetsales:Rs657.5 crore,upby30%yoyNetprofit:Rs58.4crore, downby33%yoyD/ERatio:0,ROCE:21.7%,P/E: 6DivYield:0%,Marketcap:Rs355.4crore

InsecticidesIndia

InsecticidesIndia(IIL)isanagrochemicalsand pesticidescompany.Ithaspostedarobustgrowth initsfinancials.Inthepastsevenquarters,its operatingprofitmarginhasbeenintherangeof8 10%.Itmaycontinueoperatingatsimilarmargin levelinfuture.Thisfiscal,IILexpectsanannual turnoverofRs550crore,nearly40%growth. Thisimpliesanalmost50%sequentialgrowthinthe March2010quartertoplinetoRs135croreonthe backoftheopeingofitsunitsinUdhampurand Dahej.IILsproductioncapacityoftechnicalgrade pesticidesisexpectedtogoupbysixtimesto 12,000tpa.Italsoexpectstoexpanditsreachinthe southernIndiaandintendstodevelopitsexports marketinthenext23years. PROGRESSCARD CMP:Rs282,upby224%yoyNetsales:Rs464.2 crore,upby7%yoyNetprofit:Rs32.5crore,up by10%yoyD/ERatio:0.16,ROCE:27.68%,P/E: 11.03DivYield:0.71%,Marketcap:Rs358.4crore

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RicohIndia

RicohIndiamakesphotocopiers,faxmachines, printersandotherdigitalmultifunctionproducts.Its revenueshavebeengrowingataveryslowpace sinceFY05.Itplanstoexpanditsportfolio, geographicfootprintandbusinessareas.Ithas earmarkedRs100crorefororganicexpansionandis alsoincreasingitsmanpowerto1,000by September2011.Itisalsoeyeingacquisitionsinthe ITservicesspace. Evenwithoutanyacquisition,thecompanyintends totrebletherevenuestoRs1,000crorebyFY13. Thecompanyhaszerodebtandisgenerating positivecashflows.Ithasbetterfinancialsthanits listedpeers.Itisvaluedatlessthanhalfofits revenuesofthepastfourquarters.Asitsfinancial performanceimproves,itsvaluationsarelikelyto increase. ProgressCard CMP:Rs33,downby23%yoyNetsales:Rs281.6 crore,downby7%yoyNetprofit:Rs16.9crore, upby4%yoyD/ERatio:0,ROCE:26.8%,P/E:7.68 DivYield:0%,Marketcap:Rs129.8crore

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