Monday, February 15, 2016

Aditya Birla Fashion & Retail - A Retail Giant in making !

The Aditya Birla Group had bought Pantaloons from rival Kishore Biyani’s Future Group in 2012 and thereafter, the Aditya Birla Group have consolidate their garments business recently into a single entity, Aditya Birla Fashion & Retail (ABFRL), by carving out premium apparel maker Madura Garments Lifestyle Retail Co. Ltd from Aditya Birla Nuvo Ltd and merging it with Pantaloons Fashion and Retail India Ltd to create India’s largest branded clothing company with annual sales of Rs.5,290 crore. 

This move has created India’s largest branded apparel player, valued at Rs 12,000 crore !

Post restructuring, the new entity ABFRL will have retail footprint of 4.8 million sq ft, spread across 1,869 stores and around 6,000 additional points of sale with revenues of Rs 5,290 crore and debt of Rs 1,775 crore (as debt of around Rs 475 crore will be passed on from Madura to Pantaloons Fashion).

This consolidation will create India’s largest pure-play fashion & lifestyle company, with a strong bouquet of leading fashion brands and retail formats. This move brings India’s number-one branded menswear and womenswear players together. This will also bring all branded apparel businesses under one roof, accelerate the growth of these businesses, and help exploit emerging opportunities presented by the rapidly growing Indian apparel market.

A substantially healthier balance sheet will also help Pantaloons raise external equity, if it so chooses, to fund further growth. Combining forces will also help Pantaloons explore synergies through economy of scale. The consolidation will enable tapping of operational synergies on various fronts such as sourcing, real estate, and technology platforms.

Pantaloons offers its customers a collection of apparels and accessories from the stables of globally renowned brands. The private labels for men in western wear include Lombard, Rig, Bare Denim, Bare Leisure, SF Jeans, Byford, F Factor and JM Sport apart from trendy brands like Urbana, Scullers, John Miller and Indigo Nation. Akkriti provides a wide selection of ethnic wear.

The women’s section houses the private labels — Bare Denim, Bare Leisure, Rig, Annabelle, Honey, and Ajile — in western wear, as well as the choicest ethnic wear from RangManch, Trishaa and Akkriti. Popular brands like Lee Cooper, Biba and W are also available. The formal wear section offers a range of crisp and well-tailored collection by popular international brands such as Van Heusen, Allen Solly, Peter England and Louis Philippe.

Kids can choose from private labels like Bare Denim, Bare Leisure, Rig, or indulge in exclusive brands like Lee Cooper Juniors, Chalk, Poppers, Pink & Blue, and Sach in addition to international brands like Barbie and Disney. For the ethnic look, they can opt for traditional wear from Akkriti. The portfolio of brands also includes infant wear by Chirpie Pie.

Pantaloons offers much more than just apparel. Customers can shop from an assortment of watches from renowned international brands, including Tommy Hilfiger, Esprit, Kenneth Cole, Citizen, Timex, Titan and others.

Trendy sunglasses from Polaroid, Guess, Police, Scott, I Dee and Allen Solly are also available. The accessories and beauty segments display an attractive collection of ladies’ handbags from Lavie, Caprese, Fiorelli and Fastrack. Also available are products from colour cosmetic brands such as Bourjois, Chambor, Deborah, Faces, Revlon, Maybelline, and Lakmé, as well as a wide collection of exotic fragrances.

In its endeavour to meet the consumer’s ever-changing fashion needs, Pantaloons has introduced new brands that include Candies, Alto Moda, Turtle, Spykar, 109F, AND, Chemistry, Global Desi and Giny & Jony.

Considering all these, ABRFL is poised for a high growth in coming future. One need to accumulate at every decline to take part in growth story of India's largest branded apparel player. 

Thursday, January 21, 2016

Kwality - Deserves a better valuation !

Revenue of around Rs.5,000 crore
Net Profit of around Rs.140 crore

One of the fastest growing emerging companies trading at a Mcap of Rs.2,000 crore certainly deserves a better valuation.

The dairy segment in the country is unique. In spite of being a Rs 5,00,00-crore industry, it is dominated by unorganised players, so much so that the largest company (Amul) accounts for just four to five per cent of the market. As a result, it offers ample scope to organised players to grow.

The company's stellar performance is the result of a well-thought-out strategy implemented over the last four-five years. It was already supplying products to fast-moving consumer goods (FMCG) and dairy companies such as Amul and Mother Dairy. In 2010, it entered retail with the launch of its own brand, Dairy Best. It started with ghee and by 2012 expanded the product range under the umbrella to curd, pouched milk and skimmed milk.

Today the company has processing units in six cities in three states - Haryana, Uttar Pradesh and Rajasthan. Its portfolio includes ice cream, ghee, skimmed milk powder, pouched milk, curd, chhaach, paneer and butter.

Kwality's primary strength is its institutional business, which accounts for 75 per cent revenue. It supplies bulk milk products (milk powder, ghee, curd, etc.) to well-known FMCG companies such as Britannia, Hindustan Unilever, ITC, Cadbury's and Mother Dairy.

They will soon have new product categories, such as packaged food, juices, water, food products for health-conscious people, and energy & protein drinks, over the next few years.

Considering all this, one should see the valuations getting improved significantly from hereon. After a healthy correction, it is trading near attractive valuations to accumulate the stock for a longer term horizon.

Tuesday, December 29, 2015

Praj Industries - Worth Investing

"Sugar Industries Improving", "Ethanol blending on cards", "Diversifying into other sectors"

Praj Industries started as a Biofules company 30 years ago catering to Indian Sugar Industries, under the vision and leadership of Mr.Pramod Chaudharis, founder of the company. He entered into a difficult and a niche sector, but with his perseverance and dedication towards technological advancements, he is able to create a Global company whose 40% of business is coming from International markets.
Today, Praj offers innovative solutions for beverage alcohol and bioethanol plant, brewery, water & wastewater treatment plant, critical process equipment and systems and bioproducts.

A globally leading Company with over 600 references in more than 60 countries across 5 continents, Praj has acquired an international repute for responsible and reliable solutions.

The business verticals of Praj are defined along 5 blocks :
  • Ethanol & Brewery Plants: Praj enjoys an unique position in the world of ethanol technology by virtue of its expertise which cuts across a variety of sugar to starch based feedstocks. Praj provides holistic solutions for various grades of ethanol (beverage, fuel, industrial, pharma and perfumery) and brewery plants encompassing range of technologies and systems for water & wastewater management.
  • Water & Wastewater Treatment Plants: Praj offers integrated water & wastewater treatment systems and has already made a beginning in the industrial sector with a wide range of solutions. This vertical addresses industrial applications for high quality water, complex effluent treatment including recycle, reuse and zero liquid discharge plants.
  • Critical Process Equipment System: This vertical serves a wider sectoral requirement for high end equipment & systems finding application in the oil & gas, petrochemical, fertilizer, chemicals industry. India is emerging as a sourcing hub for engineered products, especially those which have a level of criticality in terms of material of construction, complexity of fabrication and standards & codes to be followed. Praj has demonstrated capabilities wherein it supplies critical process equipment & systems to a number of domestic and global players.
  • High Purity Systems: Addressing the pharmaceutical, biotech and F & B sector, Praj acquired Neela Systems (now Praj Hipurity Systems), a Company engaged in providing hi purity water and hygienic systems to the pharma industry. Praj plans to extend its footprints in the hygienic engineering and systems business. It has the capability of providing end-to-end solutions for the pharma, biotech, food & beverage sector. This will be an area of special focus where Praj will deploy combined experience of Neela and Praj.
  • BioProducts: Praj recently announced its entry into the biotech products business with launch of its livestock feed health & nutrition business. Other than this, Praj is also working with biochemicals and human health & nutrition products which are presently in different stages of development.
The backbone of Praj’s technology development is Praj Matrix, the Innovation Center. Praj Matrix is working on bioethanol and biochemicals processes.

Having established a global leadership in 1st Generation Ethanol technology, Praj has initiated a project in expanding its 2nd Generation Cellulosic Ethanol Program to Demo scale. The plant will utilize agri-residues like cane trash, corn cobs, corn stover and bagasse to produce ethanol to be blended with petrol. Praj has successfully evaluated this technology at pilot scale.

Praj has well equipped manufacturing facilities - one in Pune and two at Kandla (Gujarat), port of India and another at Wada near Mumbai. The units are accredited with ASME ‘U’ and ‘H’ stamps and ISO 9001-2008. Equipment engineering and fabrication is in accordance with international standards and codes. Praj has recently come up with a world class manufacturing facility for its Industrial Biotech products and Processes (IBPP). Praj employs more than 1000 professionals in India and overseas from various engineering and other disciplines.

With a slew of new initiatives, Praj aspires to be a major player in the environment, energy and agri process led applications providing innovative, integrated solutions including plant, equipment and products that will enhance the quality of life.

The company started very small and today its a 1000 cr. company, with a great visionary behind will take the company to greater heights. It has to deal with crisis in the past and has recovered through them by tightening the reins of the company. The company has ventured out and diversified from the Ethanol business to various sectors which will give fruits in the long run. Only through patience and belief, one can create a great company, and Mr.Chaudhari is on the right track to do so. One can safely invest in this company for a long term horizon. 

Monday, December 28, 2015

Sectors & Stocks for the Year 2016

Year 2014 was excellent for stock market with Sensex giving 30% returns.

Year 2015 is bit disappointing if you just see the Sensex returns, but the broader market gave decent returns in the same year with BSE MidCap outperforming BSE SENSEX !

I feel the Year 2016 will be good for both Sensex and broader market. And I am betting on select beaten down stocks and few select midcaps.

On sectors, I feel the beaten down sectors will outperform like Real Estate, Power, Infrastructure & Capital Goods with improving fundamentals. Apart from these sectors, I prefer Banking, Railways & Textiles. Further rate cuts are possible next year, which will give boost to the overall economy. 

Based on the above, few stocks which I expect to do well next year are as follows:
1. DLF
2. HCC
3. GMR Infra
4. Lanco Infratech
5. Suzlon Energy
6. Amtek Auto
7. DCB Bank
8. Jain Irrigation
9. Gokaldas Exports
10. Texmaco Rail
Wish all the viewers/readers a Happy, Prosperous & Profitable New Year 2016.

Sunday, October 25, 2015

AXISCADES Engineering Technologies - A dark horse !

Aerospace * Defence * Heavy engineering * Industrial Products * Automotive

All the above sectors combined with "Make in India" tag augurs well for this company.

Also, the recent pact with Siemens Wind Power, shows its capability to do that !

AXISCADES Engineering Technologies, earlier known as Axis IT&T, a focused engineering services provider, merged with Cades, another specialised company which it had earlier acquired a few year ago. The combined entity is known as ‘AxisCades’. 

The unified brand creates a differentiator in the marketplace in providing technology solutions, addressing the business needs across domains, at every stage of product lifecycle development. The brand aims to develop expertise in futuristic technology trends in the niche domains of its solutions offerings.

Over the past 6+ years, the individual entities — Axis IT&T and Cades — are engaged in providing engineering and strategic technology solutions to heavy engineering, aerospace, defence and automotive sector globally. The combined revenues had grown manifold from about $4 million and 50 people to $100 million (CAGR of 66 per cent) with 1,600 people employed across 12 development centres globally.

They have an impressive list of customer base including marquee global OEMs who are leaders in their respective businesses - Airbus, Bombardier, Caterpillar, Volvo, Mercedes Benz, etc.

AxisCades, as part of its growth strategy plans to invest about $50 million over the next three to five years in capacity building, expand technology offerings and provide integrated product development solutions meeting customer business needs. The company will continue to actively pursue inorganic growth opportunities to grow their service offerings manifold as in the past.

The company plans to take its Offshore Development Centre model to set up innovation labs for engineering services in specific identified technologies like composite, manufacturing engineering and interiors. And inline with this the company has entered into a five-year strategic agreement with Siemens Wind Power to set up an overseas development centre for the latter in the IT hub of Hyderabad, which could see an investment of about $3 million.

AXISCADES had recently announced the acquisition of its subsidiary AXISCADES Aerospace & Technologies(ACATL), which specilises in electronics, system integration and the merger was in the process. The combined revenues of the merged entity as of March 2015 was $ 87 million and a total employee strength of 1,800 people. The company expects to reach a revenue size of $ 100 million and a total employee strength of 2000 people by the end of this year.

The growth opportunities are tremendous in the sectors it is dealing with and if the company delivers as planned, then this can even become a multibagger from hereon in next 3-5 years.