BEL - SOLID DEFENCE

Strategic tie-ups, new product development, good track record and cash hoard augur well for Bharat Electronics.


India’s recent test of two missiles, including the land-attack version of the BrahMos supersonic cruise missile, is part of its ongoing investments in strengthening its defence capabilities. The growing concerns over cross border tensions and the increasing terrorist activities in the country indicate that the need for higher defence expenditure and focus on enhancing capabilities is at its zenith. The statement of India’s defence minister at a recent seminar on Defence industry only confirms the rising importance of defence. “As the security scenario is undergoing unprecedented changes, the defence industry has come to occupy the centre-stage like never before – not only in our country, but the world over.”

Defensive business model
One of the key beneficiaries of India's focus on strengthening its defence capabilities will be Bharat Electronics, which was formed with the aim of serving different mechanical and electrical requirements of the Indian defence sector. As the defence sector is considered to be strategic, it is not surprising that government of India holds 75.86 per cent stake in the company.

CONSISTENT PERFORMER
in Rs crore FY08 FY09E FY10E
Net sales 4059 4627 5320
EBITDA (%) 24.7 23.2 23.5
PAT 826 879 1011
EPS (Rs) 103 110 126
PE (x) 7.9 7.4 6.5
E: Estimates

This has also resulted in most of the defence requirements being met through Bharat Electronics (BEL). While 70 per cent of the equipment requirements are sourced from overseas markets, BEL enjoys over 57 per cent market share of the 30 per cent sourced locally. The company supplies strategic electronics such as range of military communication systems, radars, naval systems, telecom & broadcast systems, electronic warfare systems, tank electronics and many more to all the defence establishments including Army, Navy, Air Force and Paramilitary Forces. As a result of this, 83 per cent of the company's revenue accrue from the defence sector, while 17 per cent is accounted by civil equipment like telecommunication, broadcasting products like DTH and electronic voting machines (EVM). The company was recently awarded an Rs 100 crore order for EVM by the election commission.

Consistent growth
Historically, the growth in the defence expenditure has been in the range of 6-8 per cent, which is expected to continue on the back of similar growth in the GDP. Though the growth may not look very strong, but given the consistency in the defence spending, the company has been able grow on sustainable basis. BEL's revenue and net profit have never declined in any of the last ten years. Its revenue and net profit have consistently grown annually at 14.6 per cent and 35 per cent, respectively during FY99-FY08 respectively. Moreover, the company's current order book of Rs 10,000 crore is 2.5 times BEL’s FY08 revenue and provides good revenue visibility.

Going forward, considering the political scenario and cross border tension in the country it is unlikely that India's capex on defence will be curtailed. Also, the emphasis is now given on newer and indigenous technologies with an aim to reduce dependence on imports.

Inventing to grow fast
The need for indigenous technologies and increasing overall production, the government has allowed 100 per cent private participation in the defence equipment sector. Companies like L&T are eying these opportunities in the big way. Although competition will increase, the opportunities continue to be huge given that India imports almost 70 per cent of its defence equipment. Bharat Electronics, too, has appointed global consultancy firm, KPMG, to help identify opportunities to expand in existing as well as new business segments. The company is consolidating its businesses so as to achieve its targeted revenue of Rs 10,000 crore by FY12 (from Rs 4,100 crore in FY08) implying an growth rate of 26 per cent per annum.

Plan of action
To achieve this, the company has planned a total capital expenditure of Rs 570 crore for the next two years (FY09 and FY10). This will be towards modernising its manufacturing facilities. Also, the focus will be strategic tie-ups with its partners to enhance business capabilities. The company already has partnerships with aerospace majors like Lockheed Martin and Boeing and global defence companies like EADS, Northrop Grumman, Raytheon and Honeywell.

"BEL is looking for new growth opportunities through organic or inorganic growth in existing and new areas. In this direction, BEL is discussing with reputed foreign and Indian players for forming joint venture companies in India, in the areas of defence electronics, namely electro optics, airborne electronic warfare, missile electronics and guidance systems, microwave super components, etc. Some of these proposals are in the advanced stage of discussions," says N K Sharma, Director (Marketing), BEL. The company has also been aggressively investing in developing new products in-house—in FY08, it introduced about 20 new products. The company now intends to increase its R&D expenditure, which was about 5 per cent in FY08, to 8-10 per cent of its turnover, which should help sustain its efforts in this direction.

Investment rationale
The company’s strategy to increase spend on R&D and new capacities, acquire new technologies and identify key growth areas augurs well and should help in achieving its ambitious long-term growth plans. BEL is a debt-free company and is sitting on a cash and cash equivalent worth Rs 2,400 crore, which also indicates that the company has enough muscle to fund its future plans.

In turbulent times, this stock proves to be a safer investment available at attractive valuations (PE multiple of 6.4 times its FY10 estimated earnings). Since the company has maintained a dividend payout in excess of 20 per cent, one can expect additional returns in terms of healthy dividends (yield of 3.2 per cent based on FY10 profits) in future as well. The company's cash (yields interest income of about Rs 200 crore or earnings of Rs 23 per share) is valued at about Rs 300 per share or 38 per cent of its current market price. At Rs 800, the stock is capable of delivering healthy returns in the long-run.

source : business-standard
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MARICO - IN PERFECT SHAPE

A balanced portfolio, healthy volume growth, rapidly growing international sales and easing cost pressure augur well for Marico.


Over the years, Marico Industries has transformed itself from a coconut oil manufacturer, sold under its renowned “Parachute” brand, into one with presence across hair care, skin care and healthcare segments and nearly 20 brands under its fold. Likewise, its foray into international markets in the recent years has seen the share of global revenues rise to a fifth of total. Consequently, the company has been able to sustain growth rates of about 20 per cent in sales and profit in the last five years, and establish a de-risked business model. Investment in new product development has meant that these now account for a fourth of consolidated revenues, as compared to 3 per cent in FY2000. Despite the slack economic conditions and global slowdown, Marico’s earnings are expected to grow at 18-20 per cent in the next two years, on new product launches, volume growth in existing businesses, higher rural penetration and easing input cost pressures. Notably, valuations are reasonable, with the stock trading near the lower band (14-22x) of its one-year forward earnings.

HEALTHY GROWTH
in Rs crore FY08 FY09E FY10E
Net sales 1,907 2,380 2,745
OPM (%) 13 13 13
Net profit * 159 184 227
EPS (Rs) 2.6 3.02 3.75
PE (x) 22.31 19.21 15.47
* Adjusted for extra-ordinary items
Consolidated financials E: Estimates

On solid footing
In its flagship business (coconut oil), Marico has successfully extended its Parachute brand to related hair care segments like value-added hair oils, creams and gels, by identifying new categories and launching new products. Among launches (including products in test marketing phase) in the last 15 months are “Parachute Advansed Hot Oil” (suitable for winter season; launched in Q3 FY09), “Parachute Night Repair Cream” (a fragrant, protein-based hair cream being test marketed in Mumbai) and “Parachute Advansed Starz” (oil, shampoo and cream products for kids; launched in December 2007). These initiatives have helped Marico strengthen its product range, which along with healthy growth in existing products has helped sustain volume growth (average) of 10-11 per cent in last seven quarters (9 per cent in Q3, FY09).

The value-added hair oils business is also growing at a robust rate and includes products like “Parachute Jasmine” and “Nihar” (perfume-based oils), “Hair & Care” (protein based oil) and “Silk n Shine” (post-wash hair conditioner) among others. Along with new product launches, coupled with low penetration levels, average volumes growth was 20 per cent in the last six quarters (15 per cent in Q3).

The second biggest revenue contributor is the refined edible oil business (Sweekar and Saffola), wherein its Saffola brand is positioned on the ‘preventive’ platform. Capitalising on its health-related equity, the company launched atta products viz. Saffola Cholesterol Management (in 2007) followed by Saffola Diabetics, targeting the health conscious customers. More recently, in January 2009, it has launched “Saffola Zest” a salty baked snack (positioned as one that contains 50 per cent less fat) and Saffola Rice (for weight management). The volume growth for Saffola oil, which has ranged 20-30 per cent in the past, slipped to single-digits in the last two quarters as the price gap between Saffola and other refined oils (palm, etc) widened. With the price of Kardi (a key input for Saffola) seen declining, the price gap should narrow and volumes likely to pick up.

Likewise, Marico provides skin-care products and services under its Kaya business. It has 84 clinics (six added in Q3), of which 73 are located in 20 Indian cities and balance abroad. With a plan to add 15 clinics each year, this business (6 per cent of revenues) should grow at a robust pace (59 per cent growth in Q3). In June 2007, Marico started offering weight-management solutions under the Kaya Life brand, thereby extending its services portfolio. In initial stages, the business should see a full-fledged rollout soon.

Interestingly, the company enjoys a strong position in most of its businesses (Parachute 48 per cent volume share, Hair Oils 20-22 per cent, Saffola 98 per cent, Mediker 90 per cent); some of them provide niche solutions and have helped Marico distinguish itself from others. While many of these products are a result of investment in R&D, an extensive distribution reach (over 2.5 million outlets) helps in quickly rolling out new consumer products. With these segments under-penetrated, there is immense potential for Marico to sustain growth rates.

Expanding footprint
The company has been equally aggressive in its international business (includes two acquisitions since 2006). Notably, its brands enjoy a strong position in their respective countries, and revenues in most markets have grown at a rapid pace (average 46 per cent in last three quarters).

In Bangladesh, Marico is looking at sustaining its 72 per cent market share in coconut hair oils by encouraging customers towards using branded products. It recently launched its “HairCode” hair dye, which along with backward integration (crushing of copra for coconut oil) should help sustain growth rates and improve profitability.

While “Parachute” branded products (mainly creams) are doing well in West Asia, Marico’s sales in Egypt (Fiancee and HairCode brands command 62 per cent market share) were impacted in Q3 due to restructuring of the supply chain and higher inflation. With the revamp over and inflation slipping, the trend is seen reversing from Q4. A new factory for hair creams has also been commissioned (exempt from income tax till 2018), which will help service nearby regions and lead to improved profitability.

Investment rationale
A diversified product portfolio, ability to innovate, identify and tap niche/high growth segments, strong brands and the customer’s increasing attention towards health and personal care, should help Marico grow at a healthy pace.

In the near-term, while margin pressure should ease as input prices are coming down, revenue growth in FY10 may remain subdued (volume growth should remain healthy) due to the base effect (price hikes taken across categories; like 15 per cent in Parachute in the past). Overall, expect earnings to grow at 18-20 per cent annually over the next two years. At Rs 58, the stock trades at 15.5 times its estimated FY10 earnings and, can deliver 20 per cent returns over one year.

source : business-standard
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BUY APOLLO HOSPITALS

Healthcare is one of the most underdeveloped sectors in India with a lot of growth potential. There are few large corporate players in this highly fragmented and unorganised market. Apollo Hospitals Enterprise (AHE) is the largest player in the tertiary care segment with the single largest network of integrated hospitals and pharmacies in the country.

While the Sensex has lost more than 50% of its value in the last one year, the company's market capitalisation declined by just 15% during the same period. The stock has appreciated by 26% since October '08 till date. Investors can look at this stock expecting sound growth in its fairly recession-proof business.

BUSINESS:

Chennai-based AHE is a national level operator of hospitals, retail pharmacies and provider of consultancy services in healthcare management. Nearly 83% of the company's revenues are contributed by its hospitals business, while 16% is contributed by pharmacy.

The company owns 26 hospitals and manages 17 hospitals on a contractual basis. Majority of its hospitals are in metros and tier I cities in the country. The total bed capacity is 8,500 beds, with 4,500 beds in AHE's owned hospitals. The revenue per bed per day ranges from Rs 8,000 to Rs 17,000, depending on the location of the hospital. The average length of stay has largely remained the same for the company at an average of 5.7 to 5.9 days across its various hospitals.

AHE runs a chain of 785 standalone pharmacies in the country on a franchise basis. It has 40 pharmacies operating as part of its hospitals. The company also provides various precommissioning and postcommissioning consultancy services comprising of feasibility studies, infrastructure consultation, training and deployment of medical, paramedical and administrative staff and advising on hospital management.

AHE also has other subsidiary businesses providing home healthcare services, clinical and diagnostic services, medical business process outsourcing services, third party administration services and insurance.

GROWTH STRATEGY:

The company's growth has been primarily driven by its hospitals business. The company has a high occupancy rate of 80%, with 7-8 % more head room to grow. There is also still scope for increasing the tariff.

The company is in the process of expanding capacities in its greenfield projects. By FY10, it intends to add a total capacity of 500 beds in its hospitals at Bhubaneshwar and Vizag. Over the next five years, the company has plans to start 50 hospitals in tier II and III towns in partnership with a local doctors or entrepreneurs.

AHE's pharmacy business is relatively nascent and still in investment stage. The company intends to set up 1,000 pharmacies by FY10.
In the coming years, the company expects to increase its exposure to the pharmacy business to 20-25 % of the total revenues. The company has plans to eventually hive off its pharmacy business to a strategic partner.

The company has incurred a capex of Rs 157 crore in FY08. It has planned a capex of Rs 900 crore to be incurred over the next three years.

FINANCIALS:

The company's net sales have grown at a compounded average growth rate (CAGR) of 21% over five years ended March 2008 to Rs 1,214.7 crore. The net profit (adjusted for the extraordinary items) has grown at a faster CAGR of 26.6% to Rs 71.8 crore. At 24.3%, the CAGR in the company's dividend has fairly matched the corresponding growth in profits.

While the hospital business has EBIDTA margins of 28-40 %, the pharmacy business is a low margin business with a EBIDTA margin of 8-10 %.
Besides, a new pharmacy requires 12-18 months to mature and contribute to profits. Due to the company's recent expansion of its pharmacy business, its profit margins and return on capital employed have suffered in the last three years.

The company has raised secured loans and has made significant investments in fixed assets during the last three years. The company expects to breakeven in the pharmacy business by FY10 and expects stability in the returns from the business.

VALUATIONS:

Being the largest listed healthcare player, AHE commands a premium over its peers. It is currently trading
at 25 times its earnings. Assuming the company maintains its growth in sales of more than 20%, its estimated P/E for FY09 and FY10 would be 23.4 and 18.7 respectively. Investors interested in steady and predictable earning growth can look at accumulating this stock with a long-term perspective.



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Sun Pharma an outperformer: Karvy

Karvy Stock Broking has maintained its outperformer rating on Sun Pharmaceutical Industries with a target price of Rs 1300 in its January 12, 2009 research report. "Margins are expected to lower at 42.3 % as compared to 44.1 % in the corresponding quarter in the previous year. PAT is likely to be higher by 39% to Rs 4424 million for the quarter. We have factored the USD 24.5 mn revenue upside from the controlled substances in FY 2010. We marginally upgrade our FY 2010 EPS by 1.3 % to Rs 78.2. We upgrade our price target by 4.3% to Rs 1,300 based on 16.6x FY 2010E. With increasing traction in US markets and domestic formulations on a strong wicket we maintain our Outperformer rating on the stock," says Karvy's research report.
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Some More Top Picks for 2009

Anup Bagchi, Executive Director, ICICI Securities, said infrastructure will tend to do well. Places like NTPC, etc. will tend to do well. On the defensive plays, some of the pharma will do well, Glenmark is one of our top picks and one can play on the FMCG stocks as well the HLL, etc. will do well because the input prices are correcting sharply and that will lead to increase in margins.
India Infoline feels that Reliance will be elevated to top Global League and were bullish on the stock. Besides, Reliance, India Infoline felt that SBI, ITC, Bharti Airtel and RCom should outperform in 2009.
Religare feels that Reliance, BHEL, Tata Steel, DLF and L&T should do well.

Besides Banking Stocks, Angel Broking is bullish on Reliance, Bharti and RCom.
ICICI Securities top picks are SBI, L&T, NTPC, Maruti and Bharti Airtel.

Geojit has chosen Tata Power, Infosys, SBI, HDFC and ICICI Bank as its pick for 2009.

Khandwala Securities is very bullish on the Sensex and expects a high of 15975 for the Sensex in 2009 and feel Reliance, Tata Steel RCom, ICICI and JP Associates should be bought at every declines.

Centrum Broking has picked up Hindustan Unilever besides Airtel, Infosys, LT, ICICI.

Most brokerages seem to believe that Reliace Industries and Bharti Airtel should outperform the Sensex in 2009 and should form part of every investor portfolio.
Best of luck,
Srikanth Shankar Matrubai,


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Top Stock Picks for 2009 by Experts

I have picked from various sources the top Picks By Experts for 2009 for your benefit. Go through them, it may be useful to you.

Ambareesh Baliga of Karvy Stock Broking says Stock-specific, we would say it’s NTPC, BHEL, L&T, Infy, SBI and P&B. In infrastructure, it’s GMR and Punj Lloyd.

Samir Arora of Helios Capital advises investors to have a 15-20% exposure to gold, as the yellow metal will do well in next 1-2 years.



He is bullish on financials, infrastructure, select media and broking stocks. "We don't like commodities, pharma, consumer staples, and technology.".

Outlook Money has chosen Bank of India, Titan Inds, HDFC Bank, KS Oils, Mphasis, Bharti Airtel, Indraprasta Gas and Emami.

Angel Broking's top picks are HDFC Bank and Axis Bank.

Nirmal Bang is bullish on GEShipping, JPAssociate, Moser-Baer and SBI. Nirmal Bang also felt Stock specific counters like: GEShipping, SCI, Ster, TataSteel and Welspun Gujarat looks attractive to buy on dip.

KRChoksey Research's top picks are Reliance Industries, State Bank of India (SBI), Infrastructure Development Finance Company (IDFC), Housing Development Finance Corporation (HDFC), Bharat Electronics (BEL), BEML, Bharat Forge, Tata Steel, Glenmark Pharma, Mundra Port, Bharti Airtel, Hindustan Zinc.

Prabhudas Lilladher's top picks are Hero Honda, Amtek India, ICICI Bank, State Bank of India, Bank of India, Bank of Baroda, Crompton Greaves, Voltas, Jyoti Structures, IVRCL, Hindustan Unilever, Tata Chemicals, HDFC, Sun TV, IBN18 Broadcast, Aban Offshore, Bharati Shipyard, GAIL, Reliance Industries, Sun Pharma, Dishman Pharma, Lupin, Jindal Steel & Power, Reliance Communication, Tulip Telecom, Bombay Rayon Fashions, XL Telecom & Energy, Country Club, Parekh Aluminex.

According to Anagram Research's report, be invested in upstream crude companies and buy more if the commodity dips to newer 2009 lows, (which obviously means Stocks like Reliance Petroleum, Chennai Petro, MRPL, Cairn).
UBS AG in its Top 10 Picks for Asia has picked up only one stock from India and that stock is not suprisingly is Bharti Airtel Ltd!!

Financial Chronicle has picked Sun Pharma, Glaxo, Exide, GSPL, HDIL, AIA Engg, IVRCL and Everest Kanto as its top picks for the year 2009.

In an article, Money Today picked up AIA Engg, Cairn India, MTNL, NMDC, PTC, Biocon, MIC Electronics, Champagne Indage, Raymond and Gitanjali Gems as its top picks for 2009 based on the Low Debt levels and trading below Book Value.

Sharekhan's Top Picks are Bharat Heavy Electricals Ltd, Reliance Industries Ltd, LUPIN LTD, Housing Development Finance Corp.Ltd, ITC Ltd, Maruti Udyog Ltd, Shiv Vani Universal Ltd, Marico Ltd, Hindustan Lever Ltd, Larsen & Toubro Ltd, Bharti Airtel Ltd and Aban Offshore Ltd.

Well, the list is exhaustive and should be enough for you to make a shortlist on what to buy. I have not given my own picks as I am still doing some more research on few stocks and will be posting my own in a few days. Keep visiting my blog and find out. Your comments will be highly appreciated and your Top Picks will also help me and other readers to make a final decision.
Best of luck,
Srikanth shankar Matrubai


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PIRAMAL HEALTHCARE

PIRAMAL HEALTHCARE LTD
BSE: 500302 | NSE: PIRHEALTH | ISIN: INE140A01024 |FV 2.00

Piramal Healthcare is among the leading producers of halothane and isoflurane. With its latest acquistion of Minrad Internation (a generic inhalation anaesthetics company), Piramal Healthcare is set to strengthen its global presence in the critical care space, as the deal will give Piramal immediate access into the US market for the country's largest selling inhalation anaethetic sevaflurane.
Piramal has been on the prowl for quite sometime with its acquisition of Rhodia's Inhalation Anaesthetics business in 2004 and 'Haemaccel' brand acquisition from PlasmaSelectAG of Germany.


RECOMMENDATIONS :
With the continued favourable environment for CRAMS business due to its inherent cost advantages, and strong MNC relations, Piramal will continue to be a big beneficiary of increased outsourcing from India. Its domestic business too continues to be strong and steady.
The Company should outperform its peers comfortably and can be considered for accumulation at every declines.


Other Brokerages Targets :
Angel Broking has maintained its Buy rating on Piramal Healthcare with a target price of Rs 340.
Kotak Securities has maintained its Accumulate rating on Piramal Healthcare with a target price of Rs 313.
Sharekhan has maintained its buy rating on Piramal Healthcare with a target of Rs 434 in its December 23, 2008 research report.
SBICAP Securities
has maintained its buy rating on Piramal Healthcare with a target of Rs 360.
Motilal Oswal has maintained its buy rating on Piramal Healthcare.
Religare research has maintained buy rating on Piramal Healthcare with target price of Rs 412.

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EID Parry

Sugar appears to be one of the few sectors that offers potential for strong earnings growth combined with good visibility over the next two years, as the economy enters a lean phase. With the sugar cycle likely to turn from a surplus to a deficit in the current season (Oct 2008-Sep 2009), sugar prices may sustain firm trends. The resulting jump in realisations may help sugar companies deliver strong growth in earnings from their beaten-down levels last year. EID-Parry, a South-based sugar producer, appears a good investment option in this context.

Value in subsidiary

Much smaller than leading sugar players such as Balrampur Chini Mills or Shree Renuka Sugars, EID-Parry appears less vulnerable to spikes in cane costs than the UP-based mills, due to the location of its units in Tamil Nadu. (UP-based mills are currently litigating on SAPs fixed by the State). EID-Parry’s integrated business model and a longer crushing season may also help offset the likely escalation in cane prices over the next year.

At the current market price of Rs 139, the stock’s valuation (trailing P-E multiple of about 23) appears expensive based on standalone earnings in comparison to larger players. But the stock valuation factors in the company’s 62 per cent equity stake in Coromandel Fertilizers, a fertiliser maker with good prospects. EID Parry’s equity stake in Coromandel Fertilizers alone translates into a value of Rs 84 per share at the current market price, valuing EID Parry’s core business at Rs 55 per share. That translates into a modest P-E of about nine times the trailing earnings; these reflect a depressed phase in the sugar cycle. The stock trades at 1.1 times its September 30 book value.
Stability from by-products

EID Parry owns cane crushing capacities of about 17,500 tcd spread over five locations in Tamil Nadu and is an integrated sugar producer, with a 40 kl per day distillery and capacity to cogenerate 65 MW of power from bagasse. Ongoing capital investments are expected to take up crushing capacity to 19,000 tcd over the next year, while adding additional distillery capacity and 20 MW of power.

The company also has a presence in bio pesticides and nutraceuticals. The nutraceuticals business has recently been strengthened through the acquisition of a 48 per cent stake in the US-based Valensa International, a product developer.

After de-merger of the farm inputs division to Coromandel Fertilizers in 2003-04, EID Parry has invested substantially in the sugar business, where it has expanded capacity from 14,000 tcd to 17,500 tcd and added significant facilities for processing by-products.

This has contributed to a changing product mix, with rising contributions from power and alcohol. 2007-08, a lean year for the sugar business, cogeneration and distillery operations contributed 16 per cent of EID Parry’s revenues and nearly 30 per cent of operating profits, partially offsetting segment losses from the sugar business.

Higher contract prices for ethanol, which could have bolstered margins, may not materialise now, given the steep correction in crude oil prices. But contributions from both these businesses may continue to grow on the back of higher volume sales. Tighter cane supplies may also aid better realisations from intermediary products such as molasses and industrial alcohol this year onwards.
Turnaround

EID Parry’s core sugar business saw its earnings (before interest and taxes) peak at Rs 79.6 crore in 2005-06 — the apex of the previous boom in the sugar cycle. Thereafter earnings fell steadily and slipped into losses of Rs 59.6 crore in 2007-08, on weakening sugar prices. A sharp turnaround in profitability is likely this year (FY09), as sugar prices rise in response to the emerging situation of a significant fall in production (from 270 lakh to 200 lakh tonnes), tight supplies and lower year-end inventories.

Sugar prices have already firmed up by 33 per cent over the last year and hold potential for further upside, should actual output during the ongoing crushing season be revised lower. With the inflation threat now receding sharply, policy intervention to curb any uptrend in sugar prices also appears less likely than it was a few months ago.
Comfortable on cash

Apart from the prospect of strong earnings growth, low levels of leverage in EID-Parry’s consolidated balance-sheet (1.5:1 as of March 2008) and improving cash flows from operations may help it fund its expansion plans over the next couple of years without significant increases in financing costs.

A cash consideration of Rs 747 crore received in July 2008 from the divestiture of equity holdings in Parryware Roca, also allows room to pay down debt and fund investment plans. This also leaves sufficient resources for the company to implement its recently announced buyback offer, expected to absorb a maximum of Rs 47 crore.
EID Parry’s investment book, strong cash coffers and locational advantages support valuations and offer an edge over larger peers.
The offer, set to open on December 15, intends to buy back 10 per cent of the outstanding equity through the open market at a maximum price of Rs 160 per share. The buyback may provide downside protection for investors in the stock.