PENNAR INDUSTRIES    BSE CODE 513228  FV RS 5 CMP 35

 

THE COMPANY WAS A COLD ROLLED STEEL MANUFACTURER TILL ABOUT 2-3 YEARS AGO BUT SINCE THEN IT HAS GONE INTO VARIOUS VALUE ADDED PRODUCTS WITH

CLIENTS IN VARIOUS INDUSTRIES AS FOLLOWS:

RAILWAY PRODUCTS—INTEGRAL COACH FACTORY,TEXMACO,TITAGARH WAGONS,BEML

AUTOMOBILE PRODUCTS—TATA MOTORS, ASHOK LEYLAND, EICHER MOTORS

BUILDING PRODUCTS—L&T, NAG CONST, SHAPOORJI PALLONJI

POLLUTION CONTROL—THERMAX, BHEL,ABB

PRESSED STEEL COMPONENTS—EMERSON ELECTRIC, TECUMSEH, TVS MOTORS, IFB

ROAD SAFETY PRODUCTS—NHAI AND OTHER ROAD CONSTRUCTION COMPANIES

FABRICATED PRODUCTS—ABB, THERMAX, PRASAD SEEDS

PRECISION TUBES—BUS BODY BUILDERS

COLD ROLLED STEEL STRIPS—AUTOS, WHITE GOOD, ELECTRICAL AND ENGG COMPANIES

THE COMPANY HAS FIVE MANUFACTURING PLANTS LOCATED IN ANDHRA PRADESH, MAHARASHTRA AND TAMIL NADU.

REVENUE WISE BREAK UP OF TOTAL SALES IS AS FOLLOWS:

ENGINEERED  PRODUCTS—Includes automobile products, pressed steel components, Precision tubes, Rolled steel products -----around 52%

HEAVY ENGINEERING PRODUCTS----  Includes Rail wagons and coaches, -----around 24%

INFRASTRUCTURE---  Includes building products, Road safety systems, Fabricated products, ESP Electrodes  -----    around 23%

 

FINANCIALS

 

Year	05	06	07	08	09	9m fy10
SALES	106	160	526	641	730	600
NP	-33	-1.5	26	30	38	36
EQUITY CAP	16.71	16.71	48.18	63.24	63.24
RONW	-	-	17	22	24
DEBT	237	175	180	119	127

 

LAST 5 QUARTERLY RESULTS

	DEC 08	MAR09	JUNE09	SEP09	DEC09
SALES	169	167	181	181	195
NP	9.5	10.1	10.7	12	13.6

 

 

TOTAL EQUITY IS AROUND 63.24 CRORES AND OUTSTANDING NO OF SHARES IS 12.64 CRORES.  PROMOTERS HOLDING IS AROUND  37%

COMPANY RECENTLY COMPLETED A BUYBACK PROGRAM OF AROUND 31 LAC SHARES AT WITH THE MAX PRICE FIXED AT 40.

POSITIVES:

THE COMPANY HAS TRANSFORMED ITSELF INTO A VALUE ADDED COMPANY WHICH SUPPLIES PRODUCTS TO DIVERSE RANGE OF BUSINESSES WITH GOOD GROWTH POTENTIAL

STRONG GROWTH DEMONSTRATED IN THE LAST 3-4 YEARS ALONG WITH GROWTH IN PROFITABILITY

NEGATIVES:

ALL THE RISKS ASSOCIATED WITH SMALL CAP ARE APPLICABLE TO THIS STOCK.

TECHNICAL VIEW

THE STOCK MADE A HIGH OF 46 IN JAN 08 AND FELL DOWN TO FORM A BOTTOM OF 15.5 IN MARCH 09 AND SINCE THEN HAS BEEN IN AN UPTREND.  VOLUMES HAVE INCREASED SINCE SEP 09 IN THIS STOCK.

LOOKING AT THE COMBINATION  OF FUNDAMENTALS AND CHART PATTERNS, THIS LOOKS LIKE A GOOD STOCK TO ACCUMULATE ON DIPS FOR MEDIUM TO LONG TERM.

 

 

 

Now where did you guys heard about this company?????

This is a great play on India's growth. They were doing well in early 90s but were hit by downturn in late 90s. But they came out much stronger and as a transformed company after 05. They have become a value added products comapny rather than just a rolling mill. They have managed last year's downturn in an impressive way.

Cheap valuation, low debt, good div yield, impressive return ratios and good growth prospects makes it an attractive buy.

Originally posted by chimak10 Now where did you guys heard about this company?????

I was impressed by the chart pattern of the company and the volume increase since sep 09. And in the small cap thread, equity lover was insistent on this scrip and hence I decided to look into it and found it very attractive. I am in good company with smartcat on this one.