Do check this point of import. Sounds a real good point. However, lemme confess here that although I was scouting for import plays for a long time, am yet to get into a single of them with over-riding success. I went long on Porritts and Spencer Asia and BASF India, seeing that these companies spend dollars on trading goods, machineries, royalties and dividends. However, both of them have been non-starters. And on the other hand, the company which I feared most for dollar earnings, GE Shipping, took off so quite well inspite of good exposure in tanker markets and that too with extremely soft tanker rates. These rupee-Dollar story is a bit tricky than it appears. Alongwith earnings, you also have to determine net overseas assets or liabilities. And the story becomes tough then.
Although MRO-Tek can be played for 64-65 levels but 36 is also quite a possibility. The congestion zone takes a huge toll on the patience and the trade off becomes way too huge in a raging bull market. By the way, can you please tell me what dividend it provides, if at all?
MRO-TEK
is a 22-year-old Bangalore-based hardware manufacturer focused on
access networking devices, manufactures and trades digital modems,
converters, multiplexers, routers and other related accessories.
It
has an installed capacity to manufacture 43,500 units per annum of
which, in FY07, its production was at 36,570 units, a 85% capacity
utilisation. And in converters, its installed capacity is 20,000 units
per annum of which in FY07, production was 16,847 units i.e: around 85%
capacity utilization.
The
company’s clientele includes big names like HDFC, CMC, Hutch, IBM,
Nokia, Infosys, Siemens, SBI, VSNL, Spice Telecom, RIL, Wipro, Bharti,
BEL, BSNL, Indian Airlines, Satyam. Tata’s and many more.
The
company’s financial performance is certainly nothing to get enthused
about, atleast at this juncture. For the first quarter ended 30th
June 2007, the company posted total income of Rs.25.31 crore (Rs.23.64
crore last Q1), EBIDTA was at Rs.3.63 crore (Rs.3.75 crores). PBT was
almost stagnant at Rs.2.94 crore and PAT was at Rs.2.22 crores (2.12
crores). And it is precisely due to these flat results that the share
price of the company has slipped down from the levels of Rs.100 to
Rs.45 today.
Despite
the flat results, this is a good buy as the company is now headed
towards developing and commercialising the Next Generation Network
products from the in-house R&D stable and this is expected to give
an added impetus to the company for sustained growth. So once this
venture of the company to commercialise the products gets underway, the
fruits of this will start showing in the bottomlines of the company by
end of the current fiscal or early FY09.
One
of the biggest wining facts of this company is that its networth, as at
31/03/07, stood at Rs.92.18 crore and given the equity capital of
Rs.10.37 crore, the book value is at Rs.44.54 per share, on a face
value of Rs.5 per share. A stock available at the same price as its
book value, this surely has to be the first of its kind, that too for a
profit making, dividend paying and growing company!
Another major plus in favour of the company is that it is a 100% debt free company.
As
at 31/03/07, the cash and bank balance of the company stood a Rs.32.87
crore, which coupled with the “no debt” tag, makes it an extremely cash
rich company.
The
company declared an interim dividend of 20% and then another dividend
of 20%. So a 40% dividend on a share with a face value of Rs.5 per
share means that the company has paid back Rs.2 per share, for FY07.
The company is also buying
back, from the open market, a maximum of 25.60 lakh fully paid-up
equity shares of Rs 5 each, at a price not exceeding Rs 55 per equity
share. It has earmarked a maximum of Rs 8.25 crore for the purpose,
which is being funded entirely out of the free reserves. The offer
opened from June 4, 2007 and will close on March 29, 2008 or when the
company completes buy back to the extent of 25.60 lakh shares,
whichever is earlier. Till date, the company has bought back 2,00,027
shares.
A
company that is debt free, is available at its book value, pays out
decent dividends and is also buying back the shares. What more can one
ask for?
The
best investment strategies are those when you pick up stocks at their
rock bottom prices and have a great conviction about its future. MRO
–TEK gives you that opportunity. Pick this stock when it’s down and
then scale high when the tide turns in favour of the company.
Definitely a risk free buy with growth prospects at the current price of Rs.45.
ABILITY will get u at d top. CHARACTER will retain u at d top
Although dividend is good, but there has been a reduction last year. Although I am heavily biased against tulsian, yet whatever he has spoken for financials definitely makes MRO-TEK attractive. Downside is fairly limited and thats a good way of looking at things for no God knows how much upside can you get. As investors, we can only limit downside and thats all we can do. I believe, if someone is willing to take a small bet by being non-conventional, MRO-TEK is attractive. Will like to see its annual report and then convert some of my nagarjuna fertilizers/HM into this one....
better still, lemme ask for the annual report......lets see if they send it without why any holding. In case they dont, i will get a small exposure and ask as a shareholder. there are many a things which financials dont reveal. the problem is, in a raging bull market no one wants to miss the bus. But i will also confess, the best money is made in buying highly uninteresting companies....just protect the downside, for investments at no point should lead to deterioration in confidence and leave other things to bhagwaan. And always remember, never rush to buy a thing/stock.....I have rushed to buy 1 stock and lost quite a bit, that was teledata informatics. JK Paper I bought when I was on the move, and there also I lost. but then, we learn lesson all throughout our lives. if I had been in your place, i would have utilised my profits to get into MRO-Tek, but at a very snail like pace. that ways you start wishing for more downside so that you accumulate more and more and your rupee cost averaging is done properly. the way i am doing with ultramarine and pigments.
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