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Panchratna
Vol. 4, No.14 An Investment Newsletter by G. S. Roongta July Sep 2017
Back drop
The popular indices are at their lifetime highs and specific stocks hitting record highs both in the mid-cap and the
small-cap categories.
In view of this, it is now a herculean task to identify growth-oriented stocks that are potential multibaggers or a
dark horse or value pick. However, after much in-depth research, we have once again succeeded in identifying five
such stocks from the Steel, Plastic, Infrastructure and Petro-chemical sectors to make the 14th edition of
Panchratna most profitable for its subscribers. These stocks lie in the low price range of Rs.7-50 so that subscribers
can invest and hold maximum quantity based on their capacity.
We have selected two stocks from the steel sector as the industry is reported to have turned around and is
likely to perform well on the back of government initiatives.
We have selected one stock (a turnaround case) from the Plastic/Polymer industry which is also doing well.
Similarly, the stock selected from the Petro-chemical & fertilizers industry is also a turnaround story.
The stock selected from the real estate and power infrastructure sector is a value pick - a profitable company
that pays dividends as well.
We always make an effort to identify the best stocks available in the small-cap category for maximum returns.
This time, I wish to recommend the following five stocks:
1) Om Metals Infraprojects Ltd
2) Southern Petrochemicals Industries Corporation Ltd
3) Pearl Polymers Ltd
4) Modern Steels Ltd
5) Sunflag Iron & Steel Company Ltd
Let us summarize their respective highlights hereunder:
G.S. Roongta
Hydro Power:
Top 5 Unexecuted Order Book:
OMIL has executed
Sr. Project State Amount
over 60 Hydro
No. (` in crore)
Power projects till
1 Kachh Branch Gujarat 198
now and is
currently working Canal Power House
Shareholding Pattern: (in %)
on projects 2 Rampur Barrage U.P. 193
Mar. Dec. Sep.
totalling ~2,000 3 Ujjain Smart City M.P. 166 Particulars
2017 2016 2016
MW across 4 Pallacia Rajasthan 130 Promoter 70.74 70.74 70.74
segments. It has 5 Hydro Mechanical Uttarakhand 106 Institutions 3.95 3.95 3.95
executed one of works of Vyasi HE Non- 25.31 25.31 25.31
the worlds largest 6 Others - 109 Institutions
Vertical Lift gates Total 100 100 100
Total 902
at Koldam
Electronic Project in Himachal Pradesh and one of the worlds largest
Radial gates at Gosikhurd in Maharashtra.
The target for hydro power in the 12th Five Year plan is 10,897 MW of
which only 3,811 MW was achieved in FY16. The government is taking
The Indian real estate market is expected to touch $180 bn by 2020. The
housing sector contributes 5-6% to the country's GDP. Over FY08-20, the
market size of this sector is expected to grow at 11.2% CAGR. The
government has taken several initiatives to encourage the development in
the sector. For example, the Smart City project, under which it aims to
build 100 smart cities; Housing to All; Roads projects, etc.
Subsidiaries:
1) Its Engineering division turnover for FY16 was Rs.156.6 crore (Rs.208
crore in FY15) with net profit of Rs.24.5 crore (Rs.26.3 crore in FY15).
2) Its Real Estate turnover was Rs.32.6 crore (Rs.14.5 crore in FY15) with
net profit of Rs.6.7 crore (Rs.2.7 crore in FY15).
1) Its equity capital of Rs.9.63 crore seems quite small considering its
overall business size, infrastructure and projects in hand.
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2) SOUTHERN PETROCHEMICALS
Stock Info
INDUSTRIES CORPORATION LTD CMP (`) 25.30
BSE Code 590030
Category: Potential Multibagger NSE Symbol SPIC
Company Background: Promoted by Mr. Ashwin C. Muthiah, Southern Sector Fertilizers
Petrochemicals Industries Corporation Ltd (SPIC) was considered to be the 52-week H/L (`) 31.85/17.60
largest fertilizer and chemical complex in the South till the 1990s. SPIC was Face Value (`) 10
a blue-chip stock during that period and was actively and extensively Market Cap (` cr.) 420.68
traded in the stock market. It was listed under the A group category back
then.
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the third largest consumer of Polymers and a rise in the demand for plastic
is expected to boost the consumption further.
Besides the FMCG sector, growth is also driven by the growing adoption of
plastic products in the medical industry as well as the construction
industry with the adoption of advanced coating, ceiling and polymer-
based reinforcing material in construction as well as plastics, paints and
coatings for the automotive segment.
With more than 40% of the packaging industry already shifted from other
modes of packaging like Jute, Steel, Aluminium plastics is expected to
reach 50% soon.
In view of this, the management reported that it has reviewed the
Companys strategic objectives and is geared to tap new opportunities in
the marketplace and develop innovative solutions for its customers going
forward. Its focus henceforth will remain on strategic growth initiatives for
business expansion and sector penetration.
Expansion: PPL had set up a plant at Guwahati, which started commercial
production w.e.f. 30 March 2017 and the impact of which will be reflected
partially in FY18 and fully in FY19.
Price Fluctuation: PPLs share Price Fluctuation High (Rs.) Low (Rs.)
price shows a definite sign of
April 2016 17.50 12.15
improvement through its rise
from its earlier levels of June 2016 19.40 13.30
Rs.15-20 to hit a high of July 2016 26.75 16.80
Rs.41 in April 2017. October 2016 31 18
From April 2016, its share January 2017 30.95 23.60
price has been making higher February 2017 40.10 24.50
bottoms and higher tops
while appreciating by over April 2017 41 35.05
130% over a year. This again creates hope that the stock is a dark horse set
to perform in the years to come.
Risk/Reward: There does not seem to be any risk in this counter as the
Company is making efforts to become cash-rich and improving its
performance through new initiatives like the new Guwahati factory which
has started commercial production already. However, a risk:reward ratio of
20:80 looks reasonable considering any unforeseen circumstances.
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steel ladle in the re-heating process. This system has reduced the heat
cycle time and in turn resulted in improved productivity.
Further, it has proposed installation of new capital projects viz. (i)
pulverized coal injection system; (ii) Refurbishing of mini blast furnace; (iii)
Capacity enhancement of sinter plant; (iv) Conversion of heat recovery
boiler of DRP-I to dual operation of FBC and WHRB. These projects are
expected to be commissioned in FY18.
Risk/Reward: I assign this stock a risk:reward ratio of 25:75.
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