ITD Cementation: Industrial segment to contribute heavily going ahead

Riken Mehta
Follow me on Twitter @mehtariken
 
ITD Cementation, a diversified construction player reported consolidated net profit of Rs 4.61 crore compared to Rs 6.40 crore, a year ago.  Sales were flat in this quarter at Rs 405.15 crore.

The company’s management believes it has a healthy order book and the contraction in piling and foundation work flow is a temporary phenomenon. Here is an edited transcript of the response to the questionnaire sent by moneycontrol.com

Q. What is the total order book at the end of June quarter and how much of it will be executed in FY14? Are you experiencing any delay in execution or cancellation of orders from your clients in wake of slowdown?

A. Our order book stands at Rs 3348 crore. This represents about 2 years’ of forward work. We do have some orders where the payments are slow or where the client is stuck for further funding related issues. But the value of these orders in our overall work-in-hand is not significant.

Q. Revenue growth was flat while operating margins contracted by 64 basis points. Can you elaborate more on your quarterly performance?

A. It is not always possible to make a Q-on-Q comparison of company’s performance in the construction sector. But, having said that, margins are not even across all customer segments from where the work emanates. Our work flows from developers of ports, MRT projects, dams & tunnels, highways & flyovers and piling & foundation engineering work and margins between quarters can vary with the relative contribution of these in the overall revenue.

Q. Can you give us the full year sales, profit and margin guidance for FY14?

A. We do not have a policy to issue guidance on earnings. But, barring unforeseen circumstances, we should be able to improve our last year performance.

Q. Interest cost has gone up. What is the total outstanding loan book?

A. Our loans are mainly working capital loans, which are slightly higher than the last year level.

Q. Last year the company forayed into industrial and power segment. How is the demand scenario in this division considering slowdown? What kind of revenues do you expect from this division in next 2 years?

A. Yes we have started to focus on the industrial segment, comprising of buildings across all users. Selectively, investment is happening in the industrial segment and we expect this segment to be a significant growth driver in the coming years.

Q. How is your foundation and piling division performing? What is your outlook for this division going ahead?

A. With the slowdown in power and real estate, there is a contraction in piling and foundation work flow. We hope this is a temporary phenomenon. 

Q. How is the demand outlook from the shipping and ports division (Maritime structures)?

A. The marine division continues to be a major contributor to work flow and revenues. Yes, there are some delays in awards due to client related issues and receipt of clearances.

Rubfila International will double sales to Rs 225 crore by FY15

Riken Mehta
Follow me on Twitter @mehtariken

Rubfila International  , a market leader in latex threads which is primarily used in hosiery and adhesives reported highest ever quarterly sales in the June quarter. The company posted a turnover of Rs 31.34 crore, a jump of 21 percent over its same quarter last year. Net profit was down to Rs 3.14 crore against Rs 3.54 crore in the same period since the company earlier used to enjoy tax benefit on previous years losses.

The company also declared a dividend of 60 paise per share for the first time since its IPO in 1994.

“We will clock a turnover of Rs 135 crore in FY14 and around Rs 225 crore in FY15,” said Mr. Krishna Kumar, managing director at Rubfila International in an exclusive interview to moneycontrol.com

Guidance

“The operating profit for FY14 will be around Rs 18 to 19 crore. However, the net profit will remain close to Rs 14-15 crore since the company will be paying tax this year,” he added.

Rubber and latex prices

“There is a huge difference in latex prices domestically and internationally. In domestic markets latex prices are quoting at Rs 170 per liter compared to Rs 103 per liter in the international markets. Monsoons have been pretty heavy in Kerala which led to poor availability of rubber and latex. We have already booked 500 tonne of latex internationally and planning to book another 200 tonne due to huge discrepancy in prices,” said Krishna Kumar. However, he clarified that this phenomena is temporary and the availability of rubber and latex will improve considerably in the third quarter of FY14.

Capacity

The current installed capacity of latex threads is 10000 tonne and post onset of fourth line the capacity will jump to 13000 tonne. We expect the completion of the fourth line capacity in fourth quarter of FY14.

Exports

“Exports contributed 9 percent to total revenues in this quarter. We plan to boost it up to 25 percent by the end of FY14. However, the margins are better in domestic market compared to exports,” he said.

Industry outlook

“Hosiery segment constitutes 85 percent of the total revenues while the remaining portion comes from Adhesives. We expect hosiery industry to grow at 12 percent this year,” he added.

Market share

“We have 40 percent market share in the domestic market. Currently Rubfila is a debt free company but we may look to raise capital in the future to meet our working capital requirements if required,” concluded Krishna Kumar

Are Nifty 50 stocks entering a long-term bear market?

Riken Mehta
Follow me on Twitter @mehtariken

Indian stocks crashed on Friday and the hope of Nifty moving back above its 200 day-moving-average (DMA) seems like a herculean task now. Analysts attribute recovery in US, depreciating rupee and deteriorating earnings as the prime catalysts for this fall.

Four years back market participants rejoiced the comeback of UPA to power in 2009. The Nifty closed at 20 percent upper circuit, option traders made huge money and our very own renowned anchor Udayan Mukherjee kissed his computer screen.  Today, market participants including traders, investors, brokerage houses and even common man are awaiting the elections for change of guard in the north block.

So what lies ahead since the general elections are slated in April/May next year?  In my earlier article, I had explained moving averages and the significance of Nifty breaching 200 DMA. Today we will analyse the 200 DMA of Nifty constituents.

The 200 Day Moving Average is a long-term moving average which helps in tracking the overall health of an underlying asset. A stock trading above its 200 Day Moving Average is considered to be in a long-term uptrend and vice-versa. 

As per Friday’s closing price (August 16, 2013) 38 stocks out of Nifty 50 are trading below their 200 DMA. What’s even worse is that out of the remaining 12 stocks five are trading barely above their 200 DMA (within 10 percent above their 200 DMA) including defensives like ITC, Cipla and Bharti Airtel. If one analyses the data closely, then 30 stocks are trading 10 percent lower than their respective 200 DMA. Bajaj Auto, Cairn India and Reliance Industries are the latest entrants to join the club of stocks below 200 DMA.  

Friday’s fall was also accentuated by higher delivery based selling compared to 8-day average in some of the high beta stocks. As per latest earnings analysis of Nifty 50 stocks, total sales growth was lowest in last 15 quarters. Personally, I believed this reaction should have come much earlier when every macro economic data was hitting multi-year lows and yet Nifty managed to keep its head above the 200 DMA. Around 10-12 stocks in the Nifty were able to hold it due to their large weight age in the Nifty but it seems that the tide has turned in favor of bears.  A big move is mostly followed by choppiness (highly volatile intraday moves on either side) including a pullback rally and one needs to see how long will it last.

Company Name	Current Price	200 Days	Below 200 DMA
Jaiprakash Asso	29.7	73.67	-60%
BHEL	105.55	199.4	-47%
Jindal Steel	213.15	335.31	-36%
PNB	500.25	761.52	-34%
DLF	145.45	221.06	-34%
Bank of Baroda	479.25	709.16	-32%
Tata Steel	235.35	335.26	-30%
IDFC	106.75	151.81	-30%
SBI	1,570.60	2,154.70	-27%
Reliance Infra	325.4	427.72	-24%
Larsen	757.45	994.38	-24%
Tata Power	73.45	96.17	-24%
BPCL	290.2	369.27	-21%
Grasim	2,332.90	2,966.13	-21%
Axis Bank	1,048.95	1,333.55	-21%
ICICI Bank	858.6	1,090.17	-21%
NMDC	108.75	136.74	-20%
Sesa Goa	130.25	163.2	-20%
Coal India	258.3	322.57	-20%
IndusInd Bank	356.4	435.69	-18%
Hindalco	93.55	106.58	-12%
Ranbaxy Labs	379.6	430.37	-12%
Maruti Suzuki	1,325.10	1,502.19	-12%
UltraTechCement	1,684.00	1,908.93	-12%
Power Grid Corp	98	110.72	-11%
HDFC Bank	587.9	661.74	-11%
GAIL	298.3	333.89	-11%
HDFC	737.9	821.92	-10%
ONGC	271.8	302.29	-10%
ACC	1,158.90	1,279.02	-9%
Ambuja Cements	173.4	190.9	-9%
Mah and Mah	840.1	917.05	-8%
Asian Paints	418.7	455.01	-8%
NTPC	139.65	151.33	-8%
Kotak Mahindra	632.25	679.37	-7%
Bajaj Auto	1,848.35	1,912.27	-3%
Cairn India	301.3	307.11	-2%
Reliance	826.7	832.97	-1%
ITC	320.4	312.14	3%
Cipla	414.7	397.48	4%
Bharti Airtel	335.65	311.75	8%
Tata Motors	313.95	291.34	8%
Dr Reddys Labs	2,166.15	1,968.57	10%
HUL	599	536.37	12%
Hero Motocorp	1,985.35	1,733.44	15%
Infosys	2,978.40	2,583.18	15%
Lupin	817.55	679.96	20%
TCS	1,780.90	1,455.33	22%
Sun Pharma	542.45	434.22	25%
HCL Tech	921	732.48	26%