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Tuesday, May 24, 2005


Dear Friends,

I think market has completely ignored (CMP: 62.5) the strong fundaments of this script. This has performed consistently over a period of time. I am providing some highlights below. Pls share your opinion.

1) Aro Granite Industries Ltd., has installed the most sophisticated environment friendly granite processing machinery line from Italy. Complimenting its state-of-the-art equipment, is the ingrained obsession for quality, which has got AGIL the ISO 9000 certification from RWTUV, Germany for Quality Management Systems. Promoted by two technocrat industrialists Mr. Sunil K. Arora and Mr. Prem Arora, AGIL, started its operations in the year 1991 with the manufacture of Polished / Flamed Granite Tiles with an installed capacity of 1,80,000 Sq. Mtrs.

This 100% Export Oriented Unit is ideally located at Hosur (Bangalore) - the Granite Hub of India. Over the years AGIL has earned a high degree of credibility with its broad clientele base as the most reliable and consistent supplier of premium Indian Granites. The customer network of AGIL spans the globe and is currently meeting
the granite needs of USA, Canada, Europe, Japan, Far East and South Pacific Countries.

The Unit II of AGIL manufacturing GRANITE SLABS is equipped with a processing line from some of the world's leading manufacturers making it, one of the finest slab manufacturing plants comparable to the best in the world and has an installed capacity og 1,68,000 Sq. Mtrs.

2) Fundamentals:

a) Consistent increase in the sales figures last being 61.14 crs (previous 53.37, 29.71, 24.04, 21.29 respectively). NOT A SINGLE DROP in the last five years. Backed by very decent profitability figures of 8.71 crs (previous being 7.75, 3.44, 4.06, 3.91 respectively). Only in year 2002 profitability dropped to 3.44 cr from 4.06 cr of the previous year but next year it touched high of 7.75 cr and then 8.71 cr which very decent by any means.

b) Book value of 82.35. Some one my argue that this company being in the business of Granite has not got the fancy of the market. But remember this is 100% EOU unit with good profitability and ultra-modern facility run by professionals. Company has shown this in the past thru consistent performance. Expected EPS of 20 and PE at CMP will be 3.

c) Very low share capital of just Rs 7.02 cr. and Reserves & Surplus are 33.86 cr almost 5 times. Out of the total share capital Foreign Holdings is 1.03%, Govt./Financial Institutions Corporate Bodies 10.12% and Directors and their Relatives 51.09%. So for Indian public available pie is just less than 38%. Company has not taken any unsecured (or short term debt). The secured debt is Rs 13.58 cr which has also come down from the previous year. Considering the Total Shareholders Funds of 38.54 cr this is significantly low.

d) Net Current Assets are 28.03 cr while Current liabilities 7.99 cr. So if we get the net of this figure and divide among 70.2 lac share holders then each gets Rs 29 which provides safety cushion.

e) Company has been very generous in giving dividends last two are 15% and previous 14, 12, 12% respectively. Besides, company has given in the last year one bonus of 50%. This company was incorporated in 1989 and has a history of performance.

Considering all these factors I think this is a sure buy.

Please share your opinion.

Niteen Dharmawat

Friday, May 20, 2005

Donear Industries - Update


Donear Industries reco at 208 on 10th May has spurt again and touched
273. Volumes are also picking up. Enjoy the ride.

Niteen Dharmawat

p.s.: this is not a buy call

Wednesday, May 11, 2005

Donear Industries - share your opinion

Donear Industries

It seems to be HIGHLY undervalued and not at all under the scanner of
the marketman.

Donear is one of the pioneer fabric producers in the country, manufacturing perhaps the widest range of blended suitings, trousering fabrics and shirtings... in skin friendly blends of viscose polyester, cotton polyester, wool polyester and in varying widths in contemporary designs and colours.

SUITING AND TROUSERING FABRICS: In this category Donear manufactures blends like P/V, P/C, P/V/L, P/W/L, P/W gsm ranging from 150 to 350 in plains and designs in variety of finishes.

SHIRTING FABRICS: In this category, high quality fabrics in the width of 44" & 58"/60" in P/C & 100% cotton upto 160 gsm in regular and special finishes like 'calendered' & 'wrinkle free'. These are manufactured in range of plains and yarn dyed checks.

DRESS MATERIAL: In this category high quality dress material fabrics in the width of 44" & 58"/60" in various blends and combinations weighing upto 400 gsm can be manufactured; with the best possible product mix of weaves, textures in all feels and colours.

Financials & valuations:
1) CMP 206. Very low volume. Did not get the fancy of the market and secondly low floating equity.
2) Consistently paying dividends - last two 100% earlier 20, 100, 120% respectively (2004-200). Besides bonus (1:1) at two occasions (2004 & 1998)
3) Established name. in business since 1987. www.donear.com/
4) Low equity base of Rs 2.60 cr (now 5.2 cr post bonus) but 82% with director and relatives.
5) Revenue and profitability increasing consistently (WITHOUT A single exception). 2004 revenue 122 cr and profit after tax 17.52)
6) Reserves of Rs 52.89 crs (has been increasing consistently over a period of time, in last 5 years there was not a single drop)
7) Book value of 213+ rs in FY'04
8) Net Current Assets rs 54.43 cr over Current Liabilities 11.91 cr. Net is 42.52 cr divided among .52 cr shares then 81 rs cash available for each share.
9) Secured Loans Rs 17.52 Cr & Unsecured Loans Rs 1.15 cr. very low compared to Total Shareholders Funds of Rs 55.49 cr. Even company has brought this figure down over a period. The interest component in the P&L is negligible just Rs 0.87 cr in FY04 (1.43 1.84 2.18 1.44 crs in previous years).
10) Lastly, Donear Industries to begin a Rs. 150-crore Greenfield textile project - this is the news item of Sep'04, as pasted below for info.

India: Donear Industries to begin a Rs. 150-crore Greenfield textile project
Donear Industries Ltd. plans to set up a Greenfield textile project worth Rs 150 crore approximately, in the coming 6-12 months...
by Textile Excellence
Wednesday, 15th September 2004

Donear Industries Ltd is next in line, to pump heavy investments with a view to intensify its operations. At the recent launch of international quality fabric range under the its brand `Royal Classico’, Mr Ajay Agarwal, the Executive Director of Donear Industries Ltd., unveiled the company’s plans to set up a greenfield textile project worth Rs 150 crore approximately, in the coming 6-12 months. Letting out more information about this proposed move, Mr Agarwal said that machinery requirements for the proposed project had been identified and the orders were placed. Also, with a view to complement the rise in demand for cotton fabrics, this
project would exclusively undertake this activity, the Executive Director asserted.

Though the exact project location is still under discussion, it has been reported that the company was considering either Gujarat or Maharashtra for this project. Mr Agarwal was, however, quick to note that the finalisation of place would take form only after careful weighing of incentives currently being offered by these states.

In addition to this developmental move, other strategies of Donear Industries include investment of Rs 20 crore towards capacity expansion of its Silvassa factory. From its present capacity of 1.2 million metres per month for terry wool and polyester viscose, the company aims to achieve the 1.6 million meters target by adding another 0.4 million metres to the monthly capacity.

Continuing with the growth viewpoint, it could be noted Donear Industries Ltd. has been registering high growth rates in the range of 35 to 40 per cent annually over the last six years. Further, the company hopes to sustain this growth trend and has an internal target of reaching Rs 500-crore turnover mark set for next four years. This, it hopes to achieve by expanding its distributors network for various brands. It is also contemplating to set up exclusive showrooms in key cities across the country.

Tuesday, May 10, 2005

Transport Corporation

It seems undervalue to me.

- PE 14.4. EPS 10.90. CMP 157.5
- Never skipped dividend
- Revenue always increasing (both Y-O-Y and QOQ basis) and so also profitability (with exception of Yr 2000)
- Hugh reserve and surplus (10 times the equity)
- Net Current Assets (Rs 61.59 cr) and Net Current Liabilities (Rs 30.28 cr). So if you get net of these two figures and divide among the 1.05 crore shares it provides the much needed cushion. This is very critical because it provides Rs 30 on each share
- Directors and relatives holding significant number (70% - as per
last figures)
- I expect the company to show 30% growth

Only negative: is high debt component. If company makes effort to reduce this then it would be just fantastic.

Saturday, May 7, 2005

Omax further info

Omax is certainly an excellent script and a target of 200 is very uch achievable. But the best price to buy now is sub-100 and anything in the range of 92-98 is a good price to accumulate.

One more point to add (and a reply to jayram ji's concern) - Omax is now striving to become a OEM supplier and has got good orders from delphi (approx. 200 crs for a period of 3 years). Further getting orders from other overseas buyer - thereby reducing its reliance on Hero groups performance. The best thing i like about any company is their ability to identify their weakness/mistakes/risks and an inclination to take steps to rectify it. Omax is certainly taking steps in right
directions and would be a multibagger. The list of its major clients
| Hero Honda | Denso | Tenneco | Piaggio |
| | | Automotive | |
| Maruti | Lucas TVS | Delphi Automotive| Supersprox |
| TVS Motors | Sundaram Clayton | Cummins | Honeywell |

Further it is planning to reduce the revenue share from hero honda to
60% of sales by this year.

Am bullish on Omax - buy between 92-98 - good hold for a 1 year - a multibagger in a 2-3 year time frame.

Please find share holding pattern of omax on 31 dec 04. March 05 has not been submitted yet...

As on 31-Dec-2004 Category Sub Category No. of Securities Held % Holding

Promoter's Holding Indian Promoters 7268350 35.79
Foreign Promoters 0 0.00
Persons Acting in Concert 2809182 13.83
Sub Total 10077532 49.62
Institutional Investors Mutual Funds and UTI 910762 4.48
Banks, FIs, Insurance Co.s, Central / State Govt. / Non-Govt.
Institutions 53860 0.27
FIIs 2101908 10.35
Sub Total 3066530 15.10
Others Private Corporate Bodies 1562443 7.69
Indian Public 5505532 27.11
NRI / OCBs 97963 0.48
Any Other 0 0.00
Sub Total 7165938 35.28
GRAND TOTAL 20310000 100.00

As on 31-Dec-2004 Category Shareholder Name No. of Securities Held % Holding
Promoter's Holding
Indian Promoters Devashish Mehta 227000 1.12
Jatender Kumar Mehta 1299600 6.4
Ravinder Kumar Mehta 1299600 6.4
S K Mehta - HUF (Karta S K Mehta) 836700 4.12
S M Mehta (HUF) 859950 4.23
Sudesh Mehta 355200 1.75
Swaraj Mehta 465000 2.29
Varun Mehta 330100 1.63
Vivek Mehta 310000 1.53
Sub Total 5983150 29.47
Persons Acting in Concert Forerunner Capital Investments Ltd 2809182 13.83
Sub Total 2809182 13.83
Institutional Investors
Mutual Funds and UTI SBI Mutual Fund - Magnum Equity Fund 450000 2.22
SBI Mutual Fund - Magnum Growth Fund 1999 333262 1.64
Sub Total 783262 3.86
FIIs CLSA Merchant Bankers Ltd A/C Calyon 346000 1.7
GMO Emerging Markets Fund 872010 4.29
Merrill Lynch Capital Markets Espana S.A. SVB 700000 3.45
Sub Total 1918010 9.44
Grand Total 11493604 56.60

Indian public got only 27% of equity........

Friday, May 6, 2005

Omax Autos Ltd

Omax Autos Ltd.
Market Price :- 98 (4-May-05)
First Of all, we have to understand that for any company's stock price to grow irrespective of where the market is going, there must be 3 things which have to be considered :-
1.) Cheap Valuation Compared to Growth
2.) Shareholder oriented Management
3.) Generally a company that is not in a cyclical industry

Sincerely believe that Omax Auto Will achieve a price of Rs. 200 within a period of 1 and half year because of the following reasons:-
1.) Omax Auto fulfils our first condition of Cheap Valuation :-
i.)P/e - 10.41
ii.)RONW % - 29% (This is very good compared to other companies)
iii.)5 year CAGR - 30%
iv.)TTM Profit Growth - 29%

The Company is going in for Expansion by putting up a factory in Bangalore and Gurgaon to manufacture Sheet Metal Tabular and other components. can safely assume 25% growth for the next 3 years on the basis of general growth rate in 2 wheeler industry (around 11%, which is very very high for an industry as a whole, India's total economy is growing at a rate of around 6 %) Since, Omax is a major supplier to the 2 wheeler industry, one has to see Two wheeler industry growth rates. Now if growth is 25%, then the P/e must be at least 20, which will make the price at least approx 200 at the current earnings. If earnings increase next year then the target will be revised to higher levels.

2.) It also fulfils our second requirement of Shareholder Oriented Management. The company has been continuously paying dividend since 1992 and has been continuously increasing dividend since the same period. It belongs to the Munjal (Hero) Group - the same group which is the number one manufacturer of Cycles in the World (Hero Cycles). Hero Honda is the flagship company of the group, and 75% turnover of Omax Autos is for Hero Honda. The company has also given bonus in 2002.

3.) Since Auto Ancillary is not a cyclical Industry, especially two-wheeler industry because even if the economy is not good, then people will sell cars and buy two wheeler. When economy is good, people who don't have any vehicle will buy two wheeler. So Both ways, Two wheeler industry is not cyclical. Hence, Auto Ancillary Will grow with Two Wheeler Industry and maybe faster than that and Omax Auto will grow faster than overall industry because of the brand name that it enjoys and the market that it has created for itself.