By Kukku

* Western India Shipyard Ltd. (WISL) (Rs.8.19), India’s largest composite ship & rig repair facility in the private sector, is one of the world’s more advanced multi-dimensional and multi-purpose yard offering modern, streamlined, sophisticated ship & rig repair facilities and services. Its state-of-the-art Floating Dry Dock has the capacity to repair ships up to 60,000 DWT and accommodate ships up to 225 metres in length and 32.5 metres in breadth. The yard has been designed and established in collaboration with world leaders in Ship Repairs. Functionally laid out and built around the gravity centre concept, 90% of the yard is covered by lift and carry facilities. WISL is strategically located at Goa along the west coast of India at a latitude of 15° 25' North and longitude of 73° 47' East and is thus geographically well positioned to offer the complete range of ship repair services.

In India, the major shipyards are the Public sector yards like Mazgaon Docks, Hindustan Shipyard Ltd., Cochin Shipyard Ltd. and Goa Shipyard Ltd. There are 9 private sector shiprepair yards of which WISL is the largest and most modern. Indian shipyards are competitive because of low labour costs, availability of skilled work force and duty free imports. With the growing environmental concerns of strict pollution control with safety standards and regulations, ship repair units are generally busy.

WISL has announced 27.01% jump in Total Income of Rs.38.12 crore for Q1FY12 as against Rs.30.01 crore in Q1FY11 with net profit at Rs.4.56 crore.

During FY11, the company repaired 10 vessels of Indian and foreign flags.

Seeing to the good inflow of orders, it is likely to record sales of around Rs.175 crore in the current year and around Rs.250 crore next year. Since most of its business is repairing in nature, margins are likely to be high.

The company has earned profit consistently for the last 7 quarters and is said to be attracting good orders. The business model of the company is different compared to Bharati Shipyard or ABG Shipyard as it does not depend upon the uncertainty of subsidy. Its order position is expected to improve further which will lead to higher sales with bigger orders.

Ship repairs is the main thrust area of WISL and it is concentrating more on wet repair jobs as its dry dock is fully utilized. The company also proposes to aggressively enter into supply of ship spares for its clients. Once it completes its graving dock, it will also take up shipbuilding to fully utilize its ship building facilities and workshops, to absorb the fixed costs and overheads like port lease rent/ licence fees, manpower and utilities like water, fuel and power. This will result in lower operational costs, significant economies of scale, stable earnings and cash flows. The Company has also diversified into Rig repairs, which does not involve the use of its dry dock and wet repair berths and foresees good prospects for Rig repair business in view of the long-term growth in offshore oil exploration and production in India. WISL is well-equipped to meet the challenges through excellence in quality, expertise & timely redeliveries. Long-term investors with patience can accumulate this stock on dips for decent growth.

* For Q1FY12 Rajshree Sugar (Rs.39.50), has reported net profit of Rs.5.13 crore against Rs.1.82 crore in Q1FY11, on higher sales of Rs.146 crore against Rs.118 crore.

The company entered into an out-of-court settlement of Rs.25 crore on account of the dispute pertaining to Derivative transactions with Axis Bank Ltd. Consequent upon this settlement, both parties have withdrawn all actions initiated against each other and the necessary final orders have been obtained from the Madras High Court. To survive the adverse cyclicality of the sugar business, the company has adopted an integrated business model in Unit I at Varadarajnagar by engaging in co-generation of power in the other two Units. The Company is also focusing on enhancing direct sales to institutional customers.

Company has allotted 1,100,000 equity shares at Rs.10 each at a price of Rs.62 each including a premium of Rs.52 per share to Ms. Rajshree Pathy, Chairperson & Managing Director on 9 December 2010 on receipt of the entire payment and exercise of her rights attached to the share warrants. The said 1,100,000 equity shares are subject to lock-in for 3 years upto 9 December 2013. Sugarcane crushing in the current year season is expected to be better than the crushing season of last year on account of the increase in cane planting and a better monsoon. Its Unit II at Mundiampakkam has recorded the highest cane planting in Tamil Nadu and ensure better cane availability for the next investing season as well.

With higher crushing, the value addition from cogeneration and Distillery is expected to be better during FY12.

The company has commenced construction of a greenfield distillery with an installed capacity of 80 kilo litres per day (KLPD) as a part of its 3500 tonnes crushed per day (TCD) integrated sugar complex at Semmedu village, Gingee, Villupuram District in Tamil Nadu. The molasses produced from Unit II & Unit III will be the feedstock for conversion into alcohol in the new distillery. It expects to commission the plant by the end of this financial year. With all these above developments, it is expected that in the current year there will be 25% volume growth with decent profits when it may declare a dividend of around 20% for the current year. Its long-term outlook is encouraging and considering that the promoters have bought the stock at 62, its valuation at current levels is attractive.

Long-term investors having patience can accumulate this stock on dips.

* Weizman Forex (Rs.80.35), has reported sales of Rs.3457 crore for FY11 and earned net profit of Rs.13.39 crore on its equity of Rs.11.58 crore yielding attractive EPS of Rs.11.58.

For Q1FY12, it has earned an EPS of Rs.3.3 on sales of 976 crore.

The company has declared dividend of 20%. Investors can continue to hold this stock and even accumulate on dips for good long-term growth.

* Andhra Sugars (Rs.107.25) - During the June 2011 quarter, sugar, caustic soda & industrial chemicals contributed 30%, 51% & 16% respectively to the company’s total sales, which was Rs.195 crore for the quarter.

While sugar reported loss, but caustic soda margins shot up from 18% in the last full year FY11 to 30% during Q1FY12. Industrial chemicals too reported higher operating margins of 31% during the quarter against 18% during the last full year.

And at present, caustic soda & industrial chemical prices are even still higher than Q1FY12. With government permitting higher exports by sugar on the back of firm international prices, it is expected that the company’s sugar unit, too, will report a better performance in the second half.

Its subsidiary Andhra Petrochemicals Ltd., too, has done very well and another subsidiary, Jocil Ltd., is also expected to do well in view of the fall in palm oil prices which is its raw material. Better earnings of the subsidiaries will lead to an improved consolidated bottomline.

Investors can accumulate this stock on dips for good dividend yield and decent capital appreciation.

Risk Factor: Being a commodity stock any fluctuation in the prices of caustic soda and sugar will affect its performance, which investors must take note of.

* Indag Rubber (Rs.114.20) has reported 90% higher net profit of Rs.3.82 crore on 33% higher sales of Rs.48 crore for Q1FY12 reporting a quarterly EPS of Rs.7.27. Based on this, full year EPS is likely to be around Rs.27/28 levels. Investors can accumulate this stock on dips.

* Kilburn Engineering (Rs.50.05) has reported a loss of Rs.1.85 crore for Q1FY12. Investors can continue to hold the stock or even accumulate it on dips to Rs.45/46 levels as the company’s long-term outlook is encouraging and the full benefit of its new plant should come from second half of the current year.

* Disa India’s (Rs.1483.05) June 2011 quarterly results are encouraging. Investors can continue to hold the stock or even accumulate if it falls below Rs.1500 mark.