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Dear Reader,
Our equity analysts have explored one of the chemical company engaged in the business of manufacturing explosives and accessories in India. Company manfactures emulsion explosives, bulk explosives, cast boosterds, detonating fuse of various core-loads etc. This company offers value for money and is recommended as Hidden Gem stock of the month by our equity analysts.
Company has constantly innovated and upgraded its product and technology ot offer state-of-the-art products to its valued customers both in India and abroad. Company's R&D facility is recognized by the centre for Scientific and Industrial Research (CSIR), Govt of India, as an established research centre.
In the long run, the company can grow only as fast as it delivers return on equity and in the case of this company, it has consistently been able to generate more than 15% return on shareholders wealth, without resorting to excessive debt.
The most striking feature of the company is its valuations. We find the valuations attractive at 5 times FY 12 earnings, 1.35 times the book value and a dividend yield of 3.4%.
The legendary Walter Schloss checked the stock on the following 4 criteria to determine if the stock merits a place in the portfolio:
• Zero or very low debt equity ratio
• High Promoter holding
• Dividend yield of at least 3%
• Stock purchase price lower than book value
This company satisfies 2 criteria out of 4. However, the promoters have been increasing their stake with open market purchases which demonstrates their confidence in future prospects and low valuations of the company at current market price.
Hidden Gems - July 2012 research report will be released shortly and will be shared with all Hidden Gems subscribers.
Saral Gyan Hidden Gems outperforms small cap index by whopping 40%, gave average returns of 32% against negative returns of -8% of small cap index (as on 10th July). If you are not a Hidden Gems subscriber and wants to invest intelligently in small cap stocks to grow your wealth in long run, you can subscribe to Saral Gyan - Hidden Gems.
Regards,
Equity Desk,
Saral Gyan Capital Services.
