Updates on XPRO India on target

Hi Readers,

I had recommended this stock at Rs 24/- in my value pick and small cap segment on Aug 31st 2009. Since then it has trebled. No doubt had been a slow mover but given the fact that it has been consistent dividend paying company and paid dividend of around 5% yield on then market price.

I had mentioned it is young and haven't caught market frenzy. It looks like finally it has caught the eyes and today it on Up circuit at Rs. 73.75. I myslef would start booking partial profits as it comes off the upper circuit. However given the margin of safety I enjoy in the stock @Rs. 19 I can holds on for long term and reap tax free dividend @ almost 10% yield.

XPRO India

Xpro India Limited is a diversified multi-divisional, multi-locational company with a strong commitment to the polymer processing industry. Established as a separate entity as recently as 1998, the units comprising Xpro India Limited have long been in existence. 

Xpro India Limited forms an integral part of India's largest and most reputed Industrial House with a global presence in manufacturing and trading activities - the BIRLA Group, a conglomerate comprising of many divisions, each consisting of a number of publicly-listed Companies and headed by a member of the Birla Family.

 

Website : http://www.xproindia.com

Current cash & bank balance is around 32 cr. on Equity of 11 cr. (face value: Rs. 10) that around Rs. 29 available at current market price of Rs. 24. Price t book Value of 0.25 thus screaming cheap valuation. The only negative for the stock is its low liquidity. I would recommend a buy as a potential multi bagger. In the mean while its dividend yield as on date is 4% plus thus a good stock to have in ones portfolio.

Some Ratio and valuation numbers as below:

MCap.(Rs. in Cr.)	26		YTD Sales Growth	10 - 20 %
BV (Rs.)	97.65		YTD Profit Growth	50%
P/E (x) TTM	32		Liquidity	Low
Div. Yield (%)	4.16		Share Capital	11 Cr
EPS (Rs.)	0.75		Reserves and Surplus	96.41 Cr
P/BV	0.25		CMP	24

In comparison to EPS for past year company has already done EPS of 0.91 in June quarter this year. This is a hidden gem and hasn't caught the market frenzy thus a good buy before it gets discovered.


NOTE: It is safe to assume I have vested interest in the stock and standard disclaimers apply

ICSA India Ltd.

ICSA (India) Ltd is a unique combination off the EPC business in the space of T&D infrastructure creation and embedded solutions and services. The company is providing technology solutions to the Indian power sector and telecommunication sector with the objective to identify transmission and distribution losses and monitor power consumption. They also provide rural electrification, construction of sub stations and conversion of LT line to HT lines.The Company operates through two segments: Software Division and Power Division. They are headquartered in Hyderabad, India with their operating location across the world. The company shares are listed on the Bombay and National stock exchanges.

The governments renewed focus on providing electricity to all households in the country augurs well for ICSA India's growth prospects, but problems in cash generation make it bit dicey, ideal for those with risk appetite. Besides focus on Power as a growth sector is also a definitive plus for the stock. The company earns over 90% of its revenues from public sector entities.

Website: http://www.icsa-india.com

Financials:
ICSA has grown at break-neck speed in last few years. In the two years ended March 09, the company's revenue jumped four fold to Rs 1,111 crore. Net profit trebled during the period to Rs 168 crore. The company has maintained its operating margin between 25-27 % during this period. In recent quarters, while the top line growth has remained robust, its bottom line has been impacted due to rising interest expense. The interest charge is rising since the company has to borrow to meet its working capital requirement due to poor cash generation from operations.

CMP	195
MCap.(Rs. in Cr.)	926
BV (Rs.)	125.9		3 Yr CAGR Sales (%)	214.79
P/E (x) TTM	5.57		3 Yr CAGR Profit (%)	207.97
EPS (Rs.) TTM	35		Promoter Shareholding (%)	20.64
FV (Rs.)	2		FII	39.32
YTD Sales Growth	20 - 50 %		Liquidity	High

Risks:
The company has to fund its operations through external financing since its operations are not generating enough cash. This is on account of very high level of receivables. This can prove to be a major concern for ICSA especially during tough economic situations when external funding comes at a higher cost.

Valuations and investment rationale:
At the current price level of around Rs 195, ICSAs stock is traded at a trailing twelve month price earnings (P/E) multiple of 5.57. Since there is no other listed player of ICSAs size that can match its business operations, it is difficult to build a comparative scenario. Many of the frequently traded small-cap technology companies are traded at a P/E of more than 9. The company has Rs 2,000 crore strong order book to be executed within next two years. Of this, the infrastructure services account for Rs 1,400 crore. With R-APDRP now in place, ICSA is likely to see buoyancy in its embedded solutions revenue. This is a good sign since the division earns better margins compared to the infrastructure business.

In view of its future prospects and the risk attached with it, investors with higher risk appetite can consider ICSA with a horizon of two years. ICSA is a potential multibagger in the long run

Source: Economic times, Moneycontrol and other sites

NOTE: It is safe to assume I have vested interest in the stock and standard disclaimers apply