Stone India Ltd:
CMP: Rs.50.50
Market Cap: Rs.39.62
Market Cap: Rs.39.62
EPS (TTM): Rs.6.65
Price/Book:1.20
P/E:7.84
Industry P/E: 20.88
Website: http://www.stoneindia.co.in
Website: http://www.stoneindia.co.in
Introduction: Stone India is a multi-product engineering company located in Kolkata, has been serving the Indian rail road industry for over seven decades.
Shareholding Pattern: The promoters hold 38.58% while the general public holds 61.42%. Among the general public National Insurance Company holds 1.39% of the shares of the company.
Financials: Stone India Ltd came out with flat set of numbers for the Q3FY11, when compared on Q-o-Q basis. The total income of the company came out to be Rs.23.46 Cr as against Rs.23.47 Cr in the same period previous year. The net profit of the company came out to be Rs.1.13 cr in Q3FY11 as against Rs.1.03 Cr in the same period previous year. The EPS of the company for Q3FY11 came out to be Rs.1.49 in Q3FY11 as against Rs.1.35 in the same period previous year.
Triggers:
(i) In the railway budget to be presented in this week (25th February, 2011 to be precise), there are chances of introduction of few more "DURONTO TRAINS', by the present Railway Minister, Dr.Mamata Banerjee. The following "Duronto Trains" have been proposed:
(a) Howrah - Chennai Central Duronto Express (Fully A.C)
(b) Howrah - Secunderabad Duronto Express (Fully A.C)
(c) Chennai - Mumbai Duronto Express
(d) Bangalore - Mumbai Duronto Express (Fully A.C)
(e) Sealdah - Guwahati Duronto Express (Fully A.C)
(f) Mumbai - New Delhi Duronto Express (Fully A.C)
(ii) Stone India is gradually switching over to high speed trains requiring the use of suspension systems---a beginning had already been made with "Duronto trains" which were using advanced suspension system instead of the conventional suspension system.
(iii) Its factory at Nalagarh, Himachal Pradesh has already started commercial production of Distributor Valve and Panel Mounted Brake System. The approval for other products are expected soon. The expansion plan is in progress at site for new products which will add to its production capacity. As was reported earlier Stone India Ltd has started manufacturing Air Springs and then supplying to Railway. The business of Air Springs is expected to grow substantially in the coming years as Indian Railways have decided to turnout all EMU as well as Main Line Coaches duly assembled with AIR Springs to improve passenger comfort. The enhancement of sales of Air Spring will further contribute to increase the turnover.
(iv) The Company established a Railway Electronic Division to undertake design and development of Different Electronic equipments required for railway in order to improve the performance and safety of railway wagon and coaches and also to improve the control and information system. As a part of this it has already come up with new products which are being tested and approved by RDSO.
(v) The company has received the first development orders for FDCS from Railways Chittaranjan Locomotive Works which will ensure better safety features. The company has achieved a major break through in Bio Toilet and controlled discharge Toilets and already some of the Toilets has been fitted in some Trains for Trial runs. The products are running successfully for the last one year. It has also got orders for Controlled Discharge Toilet to be supplied to Railways. Moreover, electronic Brake System for Diesel Locomotive is being pursued. For Electric Locomotive it has been recommended for the placement of the first developmental order by Railways.
(vi) Stone India Ltd recently informed BSE that it has entered into an exclusive co-operation with NRT Co. of Korea to undertake Platform Screen Projects for Metros. This co-operation comes into immediate effect and will serve different Metro Projects across the country.
Thus investors can buy the scrip of Stone India Ltd at the CMP of Rs.50-51, for a target of Rs.71-72, in the short term. The scrip trading at a P/E of 7.71 againt the industry P/E of 20.88. Now giving a suitable discounting and considering a fair P/E of 15, the scrip can have a target of Rs.85.90, in the medium term, especially in the view of the new JV with NRT Co. of Korea to undertake Platform Screen Projects for Metros.
Shareholding Pattern: The promoters hold 38.58% while the general public holds 61.42%. Among the general public National Insurance Company holds 1.39% of the shares of the company.
Financials: Stone India Ltd came out with flat set of numbers for the Q3FY11, when compared on Q-o-Q basis. The total income of the company came out to be Rs.23.46 Cr as against Rs.23.47 Cr in the same period previous year. The net profit of the company came out to be Rs.1.13 cr in Q3FY11 as against Rs.1.03 Cr in the same period previous year. The EPS of the company for Q3FY11 came out to be Rs.1.49 in Q3FY11 as against Rs.1.35 in the same period previous year.
Triggers:
(i) In the railway budget to be presented in this week (25th February, 2011 to be precise), there are chances of introduction of few more "DURONTO TRAINS', by the present Railway Minister, Dr.Mamata Banerjee. The following "Duronto Trains" have been proposed:
(a) Howrah - Chennai Central Duronto Express (Fully A.C)
(b) Howrah - Secunderabad Duronto Express (Fully A.C)
(c) Chennai - Mumbai Duronto Express
(d) Bangalore - Mumbai Duronto Express (Fully A.C)
(e) Sealdah - Guwahati Duronto Express (Fully A.C)
(f) Mumbai - New Delhi Duronto Express (Fully A.C)
Stone India Limited earlier entered into an understanding with Sumitomo Electric Industries of Japan to form a JV in phases to locally manufacture air springs for the railways. This will help the company to provide complete end to end solution of pneumatic suspension system to the Railways through supply of primary, secondary suspension products and pneumatic control system with in built failure detection device. Stone India will now start exporting metal parts of air springs to Sumitomo Electric Industries.
(ii) Stone India is gradually switching over to high speed trains requiring the use of suspension systems---a beginning had already been made with "Duronto trains" which were using advanced suspension system instead of the conventional suspension system.
(iii) Its factory at Nalagarh, Himachal Pradesh has already started commercial production of Distributor Valve and Panel Mounted Brake System. The approval for other products are expected soon. The expansion plan is in progress at site for new products which will add to its production capacity. As was reported earlier Stone India Ltd has started manufacturing Air Springs and then supplying to Railway. The business of Air Springs is expected to grow substantially in the coming years as Indian Railways have decided to turnout all EMU as well as Main Line Coaches duly assembled with AIR Springs to improve passenger comfort. The enhancement of sales of Air Spring will further contribute to increase the turnover.
(iv) The Company established a Railway Electronic Division to undertake design and development of Different Electronic equipments required for railway in order to improve the performance and safety of railway wagon and coaches and also to improve the control and information system. As a part of this it has already come up with new products which are being tested and approved by RDSO.
(v) The company has received the first development orders for FDCS from Railways Chittaranjan Locomotive Works which will ensure better safety features. The company has achieved a major break through in Bio Toilet and controlled discharge Toilets and already some of the Toilets has been fitted in some Trains for Trial runs. The products are running successfully for the last one year. It has also got orders for Controlled Discharge Toilet to be supplied to Railways. Moreover, electronic Brake System for Diesel Locomotive is being pursued. For Electric Locomotive it has been recommended for the placement of the first developmental order by Railways.
(vi) Stone India Ltd recently informed BSE that it has entered into an exclusive co-operation with NRT Co. of Korea to undertake Platform Screen Projects for Metros. This co-operation comes into immediate effect and will serve different Metro Projects across the country.
Thus investors can buy the scrip of Stone India Ltd at the CMP of Rs.50-51, for a target of Rs.71-72, in the short term. The scrip trading at a P/E of 7.71 againt the industry P/E of 20.88. Now giving a suitable discounting and considering a fair P/E of 15, the scrip can have a target of Rs.85.90, in the medium term, especially in the view of the new JV with NRT Co. of Korea to undertake Platform Screen Projects for Metros.
No comments:
Post a Comment