Saturday, March 04, 2006

Nahar Exports Ltd.

Nahar Exports Ltd. stats are enclosed -

Share Capital - 35.08 crs
Loans - 144.81 crs
Investments - 116.24 crs
Net CA - 184.18 crs
LY Profits - 23.22 crs
FV - 10 rupees per share
Dividend - 1.5 rupees per share
CMP - 70.80 rupees per share (3-Mar)

On the basis of the above, I find -
a) NCA (excluding invt) comes to 11.23 rupees per share
b) Dividend yeild is at 2.12%
c) P/E ratio (on LY profits) is 10.69

Also discovered ....

a) Breaking the investments further, I find that a lions share of those investments are held in Nahar Spinning (71,22,930 shares) whose current price is at 214 rupees/share (3-Mar). This means the market price of investments is atleast 152.43 crs from Nahar Spinning itself. Add to it the 21.3 crs, the company has invested in income/liquid funds .. final investment numbers come to 175.56 crs or, 50.04 rupees per share.

b) So your NCAV is at - 52.50 (from net current assets) + 50.04 (from investments) - 41.27 (from loans) = 61.27 rupees per share.

NCAV at 61.27 rupees per share .... CMP at 70.80 rupees per share ....

c) The disturbing aspect of this company is the reduction in Q on Q sales (10% drop in sales), although the profits have gone up. I would estimate an yr closing at 36 crs of PAT ... i.e. a fwdP/E of 6.90.

d) Some peer-estimates (Jan data of P/E ratios):
Abhishek Inds [13.86] . . . . . . Aditya Birla Nuvo [32.95]
Alok Industries [10.74] . . . . . Arvind Mills [12.20]
Bombay Dyeing [21.68] . . . . . Century Enka [12.58]
Forbes Gokak [19.41] . . . . . . . Garden Silk [19.38]
Himatsingha Seide [26.97] . . . Indo Rama Synth [12.26]
LMW [26.19] . . . . . . . . . . . . . . Mahavir Spinning Mills [12.29]
Rajasthan Spinning [9.82] . . . Raymond [24.45]
SRF [25.26] . . . . . . . . . . . . . . . Welspun India [17.37]

Nahar Exports has the least P/E of all it's peers.

The scrip looks enticing at these numbers - it has a decent dividend yield, is very close to it's NCAV and has the best P/E ratio in the industry. However the negative sales growth rates is a trade-off you might have to live with. I would recommend small quantities at this price with a stop loss at 60 rupees. The next movement in the price is expected after the Q4 results are out.

PS: I am deviating from the Buffett notion of "I'll-buy-more-when-prices-go-down" for this stock as the PAT is periliously close to my 10 crs PAT per quarter principle. I'd be more comfortable buying more on a lowering stock price if the PAT was somewhere over 20 crs per quarter (makes me more comfortable). Since this one is not in that domain, hence the stop loss.

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