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.
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.
posted by Shankar Nath at 2:58 PM
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