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Monday, September 21, 2009

Bhagiradha Chemicals & Industries Ltd and Sundaram Finance Ltd:Future growth outlook and prospects

1)Scripscan:Bhagiradha Chemicals & Industries Ltd
Bse code:531719

Story:Bhagiradha Chemicals and Industries Ltd (hereafter, BCIL) was established in 1994.It manufactures insecticides and weedicides.BCIL's new weedicide, Clodinafop is well received in the international markets. It has a promising future ahead and will be one of the major drivers of BCIL's revenues. Although monsoon in India has taken a hit, BCIL's major revenues (more than 80%) stem from exports to Australia, South Africa, China, Germany, Singapore, Spain, U.K. Belgium, Greece, Italy, Malaysia, Taiwan, Indonesia, Peru, Brazil, etc. So, one really need not correlate BCIL's product sales with the monsoons in India. BCIL's 4-year contract manufacturing agreement with Dow AgroSciences, Europe has ensured minimum revenues till FY10
For FY09, BCIL has spent Rs1.54 cr on R&D of technologies for key intermediates. This expenditure is 1.48% of the total turnover for FY09.From FY06 to FY09, Total Income has increased by a CAGR of 10.48%, but PAT has decreased at a rate of 1.64% respectively. This rise in sales and profitability is attributed to a 27.4% jump y-o-y in sales of Floroxypyr and the introduction of new product "Clodinafop" towards the end of FY09.Going forward, I expect BCIL to benefit from this R&D in terms of development of new products.Considering all these its a safe buy at dips.

2)Scripscan:Sundaram Finance Ltd
Bse code:590071

Story:Sundaram Finance Ltd (SFL) was established in 1954 by Mr TS Santhanam. He was the son of Mr TV Sundaram Iyengar, the founder of TVS Group of companies.SFL is involved in the following operations:
Investments - Deposits, Mutual funds
Retail Finance - Car finance, Retail finance
Business finance - Commercial vehicle, Equipment finance, Tyre finance, Fleet card
Services - Infotech solutions, BPO, Logistics services, Insurance.
SFL has ventured into the financing of cars and multi-utility vehicles, which is a growing market.Foreseeing the slump in commercial vehicles sales in FY09, SFL reduced its exposure on commercial vehicles which helped it to report 11% growth in net profits (Rs 150.73 crore) in FY09. This highlights the foresight of the management.The FY09 consolidated accounts of SFL have excluded Sundaram Securities Services Ltd as it became a subsidiary on 27th June 2008. SSSL has entered into a JV with BNP Paribas Securities Services (BP2S) to provide registrar and share transfer agency services (including for mutual funds) and other ancillary securities services in India. Hence SSSL's operations are certainly going to add value to SFL's FY10 consolidated accounts.SFL's 2 JVs - Royal Sundaram Alliance Insurance Company Ltd and BNP Paribas Sundaram Global Securities Operations Pvt Ltd - are doing extremely well as reflected in SFL's FY09 annual report.A great buy for a period of 3-5 years horizion.

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