Dark Horse PDF

Financial Weekly
SMART
INVESTMENT
27th May, 2018 to 2nd June 2018 14
SMART
BUY OF THE WEEK
Dark Horse
20 Microns Ltd.
(533022 & NSE) (Rs.41.5) (FV: Rs.5)
Incorporated in 1987, Baroda based 20 Microns Limited produces and trades in industrial min-
erals in India. It offers micronized minerals, including calcined clay/calcined kaolin, China clay/
kaolin, natural redoxide, natural silica, natural mica, natural baryte, natural ground calcium carbon-
ate, natural talc, and nepheline synite/feldspar. The company also provides specialty chemicals,
such as white pigment opacifier, synthetic aluminum silicate, high performance opacifier, flash
calcined clay/kaolin, flatting/matting amourphous alumino silicate, specialty matting silica, syn-
thetic barium sulphate - blancfixe, inorganic water base thickener, organoclay solvent base thick-
ener, sub-micron calcium carbonate, high aspect ratio sub-micron talc, sub-microns hydrous clay/
kaolin, flame retardant and smoke suppressant, polyethylene wax, and ultrafine natural silica. It
serves textile, plastic, rubber, adhesive, paint, paper, printing ink, agro-chemical industries. The
company exports its products to 47 plus countries.
Company has equity of Rs.17.64crore while it has huge reserve of around Rs.103.55crore. Pro-
moters hold 43.36% while investing public hold 56.64% stake in the company.
During Q4FY18, net profit soared 542% to Rs.4.50crore on sales of Rs.101.13crore. During
FY18, net profit zoomed 30% to Rs.19.93crore on sales of Rs.431.39crore fetching an EPS of
Rs.5.34. Company had reported net loss of Rs.2.50crore in FY15, PAT of Rs.10.99crore in FY16 &
PAT of Rs.15.41crore in FY17.
It had paid 10% dividend for FY13 after 5 years it has paid 8% interim dividend for FY18 &
declares 7% final dividend for FY18 which is positive.
At CMP, it trades at PE ratio of 8x earnings.
Investors can accumulate this stock with a stop loss of Rs.35. It may give very good returns in
medium to long term.
Cont...
Financial Weekly
SMART
INVESTMENT
27th May, 2018 to 2nd June 2018 15
Frontier Springs
(522195) (164.7) (Face Value Rs.10)
Incorporated in 1981, Kanpur based Frontier Springs Limited manufactures and sells coil and leaf springs,
L.B. and hot coiled compression springs, and forging items in India and internationally. Its forging products
include bogie bolster suspension hangers, brake block hangers, hooks, knuckle throwers, shafts for silent
block, shoes, toogles, top followers, knuckle pins, screw coupling for coaches and locomotives, and wedges.
The company offers its products to railways, wagons, locomotives, coaches, heavy engineering industries,
and original earth mover equipment manufacturers.
It has an equity base of just Rs.3.96crore that is supported by reserves of around Rs.22.19crore. The
Promoters hold 51.76% while the investing public holds 48.24% stake in the company.
Company has reported fantastic numbers for Q3FY18. During Q3FY18, FSL posted 60.41% higher PAT
of Rs.0.77crore on higher sales of Rs.14.19crore fetching an EPS of Rs.1.96.
During 9MFY18, its net profit soared 328.98% to Rs.2.96crore from Rs.0.69crore in 9MFY17 on higher
sales of Rs.42.25crore fetching an EPS of Rs.7.52. 9MFY18 PAT was 39% higher than PAT recorded for
FY17.
Company has already set up the forging plant at Rania and the management is taking pro-active steps to
further expand the forging division by expanding its product base. Company would be the first one to re-
ceive orders for manufacturing of springs for Link-Hofmann Busch(LHB) coaches which were being im-
ported till date. This would lead to Import Substitution and increase in the Gross Domestic Product of
country. Presently LHB Coaches are used in Super Fast trains such as Shatabdi & Rajdhani Express. The
execution of such kind of orders would increase the turnover and profits manifold.
At CMP stock is trading at PE ratio of just 14. Its 52 week high rate is Rs.285 which was formed on 2nd
January 2018. Stock almost corrected 45% from 52 week high.
Investors can accumulate this stock with a stop loss of Rs.140. It may give very good returns in medium
to long term.
Nayan Patel
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