Equity Watch

NAKODA ,Its following the Reliance path: Catch it NOW

Nakoda Industries

Nakoda, an ISO 9001 – 2000 company, is one of the prominent players in the Polyester Filament Yarn Industry in India. From a modest capacity of 354 MTPA in 1986, Nakoda grew to 50,000 MTPA capacity company by 2008. With the completion of its ongoing backward integration/ expansion / forward integration project with a capital outlay of Rs 333 Cr, Nakoda will achieve a capacity of 1,40,000 MTPA by August / September, 2010. Nakoda is contemplating further investments of over Rs 1,500 Cr to raise the capacity to a level of 5,00,000 MTPA in India and abroad with inorganic growth with  future overseas acquisitions.

History:

In the year 1999 the company was successful in acquiring plant and machineries of Garware Nylons Ltd. (in Liqn.) Pune. It has enhanced its POY production capacity to 21600 MTPA in the year 2001. Further, company also acquired POY production facilities of Indian Organic Chemicals Ltd., Chennai. The equipement of same were used at surat plant for further expansion and to enhance production. In the year 2004 POY spinning capacity has been expanded to 31000 MTPA.

In the year 2007 company undertook expansion envisaging addition of 20,000 MTPA of Fully Drawn Yarn (FDY) to the existing capacity. The FDY plant became fully operational in November 2007. FDY is expected to improve both, the top and bottom line of the company significantly as FDY is a more value added product. Unlike POY needs to be texturised before conversion to fabrics while FDY can be directly used for weaving…

Company is on an expansion mode http://nakodaltd.com/news-media.html with investment of Rs. 1500 Cr. lined up for the next 5 years..

Financials:

With equity of Rs. 33 cr ( 6.6 Cr shares of FV =5 ) the market cap is less than Rs. 100 crores, while the turnover is expected to touch Rs. 5000 cr after the said expansion is complete..Company has acquired a plant in South Korea http://www.bseindia.com/xml-data/corpfiling/AttachHis/Nakoda_Ltd_070810.pdf which is already running.

Company is expected to report an EPS of Rs. 7 for the year ending Dec. 2010.The share is available at P/E of only 2.

Buy at CMP is recommended for 2 years HOLD

This report has been prepared solely for information purposes and the information contained herein may not be deemed to be an investment advice. Such information is impersonal and not tailored to the investment needs of any specific person. The information contained herein is not a complete analysis of every material fact representing any company, industry or security. The views expressed may change. While the information contained herein has been obtained from sources believed to be reliable, no responsibility (or liability) is accepted for the accuracy of its contents. Investors are advised to satisfy themselves before making any investments and should consult with and rely upon their own advisors whether and how to use such information in making any investment decision. Neither the author nor his firm accepts any liability arising out of use of the above information

Standard

15 thoughts on “NAKODA ,Its following the Reliance path: Catch it NOW

  1. Mahesh says:

    Dear Ashok Sir,

    I am avid reader of your blog since from Liberty Phosphate which i bought 3k shares @ 16 and still holding :).

    I would like to share some profits with you as a perk 🙂 and also i would like to learn stock research from you.

    please send me test mail i will revert back to you.

    Thank you sir.

    Like

  2. Thanks for your compliment.I am glad that someone has made money after reading my posts.All profits are yours..In case you do want to share some of your profits, I suggest that give some part as donation to some NGO..I suggest http://www.artofliving.org of Sri Sri Ravishankar…Thanks

    Like

  3. N R V MOHAN says:

    Yes, Nakoda is a significant player in the polyester filamant yarn industry. I observed some concerns while checking the numbers:
    i)The cashflows, especially operating cash flow is negative for the last five years.
    ii)Debt/equity ratio is very high at 2.5 in comparison with industry standards.
    iii)Margins are not great even in value added products in the filament industry.
    iv)South Korean acquisition to the bottomline contribution will be known in future (I may be a pessimist)
    Yes, the company has rewarded investors by way of bonus and stock split.

    Like

  4. girish says:

    IS there any doubts on managemnet Ashokji.
    Because market is ignoring this share.
    if you have info abt management of company then plz share.
    you Rock Ashok Sir

    Like

  5. Girish says:

    Hello Ashok Sir,
    I am constantly searching on net for some good investment ideas.
    I just discovered your blog today.
    After seeing your previous recommendation I feel that I should have found you as early as a year ago.
    But still I feel after following your reccom. we all could make some money.
    Keep going. and you rock man!!

    Thanks,
    Girish

    Like

  6. Ghani Uthkade says:

    Dhingra sir,
    I happened to buy a few thousand shares of Nakoda with avg price of around Rs.14.6. I dont think they are making an EPS for CY2010. From the management interview that was given on one of the business channels, they were talking around 1400Cr. topline which could roughly translate to an EPS of around 5 (and not 7). That makes the company sort of, fairly valued for this year, around 15. While your timeline is 2 years, it looks like, the company might slowly grow, if past is what to be extrapolated. What kinds of target do you have in mind, for the next 2 years, for this company. We dont really understand, what kind of growth they are expecting to have, but looks like, they have done some wind energy investments, which they are hoping, would boost their NPM.

    Like

    • I always book partial profits when the share price goes up by 50%.I also book 100% LOSS if the share price drops by 25% from the price I entered..The price one enters the share is most crucial..I avoid buying when there is a good news. I try and enter when there is some bad news on the counter..

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s