Independent Recommendation

GANDHI SPECIAL TUBES

 

Gandhi Special Tubes Limited manufactures and sells automobile components primarily in India. It offers a range of small and big diameter seamless and welded tubes; and tubular components, such as condensors, compressor parts, fuel injection tube assemblies, and hydraulic tubes. The company also offers cold formed tube nuts for fuel injection tube assemblies. In addition, it generates wind power through windmills located in Gujarat and Maharashtra states of India. Gandhi Special Tubes Limited also exports its products to customers in Germany, the United Kingdom, and the south east Asian countries. The company was formerly known as Gandhi Special 07 Tubes Ltd. Gandhi Special Tubes Limited was founded in 1985 and is based in Mumbai, India.

Website: www.gandhitubes.com

 

During the last year they have closed down a plant, thus bringing all manufacturing to a single location and thus boosting their margins. Operating margins have improved from 34% to 53% in the last quarter.

In the 9 months of current year, the revenues and EPS figures have crossed the annual figures for 2009.

I expect ROCE to jump from 30% last year to more than 50% for March 10 results.

Currently available at about 5.2 times expected earnings (Price 90-92).

Consistent and increasing dividend payment history with a good Dividend yield of 2.7% (excluding the special dividend of 2.5 paid this year)

I see liquidity as the only issue. Any information on management may be shared as I do not have info on that and I would like to have other views.

 

Following is the published data

 

LAST QUARTERLY:
INCOME :	Dec-09	Dec-08	YOY	Sep-09	QOQ
Operating Income	22.94	9.09	152.37	19.52	17.52
Material Consumed	6.31	2.59	143.63	6.77	-6.79
Manufacturing Expenses	0.85	1.09	-22.02	0.61	39.34
Personnel Expenses	1.68	0.63	166.67	1.25	34.4
Cost Of Sales	8.84	4.31	105.1	8.63	2.43
Selling & Adminstrative Expenses	0	0	N.A.	0	N.A.
Other Expenses	1.93	1.25	54.4	2.26	-14.6
Expenses	10.77	5.56	93.71	10.89	-1.1
Operating Profit	12.17	3.53	244.76	8.63	41.02
Other Income	0.52	0.26	100	2.03	-74.38
PBDIT	12.69	3.79	234.83	10.66	19.04
Financial Expenses	0	0	N.A.	0	N.A.
Depreciation	1.28	1.35	-5.19	1.28	N.A.
Provisions & Write offs	0	0	N.A.	0	N.A.
PBT	11.41	2.44	367.62	9.38	21.64
Tax Charges	4.64	0.82	465.85	2.18	112.84
Reported Net Profit	6.77	1.62	317.9	7.2	-5.97
Total Non Recurring Items	0	0	N.A.	1.13	-100
Adjusted Net Profit	6.77	1.62	317.9	6.07	11.53
Equity Dividend (%)	100	50	100	0	N.A.

 

 

 

ANNUAL STATEMENTS P&L:
INCOME :	Mar-09	Mar-08	Mar-07	Mar-06	Mar-05
Sales Turnover	62.87	88.34	69.78	63.07	52.73
Other Income	6.81	2.79	2.14	2.61	2.19
Stock Adjustments	-1.02	0.96	0.22	0.11	0.37
Total Income	68.66	92.09	72.14	65.79	55.29
EXPENDITURE :
Raw Materials	16.76	25.28	21.49	18.48	15.08
Excise Duty	6.69	12.2	9.67	8.82	7.29
Power & Fuel Cost	5.55	7.97	5.04	4.5	3.64
Other Manufacturing Expenses	5.62	7.57	5.49	5.32	4.68
Employee Cost	1.62	1.45	1.31	1.07	0.99
Selling and Administration Expenses	3.57	5.06	5.39	5.3	4.97
Miscellaneous Expenses	0.21	0.99	0.25	0.33	0.32
Less: Preoperative Expenditure Capitalised	0	0	0	0	0
Profit before Interest, Depreciation & Tax	28.64	31.57	23.5	21.97	18.32
Interest & Financial Charges	0.09	0.1	0.05	0	0
Profit before Depreciation & Tax	28.55	31.47	23.45	21.97	18.32
Depreciation	5.36	4.63	4.09	3.43	3.4
Profit Before Tax	23.19	26.84	19.36	18.54	14.92
Tax	7.26	8	6.49	2.4	5.08
Profit After Tax	15.93	18.84	12.87	16.14	9.84
Adjustment below Net Profit	0	0	0	0	0
P & L Balance brought forward	53.4	40.85	33.33	22.54	16.2
Appropriations	6.3	6.29	5.35	5.35	3.5
P & L Bal. carried down	63.03	53.4	40.85	33.33	22.54
Equity Dividend	3.68	3.67	2.94	2.94	2.21
Preference Dividend	0	0	0	0	0
Corporate Dividend Tax	0.62	0.62	0.41	0.41	0.29
Equity Dividend (%)	50	50	40	40	30
Earning Per Share (Rs.)	10.41	12.39	16.95	21.4	12.99
Book Value	57.67	49.76	79.74	66.79	49.39

 

ANNUAL STATEMENTS BS:	Mar-09	Mar-08	Mar-07	Mar-06	Mar-05
SOURCES OF FUNDS :
Share Capital	7.35	7.35	7.35	7.35	7.35
Reserves & Surplus	77.43	65.8	51.26	41.74	28.95
Total Shareholders Funds	84.78	73.15	58.61	49.09	36.3
Secured Loans	0	0	0	0	0
Unsecured Loans	0.29	0.57	0.85	1.13	1.42
Total Debt	0.29	0.57	0.85	1.13	1.42
Total Liabilities	85.07	73.72	59.46	50.22	37.72
APPLICATION OF FUNDS :
Gross Block	87.02	84.67	67.05	54.61	41.96
Less: Accum. Depreciation	40.13	35.08	31	27.15	23.87
Net Block	46.89	49.59	36.05	27.46	18.09
Capital Work in Progress	0	0.01	1.58	1.79	0.07
Investments	17.62	4.02	5.61	5.36	10.43
Current Assets, Loans & Advances
Inventories	17.74	14.74	10.71	9.69	7.06
Sundry Debtors	9.98	9.67	9.07	9.01	8.38
Cash and Bank Balance	1.25	1.09	1.24	2.88	1.13
Loans and Advances	2.64	4.47	3.54	2.28	1.28
Less: Current Liab. & Prov.
Current Liabilities	9.75	8.68	7.6	7.67	7.76
Provisions	1.3	1.19	0.74	0.58	0.96
Net Current Assets	20.56	20.1	16.22	15.61	9.13
Total Assets	85.07	73.72	59.46	50.22	37.72

 

CASH FLOWS:	Mar-09	Mar-08	Mar-07	Mar-06	Mar-05
Net Profit before Tax & Extraordinary Items	23.19	26.85	19.36	18.55	14.9
Net Cash from Operating Activities	20.24	19	14.33	14.06	10.21
Net Cash Used in Investing Activities	-15.5	-14.57	-12.33	-8.69	-8.93
Net Cash used in Financing Activities	-4.58	-4.58	-3.63	-3.63	-4.89
Net Inc/Dec in Cash and Cash Equivalent	0.16	-0.15	-1.63	1.74	-3.61
Cash and Cash Equivalents at Beginning of the year	1.09	1.24	2.87	1.13	4.74
Cash and Cash Equivalents at End of the year	1.25	1.09	1.24	2.87	1.13

 

RATIOS:	Mar-09	Mar-08	Mar-07	Mar-06	Mar-05
Operating Profit Margin (%)	45.55	35.74	33.68	34.83	34.74
Adjusted Net Profit Margin (%)	25.34	21.33	18.44	25.59	18.66
Cash Profit Margin (%)	33.86	26.57	24.3	31.03	25.11
Return On Capital Employed (%)	29.32	40.46	35.39	42.17	43.62
Return On Net Worth (%)	20.17	28.6	23.9	37.8	30.16
Debt Equity Ratio	0.01	0.01	0.02	0.03	0.05
Long Term Debt Equity Ratio	0.01	0.01	0.02	0.03	0.05
Current Ratio	2.94	2.99	2.92	2.46	1.92
Interest Cover	258.67	269.4	388.2	0	0
Debotors Turnover Ratio	6.4	9.43	7.72	7.25	6.61
Fixed Assets Turnover Ratio	0.73	1.16	1.15	1.31	1.3
Inventory Turnover Ratio	3.87	6.94	6.84	7.53	8.92
Total Assets Turnover Ratio	0.79	1.33	1.27	1.43	1.54

 

SHAREHOLDING:	Dmat	No of Shareholders	Percentage	No of shares
Promoter
Foreign Promoter	4,000	1	0.03	4,000
Indian Promoter	10,770,467	28	73.28	10,770,467
Total Promoter	10,774,467	29	73.3	10,774,467
Non Promoter
Institutions
Mutual Funds / UTI	0	1	0.01	1,000
FI/Bank	0	3	0.05	7,200
Insurance	0	0	0	0
Govt	0	0	0	0
FII	0	0	0	0
Other	0	0	0	0
Non-Institution
Bodies Corporate	271,588	120	1.85	271,588
NRIs/OCBs	124,039	313	2	293,589
Individuals	2,607,007	5,045	22.78	3,348,113
Others	0	0	0	0
Total Non-Institution	3,005,293	5,497	26.64	3,915,949
Total Non Promoter	3,005,293	5,501	26.7	3,924,149
Depository Receipts	0	0	0	0
Total	13,779,760	5,530	100	14,698,616