The Insider
JUL 19 - JUL 24 1999
Working up a lather-Godrej
godrejindia.com
GODREJ Soaps is expected to realise over Rs 300 crore through the sale of its brands to various bidders. Analysts expect the company's flagship brand, Cinthol, to be sold for Rs 200 crore and Colgate has shown keen interest in acquiring the brand.
However, Hindustan Lever too is learnt to be in the race. Cinthol is a 44-year old brand enjoying a market share of 9 per cent in the Rs 4000 crore toilet soaps market. The total value to be realised from the sale of various brands is likely to exceed Rs 300 crore. On a paid-up capital of Rs 60 crore, this alone would lead to a cash accrual of nearly Rs 50 per share. Godrej would however, continue to retain its strong distribution and retail network, a strategy similar to Lakme.
Godrej is learnt to be in talks with players like Henkel, Spic, Hindustan Lever and Marico Industries among other foreign companies for sale of the brands. Godrej Soaps had earlier indicated that it proposed to announce a buyback of shares. While it enjoys a book value of over Rs 42 per share, this excludes the value of its brands and distribution network which are valued much higher.
On a roll -Century Textiles
CENTURY Textiles, once the favourite of Indian bourses, is set to report a sharp turnaround this fiscal. The Insider learns that the company is set to report a bottomline of Rs 20 crore for the first quarter of the current fiscal against a loss of Rs 14 crore in the first quarter of the previous year.
For the full fiscal, Century Textiles is expected to report a net profit of around Rs 100 crore against a loss of Rs 93 crore in fiscal ‘98-99. This will result in an EPS of over Rs 10 per share.
The turnaround is being achieved on the back of increased operational efficiency and rise in prices of cement, pulp and paper as well as an increase in the offtake of rayon.
It is a large player in cement with a capacity of 4.9 million tpa. Its pulp and paper divisions would be operating at 95 per cent capacity against low utilisation levels in the previous fiscal. Besides, pulp and paper prices have improved in the international and domestic markets. Cement and paper together account for over 60 per cent of the company's turnover.
The textiles division has also shown improved profitability on the back of lower cotton prices and DEPB entitlements. The scrip is being aggressively picked by FIIs which have purchased Grasim Industries and Indo Gulf Corporation.
Not good on paper alone-Ballarpur Industries Ltd
BIG things are happening at Ballarpur Industries Ltd (BILT). The company has raised paper prices once again effective this month and it is on the verge of taking over another well known paper company. Along with an earlier hike, it has raised prices by over Rs 1.60 per kg now. The company produces nearly 2.5 lakh tonnes of paper annually and this price hike alone would add over Rs 40 crore to the company's bottomline this fiscal. And according to insiders, this is just the beginning and prices are set to rise further during the year.
On conservative estimates this would fetch BILT profits of nearly Rs 90 crore this fiscal, an EPS of nearly Rs 15 per share. Paper industry has been in the forefront of the recent market rush for commodity stocks. A well known US-based Foreign Institutional Investor has been accumulating the stock and Unit Trust of India too is understood to be bullish on the counter. Fund managers are recommending it as a good medium term bet.
Oh, for a piece of the cake! Telecom Cable Companies
TELECOM cable companies are expected to get a bonanza this week as the long awaited order from DoT for jelly filled cables is likely to materialise. The Rs 2500-crore expected order size will change the bottomlines of many big and small cable manufacturers like Sterlite Industries, Finolex Cables (http://www.finolex.com/), Vindhya Telelinks and Uniflex cables.
While other stocks appear to have been discounted for the expected gains, a small player - Uniflex Cables - has remained in the background despite expectations of a bumper Rs 150 crore order this year. The company's bottomline will jump manifold as a result, making it cheap in comparison with other industry players.
(ET online) |
