Thursday, March 3, 2011

Stovec Industries Ltd - Printing success !

Stovec is engaged in textile and graphics printing market.
Plant  location: Ahmedabad, Gujarat.
The land size around 3.45 lakh square feet while the plant built up area is about 97000 square feet.
Products : The Company operates in four business segments: screens, industrial machinery, graphics product and chemicals.
Its product range includes :
1)      Rotary Printing Machines for textiles
2)       Rotary Screens and Chemicals for textile printing
3)       Anilox rollers  for graphic printing
4)      Screens for graphic printing
Consumables (Screens )are marketed to the domestic market.
Machinery products are sold both to domestic markets and also exported.
Exports constribute about 12-13% of total sales.
Main domestic markets: West ( Ahmedabad,Surat, Mumbai), south ( Bangalore, Tirpur, Erode) & North ( Amritsar & Delhi)

Market position: Technological and market leadership in the segments that it operates.

Main promoter: Stork Prints BV , Netherlands
Stork Prints is owned 61.5% by Bencis Capital partners, an independent European investment company & 38.5% by Stork, Netherlands whose core activities are systems, components and processes for the Aerospace industry.
Promoter shareholding: 71%
Paid up equity capital : Rs.2.09 cr
Debt : Nil
Fixed Deposits: Rs.12.50 cr ( as of Dec 31, 2009). The figure may be higher as of Dec 31, 2010.
Year ended Dec 2010:
Revenue: Rs.61.20 cr
PBT : Rs.10.80 cr
PAT:Rs.7.20 cr
EPS : Rs.34.55
Dividend per share : Rs.10.30
Current market price : Rs.309
Market Cap :  Rs.64.5 cr
New Developments and future prospects:
In 2010, Stovec expanded its product portfolio with the addition  of Sugar Screens to the current product range. The existing textile printing machines and rollers plant had enough capacity to manufacture sugar screens as well. The sugar screen market has an approx 20,000 units annual demand in India. The company has also commenced manufacture of digital inks for the textile industry. In the current year, Stovec sold sugar screens worth Rs.2.6 cr.

Last year, Stovec's parent company, Netherlands-based Stork Prints shifted its textile printing machines business to the Ahmedabad unit completely.  

The recent expansion of its textile capital goods manufacturing capacity like printing machines and printing rollers will enable the has enabled the company to also aggressively tap the Chinese market in addittion to overseas markets like Turkey, Brazil, Europe and Russia which the company already services.
The company last year, expanded its textile machine manufacturing capacity from 10-15 machines to 25-30 machines per annum .  
Stovec commands a 55% plus market share in the for the supply of rotary screen printing machines and rotary screens for the textile printing industry. The  Rotary printing machines and loop steamers manufactured by Stovec  are suitable for all types of fabrics - from most delicate georgette and chiffon saris to knitted fabrics including hosiery and terry towels.
The company also augmented its label printing consumables capacity at its Ahmedabad unit to some extent.
There is a huge growing market for label printing, especially among fast moving consumer goods (FMCG).  Stovec’s next  focus of expansion after machinery business is likely to be the  label printing consumables and coating applications .
The company is currently available at a PE ratio of  about 9. Dividend yield is  about 3.3% .Given its market leadership in its line of business, strong technological capabilities due to parent linkage and growing demand for its products, Stovec presents  a good investment opportunity at current price of Rs.312

At the time of writing this report, the author /his family have an investment interest in the stock mentioned above. Under no circumstance does the information in this report represent a recommendation to buy or sell the above-mentioned stock.  This report has been prepared and issued on the basis of publicly available information, internally developed data & other sources believed to be reliable. This is just a suggestion solely for information purposes and does not constitute a solicitation to any person to buy or sell a security. While the information contained therein has been obtained from sources believed to be reliable, no responsibility (or liability) is accepted for the accuracy of its contents. Readers using the information contained herein are solely responsible for their actions and are advised to satisfy themselves before making any investments.

1 comment: