| On an average globally the stock to consumption ratio is pegged at around 40-45 per cent whereas in India the sugar year 2005-06 is expected to start with an inventory of 5.2 million tonne of sugar, which as a proportion of consumption is a mere 29 per cent. |
| Even with higher production in 05-06, the stock to consumption ratio would be below 25 per cent thereby keeping the prices firm. Domestic prices are currently ruling at Rs 17.3-17.5 per kg. |
| With the crushing season starting from the second week of October, slight dip in the price would not be unusual. However, lower stock to consumption ratio, re-export obligation, cut down in EU subsidies, probable diversion of sugarcane towards ethanol production in Brazil, would keep the domestic and international sugar prices firm. The stock trades at a P/E multiple of 4.5x FY06E. |
| Garware Shipping: Cruising along |
| Fortis Securities, initiating coverage on Garware Shipping, rates it as an "outperformer". The report states that the company owns and operates offshore support vessels (OSVs). |
| These are specialised vessels used in the oil exploration & production activities (E&P) off the coast of India. Continuous higher demand for petrol products coupled with increased capability of Indian players to develop oil blocks have led to growth of offshore services offered in India. |
| ONGC commands almost 75 per cent of total demand for offshore services. Total demand for OSVs is 80-85, out of which 60 are required by ONGC. Garware stands to benefit from the same. It is planning to acquire three more PSVs by 2007E to tap this demand growth. |
| There is also opportunity for Indian vessels within and outside India, with oil prices remaining buoyant and the increasing E&P activities. Indian flag vessels may operate successfully in international markets, especially North Sea. The stock trades at 7.6x and 6.2x earnings. |
| Balaji Amines: Broadening product portfolio |
| Motilal Oswal, in an update, recommends a "buy" on Balaji Amines. The company is among the leading manufacturers of methyl and ethyl amines, which are speciality intermediates finding applications in various chemical industries. |
| Over the last few years, it has gradually broadened its product profile and currently markets around 10 derivatives and one natural product. Its natural products segment is expected to drive the bottomline. |
| In 2003, it had acquired Bhagyanagar Chemicals where it has set up a natural products (herbal extracts) division with capex of around Rs 10 crore. |
| The company is currently working on nine products, out of which eight products will cater to the needs of pharma sector. It has successfully commercialised a product called Solanesol, which is extracted from tobacco, and is the starting material for many high value bio-chemicals such as Vitamin-K analogues, Vitamin-E and Coenzyme Q10. The stock is currently discounted at a P/E of 9.3x and 6.1x FY06E and FY07E. |
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