Technocraft Industries Ltd is quite a newly listed company. It listed in 2007 on the stock exchanges following an IPO where 25% of the shares were offered at Rs. 107. The trading of this stock witnessed an alltime high of Rs. 130 on the BSE in 2007. An alltime low was recorded at Rs. 17.55 during the calamity this year. The stock currently trades between Rs. 40-45. Such is the listing information.
Fundamentals and Revenue Growth:
The company was founded in 1972 by graduates from IIT, Bombay. It is a diversified group. The company along with its subsidiaries manufactures drum closure products, cotton yarn, steel tubes & scaffolding systems. There is also a garment division which manufactures active wear products under the names Danube Fashions and Haute Chilli. The head office of Technocraft Group is in Mumbai. It has overseas presence in UK, Poland, Hungary, Germany and Australia.
In the 2-2.5 years it has been in the market, Technocraft Industries has posted strong results, with increased top line, however the bottom line, or the profits continue to lag behind the growth in the revenues, and have also dipped. Revenues have grown from Rs. 300 cr in FY0607 through Rs. 458 cr in FY0708 to Rs. 497 cr in FY0809. However Q1FY10 was bad for the company, with revenue dipping 21% YoY and profits falling by more than 40% YoY in the quarter. However, QoQ, the profits were better as the company made losses in Q4FY09. The company has weathered the storm, and is now poised to grow faster. When the growth would reflect in increasing bottom lines, and that is where the investor would be betting, the stock price would zoom to higher levels. An EPS of Rs. 10 would be welcome, and at a P/E of 11-12, the stock would be at Rs. 110-120. This would, of course, be in good conditions.
Previous Price Performance:
The stock has underperformed at the stock markets, as is clearly visible from the following data (from BSE *as on 21-10-09):
| Year | Open Price | High Price | Low Price | Close Price | No. of Shares | No. of Trades | Total Turnover(Rs.) | * Spread (Rs.) | |
| H - L | C - O | ||||||||
| 2007 | 125.00 | 130.00 | 53.00 | 87.25 | 65476734 | 527786 | 6,596,540,882.00 | 77.00 | -37.75 |
| 2008 | 88.90 | 105.20 | 18.00 | 31.05 | 6712763 | 63881 | 437,485,032.00 | 87.20 | -57.85 |
| 2009* | 31.25 | 51.40 | 17.55 | 47.25 | 1959093 | 16629 | 69,149,753.00 | 33.85 | 16.00 |
Shareholding Pattern:
Promoters hold 75% equity shares. The holding increased from just under 74 to 75% over the last year. The promoters bought shares from the market during Dec08 to Mar09, as is evident from various disclosures.
| "Public" and holding more than 1% of the Total No.of Shares | |||
| Sl. No. | Name of the Shareholder | No. of Shares | Shares as % of Total No. of Shares |
| 1 | Reliance Capital Trustee Co Ltd Reliance Longterm Equity Fund | 486,589 | 1.54 |
| 2 | HDFC Trustee Company Ltd A/c HDFC Growth fund | 538,745 | 1.71 |
StocksCenter View:
One can invest in Technocraft Industries at these levels (40-45 or so) in dips with a cautious approach. A target of 150 plus is possible if the global scenario improves. The company has inherent capacity to grow irrespective of the global scenario as well as shown in Q3 and Q4 of FY09, however the profits took a beating- the sales were resilient. The stock price here will soon be a direct consequence of the bottom line growth, if sales remain resilient as is expected.
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