Lanco Industries

Lanco Industries Ltd is currently trading at around Rs 54. It has previously seen 100+ and was hammered in Jan 2008 crashlanding. Caveat - Its a smal cap company with 40 Cr of market share. Previous observations says that when this share starts rallying it is locked in upper circuit for days together making it difficult to buy. So have patience in such a scenario. Your comments on this are invited. My two cents on why to buy this stock are as follows -

Lanco Industries Ltd. is a part of Electrosteel Castings Group and manufactures Ductile Iron Pipes, Pig Iron, Cement and Coke. Ductile Iron Pipes is used mainly in Water Supply and Sewerage applications. Considering the growing urbanization in the country and shortage of Adequate water infrastructure, which is a priority for the country, the demand scenario for DI Pipes is positive.

The government of India is currently implementing over $ 5 billion worth of Water Resource Management Projects. We believe the allocations for Water Resource sector will grow substantially in the coming years. The Union Government in its Finance Budget - 2007 has given special emphasis on providing pure drinking water to households and communities in the country and has extended exemption from excise duty on certain water purification devices & pipes of diameter exceeding 200 mm used in water supply systems.

Lanco Industries is the only fully backward integrated producer of DI Pipes. It has capacity of 90,000 tonnes of spun DI Pipes, 150,000 tonnes of Pig Iron , 90,000 tonnes of Slag Cement and 51,000 tonnes of Castings. Besides these it also owns captive Iron Ore Mines and that way its a fully backward integrated DI Pipes producer in India. Lanco Industries has over the past few years taken initiatives which will enable it to emerge as a cost efficient manufacturer of Ductile Iron Pipes in the country – these include enhancing capacities, backward integration by way of setting up Coke Oven Plant and 12 MW Captive Power plant. These initiatives will hold the company in good stead in the years to come. The establishment of Coke Oven Plant and Captive Power generation will not only make it a fully integrated company but will also bring in substantial cost benefits, thereby enhancing profitability.

its time to look for valuations. See results -
With this in place company can achieve revenues of Rs.425-440 crores in FY 08 and PAT of around Rs.26-28 crores, resulting in an EPS of around Rs.7. Current EPS is 5.6 and P/E less than 10. Though it has been a profitable company since last many yrs but it has shown an exponential growth in profit this yr only.

Mar '07 Jun '07 Sep '07 Dec '07

Net Profit 5.05 4.65 4.62 8.06

A company that is doubling net profits in 2 quarters needs to be looked into .
...with the budget in pipeline , further soaps are expected in rural infrastructure and water management sector and company price will get a boost.

Gujarat NRE coke

Your views are invited on investing in Gujarat NRE coke.

Company has listed subsidary in Australia where it has coal mines and is now into oil exploration as well. A boost to Australia's export revenue is on the way with coal and iron ore miners close to settling massive price increases with China and Japan.Analysts believe coal prices will double, while Asian steel mills are expected to settle for a 60 % jump in iron ore prices, News Limited reports.If the increases are achieved, Australia`s export revenue from coal and iron ore is set to jump from billion to more than billion next year.From Economic times: Gujarat NRE Coke finds favour with investors of Oz A batch of foreign investors led by an Australian fund were seen buying shares of Gujarat NRE Coke in good numbers. According to these investors, floods in Australia, freezing weather in China and transport bottlenecks in Indonesia will stoke a sharp rise in the price of coal in other parts of Asia. JP Morgan recently raised its forecast for 2008 coking coal prices to 0 a tonne, a 42% jump from last year`s agreed price of .38. Its previous estimate was 0 a tonne. It is in this light that foriegn investors are accumulating shares of mining major Gujarat NRE Coke in good numbers.