11 Camlin Fine Sciences
This specialty chemical company manufactures and exports food antioxidants, fine chemicals and food grade products. The company has a moat in the sense that its product portfolio is not available with any other domestic player. Globally, too, a few competitors exist. As a backward integration move, Camlin acquired Borregaard Industries of Italy, giving it the technology to manufacture Diphenol and Catechol. It also developed water-based synthetic technology to manufacture Vanillin, which is used as a flavouring agent in place of natural vanilla extract, making it one of the four companies in the world with the ability to do so. Camlin Fine Sciences plans to set up a new manufacturing facility at Dehaj in Gujarat with an investment of 193 crore. New product launches as well as geographical expansion will be its key revenue drivers.
10 Astra Microwave
Astra Microwave Products offers products in defence, telecommunication and space equipment. Defence is the major contributor to sales, with over 90% of revenue coming from this segment. While production of missiles and radar subsystems drives the domestic business, defence offset requirements drive exports. Its order backlog of 536 crore as of October 2015 and expected inflows of 550 crore-600 crore in FY16, gives the company good revenue visibility. With the cap on defence FDI hiked to 49% and with the sector brought under the automatic route, there is a likelihood of the cap being raised to 100%. If that indeed plays out, the company could be a prime beneficiary.
9 Hindustan Media Ventures
One of the older media groups in the country, HMVL, which owns the Hindi daily “Hindustan” has a readership base of over 15 million across Bihar, Jharkhand, Uttarakhand, Uttar Pradesh (UP) and Delhi. HMVL generates over 70% of revenue from Bihar and UP. The company gets 73% of its revenue from advertising, which has grown 15% annually over the past five years to 600 crore. UP is the largest market in India and since the company being the second largest player, it has been able to get a sizeable chunk of the advertising spend. Analysts forecast a 11% revenue growth over FY15-17, primarily driven by 12% ad-revenue growth and 10% circulation-revenue growth and a net profit growth of 22%, driven by lower newsprint prices.
8 Thomas Cook (India)
Canadian investment firm Fairfax controls India’s largest integrated travel company Thomas Cook India, which has grown through acquisitions, snapping up seven companies in nine years. It operates in two main business segments – travel business and forex business. In 2014, the company acquired Sterling Holiday Resorts and services company Ikya which has been rebranded as Quess. These acquisitions bring in 83% of its revenues. Additionally, the company acquired Kuoni Travels, making it the largest packaged tour operator in the country adding to its distribution network of 115 franchises and 112 sales agents. The deal also makes Thomas Cook the biggest tour operator in both the inbound and outbound segments.
Delhi-based dairy major Kwality supplies to FMCG brands, government institutions and retail chains under the brand Dairy Best. Institutional sales account for 75% of its turnover. Now, the company plans to enter the value-added segment with products such as flavoured milk, tetra pack, cheese and table butter under Kwality. The brand has even roped in Akshay Kumar as its brand ambassador. The company is looking to acquire mid-size diaries to increase its capacity across its six plants where it processes three million litres a day. The company, which purchased the rights to use Kwality artwork from founder PL Lamba, is now in the middle of feud between the Lambas and their former business partner Ghais, who alleged that Lamba did not have the right to transfer the trademark. Analysts are, however, bullish on the stock given that it is the third-largest private diary processing company and the value-added segment is expected to grow by 20% in the near term.
Note: Financial year as stated. Market-related data as on December 14, 2015; M-cap, PAT, sales, assets, cash and dividend in cr; CMP in ₹; PE and D/E in x; return and CAGR in %. Source: Ace Equity