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Published: Dec 29, 2021
Updated: Dec 29, 2021

10 Hidden Jewels

The last two Covid-hit years have been a time of turmoil for people, economies and stock markets the world over. The Indian stock market is no exception. Just as the Indian economy started picking up and both domestic and foreign investors started pumping money into the stock market, the deadly Omicron variant of Covid-19 has played spoilsport and pulled down the twin barometers of the stock market - the BSE Sensex and Nifty 50 - to levels from several months ago.

In this see-sawing scenario, Indian investors find hitherto favourite stocks highly overpriced and out of reach, and alongside are frightened at the prospect of another market slump.

However, not all is gloom and doom. There are 'hidden jewels' - fundamentally sound stocks but little known in the market and hnec lack investors fancy. What is more, these can yet be acquired at attractive rates.

WITH

other investment avenues shrinking, the stock market has in recent years emerged as the top investment destination, surpassing even traditional attractions like real estate and precious metals. And as company fixed deposits, debentures and bonds lose their earlier charm, more and more investments are flowing into stock markets the world over. No wonder then that with domestic investors – comprising companies, institutions, mutual funds, HNIs and other retail investors — as well as foreign investors via the FII and FPI routes making a beeline to the Indian market, stock prices have turned extremely buoyant. So much so that headline indices like the Sensex, the most popular index based on prices of the top 30 top pivotals quoted on the BSE, and the Nifty 50, based on 50 leading stocks quoted on the National Stock Exchange, have skyrocketed to unprecedented and unbelievably high levels.

SEE-SAW MARKET

Retail investors in particular are on the horns of a dilemma. On one hand, they see their favourite stocks go through the roof and are left wondering whether it makes sense to open their purse at such sky-high price levels, or whether the returns will be worthwhile even if the chosen company pays a handsome dividend! On the other hand, the deadly Omicron variant of Covid-19 is once again spooking economies worldwide, and the Indian stock market has caught the fever and has started crashing on widespread selling led by FIIs and FPIs. Unsurprisingly, Indian retail investors are caught in a cleft stick – they don’t want to try their luck with traditional avenues like realty and gold but don’t know what to make of the see-saw fluctuations of the stock market.

Of course, there are highly promising and growth-oriented stocks but their prices have gone through the roof. Besides, the frequent selling waves have depressed market indices to new lows and investors fear that prices will go down further! In these circumstances, investors should pay attention to the ‘hidden jewels’ — stocks which are fundamentally strong with remarkable growth potential but which have still not attracted investor attention and hence lack investor fancy. Contrary to their high-profile cousins, these stocks are obviously available at attractive rates. In fact, there are hundreds of such stocks which are worth investing in and which have tremendous bullish prospects going ahead. We have selected 10 such ‘hidden jewels’ for readers of Corporate India. Here goes the list — Happy Investing!

The Indian subsidiary of the Milan (Italy)-headquartered De Nora group, De Nora India, is engaged in developing and manufacturing electrodes, anode coatings and systems for several electrochemical applications. Its product range also includes chlor-alkali which makes a full range of products and systems for chlorine and alkali and sodium and potassium chlorate commodity chemical producers.

As De Nora is a subsidiary of the multinational De Nora group with a 51 per cent equity stake, it gets the latest technologies with complete support of De Nora's technical expertise and management. The company, with its factory in Goa, provides its customers not only a superior product but also technical assistance in installation and operating of their electrodes for both new and retrofitted calls of different technologies, throughout their operating life.

The company is steadily growing on the financial front. During the last five years, its sales turnover has almost doubled from Rs 27 crore in fiscal 2017 to Rs 51 crore in fiscal 2021, with its profit at net level more than doubling from Rs 2.88 crore to Rs 5.31 crore during this period. The company has been regularly paying dividends and except for fiscals 2019 and 2020 - when the pandemic struck --, it has paid dividends rangiong from 10% to 70%.

Stocks of the company are quoted around Rs 460 (face value of Rs 10) with its 52-week high and low being Rs 538 and Rs 207. There has been no investor fancy for this scrip as yet, though its share price reflects its extraordinary technologies and excellent customer service.

innovative, reliable and affordable metal- cutting solutions provider. Keeping pace with the times and its endeavour to serve the industry better, it is coming up with new technology for better machines. The company provides a single-point service and is a onestop responsibility centre for setting up an entire tube manufacturing plant.

The company is steadily improving its financial performance. During the last five years, its sales turnover has moved up from Rs 69.79 crore in fiscal 2017 to Rs 88.96 crore in fiscal 2021 with the net profit inching up from Rs 3.74 crore to Rs 5.04 crore during this period. The company has been regularly paying dividends, though the rate is small -- between 5% and 10%.

Prospects for the company going ahead are quite promising. According to experts, the current stock price is less than the intrinsic value of the company. The intrinsic value is the calculated value of the company and may differ from the current stock price.

Set up as a joint sector venture in 1984 by the Andhra Pradesh Industrial Development Corporation and Andhra Sugars, Andhra Petrochemicals is engaged in the manufacture of oxo alcohols, which include ethyl hexanol, normal butanol and iso butanol - which have applications in plasticizers, stabilisers, solvents, acrylates and finishing compounds for ink.

The company has been doing quite well on the financial front. During the last five years, the sales turnover of the company has expanded from Rs 328.90 crore in fiscal 2017 to Rs 566.07 crore in fiscal 2021, with the net profit galloping to Rs 76.47 crore, in striking contrast to a loss of Rs 7.36 crore in FY 2017. The company's financial position is strong, with reserves at the end of March 2021 standing at Rs 219 crore - over two and a half times its equity capital of Rs 84.97 crore. The company has been paying dividends, the rate for the last year (2021) being 15 per cent.

Prospects for the company going ahead are quite encouraging. The Rs 10 face value share is quoted at Rs 123. The PE ratio is around 18.70 which indicates that there is scope for a further rise.

Set up in 1986, Manali Petrochemicals is a promising company engaged in the development of innovative products that find applications in a variety of industries, including footwear, paints and coatings, and pharmaceuticals. The company is focused on sustaining leadership positions in its markets and creating value for its stakeholders.

The company is doing exceedingly well on the financial front. During the last five years, its sales turnover has expanded from Rs 577 crore in fiscal 2017 to Rs 922 crore with the net earnings, taking a high jump from Rs 40.42 crore to Rs 193 crore during this five-year period.

The company's future prospects are all the more promising as it has entered into an agreement with UK-based Econic Technologies for introducing more environment-friendly Co2- containing polyols on a trial basis. The partnership involves MPL and Econic collaborating to scale in India, the successful completion of which will be followed by the introduction of the process to one of the production units in MPL's main plant. The shared intent is to bring Co2-containing polyols to MPL's customers.

The share with a face value of Rs 5 is quoted in the price range of Rs 100-110 with a 52-week high of Rs 139, which is an attractive price level.

Poly Medicure is a leading manufacturer of medical devices, offering a wide range of disposable healthcare products for infusion, therapy, anesthesia, urology, gastroenterology, blood management, surgery, and drainage and catheters.

In India, the companies engaged in the manufacture of medical equipment are usually in the SME sector and their products largely compete in low-priced and high-volume segments. But Poly Medicure is a manufacturer of high-value sophisticated products and competes successfully with even multinationals. In February 2021, it raised Rs 400 crore through a QIB (qualified institutional buyers) offer. This improved the financial position of the company and it did a wonderful job during the first two waves of Covid-19. The company is now among the top five medical equipment manufacturers in the country.

Even on the financial performance front, the company has grown from strength to strength. During the last five years, its sales turnover has expanded from Rs 440 crore in fiscal 2017 to Rs 747 crore in fiscal 2021, with the profit at net level more than doubling from Rs 63.39 crore to Rs 129.51 crore during this 5-year period. The company’s balance sheet is very healthy. At the end of March 2021, its reserves stood at Rs 906 crore, over 19 times its equity capital of Rs 47.94 crore. What is more, FIIs and DIIs have been raising their stake in the company’s equity capital.

Prospects for the company going ahead are highly promising. During the last five years, its revenue CAGR has been at 14 per cent. During the same period, its net profit and return on equity CAGR stood at 22 per cent and 21 per cent respectively. Even based on key technical indicators such as RSI, momentum, MACD and 10-day/20-day/50-day/100-day/200-day EMA, the stock appears attractive.

What is more, the company is now expanding its footprint geographically. It has incorporated a step-down subsidiary styled Polyhealth Medical Inc in the US for manufacturing and marketing of medical devices.

Promoted by the well-established business house of Bhagerias, Filatex India is a pioneer in manufacturing monofilament yarns for zippers, toothbrush bristles, Velcro magic fasteners and forming fabrics in India. The company, started in 1990, went public to manufacture 500 tpa specialty polyester/nylon/polypropylene monofilament yarns in technical collaboration with Reifenhäuser GmbH, Germany, who are the pioneers in extrusion technology and have supplied monofilament plants and machinery to leading world manufacturers like Du Pont, Hoechst and Bayer.

Today, it has become one of the leading manufacturers of monofilament yarns. In January 1996, FIL diversified into the high- growth area of specialty polyester filament yarns by putting up its second manufacturing facility at Dadra in the Union Territory of Dadra & Nagar Haveli, 170 km north of Mumbai.

FIL manufactures specialty polyester filament yarns which have a high value addition as compared to the normal denier synthetic yarns. One of the specialty yarns which FIL manufactures is micro denier polyester filament yarn (MDPFY). MDPFY is an import substitute and its demand is growing at a very rapid pace because of its inherent strengths. These specialty yarns are used for high value-added fabrics like artificial silk which are used for manufacturing of high-quality sarees, dress materials, shirtings and other textile applications. FIL is one of the first dedicated plants for manufacturing specialty micro denier filament yarns in the country. FIL’s Specialty Polyester Filament Yarn Project is located close to the major textile centers in the country i.e. Surat and Bombay. This enables FIL in reducing its freight cost and helping fabric manufacturers in maintaining low inventory levels.

In August 1998, FIL started production of polypropylene (PP) multifilament yarn in dope-dyed colours, which is widely used in all types of socks, hosiery, panty hoses and seamless garments. Polypropylene is the best subsitute for nylon/polyamide because of its superior characteristics. In 1990, the company went public.

The company is steadily growing on the financial front. During the last five years, its sales turnover has expanded from Rs 1,551 crore in fiscal 2017 to Rs 2,874 crore in fiscal 2874 crore before declining moderately on account of the pandemic to Rs 2,782 crore in fiscal 2020 and further to Rs 2,227 crore in fiscal 2021. However, its earnings continued to move up, with the profit at net level shooting up from Rs 41.20 crore to Rs 166 crore during these five years. The company’s financial position is very strong, with reserves at the end of March 2021 standing at Rs 717 crore — over 16 times its equity capital of Rs 45.05 crore. The company has started paying dividends to its shareholders and the rate for the last year (2021) was 20 per cent.

Prospects for the company ahead are highly encouraging. Its ambitious brownfield expansion for bright polymerizations has been completed. This project has added bright polyester capacity of 108,000 tonness per annum.

Waa Solar is a Gujarat-based solar power company and has by now completed 10.25 MW (DC) capacity of a groundmounted solar photovoltaic power project in an area of 59.80 acres at village Tikar (Parmar) in taluka Muli of district Surendranagar in Gujarat. The company has also entered into a power purchase agreement with the Airport Authority of India to develop a solar power plant at Bhopal Airport, which has now been commissioned with a 100 kW solar power capacity.

The company is doing quite well on the financial front. During the last five years, its sales turnover has been around Rs 25 crore per year. Its net profit, which had shot up from Rs 4.28 rore in fiscal 2017 to Rs 10.29 crore in fiscal 2020, dropped to Rs 3.31 crore in fiscal 2021 on account of Covid-19.

The company’s stature was raised in 2015 when it was selected to design the Bahrain Bay Tower in Manama. The tower encompasses housing, offices, retail and public space – all of which seek to remain flexible and adaptable to future change. In this way, as Bahrain Bay further develops, the tower has strengthened the local character and supports community needs while simultaneously creating an iconic destination. Standing at a height of 49 stories, it comprises two housing complexes atop a plinth of retail spaces, offices and a parking garage, the last of which occupies seven stories and includes 700 spaces. As the tower reinterpretes its immediate historic context by innovating while retaining essential cultural characteristics, its housing, offices and retail spaces impart an understated elegance, modernity and iconic world-class address in Bahrain Bay. This project has raised the company’s prestige globally.

With the recent emphasis on non-conventional power sources by the government, the company’s prospects have improved substantially. After 2018, when the company came out with an IPO, its financial position has improved and now it is fully equipped to implement orders from home as well as abroad.

Set up in 1995, Prima Plastics is one of the major market leaders in the plastics moulded furniture industry in India and by now has emerged as the fourth largest company in this segment in the country.

The company designs and manufactures plastic moulded furniture from chairs, baby chairs, dining tables, stools and teapoys in a wide range of attractive colours and also exports these products to the US, Africa and Middle East. It has consistently increased its market share over the last few years and has consolidated its position as a brand leader in the garden and leisure furniture segment.

The company’s client range includes various industries from hotels and restaurants to household use for swimming pools, gardens, etc., from domestic as well as international markets.

The company has modern manufacturing facilities in the UT of Daman and Kerala and recently established a unit in Andhra Pradesh. It is steadily expanding its marketing network and by now has 400 distributors and 5000 dealers in the country.

The company has also operations in Cameroon (West Africa) which it operates through a joint venture company styled Del-Life Plastics SARL. Moving ahead, the company has recently set up a subsidiary company, Prima Union Plastics SA, at Guatemala (Central America) with a local partner, with a planned capacity of 3,000 mtpa.

The company has been doing well on the financial front. During the last five years, its sales turnover has gone up from Rs 88.12 crore in fiscal 2017 to Rs 91.52 crore in fiscal 2021. Its net profit declined from Rs 9.76 crore in fiscal 2017 to Rs 1.98 crore in fiscal 2020 on account of the pandemic. However, the trend is changing with the declining impact of Covid-19 and the net profit moved up to Rs 4.34 crore in fiscal 2021 and will be moving up further going ahead.

Prospects for the company going ahead are quite encouraging. It has been consistent in adding value-added plastic products in its product output. It has a wide range of consumer-based plastic furniture products but it has also gone beyond the consumer and has added plastic products for the government’s requirements. The export demand is also picking up as the plants in Africa and Central America are doing very well.