Hanung Toys & Textiles:
It’s already India’s largest manufacturer of soft toys. Now Hanung Toys plans a fairy tale-like foray into home furnishing. The order book of the Rs 275-crore soft toys and bed linen export is crammed. Within the last three weeks, Hanung has signed deals worth over $265 million (Rs 1,060 crore).
In next few years, Hanung will work on expanding its footprint across the country. It is already present in over 3,000 stores, which includes like Archies, Lifestyle, Shoppers’ Stop and Pantaloons. Hanung has invested Rs 160 crore in a new plant in Uttaranchal, which will boost its capacity from six million metres to 39 million metres. As with toys, the new plant will also help Hanung grow its domestic business.
On the valuation front, the CMP of Rs 173.85 discounts its FY07 earning by 15.75x. But with the management confident of its 50 per cent growth the counter seems to be a good buy.
Dhanlakshmi Bank:
Dhanalakshmi Bank is a Kerala based bank, with about 180 branches and 26 extension counters spread. The bank has deposits of about Rs 3200 crore, advances of about Rs 2000 crore, investments of about Rs 700 crore and capital adequacy of about 9.87 per cent.
Recently the RBI did not allow the bank to come out with right issue as promoter holding is higher than 10 per cent. But recently the promoters have brought down their holding to 9.68 per cent by selling stake in the open market. So, now the company can go for right issue which will increase its networth beyond Rs 300 crore, which will also help the bank to take its
branch network beyond 200.
Warburg Schweiz, Deutsche Bank and FIIs like Lotus Global Investments, Rhodus Diversified Fund and Somerset Emerging Opportunities Fund have bought stake in the bank. The counter would be a good takeover candidate in the long run.
The bank may post an EPS of Rs 8 plus for FY08 and the right issue may likely to be in the ratio of 1:1 with the price not exceeding Rs 50 per share; close to its present book value. This, would be perceived positively by the market.