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Three Low Price High potential Stock
20-08-2016
Advice at a Glance
Page Company
No.
Current
Price(*)
Target
Price
Target
Gains
Stop
Loss
Perceived Holding
Risk
Period
3
JK Paper Ltd.
Rs
58.00
Rs
75
30%
Rs 50
5
Grauer and Weil
Rs
31.00
Rs
46
49%
Rs 24
Medium 12 months
7
Nocil Ltd.
Rs
59.00
Rs
80
34%
Rs 48
Medium
9
Frequently Asked Questions
Low
12 months
9 months
* - As on 19th Aug 2016
BSE Sensitive Index - 28,077
NSE NIFTY—8,665
Average expected gains : 38%
Average holding period : 11 Months
Average Risk : Medium
For Enquiries/Feedback
Smart VERC: Ph.: (0755) 2488115; M: 09755920780, EMail: [email protected], [email protected]
JK Paper Ltd.
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J K Paper belongs to J K Organisation which has com- Current Price
panies like JIK Lakshmi Cement, JK Tyre, Fenner India, Target Price
JK Agri Genetics under its fold.
Holding Period
The company started manufacturing Straw Boards way Expected Returns
back in 1938
Expected Risk
- Rs
58
- Rs
75
- 12 months
- 30%
- Low
JK Paper Limited is India’s leading branded Paper Company.
NSE Symbol
It is the largest producer of Photocopier Paper with
BSE Ticker
Brands like JK Copier, JK Easy Copier, Sparkle, etc. JK
Paper’s portfolio of products includes other brands such Face Value
as JK Cote, JK Excel Bond, JK SHB Maplitho, JK Tuff- Book Value
Cote, JK Ultima and JK PureFil all of which enjoy great
Avg. Daily Vol. (BSE)
popularity with consumers.
52 Week High/Low
- JKPAPER
- 532162
- Rs 10.00
- Rs 60.32
- 77,000 sh
- Rs 64/34.25
It has two large integrated paper manufacturing units –
JK Paper Mills, Rayagada, Odisha and Central Pulp Market Capitalisation - Rs 860.73cr
Mills, Songadh, Gujarat with a combined capacity of
4,55,000 TPA.
Shareholding Pattern
Its products are sold through extensive distribution net- Promoter Stake
57.74%
work of 188 wholesalers, 10 depots & 4 regional marketMutual Funds
0.03%
ing offices, and covering nearly 4,000 dealers.
FIIs
Nil
JK Paper Ltd is the market leader in the Branded Copier
Public
42.23%
Paper segment in India with market share of 27%.
It is amongst the top producers of Coated Paper and
Packaging Boards in the country.
80
The company is consistently following a policy of focusing on value added products like Copier, Coated Paper,
Virgin Fiber Packaging Boards and High end Maplitho
Paper.
60
It is a leading exporter of Branded Copier Papers from
India with exports to 35 countries.
20
Revenues
Other Income
Interest
Depreciation
Tax
Net Profit
Equity
EPS (Rs)
Dividend
* - Three months,
70
03 Aug’15 - 20 Aug’16
50
40
30
03/’12
03/’13
03/’14
03/’15
03/’16
1330.06
23.50
-51.25
-72.94
-2.80
49.32
136.62
3.61
15%
1459.11
11.87
-49.90
-72.91
0.36
37.70
136.62
2.76
50%
1737.87
14.76
-121.86
-122.10
45.75
-77.19
136.62
-5.65
Nil
2158.83
12.15
-203.93
-113.59
38.29
-12.74
136.62
-0.93
Nil
2454.72
14.75
-198.40
-107.31
-35.56
79.56
148.53
5.36
5%
06/’15*
585.35
2.06
-51.49
-26.53
-7.36
16.78
136.62
4.91#
-
06/’16*
606.51
3.37
-48.06
-29.82
-12.16
26.66
148.53
7.18#
Rs in crs
# - Annualised,
3
JK Paper Ltd.
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JK Paper has recently invested substantially (about Rs 1775 crore) in expanding and
modernising its capacity at JK Paper Mills Rayagada. It involved state-of-the-art machines with 1,65,000 TPA of paper capacity and a pulp mill with 2,15,000 TPA. This has
significantly reduce water and energy usage.

As part of a larger commitment & respect for environment, the Company has sustained
its efforts for increasing the green cover within 200 Km area from the plant sites at
Jaykaypur, Distt. Rayagada (Odisha) and Fort Songadh (Gujarat).
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During the Quarter, the company submitted a Non Binding offer to acquire two units of
BILT Graphic Paper Products Ltd (BGPPL), having annual Capacity of 3.55 Lac MT.
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CAGR of revenue is impressive at 16.56% over last five years.
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During last two years its Sales has jumped up by 41% while bottomline turned from a
loss of Rs 77 crs to a net profit of Rs 79 crs.! Sharp turnaround in operations has resulted in a Dividend of 5% for FY16 against nil during previous two years.
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The company has reported very good first quarter results. On Gross Sales of Rs 710.87
Cr for the Quarter ended 30th June, 2016 (up by 4%) it has posted profit after tax of Rs
26.66 Cr. against Rs. 14.89 Cr in the corresponding Quarter, a growth of 79%.

Market Capitalisation at Rs 860 crs is way below the company Sales of 2454 crs last
year. Another indicator of under valuation is a healthy Book Value of Rs 60.

Falling interest expenses are positive from the valuation purpose but still it is way too
high.

One would be surprised to know that Per Capita consumption of Paper and Board in the
year 2014 in India is only 12 Kg as against World average of 57 Kgs!
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On expected EPS of Rs 8.5 for the current year the ruling PE gives a PE Ratio of 6.8
and leaves a scope for about 30% gains in next 9 to 12 months.
“The improvement in performance is mainly due to higher production & sales, enriched product mix, continuously efficiencies and input cost reduction in comparison to corresponding Quarter.
The results also reflect the improved outlook of Indian Paper Industry.”
- Shri Harsh Pati Singhania, Vice Chairman & Managing Director
4
Grauer and Weil (India) Ltd.
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Established in 1957 in collaboration with Messer's
Grauer & Weil of The United Kingdom, Grauer & Weil (I)
Ltd., has been market leader in the field of manufacture
of Electroplating and Allied Chemicals and Engineering
Plants to Surface Coating Industry in India.
Current Price
- Rs
31
Target Price
- Rs
46
Holding Period
- 12 months
Expected Returns
- 49%
Its strong commitment to Research & Development of Expected Risk
products and processes and various global alliances has
enabled to offer the most comprehensive range of Sur- NSE Symbol
face Finishing Processes, complemented by state-of-art BSE Ticker
equipment and plating plants to the end user Industry.
Face Value
- Medium
- NOT TRADED
- 505710
- Rs 1.00
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It is one of the very few surface finishing solution providBook Value
- Rs 11.10
ers across the Globe, who can offer integrated packages
of Electroplating and Allied Chemicals such as Anodis- Avg. Daily Vol. (BSE) - 2000 sh
ing / Phosphating / Pre-treatment and Topcoats.
52 Week High/Low
- Rs 38.2/15.55

It also develops Engineering Plants, Effluent Treatment Market Capitalisation - Rs 710.72cr
& Waste Recovery Systems, Industrial Lubricants, High
Performance Protective Paints and Coatings also for
Shareholding Pattern
Automotive and Marine Industry to name a few.
68.99%
Growel name has been synonymous with Plating Indus- Promoter Stake
Mutual Funds
0.01%
try for over six decades.
Nil
Its manufacturing plants are located in Dadra Plant , FIIs
Western India, Jammu Plant , Northern India, Barotiwala Public
31.00%
Plant , Northern India, Vapi Plant , Western India, Engi40
neering Plant, Western India and Paints R&D center,
03 Aug’15 - 20 Aug’16
Western India.
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It has three Overseas Subsidiaries viz. Grauer & Weil
(Shanghai) Ltd. at China, Grauer & Weil (UK) Ltd. at
United Kingdom and Growel Chemicals Co. Ltd. at Thailand.
Its International Partners and Associates are Herbert
Schmidt GmbH & Co. KG (HSO), Germany, SIDASA
03/’12
Revenues
Other Income
Interest
Depreciation
Tax
Net Profit
Equity
EPS (Rs)
Dividend
* - Three months,
333.23
2.85
-21.19
-9.89
-7.04
23.20
22.67
1.02
15%
03/’13
03/’14
335.01
2.11
-20.54
-10.99
-4.03
19.83
22.67
0.87
12%
385.86
3.42
-16.74
-11.49
-5.05
30.80
22.67
1.36
16%
30
20
10
03/’15
416.34
2.43
-14.03
-16.41
-12.80
33.19
22.67
1.46
22%
03/’16
422.86
5.14
-8.83
-14.17
-13.54
39.05
22.67
1.72
28%
06/’15*
90.44
1.12
-2.85
-3.62
-1.96
7.18
22.67
1.27#
-
06/’16*
95.63
0.79
-1.58
-3.49
-3.41
12.62
22.67
2.23#
Rs in crs
# - Annualised,
5
Grauer and Weil (INDIA) Ltd.
(Spain) and NOF Metal Coatings Group (Japan).

During last five years its Sales is growing steadily, Interest outgo has declined very fast
by 60%, Depreciation provision is up 40% (indicates constant expansion and modernization activities), Net Profit has zoomed up by 70%!

Debt Equity raio which stood way high at 0.75 as on 31-03-2012 has come down
sharply to 0.10 as on 31-03-2016!
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The story got more better for the first quarter of current year. Net profit of Grauer & Weil
rose 75.77% to Rs 12.62 crore and Sales rose 6.04% to Rs 93.94 crore.
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Promoters hold 69%, major chunk of equity. Reserves at 11 times Equity are fairly
strong.
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Based on first quarter results and the strong growth momentum, we expect the company to post an EPS of Rs 3 to Rs 3.25 in the current year and applying a reasonable
PE of 15 we hope share price to move to around Rs 45 levels in a year from now.
6
Nocil Ltd.
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NOCIL LIMITED is a part of the AMG (Arvind Mafatlal Current Price
Group) of Industries, a well-known Business House of Target Price
India having diversified business interests.
Holding Period
NOCIL commenced Rubber Chemicals production in the Expected Returns
year 1975.
Situated in a designated ‘Chemicals Zone’ about 40 km
away from Mumbai City; NOCIL today is the Largest
Rubber Chemicals Manufacturer in India with the State
of the Art Technology for the manufacture of PILFLEX ®
Antidegradants, PILNOX ® Antioxidants, PILCURE ®
Accelerators, Post Vulcanization Stabilizer and PILGARD ® Pre Vulcanization Inhibitor are well recognised
in both domestic as well as international markets.
Expected Risk
- Rs
59
- Rs
80
- 9 months
- 34%
- Medium
NSE Symbol
- NOCIL
BSE Ticker
- 500730
Face Value
- Rs 10.00
Book Value
- Rs 29.10
Avg. Daily Vol. (BSE) - 7.53,000 sh
52 Week High/Low
- Rs 64.5/36.30
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Its second plant is located at Dahej, Gujarat.
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It has built a broad customer base in India and over forty Market Capitalisation
countries across the world.
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The products manufactured by the Company are used
Shareholding Pattern
by the tire industry and other rubber processing indus- Promoter Stake
37.61%
tries.
Mutual Funds
0.01
The Company operates a subsidiary, PIL Chemicals
FIIs
Nil
Limited, which is engaged in processing of rubber
Public
62.38%
chemical products.
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The Credit Rating Agency CARE, has re-affirmed Company’s Long Term Credit Rating at ‘AA–’ and Short term
borrowings rating at ‘A1+’.
80
03 Aug’15 - 20 Aug’16
60
The company derived 28% of total income last year from
export markets, that speaks volumes about the quality of
its products.
40
The company has reported sharply improved bottomline
(more than three time up) during last two years despite
20
03/’12
Revenues
Other Income
Interest
Depreciation
Tax
Net Profit
Equity
EPS (Rs)
Dividend
* - Three months,
483.36
21.38
-0.28
-8.99
-13.07
33.99
160.79
2.11
6%
03/’13
03/’14
488.18
13.87
-3.75
-7.85
-1.64
42.49
160.79
2.64
6%
596.14
10.76
-17.39
-17.56
-11.08
23.62
160.79
1.47
6%
- Rs 951.05cr
03/’15
719.00
3.89
-16.51
-13.60
-28.90
56.76
160.79
3.53
10%
03/’16
715.21
3.05
-9.34
-13.72
-40.39
77.74
160.79
4.83
12%
06/’15*
186.01
1.60
-3.11
-3.38
-9.27
16.74
160.79
4.16#
-
06/’16*
192.78
2.80
-0.68
-3.50
-12.05
23.20
160.79
5.77#
Rs in crs
# - Annualised,
7
Nocil Ltd.
sharp price undercutting by players in China and Korea.

Even for the first quarter of current year its Net Profit rose 38.59% to Rs 23.20 crore as
against Rs 16.74 crore during the previous quarter ended June 2015.

Value Addition which was at 46% in FY15 increased to 49.7% in FY16.

Dividend is rising steadily, which is another indicator of management’s confidence on
future prospects.

Long term Debt to Equity ratio has declined sharply from 0.17 in FY15 to 0.05 in FY16.

Interest cover has more than doubled during last one year from 6.19 to 13.65.

Automobile sector is doing pretty well and thus demand for rubber chemicals from Tyre
manufacturers is expected to remain robust.

The company holds quoted investments whose market value is Rs 111.63 crs. and unquoted investments valued Rs 25.05 crs as on 31-03-2016

If everything goes well then an EPS of Rs 6.5 is a distinct possibility for FY17. Even a
moderate PE of 12 can take the stock to beyond Rs 75 levels in next 9 to 12 months.
...Given the acknowledged quality of its products and services, your Company
sees 2016-17, as a year of significant opportunities, to grow its volumes and improve its capacity utilization…..Your Company, with its improved cash flow position, also managed to prepay its term loan of ` 25 crores, to one of its term loan
lenders. The other term loan lender, agreed to bring down the interest rate, instead
of accepting prepayment…..
- Excerpts from company Annual Report 2015-16
8
Frequently Asked Questions
Q. What is the Guarantee of success of the expected returns indicated in this report ?
A. There is no Guarantee of meeting the expected returns, it is only a probability. Returns have been
calculated based on our past experience and certain expectations from the company, industry and
the economy.
Q. Can these stocks go down ?
A. Recommendations are based on current valuations of these stocks with respect to the market. Any
adverse news about the individual company or sharp correction in stock indices can drag the individual stock prices down.
Q. Will these stocks be reviewed in future ?
A. At least One review shall be made as and when required.
Q. Will these stocks get coverage in other services provided by SMART VERC. ?
A. If they continue to provide value, we may give them due coverage.
Q. What is the minimum amount, one should invest in these stocks?
A. Limit your exposure in any single stock to maximum 5% of your total portfolio value.
Q. Stock advised by you is ruling up from your recommended price, can I still purchase this stock?
A. One can buy the stock as long as it is within the 10% band of recommended price.
Q. If I have a query, how and whom should I contact ?
A. All the related queries shall be addressed to [email protected]. We shall revert back to you
within 24 hours.
Note :


Investors are advised not to borrow money even for the short term to invest in these stocks.
Members of team SMART VERC hold negligible quantity of few of the shares recommended in this
report.
Disclaimer : Recommendations given in this report have been researched and prepared by A K Asnani. He
and associates hold stake in all the three stocks to the extent of much less than 1%. SMART
VERC will not be responsible/liable for any loss arising out of investments based on its advice.
Though every care has been taken to ensure correctness, SMART VERC will not be responsible
for any inadvertent errors / omissions. Stock investments are subject to market risk. Investors
are advised to consider this for educational purpose
All disputes subject to Bhopal jurisdiction only.
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10