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Puneet Resin Ltd India

Hidden gem "Puneet Resin ltd" (BSE: 526492) at 40/- target of 65/- & 95/-

STOCK : PUNEET RESINS LTD (BSE CODE: 526492) Trading in BSE CODE : 526492

CMP : 40/- Promoters Buying Heavily….. Increasing Stake (Check in BSE Promoters Holding every Quarter by Quarter increasing stake)

Target : 65/- to 95/- in Short term and Medium terms; 150/- above for Long Term easily.
Equity : 5.2 Cr
Promoters Holding : 55.76%;
Body Corporate and NRI's : 3.69%
Public Only 39%
Face Value : 10/-
No DEBTS and Company having Good Cash flow and Good Valuable Assets and Machinery.
EPS : 11.38/- for 2011-12 and 2012-13 Expecting 19/- as per the Order Book.

Every Year Dividend Paying company.
Dividend History :
2012 --- 17%;
2011 --- 15%;
2010 --- 12%;
Dividend Yielding per Year 4.5%

PUNEET RESINS LTD Having Good Land Bank and Valuable Assets.
PUNEET RESINS LTD expanding plans is very aggressive.

PUNEET RESINS LTD Stock Will go 65/- to 95/- range in Short term and Medium Term., Like SE Investment (Call Given at 175/- Now including Bonus and Stock split 1250/-) and Bihar Tubes Ltd (Call Given at 57/- Now 165/-).

For 2011-12 Year Net Income of 61 Cr and Net Profit was 5.94 Cr EPS 11.38/-

For 2012-13 Full Year Estimating Net Income of 97 Cr and Net Profit of 8.7 Cr As per this EPS was 17/- above. Stock Trading at 38/- PE just 2 Industry PE is 10. As per this Stock will zoom to 150/- levels in 6 Months to 1 Year Time.

Almost Debt Free Company, the stock`s valuations appear to be quite attractive.

Puneet Resins Limited was incorporated in 1984 in the State of Maharashtra. The company has its Registered Office at Bombay and factory at Satpur MIDC, Nasik.

The company is a public limited company listed on the Bombay Stock Exchange. It has received ISO 9001:2000 Certification and has been a pioneer in introducing various grades of rubber compounds in India. Currently its products are exported to various developed markets across the globe.

Puneet Resins has been producing high quality products through innovation, development and improvement meeting each customer's requirements.

The company has been manufacturing Rubber & PVC Compounds which have specialised properties such as oil resistance, flame retardancy, ozone resistance, fuel and solvent resistance, etc.

These compounds are used to make products such as petrol hose, LPG tubes, footwear, auto parts, protective clothing, seals, conveyor belts, etc.

Puneet Resins Ltd has informed BSE that the name of Puneet Resins Limited have been featured in the Forbes Asia's Top 200 'Best Under a Billion' List, 2011. This is for the first time the Company has made it to this elite list of Companies.

Forbes Asia's "Best Under A Billion" Companies are Asia Pacific's top small and mid size listed Companies. Looking at profitability, growth, modest indebtedness and future prospects, Forbes editors picked 200 Companies out of an universe of over 15,000 Asia Pacific Companies with actively traded shares and sales between US$5 million and US$1 billion.

In the year 2009, Puneet Resins signed Memorandum of Understanding with Excel Polymers LLC of USA for introduction of Specialty Grades to Indian Rubber Industry and neighboring countries.

Excel Polymers LLC is a leading global supplier of thermoset elastomeric solutions for technical

Rubber compounds, performance rubber chemical additives and their related technical services,

With plants located in the USA, Mexico, China and the UK.

Puneet and Excel have established a marketing and distribution agreement to deliver innovative,

World class technical rubber solutions for the Elastomer Component manufacturing industry

In India and neighboring countries. Targeted product offerings include a broad range of rubber

Master batch materials, from standard to high performance elastomers, pre-dispersed rubber

Chemicals and best in class roll covering compounds.

Through their collaboration, Puneet And Excel introduced the concept of ready to use, cost effective and high Through theircollaboration, Puneet and Excel introduced the concept of ready to use, cost effective and high quality customized rubber compounds, performance additive master batches and provision of technical solutions in formulating compounds to meet the ever increasing for finished part performance. Both the companies recently extended their MoU on the same terms and conditions as contained in the original MoU dated January 27,2009.

We believe that the collaboration is beneficial for both as Puneet gets access to wider range of products and also the technical expertise while Excel gets access to Indian market with

Puneet's wide distribution network.

Puneet Resins Ltd will be expanding the production capacity of Polymer Blends by installing A new production line at the Wadiv are Plant. This plant situated in the Village Wadiv are, Nasik Highway, was closed since last few months. The company has decided to fund This project via a mix of internal accruals and debt.

We believe that the expansion should not be a very big ticket one and time taking. If we look at the Gross block of the company then it's about 6.3 crore, out of which 4.6 crore constitutes plant and machinery.

The expansion the company is talking about is addition of a new line at the existing facility so the expenditure should mostly be on Plant and Machinery and considering that it will be on e of the production lines, we believe the capex should not be too high.

With the capacity expansion, the company should be able to maintain the current set of margins as they are increasing the product ion line and thus manufacturing sales of the company should increase. The manufacturing sales of the company command higher margins in comparison to trading sales.

The increase in sales of the company coupled by the fact that they are further enhancing the capacity (which they didn't do for last many years) gives a robust outlook for the industry which now seems to be coming out of a consolidation phase.

The Promoter's have been making open market purchase since long even though their stake is in excess of 50%. Now 55.67% from 48%.

PUNEET RESINS LTD having Lot Expansion Plans in Fututre.

Financials for PUNEET RESINS LTD

For 2012-13 Full Year Estimating Net Income of 97 Cr and Net Profit of 8.7 Cr As per this EPS was 17/- above. Stock Trading at 38/- PE just 2 Industry PE is 10. As per this Stock will zoom to 150/- levels in 6 Months to 1 Year Time.

Type	Audited	Audited	Audited	Audited
Period Ending	31-Mar-12	31-Mar-11	31-Mar-10	31-Mar-09
No. of Months	12	12	12	12
Description	Amount(Rs. million)
Net Sales / Interest Earned / Operating Income	615.13	526.64	247.64	244.48
Other Income	2.81	2.27	2.64	1.13
Expenditure	-524.07	-448.78	-212.56	-214.37
Interest	-2.53	-2.67	-1.30	-4.17
Profit Before Depreciation and Tax	91.34	77.46	36.42	27.07
Depreciation	-3.54	-3.11	-2.66	-2.53
Profit before Tax	87.81	74.34	33.75	24.53
Tax	-28.45	-22.39	-9.18	-10.28
Net Profit	59.36	51.95	24.57	14.25
Equity Capital	52.16	52.16	52.16	52.16
Reserves	116.81	67.76	24.90	10.87
Basic And Diluted EPS after Extraordinary item	11.38	9.96	4.71	2.73
Nos. of Shares - Public	2,307,337.00	2,361,382.00	2,461,843.00	2,649,137.00
Percent of Shares-Public	44.24	45.27	47.20	50.79
Operating Profit Margin	15.26	15.22	15.23	12.78
Net Profit Margin	9.65	9.86	9.92	5.83
Cash EPS	12.06	10.56	5.22	3.22

It's a Multi bagger stock. Just buy at 40/- levels and hold 1 year will get 5 times Return like NATCO Pharma (Call given in 2009 at 40/- levels Now 450/-) and SE Investments Ltd (This Stock I have Recommended at 175/- levels after that reached 1200/- levels including Bonus and Split).

Positive Points for this stock for Up moving:
1) Company is in Industrial Product Business; company Promoters Buying heavily (Check bseindia.com for share Holding Pattern every Quarter by Quarter Promoters rising their stake Now came to 55.76%. Because Company Stock Good Value at 38/- Debt Free Compnay and Good Cash Flow and Good dividend paying company.

2) Equity is very small at 5.2 Cr promoters Holding 55.76%

3) Company recently going Expansion Plans regarding Huge orders.

4) Good Profit Making Company for 20011-12 EPS 11.38/- and Expecting EPS for full year 2012-13 is above 17/-because Expansion income will add next Quarters.

5) Company having Good Cash Flow and Good Land Bank and Good Assets.

6) Forbes Asia's "Best Under A Billion" Companies are Asia Pacific's top small and mid size listed Companies. Looking at profitability, growth, modest indebtedness and future prospects, Forbes editors picked 200 Companies out of an universe of over 15,000 Asia Pacific Companies with actively traded shares and sales between US$5 million and US$1 billion.

7) Good Dividend Paying company every year 17%, So Dividend yielding is 5% nearly and FII's Eyes in this stock. If they will start buy Stock will zoom to 65/- to 95/- levels easily.

8) Risk Free at Current Market Price, Its very cheap price trading at 38/- Compare to companies Reserves, Assets and Value and Equity and Profits and Future Plans.

9) This Stock is not Participated this Market Rally. So Operators and FII's eye's in this stock.

Happy Invest ……….. Good Fundamentals and will give good returns from 100% to 500% returns with short and medium terms and Long terms.

In the debate on 'mandatory auditor rotation' its supporters and opponents are evenly balanced.
The proponents weighing in on the auditor being replaced every few years cite auditor's incentive to cosy up to the management, who pay their fees, is reduced once they know they will be replaced. In addition they argue that a mandatory change would keep the current auditor in check if they fear that a new auditor would expose any previous errors or omissions.

Its opponents argue that the costs of mandatory rotation are far higher than the perceived benefits. Today's corporations are very complex, and an auditor must develop industry and company specific knowledge to fully understand the company's finances. Mandatory rotation erodes this institutional knowledge and reduces audit quality thereby undermining the very purpose of the mandatory rotation is set out to achieve.

It is important to note that no centralized database exists regarding tenure of auditor. One has to go find company annual reports to ascertain the terms of the audit firms. As most companies have annual reports going back five or ten years on their website, this data is atchy. However IiAS has managed to collect some data on the length served by the auditors.

IiAS recommends auditor rotation every six years, with change in audit partner every three. Till this gains currency IiAS proposes that companies disclose the following at the time of seeking re-appointment:

*For how many years has the audit firm being auditing the companies accounts
*For how many years has the audit partner been signing the accounts
*Total and audit fees paid during the last three years, and what is proposed during the current year
*Chairman of audit committee should give the reason for recommending the reappointment of the audit firm (if term is beyond six years)

(Amit Tandon : The writer is the founder, managing director of IiAS, a proxy advisory firm)
For details of auditor tenure at leading companies, click the attachment attached.

Auditors Tenure Details.xlsx

"No guts, no glory" is an oft repeated remark which is applicable to a wide variety of situations in life, and holds true for investing as well. Rob Arnott, the CEO and founder of the financial advisory and money management firm Research Affiliates and a leading proponent of the concept of fundamental indexing (which weights stock portfolios based on a set of fundamental factors rather than market capitalization as favoured by the standard indices) makes a convincing case for investing when the markets conditions are most unfavourable and thereby achieving superior returns over the long run. To summarise:

-While people generally measure wealth based on the dollar value of the portfolio, they believe that it is better to measure wealth in terms of the real spending that the portfolio can support over its lifetime. The concept is termed "sustainable spending" .

-The implications of this are somewhat counterintuitive – if under a bull market the prices of all stocks in the portfolio double, while dividend yields fall in half, we are not really better off as the long-term sustainable spending of the portfolio has not really changed. We are better off only if we liquidate the portfolio and spend immediately.

-Bull markets are therefore not good for those who are net savers and are building portfolios to service future needs, as it actually costs more to purchase the same real income stream over the course of the bull market.

-Conversely, investors panic at market troughs (like in early 2009) because they feel that their assets have been wiped out. That is only true if they liquidate their assets and spent immediately. For buy-and-hold investors the real income stream was higher in 2009 than in 2007.

-Market sell-offs actually provide opportunities to increase sustainable spending by judiciously rebalancing portfolios between asset classes and within asset classes, particularly for volatile assets like equities.

-Temporary losses of capital are rebalancing opportunities while permanent losses of capital are a disaster and can arise from temporary losses which are made permanent by selling at the trough.

-Analysing the 10 bear markets (with losses larger than 30%) over the past century, the average loss is a debilitating 46% real return loss occurring usually within a period of two years.

-Meanwhile, the peak to trough decline in real dividends during these bear markets was a scant 3% , on average. During the Great Depression, the drop in real dividends was 25% compared to a devastating 80% real loss on the portfolio value, and was the single worst outlier in a century.

-On average, real sustainable spending was lowered only slightly during these 10 bear markets, and recovered by 35% off their lows during the ensuing 5 years after the market trough. Additionally, real dividends achieved new highs, rising by an average of 29% compared to the previous peak. During the recent financial crisis, US stocks fell by 51% while the real dividends actually grew by 4%.

-Investors who focused on the level of real spending, rather than market prices, were able to view the worst downturns in market history as periods of minor disappointment rather than disasters. However, this requires courage and the ability to ignore headlines, brokerage reports and our natural human instinct to sell.

-Real sustainable spending can be increased during market downturns by rebalancing into higher-yielding assets after they have suffered precipitous drops, funded by selling assets which have performed much better. Such an approach would have necessitated a switch from equities into bonds in 2000, and a switch back into equities in 2009.

-The focus on sustainable spending would also necessitate rebalancing within asset classes like equities – for example, the Fundamental Index approach would trim holdings in stocks which have outperformed the market and suffered drops in real dividend yields, switching into stocks with higher yields and thereby raising the yield on the portfolio.

-Historically, the rebalancing between value and growth stocks based on relative performance over the preceding two years have, on average, raised yields on stock portfolios by about 4% in the US, and by about 6.5% in non-US developed stock markets. The increase in spending power has occurred three-fourths of the time, 24 out of 33 years in the US and 22 out of 28 years in international markets.

-The recent crisis offers an exceptional opportunity to rebalance into recently savaged deep value stocks in Europe and the emerging markets. Their March 2012 rebalancing was able to boost dividend yield from 3.8% to 4.2%, resulting in a 10% raise in income.

-This rebalancing approach as illustrated by the Fundamental Index, has resulted (since 1964) in a 0.7% higher dividend yield than a market cap weighted index plus a 1% higher annualized growth rate in dividends.

-Countercyclical investing requires courage, and if one is able to do it in a disciplined and contrarian manner, it provides the ability to achieve a steady increase in sustainable spending while letting others invest for comfort.

An intriguing argument which is counterintuitive but does make sense and is actually supported by historical data and investing experience. Our natural tendency is to chase the winners, and while that may work for specific stocks over certain periods, being a "contrarian armed with a calculator" is what works over time. This approach requires courage and the discipline to stick with the process through "thick and thin". In previous newsletters, I have made the case for using market downturns to add exposure to the Indian, Chinese and European stock markets. As long as this is done within the context of a diversified portfolio, it is very likely to yield dividends over time.

The recent cut in interest rates by the PBOC marks the commencement of an easing cycle to arrest the downturn in the economy. The turn in the growth of money supply in China has typically led rallies in various assets across the world- the first one occurred in late 2004 when M2 growth rate accelerated until around mid 2006, during which period gold prices went up around 65% and the S&P 500 went up 20%. In the second period of acceleration from late 2008 to late 2009, gold was up 65% and the S&P500 was up 15%. We are now at one of these inflection points (see graph below).

China's M2 Monthly year-over-year growth (Mike Krieger)

-While a lot of attention has been paid to the impact of the European crisis on Chinese exports, they have a relatively small impact on the GDP (as the chart below exhibits) . What matters are investment and consumption and government policies have a big impact on investment and thereby the ability to influence GDP growth.

-Commodity prices have been down sharply this year, mainly from better weather and a slowing of demand in emerging markets. However, as emerging market pursue stimulative policies to boost growth, commodity price are likely to resume their uptrend . This is supported by long-term charts (see below) on commodities which point towards the latest downturn being a correction in a secular bull market which has at least a few more years to go.

-And finally, if you had any doubt about the paradigm shift in commodity prices (as argued by Jeremy Grantham and summarised in a previous note), please take a close look at this really long-term (since 1749) chart on commodities. Please note the three upward structural shifts in prices- the first in the early thirties following the dollar devaluation against gold, the second one in the early seventies following the replacement of the gold standard by the dollar standard, and the third one in the early 2000s following the commencement of the Fed's "easing-on-market falls" programme. As long as central bank easing continues, commodities, being a hard asset, are likely to be in an uptrend.

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