Gillanders Arbuthnot (BSE Code: 532716) : For those who can take risk.

Company profile...

• Gillanders Arbuthnot & Co (GACL) was incorporated on Feb. 1, 1935 as a private limited company and became a public limited company Feb. 28, 1947. At present, GACL is a part of G.D. Kothari Group of companies.
• The company has business activities in various fields including plantation, manufacture & sale of tea under the group company Tengpani Tea Company, construction under the division MICCO, Textile i.e manufacture of yarn for export & domestic purpose under the group company GIS Cotton Mill, trading in paints and allied products under the marketing division, letting out real estate under the property division, and manufacture of lead oxides and stabilizers for PVC industry under the group company Waldies.
• The head office of the company is situated at Kolkata and it has its sub-branches at Chennai, New Delhi and Mumbai.

Positive triggers....

• The company has earned widespread reputation not only in India, but also in overseas countries like Sweden, Norway, Lithuania, Switzerland, Portugal, Spain, Tunisia, Romania, Cyprus, South Korea, Bangladesh and Chile.
• The company recently got its equity shares listed and admitted to dealings on National Stock Exchange of India Ltd. with effect from December 14, 2009. The listing of the company on National Stock exchange helps in better visibility of the company amongst Institutional investors and is thus always a positive outbreak.
• The company two division Tea & Engineering (turn key projects) are the major contributor to its income & going forward they are expected perform better.
• Dividend paying company, consistently giving dividends since longer period of time
  20-Aug-2009 5.00
  08-Sep-2008 4.00
  23-Mar-2007 2.50
  27-Dec-2006 2.25
• Gillanders Arbuthnot & Co (GACL) has issued first bonus in 1978 of 4,22,804 equity shares in prop. 1:2. & again in 1985 bonus issue of 3,17,103 equity shares issued in prop. 1:4.
• Promoters hold 68.51% of total equity capital.
• Net profit of Company rose 85.49% to Rs 19.81 crore in the quarter ended December 2009 as against Rs 10.68 crore during the previous quarter ended December 2008. Sales rose 43.21% to Rs 185.70 crore in the quarter ended December 2009 as against Rs 129.67 crore during the previous quarter ended December 2008.

Negative triggers...

• The other divisions such as trading, property and Chemicals do not lend a major impact on the income statements of the company.
• Due to amalgamations like GIS Cotton Mill Ltd. (GCML) & Tengpani Tea, Company is able to perform well during last few years

Our views on the stock....

• It is expected that Tea division, Textile and Engineering division will perform well going forward. The company has reported EPS of Rs 27.06 for the nine month cumulative; company has reported EPS of Rs 13.92 as against Rs7.59 for the quarter ended December 2009. The company has been commanding reasonable valuations as it has already recorded EPS of Rs 27 for three quarters, hence the company is available at P.E multiple of 4.5 or 5 x its earning. If someone is risk averse, and looking for higher dividend paying stock its better to go with a Gillanders Arbuthnot.

- Hitesh, Equity Research Analyst, HBJ Capital Services Pvt. Ltd [Hitesh@hbjcapital.com]

Note: The stocks discussed at MPS thru blog postings are neither a part of “Business Insights” issue nor a “Penny Stocks” which we reco/publish for paid subscribers. These are just stock specific viewsa by MPS team; one MUST do the due diligence before doing any investment based on our reco.