I picked up APM Industries today. It is available at two times earnings and half the book value. The market capitalization of the company is Rs.55 Crores.
Company's profile from CARE Report:
APM was promoted as Ajay Paper Mills Private Limited in September 1973, by taking over the partnership business of M/s Prayagdas Kanhaiyalal & Co. The company had two divisions viz paper and textile. The paper division was closed down in 1987.
The name of the company was changed to present name in April 1990. The company is engaged in the manufacturing of synthetic blended yarn comprising polyester/viscose, polyester 100%, acrylic 100% and acrylic/viscose yarn with an installed capacity of 50,336 spindles as on March 31, 2012.
Company has a revaluation reserve of Rs.67 Crores 1. The adjusted net-worth (after removing the revaluation reserve, i.e. 153 - 67) is Rs.86 crores. It still looks at a substantial discount to the book value.
In the September 2013 balance sheet, the company's borrowing have have further reduced to 18 crores from 25 crores. The company has also declared an interim dividend of Rs.1 per share. The total dividend for last 12 months is Rs.2 and provides a lucrative yield of 8% 2.
The attractiveness is primarily because of the increase in earnings over last couple of years. The revenue has grown from 200 crores in 2010 to around 300 crores, but the operating profits have more than doubled and net profits have around quadrupled. CARE's 2012 report provides some insights:
It will be interesting to see if the company is able to maintain the OPM over 10% in long run. I believe that the consistency in profits can reward something big, and the downside looks limited because of an attractive yield.
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The revaluation was done in 2009 against the leasehold land (with a remaining lease period of 80 years). Since it is a leasehold land, it might not be salable and therefore I adjusted the revaluation amount from the net-worth. ↩
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In FY'13, the company had declared an interim dividend of Rs.0.60 and finial dividend of Rs.1. ↩
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Orient Sintex Ltd. (name often mentioned on the company's website) is a dormant company as per mca.gov.in. ↩