Stock Views on Navin Fluorine International, Mac Charles India, LKP Finance, Kothari Products

Kothari Products

Kothari Products is a EBIT:81cr diversified trading company engaged in the import and export of various products, commodities, and minerals petroleum , metals (%) products. It is Dividend 16.4 real also estate involved devel in - Interest Tax 2.3 17.9 Retained Earning 63.4 opment. Kothari is a zero-debt cash-rich company paying dividends at an average rate of 100% of the equity. Its net sales for the first half of FY11 increased four fold. However, its profit during the period halved over the previous year. Considering its dividend history and reserves, the likelihood of the company maintaining its dividend rate is high.

 

LKP Finance

LKP Finance is a non-banking finance company offering wide range of services from equity broking to fixed income securities, commodities and merchant banking. The company has started paying dividends from FY08. It has paid around 9 crore each as dividends in the past two years — at a time when most companies refrained from paying dividends. Considering LKP's good performance for the first nine months of FY11, it is likely to pay dividends for this T fiscal year. The Interest 22.7Retained Earning 31.1 company's stock has fallen by almost 28% in the past three months. It may be a good opportunity to invest in the stock, but an advice of caution is warranted here. LKP derives its income mainly from capital market businesses. Hence, a 10% fall in benchmark indices in the past three months and the current negative sentiment could affect the company's profitability.

 

Mac Charles India

Bangalore-based Mac Charles India is a profitable hospitality company that pays consistent dividends.

   Despite the capital-intensive nature of hotels business and a small-size hotel, the company, , which is known for Le Meridian brand, has maintained a healthy net profit margin of 22.6% during the 12 months ended September 2010. In the past five fiscals, the company maintained an average pay-out ratio of over 22%. As the hotels industry regains momentum on the back of a rise in business travel, Mac Charles would benefit from its presence in Bangalore. It is expected to end the fiscal with a net profit of more than Rs 30 crore. With almost no debt to service, the company is likely to maintain its dividend rate at 100% of the equity.

 

Navin Fluorine International

Navin Fluorine is one of the largest producers of fluorochemicals, which are mainly used as cooling agents in refrigerators and airconditioners. A chunk of its revenues is generated from carbon credits. The company has turned debt-free last year. It has been paying dividends consistently for the past seven years and has never reduced it. It paid Rs 14 per share as dividend in FY10. In FY11 so far, the company's financial performance has been weak with profits falling 57%. In spite of lower profits, a dividend of Rs 14 would need the company to raise its payout to around 45%. Considering the company has increased its payout in excess of 50% in the past, it appears feasible for the company to maintain its dividend even in FY11. At the current market price of Rs 270, the yield comes to 5.1%.