MANUGRAPH INDIA

The share of Manugraph India (MIL) (Code No: 505324) (Rs.250) is recommended for medium-to-long-term gains. MIL's performance has surpassed all expectations in recent years.

The leader in the manufacture of web offset and sheet fed offset presses has recently produced mind-boggling results for Q2FY06. Going by the trend, MIL is all set to register an EPS of about Rs.20 on face value of Rs.2 for FY06 and may even consider a liberal bonus in the current year.

Established in 1972 by Mr. Sanat M. Shah, MIL is India's largest manufacturer of web offset and sheet fed offset presses. Over the years, it has emerged as a thriving, nimble footed, printing machinery enterprise due to its ability to transform itself rapidly to meet the challenges of a highly competitive global economy and its commitment to become a supplier of choice. Constant modernization and introduction of state of the art technology at MIL has enabled it to stay ahead in the industry and successfully surpass all expectations.

In India, MIL ranks as the number one in the manufacturing and supplying of web offset presses. With a whopping 70 per cent market share, its presses are present in nearly all-major publication houses. With presses having speeds ranging from 35,000 – 55,000 copies per hour, it can meet their production needs efficiently. Its technical expertise and unrelenting thrust towards continuous quality improvement are its principal strengths. It owes its strong position as a supplier of printing presses to its technical competence.
Domestic customers in web offset segment include The Times of India, The Indian Express, The Statesman, Chitralekha, Malayala Manorama, Hind Samachar, Hindustan Times, Hindu, Sandesh and Mathrubhumi. In the sheet-fed category, MIL's clientele consists of Magna Graphics Pvt. Ltd, PS Press, S T Reddier & Sons, Herneggar Offset Druck (Austria), Benfoy Press (UK), 3E(USA), InterDruck (Belgium) and Physics Centre (Thailand).
During FY05, MIL registered 22% increased sales of Rs.248 cr. and recorded 77% higher net profit of Rs.28.4 cr. yielding an EPS of Rs.9.2 and paid a dividend of 100%. During Q1FY06, while sales jumped by 116% to Rs.86.7 cr., net profit skyrocketed by a whopping 428% to Rs.15 cr. During Q2FY06, while sales moved up by 15% to Rs.88 cr., net profit ballooned by 162% by to Rs.20.2 cr. MIL has already declared 60% interim dividend for FY06. In all, during H1FY06, sales increased by 51% to Rs.175 cr., whereas net profit jumped by 333% to Rs.35 cr. from Rs.10.5 cr. in the corresponding previous period.

In its efforts to meet the needs and demands of its customers, MIL has made rapid progress in the international market. Leading publishers from South America, Europe, Middle East , Asia and the CIS countries have all invested in MIL's presses. Its exports during FY05 stood at Rs.60 cr.
MIL is in sound financial health. Against its small equity capital of Rs.6 cr., reserves stand at Rs.60 cr., which gives the book value of the share of Rs.22 on its face value of Rs.2 per share and the debt-equity is 0.4:1. The value of its gross block is Rs.90 cr. MIL has incurred Rs.16.5 cr. towards capital expenditure consisting of building, office premises, plant and machinery and other miscellaneous fixed assets during FY05. This will continue in FY06 to help it improve, enhance and modernize both its plants. The promoters hold 58.2% in the equity capital; NRIs and institutions and bank holds 14.2% aggregate. leaving 19% with the investing public.
The explosive growth in the newspaper business over the past couple of years has led to a substantial scaling up of revenues and earnings for Manugraph. As the English and vernacular language papers are in the process of expanding their footprint, the demand for the company's products are likely to remain robust.
In the current year 2005-2006, demand for 4-page single width single circumference market, which constitutes 90 per cent of company's business continues to remain good. The continuous thrust on the export front has resulted in the establishment of new markets in Sweden, Netherlands and Indonesia and expansion of business in existing markets in CIS countries, Middle East and Latin America. Over and above, the company holds and maintains the major market share in India with the launch of several regional and English dailies who continue to bring out this 4-page market.
Based on its first half yearly results, MIL is all set to register an EPS of Rs.20 on its face value of Rs.2 per share. On a tiny equity of just Rs.6 cr., the reserves are expected to cross the Rs.110 cr., which may prompt the management to declare a handsome maiden bonus apart from a hefty dividend.