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Dividend paying stock picks
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s been able to pass on the increase in costs and a large part of the loans given are on floating basis.
While NIMs are expected to remain at current levels, the company’s loan book and disbursals are likely to grow by 25 per cent annually in the next two years; profits growth seen between 20-25 per cent.
The company’s foray into distribution of third party products through its subsidiary should add to its income and profits. The stock is up 30 per cent in one week (after announcement of Q1 results) to Rs 306. Investors may hence, like to wait for some correction before buying.
Varun Shipping
Varun Shipping has been paying dividend consistently Its annualized dividend has gone up from 15 per cent in FY01 to 50 per cent in FY08. Post stockmarket correction, its stock is attractively valued at just 4 times its estimated FY09 earnings and offers a dividend yield of 7.8 per cent.
The company owns a well diversified fleet of 21 vessels, which includes 12 LPG carriers, 3 double hull Aframax crude tankers, a product tanker and 5 AHTS vessels.
Since Varun is a leading player in LPG transportation accounting for 70 per cent of all PSU-controlled incoming LPG cargoes, it will benefit from the growing investments in the oil and gas sector. Also, Varun will stand to gain on the growing demand for the energy in India and its dependence on the imports.
Not only volumes, rising freight rates on account of higher demand and shortage of vessels should lead to higher margins. A part of this is also visible in its PBIDT margins, which have gone up from 55.7 per cent in FY07 to 62.12 per cent in FY08. Besides, it entry into the growing offshore segment, where the demand and the realisations are relatively high, should further help increase revenue and margins.
It has recently taken delivery of a third Anchor Handling and Towing Supply Vessel (AHTS). This is a specialised vessel which is used for deep sea oil exploration activity.
As a result of its efforts, contribution of offshore revenues to total revenues has gone up from mere 3.55 per cent (Rs 23.9 crore) in FY07 to 19.46 per cent (Rs 165.5 crore) in FY08. Apart from good dividend yield, the stock can deliver about 20-25 per cent in the next one year.
TN Newsprint
Tamilnadu Newsprint & Papers, one of the leading integrated players in the paper industry, offers a dividend yield of 5 per cent and trades at a reasonable 4.8 times its FY09 estimated earnings.
The company has been growing consistently in terms of revenue and cash profits. This is primarily on account of growing demand for paper. The growing economy and particularly the growth in print media have been the prime reasons for the higher paper demand.
Driven by higher demand and the benefits of its backward integration, the company has been able to sustain margins at about 26 per cent (among the best in the industry) even as input prices have been on the rise.
Going forward, the benefits will also accrue on account of ongoing capacity expansions, whereby the company is increasing its pulp (raw material) production capacities from 1 |
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