A few dark horses

It's that time of the year when your wife says, 'Need to show you how much weight I lost at the waist', and you intone 'wow' because you have just seen another amazing quarterly in the newspaper. These have been some of my marital distracters:

Pasupati Acrylon: This acrylic fibre play was a long-standing disappointment. It appears the company has got its act in order. Proof: Its sequence of profit-making quarters, and the pleasantly surprising last quarter. It reported an Ebitda (earnings before interest, taxes, depreciation and amortisation) of Rs 22.9 crore, an amazing interest cover (because term loan is around Rs 10 crore only) for what is usually a capital-intensive business and a profit before tax (PBT) of Rs 18.9 crore. Market capitalisation marginally in excess of Rs 200 crore. In my small mind, it appears the margins will need to be sustained through prudent de-bottlenecking that prevents any interest build-up, while gradually improving the revenue run rate.

Saksoft: Credible Chennai-based information technology company, foscused on the digital transformation piece for its clients. It appears the company is transforming itself as well in the process. In the past quarter, it reported an Ebitda of Rs 10.1 crore and a PBT of Rs 8.9 crore. Hardly any interest or depreciation. The revenue, margins and profit numbers are higher than the 2015-16 annual average. I am a sucker for optimism; I think the company has got its growth piece going. Besides, not much to lose at market a cap of around Rs 230 crore either.

JHS Svendgaard: The company is a back-end partner for a number of fast-moving consumer goods (FMCG) companies which intend to leverage their brands but do not possess manufacturing facilities. JHS was a good story because it enjoyed the support of a multi-national giant but that story fell through. So, what you see on the JHS numbers are adjustments and write-offs, which tend to distract from the light at the end of the tunnel. The company reported Rs 25.6 crore of revenues in the past quarter, around Rs 2.8 crore of Ebitda and hardly any interest on the books. In an India of the Patanjalis, I would trust the company to deliver revenue traction in 2016-17; with this traction should come a moderate increase in margins. If that transpires, volume and value, there is a likelihood of every man and his cousin calling this an FMCG proxy two quarters from now.

Freshtrop Fruit: First, a disclaimer. This grape processing and exporting company is a seasonal play. Revenues are generally robust in the March and June quarters; if they haven't reported a loss in the September quarter and made reasonable money in the December quarter, you should cry Yippee in public. Here is my bullish fix on the company: Nearly Rs 60 crore of revenues in the last quarter and an Ebitda of Rs 5.7 crore. What I like about the company - change that to 'love' - is a mere Rs 36 lakh of interest in what is generally a heavy quarter, which means two things: Excellent terms of trade before the company has hit scale. Besides, remember the June quarter is usually the biggie.

If any of you make money on any of these counters, don't just send me a line asking 'What's your next tip?'

The author is a stock market writer, tracking corporate earnings and investor psychology to gauge where markets are not headed