Friday, June 5, 2009

Tyche Industries : Unknown & Unloved - but for how long ?

Company : Tyche Industries Ltd

BSE Code : 532384 ( CMP : Rs 17.15, closing price on BSE - 3rd June, 2009)

Website :

Business : Contract Research / Manufacturing of API's, Intermediates, Nutraceuticals, and Fine & Specialty Chemicals

Company has :

  • 5 manufacturing units across 2 sites in A.P – Kakinada & Tanuku
  • Kakinada facilty in the process of obtaining USFDA approval
  • Setting up new project in East Godavari., A.P.
  • Got ISO 9001:2000 certification

Positives :

  • Zero Debt Company
  • Paying dividend since last 4 years
  • Showing steadily increasing trend in Sales / profits

Also :
A company Tyche Chem has taken 14.88 % in market purchases in Dec 08 qtr. The name suggests that they are associated with Tyche Industries, though not listed as a promoter entity. The inference from this market purchase seems obvious – that there is value in the listed company.

Tyche Industries - Financials
Equity :
9.84 Cr
Book Value : 20.6
Year Ending : 2005 - 2006 - 2007 - 2008 - 2009 (9Mths)

Sales (Rs Cr) : 5.4 - 19.3 - 27.2 - 29.2 - 27.1

NP (Rs Cr) : 0.5 - 3.6 - 4.5 - 3.4 - 4.7

EPS (Rs) : 0.51 - 3.68 - 4.36 - 3.35 - 4.59

Dividend : 5% - 10% - 15% - 5% - n.a.

Negatives :

  • Company was originally in the Software business (as Siris Soft Ltd) but shifted to current business in 2003-04. [ Note : The company is not listed as a part of the Siris Group of companies whose flagship company Siris Ltd is under BIFR. However the promoters are related - i beleive the Tyche promoter is the son of the Siris promoter.]
  • Like with most small companies, there appears to be no proper compliance set-up , else the acquisition of 14.88 % stake by Tyche Chem should have been formally intimated to the stock exchanges when the 5% & 10% stake was triggered.
  • Annual Reports of the company do not give sufficient details regarding the future plans of the company, nor the SWOT analysis

Conclusions & Recommendation :

The company looks worthy of analysis & research by investors. It's dividend paying track record (likely to be continued this year) & zero-debt status gives comfort. However, as with most small-caps, enough information is not freely available & so investors are advised to do their own strict due diligence.

Disclaimer/Disclosure : At the time of writing this article the author has a position in the stock covered by this report. The author or any of his dependent family members may make purchases or sales of the securities mentioned in the report while the report is in circulation. Readers/recipients of this report are strongly advised to do their strict due diligence, and should be aware that the value of investments can go down as well as up. The author shall not be liable for any direct or indirect losses arising from the use of the contents of this report, and readers are therefore cautioned to use the information contained herein at their own risk. In fact, readers would do well to seek the advice of a qualified independent advisor. The author certifies that all of the views expressed in this report accurately reflect his personal views about the subject company at the time of writing this report. Feedback / brickbats may be hurled at the author at .

Brief Update On Recommended Scrips

Just a brief update of the stocks recommended on this blog so far, from the author's point of view. Readers are advised to do their own due diligence.

Almondz Global Securities :
Recommended initially at approx Rs 25 on some investor forums, then at approx Rs 62 in the form of a research note & then at approx Rs 77 on the opening of this blog in Oct 2007, Almondz now quotes at Rs 36.50 on the BSE.
Almondz continues to do well in it's core operations of distribution of financial products , debt market operations & debt syndication.
However the equity broking division which was to be the growth driver was hugely impacted by the events of Jan 2008 & the subsequent bear market thereafter. To conserve cash, Almondz curtailed it's expansion plans in equity broking, and even closed down a few branches. Even so, losses from this division have impacted the overall financial performance.

UT Ltd
This company, a leading manufacturer of hydraulic cylinders & systems for earth moving equipment, was recommended at Rs 43 in Oct 2007.
However despite the excellent prospects of it's industry, the company was not able to seize the opportunity, and has reported insipid numbers ever since. Poor top-level management & lethargy in bringing in much needed funds appear to be the main reasons.
Stock quotes at Rs 13 today.

Zen Technologies
Recommended at Rs 135 in Jan 2008, this company operates primarily in the niche segment of Simulations Systems for Defence industry.
Quoting at Rs 165 currently, the company continues to do well, and with the enormous potential for increasing business from the Indian defence forces, as well as export potential, the future continues to be very bright.

Camson Biotechnologies
This author had profiled this stock in July 2008 with the recommendation to buy at Rs 55 & lower , for a 3-5 year hold. Stock quotes at Rs 41 currently.
Given the humungous opportunity in the bio-fertilizer, bio-pesticide & genetic seeds industry, especially with the increasing focus on organic farming & chemical-free food, both in India & abroad, what this company only needs now is a better marketing focus & innovative ideas to ensure that it does not miss the speeding jet .

Saag RR Infra
Recommended at Rs 20 in Nov 2008, this E&P services player quotes at Rs 26 currently.
With the Rs 288 Cr ONGC order for Workover Rig Services set to start in the near future, the company looks to be on the growth path, even though it’s construction business (which going forward will not be the focus area) may continue to decline.
The company has also faced a cash crunch recently, and was facing difficulty in funding it’s working capital needs to execute the ONGC order, but with liquidity now easing, this problem should get resolved going forward.
Though the company has not shared any details regarding the profitability of the ONGC order, it is expected that the ONGC order will be a turning point in the prospects & profitability of the company.

This rice miller was recommended in Jan 2009 for picking up in the Rs 50-75 range. It currently quotes at Rs 113.
Despite higher interest burden due to higher working capital requirements (as a consequence of bumper rice crop & the storage requirements – basmati rice needs proper ageing) the prospects continue to look very bright for the company.