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Hidden Gem - Buy Orient Carbon @118

As a investor, one should dig for value stocks which are not recognised by any of the Brokers. Once it does recognition, the price will fly like rocket. I will be posting many number of such calls.

1. Oriental Carbon & Chemicals Ltd

Buy this stock around 118 and a short Term Target of 135.

Stock Summary

BSE NSE As on : 27 Apr 11 | 02:47 PM
Open (Rs) : 114.00
Days High / Low (Rs) : 121.90 / 114.00
MarketCap (Rs cr) : 123
P/E : 3.14
EPS : 35.58
52-Week High (Rs) : 161.00 (15 Jul 10)
52-Week Low (Rs) : 88.50 (25 May 10)
Volume (No of shares) : 27,337
BID Price / Qty : 119.05 / 6
ASK Price / Qty : 120.45 / 5

Key Financials

(Rs cr) Dec 2010 Dec 2009 YOY
Operating Income 42.51 32.34 31.45
Total Expenses 29.04 21.57 34.63
Operating Profit 13.47 10.77 25.07
Other Income 0.19 0.46 -58.70
PBDIT 13.66 11.23 21.64
PBT 10.50 9.60 9.38
Adjusted Net Profit 9.39 7.46 25.87

Shareholding Pattern

Promoters 56.13 %
Mutual Funds / UTI 0.06 %
FI/Bank 0.99 %
Insurance 10.21 %
Others 0.00 %
Govt 0.00 %
FII 0.00 %
Non-Institutions 32.62 %
Depository Receipts 0.00 %
Total 100.00 %

Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06
Peer share ratios
Adjusted EPS (Rs) 29.04 6.76 4.86 3.60 4.43
Adjusted cash EPS (Rs) 33.60 11.11 9.35 8.37 8.30
Reported EPS (Rs) 28.61 7.41 1.65 3.16 4.19
Reported cash EPS (Rs) 33.16 11.75 6.14 7.93 8.06
Dividend per share 4.00 1.50 0.50 1.00 1.00
Operating profit per share (Rs) 39.78 14.72 13.11 11.72 10.84
Book value (excl rev res) per share (Rs) 88.70 64.76 60.36 61.40 59.41
Book value (incl rev res) per share (Rs.) 90.11 66.26 61.96 63.13 61.16
Net operating income per share (Rs) 123.23 118.96 92.78 70.38 59.05
Free reserves per share (Rs) 61.83 37.89 32.71 32.54 30.54
Profitability ratios
Operating margin (%) 32.28 12.37 14.12 16.64 18.34
Gross profit margin (%) 28.58 8.72 9.29 9.86 11.79
Net profit margin (%) 23.06 6.19 1.77 4.48 7.05
Adjusted cash margin (%) 27.07 9.28 10.02 11.88 13.97
Adjusted return on net worth (%) 32.74 10.44 8.05 5.85 7.45
Reported return on net worth (%) 32.25 11.43 2.73 5.14 7.04
Return on long term funds (%) 35.87 14.76 12.79 8.87 8.67
Leverage ratios
Long term debt / Equity 0.13 0.15 0.17 0.28 0.41
Total debt/equity 0.20 0.33 0.43 0.47 0.54
Owners fund as % of total source 83.05 74.72 69.79 67.99 64.81
Fixed assets turnover ratio 1.12 1.27 0.96 0.69 0.58
Liquidity ratios
Current ratio 2.83 2.65 2.28 2.63 2.75
Current ratio (inc. st loans) 1.74 1.20 1.02 1.19 1.43
Quick ratio 2.17 1.73 1.48 1.75 1.99
Inventory turnover ratio 12.50 8.92 6.28 6.05 7.00
Payout ratios
Dividend payout ratio (net profit) 16.33 23.69 35.41 37.02 27.22
Dividend payout ratio (cash profit) 14.09 14.93 9.52 14.74 14.15
Earning retention ratio 83.91 74.05 87.98 67.48 74.26
Cash earnings retention ratio 86.09 84.20 93.75 86.03 86.26
Coverage ratios
Adjusted cash flow time total debt 0.53 1.97 2.79 3.45 3.89
Financial charges coverage ratio 17.30 4.04 4.07 4.48 5.85
Fin. charges cov.ratio (post tax) 15.12 4.08 2.84 4.01 5.23
Component ratios
Material cost component (% earnings) 23.58 49.53 37.52 34.50 36.66
Selling cost Component 9.85 7.55 9.78 10.76 9.56
Exports as percent of total sales 60.35 54.99 50.84 55.12 53.56
Import comp. in raw mat. consumed 23.90 36.45 10.47 8.27 21.63
Long term assets / total Assets 0.55 0.51 0.49 0.55 0.58
Bonus component in equity capital (%) 7.80 7.80 8.21 8.77 8.77

Intoduction to C#

Introduction

Microsoft .NET is one of the most powerful technologies available today for developing robust Windows and Web applications. It consists of several programming languages like C#, Visual Basic .NET, Visual C++ .NET, Visual J# .NET and frameworks like ASP.NET. The Microsoft .NET Platform comprises a number of key components including the following:

• .NET Framework • .NET Compact Framework for smart devices like Pocket PC and Mobiles • Visual Studio .NET • Microsoft Office 2003 System • XML Web services • Enterprise Servers like Windows Server 2003

.NET Framework Process

Microsoft's .NET Framework is comprised of two main components - the Common Language Runtime (CLR) and the .NET Framework class libraries.

Common Language Runtime

Common Language Runtime is also called CLR which provides a universal execution engine for developer’s code. It generates SOAP(Simple Object Access Protocol) when it makes remote procedure calls. CLR is independent and is provided as a part of the .NET Framework. The main features of CLR are as follows:

1. Automatic Memory Management 2. Thread Management 3. Code Compilation & Execution 4. Code Verification 5. High level of security 6. Remoting 7. Structured Exception Handling 8. Interoperability between Managed and Unmanaged code. 9. Integration with Microsoft Office System 10. Automatic Garbage Collector

All .NET applications are compiled into Microsoft Intermediate Language code (MSIL). When it executed on the CLR, MSIL is converted into native machine code specific to the operating platform. This process is done by a Just-In Time (JIT) compiler. The code executed by the CLR is called as Managed Code.

This code is type safe and thoroughly checked by the CLR before being deployed. The .NET runtime also provides a facility to incorporate existing COM components and DLL's into a .NET application. Code that is not controlled by the CLR is called Unmanaged Code.

The .NET Framework is further comprised of Common Type System (CTS) and Common Language Specification (CLS). The CTS defines the common data types used by .NET programming languages.

The CTS tells you how to represent characters and numbers in a program. The CLS represents the guidelines defined by for the .NET Framework. These specifications are normally used by the compiler developers and are available for all languages, which target the .NET Framework.

Another core component of Microsoft’s .NET Framework is its built-in powerful class libraries. It is an object-oriented collection of reusable classes or types that you can use to develop applications such as traditional command line, Windows, and Web applications. It contains around 3400 classes, classified logically into so-called Namespaces.

.NET Framework Class Libraries

These class libraries works with any language under the common language runtime environment. It includes Visual Studio.NET, C-Sharp. Therefore if you are familiar with one .NET language then you can easily migrate to other .NET Languages. The figure given below shows the .NET Framework hierarchy.

Note:

1. All namespaces should have to be called in your Program by applying the keyword using. For example if your program needs to call System namespace, then it should be applied in the program as using System.

2. Classes cannot be called along with the using directive.

3. The using directive applies only to namespaces, just like importing packages in Java. Hence the following code will result in compilation error, using System.Console.

However you can create an alias like the following:

using mysys = System.Console. Then you have to apply the alias in your program as follows mysys.writeLine ("Hello C#");

Common Language Specification (CLS)

It is a set of rules that a language compiler must adhere to in order to create .NET Applications that run in the CLR. If you are going to create a compiler for .NET, you have to adhere to the rules enumerated in the common language specification and this enables us to create a club of CLS compliant languages.

Each such compiler will have the following features:

(a) Complete access to .NET Framework hierarchy. (b) High level of interoperability with other compliant languages like Visual Basic, NET etc. For example a Visual Basic class can inherit from a C# Class.

Design goals and principal features

Microsoft .NET Framework was designed with several intentions:

• Interoperability - Because interaction between new and older applications is commonly required, the .NET Framework provides means to access functionality that is implemented in programs that execute outside the .NET environment.

Access to COM components is provided in the System.Runtime.InteropServices and System.EnterpriseServices namespaces of the framework, and access to other functionality is provided using the P/Invoke feature.

• Common Runtime Engine - Programming languages on the .NET Framework compile into an intermediate language known as the Common Intermediate Language, or CIL (formerly known as Microsoft Intermediate Language, or MSIL).

In Microsoft's implementation, this intermediate language is not interpreted, but rather compiled in a manner known as just-in-time compilation (JIT) into native code. The combination of these concepts is called the Common Language Infrastructure (CLI), a specification; Microsoft's implementation of the CLI is known as the Common Language Runtime (CLR).

• Language Independence - The .NET Framework introduces a Common Type System, or CTS. The CTS specification defines all possible datatypes and programming constructs supported by the CLR and how they may or may not interact with each other. Because of this feature, the .NET Framework supports development in multiple programming languages. This is discussed in more detail in Microsoft .NET Languages.

• Base Class Library - The Base Class Library (BCL), part of the Framework Class Library (FCL), is a library of types available to all languages using the .NET Framework. The BCL provides classes which encapsulate a number of common functions, including file reading and writing, graphic rendering, database interaction and XML document manipulation.

• Simplified Deployment - Installation of computer software must be carefully managed to ensure that it does not interfere with previously installed software. The .NET framework includes design features and tools that help address these requirements.

• Security - .NET allows for code to be run with different trust levels without the use of a separate sandbox.

A design goal of the .NET Framework was to support platform independence. That is, a program written to use the framework should run without change on any type of computer for which the framework is implemented.

However, Microsoft has only implemented the full .NET framework on the Windows operating system. Microsoft and others have implemented portions of the framework on non-Windows systems, but to date these implementations are neither complete nor widely used, so full cross-platform support has not been achieved.

.NET Framework Architecture

Visual overview of the Common Language Infrastructure (CLI)

Common Language Infrastructure (CLI)

The important component of the .NET Framework lies within the Common Language Infrastructure, or CLI. The purpose of the CLI is to provide a language-agnostic platform for application development and execution, including, but not limited to, components for exception handling, garbage collection, security, and interoperability. Microsoft's implementation of the CLI is called the Common Language Runtime, or CLR. The CLR is composed of four primary parts:

• Common Type System (CTS) • Common Language Specification (CLS) • Just-In-Time Compiler (JIT) • Virtual Execution System (VES)

Assemblies

The intermediate CIL code is housed in .NET assemblies, which for the Windows implementation means a Portable Executable (PE) file (EXE or DLL). Assemblies are the .NET unit of deployment, versioning and security.

The assembly consists of one or more files, but one of these must contain the manifest, which has the metadata for the assembly. The complete name of an assembly contains its simple text name, version number, culture and public key token; it must contain the name, but the others are optional.

The public key token is generated when the assembly is created, and is a value that uniquely represents the name and contents of all the assembly files, and a private key known only to the creator of the assembly. Two assemblies with the same public key token are guaranteed to be identical. If an assembly is tampered with (for example, by hackers) the public key can be used to detect the tampering.

Metadata

All CIL (Common Intermediate Language) is Self-Describing through .NET metadata. The CLR checks on metadata to ensure that the correct method is called. Metadata is usually generated by language compilers but developers can create their own metadata through custom attributes. Metadata also contain all the information about assembly.

The Base Class Library, sometimes incorrectly referred to as the Framework Class Library (FCL) (which is a superset including the Microsoft.* namespaces), is a library of classes available to all languages using the .NET Framework.

The BCL provides classes which encapsulate a number of common functions such as file reading and writing, graphic rendering, database interaction, XML document manipulation, and so forth. The BCL is much larger than other libraries, but has much more functionality in one package.

Security

.NET has its own security mechanism, with two general features: Code Access Security (CAS), and validation and verification. Code Access Security is based on evidence that is associated with a specific assembly. Typically the evidence is the source of the assembly (whether it is installed on the local machine, or has been downloaded from the intranet or Internet).

Code Access Security uses evidence to determine the permissions granted to the code. Other code can demand that calling code is granted a specified permission. The demand causes the CLR to perform a call stack walk: every assembly of each method in the call stack is checked for the required permission and if any assembly is not granted the permission then a security exception is thrown.

When an assembly is loaded the CLR performs various tests. Two such tests are validation and verification. During validation the CLR checks that the assembly contains valid metadata and CIL, and it checks that the internal tables are correct. Verification is not so exact.

The verification mechanism checks to see if the code does anything that is 'unsafe'. The algorithm used is quite conservative and hence sometimes code that is 'safe' is not verified. Unsafe code will only be executed if the assembly has the 'skip verification' permission, which generally means code that is installed on the local machine.