National Oxygen Ltd: Searching for Value in Indian Equities

National Oxygen Limited

Introduction:

Stock Snapshot:

As of Oct 15’ 2012, the stock traded at INR 42.10 representing a total market capitalization of INR 131.2 million. Over the last year the stock has traded at a narrow range of INR 42 to INR 44.6. The stock has been trading at a P/E ratio of 16.67, a P/B ratio of 0.76 and a P/S ratio of 0.62.

Competitor Analysis:

Mapro Industries Ltd manufactures various types of industrial gases. The Company’s products include industrial oxygen, dissolved acetylene, and compresses air. As of Oct 15’ 2012, the Company’s stock traded at INR 12.9 representing a total market capitalization of INR 14.03 million. On price multiple basis, the stock has been trading at a P/E ratio of 16.97 and a P/S ratio of 13.13.

Bhagawati Gas Ltd produces, distributes, and markets industrial gases. The Company manufactures oxygen, nitrogen, argon and other gases. As of Oct 15’ 2012 the stock traded at INR 1.64 representing total market capitalization of INR 27.46 million. On price multiple basis, the stock has been trading at a P/B ratio of 0.11 and a P/S ratio of 0.84

Financial Analysis:

Revenue:

For quarter ending 30 June 2012, the Company registered total revenue of INR 59.7 million as compared to 57.8 million for the corresponding period last year; resulting in a YoY increase of 3.28%.

Expenditures:

For quarter ending 30^th June 2012, the Company recorded total operating expense of INR 49.1 million as compared to 50.4 million during the corresponding period last year.

Earnings Analysis:

The net profit for quarter ending 30^th June’ 2012 was recorded at INR 6.9 million as compared to 2.6 million during the corresponding period last year; representing a YoY increase of 265%. Consequently, the Company recorded earnings per share for the most recent quarter of INR 2.23 as compared to earnings per share of INR 0.84 achieved during the corresponding period last year.

Factors to Watch Out:

• Strong presence in the industry with well established business relationships.
• Improving profitability performance.