STOCK WATCH

CCS Infotech (Code No: 532405)(Rs.18.55) is an Information Technology Solutions provider with expertise in Hardware Solutions, Software Development and Networking Services. Apart from being a Microsoft certified partner, this ISO 9001-2000 company also has Intel certification for servers workstations, Home PCs and laptops. It is operating through 12 branches, 50 channel partners and one overseas office in Singapore. Of late, the company has bagged some good overseas and domestic orders. For FY05, it reported sales of Rs.32 cr. with NP of Rs.2 cr. whereas for June’05 qtr., its sales tripled to Rs.11 cr. and NP stood at Rs.1.05 cr. reporting an EPS of Rs.1.1 on its current equity of Rs.9.16 cr. With an expected EPS of Rs.4 and current market cap of only Rs.18 cr., the share price can double in 6~9 months. Only aggressive investors should buy.

Navabharat Ferro Alloys (Code No: 513023) (Rs.77) is a undergoing a 200 cr. expansion whereby it plans to add another furnace with a capacity of 50,000 TPA. It is also setting up a 32 MW power plant in AP and 15 MW power plants in Orissa. In its sugar division, it has recently expanded its cane crushing capacity from 2500 to 3600 TCD and now intends to raise it to 4500 TCD first and further to 5000 TCD over the next two seasons. The co-genration capacity will also be increased to 9 from 5 MW. The company has already received the part payment under insurance claim and will get the final payment soon. Share price is expected to hit Rs.100 in a month or so and then to cross Rs.120 in the next 3~6 months.

Although the Sensex has hit an all time high above 8000, still well-managed companies like GNFC (Code No: 500670) (Rs.98.30) are available at 5~6 times their FY06 earnings. GNFC is India‘s largest producer of Formic Acid, Acetic Acid and Methanol. It’s also India's only producer of Glacial Acetic Acid through the cutting-edge Methanol route using British Petroleum Technology. Its also has the world's largest single stream fuel oil based Ammonia-urea plant. It reported excellent numbers for June’05 qtr. Sales increased by 18% to Rs.314 cr. whereas NP almost tripled to Rs.61 cr. For FY06, it can report an EPS Rs.18~20 on its current equity of Rs.146.50 cr. With a dividend yield of nearly 5%, it’s a good buy with short to medium term perspective.

Being in the T2T category, Aarti Drugs (Code No: 524348) (Rs.151) has not seen much action although the market has hit a new high. It’s a professionally run company with a strong strong presence in the anti-diarrhoea, anti-inflammatory therapeutic groups with products such as Tinidazole, Metronidazole, Nimesulide & Rofecoxib. It is expected to report strong numbers in coming quarters due to the sharp rise in the prices of its two major products viz Ciprofloxacin and Metronidazole. It has also bagged a huge export order of Rs.200 cr. for anti-fouling agent. Some months back it raised Rs.55 cr. through the FCCB route, which will be converted into equity shares at Rs.170 per share. With an expected EPS of Rs.16 even on its diluted equity, its share price is set to cross Rs.200 sooner than later. A strong buy.

In such a high market where everyone is short of ideas, Gujarat Carbon (Code No: 506457) (Rs.26.35), a Duncan Goenka group company has still not caught the analyst’s attention and its trading reasonably cheap. It manufactures Methyl Ethyl Ketone and Secondary Butyl Alcohol, which is used by oil refineries. Basically it’s a turnaround story as the company has successfully sourced an alternate raw material, which is cheaper and easily available. For FY06, it can report Sales of Rs.30 cr. and NP of Rs.6.50 cr., which means an EPS of more than Rs.5 on its current equity of Rs.12.40 cr. Scrip has the potential to touch Rs.50 once it comes out of T2T.

Although share price of Videocon Appliances (Code No: 500945) (Rs.36.30) has appreciated smartly in last few weeks still it is going cheap considering its fundamentals. Interestingly, all Videocon group companies are discounted richly on the bourses except Videocon Appliances, which is available at price to earning multiple of 5x. Due to huge reserves, its book value is around Rs.80 but its trading at more than 50% discount to book value. Against FY05 expected sales of Rs.1100 cr. and NP of Rs.26.50 cr., its market cap is merely Rs.120 cr. A strong re-rating upto Rs.75 can be expected and long term investors are advised to keep accumulating this scrip at declines.