STOCK WATCH

Ahlcon Parenterals Ltd. (Code: 524448) (Rs.60) is engaged in the manufacturer of life saving intravenous fluids and medical disposals including Dextrose, Saline, Electrolytes, Amino Acids, Fat Emulsion, Blood Substitutes, Small Volume Injectables, Eye Drops etc. For September’06 quarter, its sales improved by 20% to Rs.18.50 cr. and net profit spurted by 45% to Rs.2.80 cr. posting an EPS of Rs.3.80 for the quarter. The company is in the process for setting up a new project to double its production capacities by 2007-08. Its state-of-the-art testing facility and formulation development lab has become operational and many new formulations are likely to be added in the near future. Exports are expected to shoot up as registrations of products in more than 15 countries are in progress in both regulated and unregulated markets. For FY07, it can report top-line of Rs.55 cr. and net profit of Rs.9 cr. i.e. EPS of Rs.12 on its equity of Rs.7.20 cr. A good bet for the medium to long-term.

In the last few years, Micro Technologies (Code: 532494) (Rs.209.45) has developed a wide range of security and IT products leveraging over various technology platforms such as embedded software, web-based and client server applications. Some of its focus areas comprise Security, E-commerce, Telecommunications, Wireless Technology, GIS, disaster management etc. For the September quarter, it reported very encouraging numbers with sales increasing by 70% to Rs.26 cr. while the whereas net profit doubled to Rs.7.40 cr. Recently, it flagged off its first consignment of Home Security System ‘Micro HSS’ to UAE and also won the got approval of the from Chief Controller of Explosives for its Vehicle Security Product which will boost its top-line in coming quarters. For the full year 2007, it may report total revenue of Rs.100 cr. and PAT of Rs.25 cr. This works out to an EPS of Rs.24 on its current equity of Rs.10.50 cr. A company operating in a niche segment surely deserves much better valuation and its share price can easily appreciate 50% from the current level. Patience is the key.

Most engineering and capital goods companies are discounted at rich valuations of over 20 times. But International Combustion (Code: 505737) (Rs.347.15) is available at a single digit P/E ratio. It reported encouraging numbers for the September’06 quarter. Sales grew by 30% to Rs.20 cr. and net profit increased by 65% to Rs.2.20 cr. To meet the growing demand, an expansion programme for augmenting the manufacturing capacity of the Gear Box/Geared Motor Division has been initiated. It is also upgrading the manufacturing capacity of the Heavy Engineering Division. Under licence from Ecutec, Spain, it has started manufacturing Microfine Classifiers, which has a strong market potential and is expected to make a major contribution in the future years. For FY07, it may clock a turnover of Rs.90 cr. with and net profit of Rs.8.50¬9.00 cr., which will result in an EPS of Rs.35 on its tiny equity of Rs.2.50 cr. With huge reserves of Rs.28 cr. on such a small equity, the scrip is ripe for a bonus as well.

In the textile sector, Winsome Textiles (Code: 514470) (Rs.48.25) has declared mind-blowing numbers for the September’06 quarter. Its sales grew by 25% to Rs.37 cr. but net profit skyrocketed by 250% to Rs.3.20 cr. reporting an EPS of Rs.5.40 for the quarter. For the first half, it has already clocked sales of Rs.71 cr. and the net profit of Rs.6 cr. is a substantially more than full year FY06 profit. This works out to an EPS of Rs.10 for 6 months. For future growth, the company has undertaken a modernisation cum expansion project to add 13000 spindles, 10 tonnes/day dyeing, 2.50 MW Hydro Power Plant along with complete replacement of old ring frames at a capex of Rs.117 cr. Hence, it may end FY07 with sales of Rs.150 cr. and net profit of Rs.8 cr. i.e. EPS of Rs.14 on its small equity of Rs.5.87 cr. With cash EPS of Rs.24 and book value of Rs.55, this scrip is available damn cheap and has the potential to rise 50% even from the current level. Just buy and hold.

Peptides are aggressively emerging as a chemical compound potential area around which biotechnological and pharmaceutical research will be centered and the number of peptide drugs in advanced clinical trials has increased quite substantially with application ranging from analgesics to anti-cancer drugs. Jupiter Bioscience (Code: 524826) (Rs.111.90) being an integrated manufacturer of peptides is in a unique position to capitalize the demand for peptide raw materials as well as finished products. For September’06 quarter, the company has announced satisfactory results with single digit growth in sales and net profit to Rs.20 cr. and Rs.5 cr. respectively. To fund the company’s growth plans, the promoters are infusing their own money to the tune of Rs.40 cr. by subscribing to 27.50 lakh warrants to be converted into equity shares at Rs.146 per share, which establishes the promoters confidence in the company’s future prospects. This scrip is a pure multi-bagger if held for 3 years at least.