Ramsarup Industries - Rs.80

Incorporated in 1973, Ramsarup Industries Ltd (RIL) is the flagship company of the Kolkata based Ramsarup Group and manufactures and exports steel wires, galvanized wires, TMT bars and rods which are primarily used in the power, housing and infrastructure sector. Today, RIL is one of the largest black and galvanized steel wire producers and among the very few manufacturers in India to provide the whole range of TMT products under the Thermax technology. It is selling the TMT bars under the brand name of ‘Ramsarup TMT Bars’ and enjoys wide acceptability in the market both for its quality and competitive price. RIL has an enviable customer base that caters to almost all sectors. In the Power sector, which generates 40% of its revenues, the main customers are Power Grid Corporation, KEC, L&T, Tata Projects, Tata Power. In the housing and construction sector its main customers are L&T, Gammon India, Nuclear Power projects, Reliance Industries, PWD, WIPRO and NTPC Projects etc. Further, its customers also include the railways, roads and bridges projects, water management and defence. RIL has the following three manufacturing units:

Ramsarup Industrial Corporation
Situated at Kalyani, West Bengal it was originally established in 1966 as a partnership concern and was subsequently taken over by RIL to become its unit. Presently, it has an installed capacity to produce 1,13,000 MTA of steel wire and 60,000 MTA of galvanized wire. In future, it plans to produce low relaxation PC wire and electroplated wire of size 26swg to 32swg.

Ramsarup Bars and Rods
Situated at Shyamnagar, West Bengal RIL acquired the steel division of Nicco Corporation Ltd., a sick unit, in August 2002 and started operating it under the name and style of Ramsarup Bars & Rods. The unit is engaged in manufacturing Steel Bars, Wire Rods, Steel Wires (both Black and Galvanized) and TMT Bars. Last fiscal; it expanded the facilities to produce higher sizes in 20 mm to 40 mm diameter TMT (Thermo Mechanically Treated) Bars using the Thermax Cooling technology of Henningsdorfer Stahl Engineering Gmbh Germany. After the expansion, the unit’s capacities have increased to 87,000 MTPA of TMT Bars & Rods and 24,000 MTPA of Steel Wires and 12,000 MTPA of galvanized wires. Considering its extensive clientele, who also require structurals, RIL is setting up a structural mill with an installed capacity of 1,35,000 MTPA to produce medium structurals like angles, channels and beams at a cost of around Rs.70 cr. which are mainly used in the construction sector.

Ramsarup Vidyut
Set up very recently at Dhule, Maharashtra, it has embarked into the production of power by setting up windmill to generate 3.75MW of power annually. The company has entered into a long term power purchase agreement with the Maharashtra State Electricity Board business (MSEB) and is considering downstream integration into the electricity transmission and distribution business as the company is already producing steel wires that are required for power transmission and distribution.

Being one of the beneficiaries of the boom in infrastructure spending, the future prospects of RIL appear promising. For FY06, RIL is expected to clock a turnover of Rs.950 cr. and NP Rs.30 cr. which leads to an EPS of Rs.17 on its current equity of Rs.17.50 cr. For FY07, it can report an EPS of even Rs.25. Though it belongs to the metal sector, it deserves much higher discounting being a power / infrastructure ancillary company. As its IPO was priced at Rs.60, the downfall from hereon is very minimal. Investors are strongly recommended to buy at the current level with a price target of Rs.120 (50% returns) in 9~12 months.

Kovai Medical Centre - Rs.59.00

Incorporated in 1985 and promoted by Dr. N.G. Palaniswamy, Kovai Medical Centre and Hospital Ltd (KMCHL) is a Rs.50 cr., multi-disciplinary, super-speciality corporate hospital located on the Avanashi Road in the Coimbatore-Chennai highway. It is rated one of the best medical centres in the world equipped with the most modern equipments like CT scanner, Angiography equipment with DSA, Operating Microscope, Mammography, C-arm, Color Doppler etc. Super-speciality procedures like Coronary Bypass surgeries, Coronary Angioplasty, Stent Implantation, Laproscopic & Vascular Surgeries, Hip & Knee replacements, Kidney transplants and complex Neuro surgeries are regularly done at the hospital. KMCHL is recognized as one of the best Trauma care centres in the country and has a 24 hours Emergency Department with ambulance services, CT scan, a well-equipped operation theatre with C-arm, Monitoring equipment, 30 bed sophisticated Intensive care unit with well-organized physiotherapy and occupational therapy departments for rehabilitation.

Apart from the main hospital, it has two other full-fledged satellite medical centres - one in Coimbatore itself with 10 beds and the other at Erode with 50 beds. There are over 30 medical departments and 11 operation theatres at the hospital. Nearly 500 outpatients & inpatients are treated everyday with 25 major and minor surgeries performed daily. In order to cater to the increased patient in flow, KCMHL is expanding rapidly and its West Wing project at the main centre has been successfully completed. With this, its total bed capacity has increased substantially. A Neonatal ICU has also been established at the Erode facility. Last fiscal, the hospital added new medical equipments to the tune of Rs.1.2 cr., like the latest ADC Digitiser, Pulsar 3 Chip Camera, Neuro Microdrill, Pacemaker, Therapeutic Drug Analyser etc. to its armoury of medical equipments in order to deliver healthcare on international standards. It has plans to procure 64 slice cardiac CT, state-of-the-art monitoring equipment, Linear accelerator and a Gamma camera in the near future. KCMHL can boast of conducting around 413 Open Heart Surgeries last year with incredible success rate of 99%. Its Cardiology is widely acclaimed and continues to attract large number of patients from the neighbouring states.

Besides, medical tourism is growing phenomenally from a mere 5000 patients 5 years ago to 1,00,000 today and still rising. Being in the promising healthcare sector, KCMHL is estimated to end FY06 with total revenue of Rs.50 cr. and NP of Rs.6 cr. This may rise to Rs.70 cr. and Rs.7.50 cr. respectively for FY07. This works out to an EPS of Rs.5 and Rs.7 on its current equity of Rs.10.94 cr. As it is trading fairly cheap compared to its peer, the share price has the potential to appreciate 60% in 12~15 months.

STOCK WATCH

Belonging to Patodia Group, PBM Polytex (Code No: 514087) (Rs.32) is a leading producer of top of the line 100% combed cotton yarn using blends of Egyptian giza cotton etc. In FY05, it suffered a severe setback because of a five months illegal strike by the workers at its Borgaon unit. But in FY06, things are working fine and the company is back on track with Sales at Rs.83 cr. and NP at Rs.3.05 cr. for the nine months ending 31st Dec 2005. Hence for FY06, it can post an EPS of Rs.6. Having a book value of Rs.50, Cash EPS of Rs.12, 52 week high of Rs.45 and market cap of merely Rs.25 cr., this regular dividend paying company is trading reasonably cheap. Besides, the management has decided to dispose off its texturising and twisting unit at Silvassa which may trigger its share price.

From the Budget speech one can easily make out that the FM cares for farmers and as always the government’s focus is on agriculture. Increasing the farm credit limit to Rs.1,75,000 cr. and directing NABARD to give short term loans to farmers @ 7% with an upper limit of Rs.3,00,000, is all good news for Dhanuka Pesticides (Code No: 507717) (Rs.108) which has already corrected sharply from its recent high of Rs.163. For FY06, it is expected to clock sales of Rs.55 cr. and NP Rs.4 cr., which translate into EPS of Rs.20. Due to its tiny equity of Rs.1.98 cr., EPS for FY07 can shoot upto Rs.30 as well. With a dividend yield of 4% and a market cap of merely Rs.20 cr., the scrip has the potential to rise sharply in future. One of the best bets related to the agriculture sector.

Due to debt restructuring and one-time settlement with all institutions/banks, Cubex Tubings (48.00) turned around sharply in the last fiscal. Since then, it is on a high growth trajectory. It manufactures copper, copper alloy products and enamelled copper wires used by the core sector and other critical industries like power generation, shipbuilding, railways, telecommunications, defence and automobiles. Recently, it made a preferential allotment of 9,25,000 equity shares and 15,75,000 share warrants @ Rs.48 for expansion and modernisation to increase its production capacity from 2800 TPA to 5000 TPA. For FY06 ending June 2006, it is estimated to report sales of Rs.60 cr. and NP of Rs.5.50 cr. i.e. EPS of Rs.7 on its diluted equity of 7.70 cr. Only aggressive investors should take exposure as there is risk of further equity dilution upto Rs.10 cr. through the FCCB/ADR/GDR route.

Mayur Uniquoters Ltd. (Code No: 522249) (Rs.35) is engaged in the manufacture and export of PU/PVC made Synthetic leather. Being a highly capital intensive, technology intensive industry, there is hardly any quality manufacturer of PU in India. Last fiscal; the company installed a new coating line with a production capacity of 3.6 million metres per annum (MMPA) which has increased its overall production capacity by 60%. Recently, it has diversified into the growing home furnishing business and is developing a lot of products for the upper end market in upholstery and furnishing products. The company is also making rigorous efforts to develop the market for its leather products in the countries like South Africa, Dubai, Shri Lanka, Malaysia, West Africa, etc. For FY06, it is estimated to report an EPS of Rs.5 which may rise to Rs.6~7 in FY07.

Ahlcon Parenterals Ltd. (Code No: 524448) (Rs.66) manufactures life saving Intravenous Fluids and medical disposables by employing a highly sophisticated production process imported from Switzerland. Its product range includes Dextrose, Saline, Electrolytes, Amino Acids, Fat Emulsion, Blood Substitutes, Small Volume Injectables, Eye Drops etc. It is also diversifying to add more value added ophthalmic products and expand its existing Infusions and Anti- microbial solutions. Moreover, the company has already initiated the process of setting up a state-of-the-art Testing Facility and Formulation Development Lab equipped with the best infrastructure. For FY06, it is estimated to register total revenue of Rs.45 cr. with NP Rs.7 cr. which can lead to an EPS of Rs.10 on its current equity of 7.20 cr. It may even declare 25~30% dividend for FY06, which works to a dividend yield of 4%. With a net profit margin (NPM) of around 15%, this scrip deserves much better discounting.