Aro Granite Inds - Rs.111.00

Incorporated in 1989, Aro Granite Industries Ltd (AGIL) is one of the largest manufacturers and exporters of modular granite tiles (polished and flamed) and slabs. In fact more than 5% of India’s total export of granite products are made by AGIL. The company has won CAPEXIL’s ‘Certificate of Merit’ award for three consecutive years and ‘Special Export Award’ for five years. It has access to rich natural stone deposits that enable it to provide clients with rare and exclusive colours. The marketing network of AGIL spans the globe and is currently meeting the granite needs of USA, Canada, Europe, Russia, Japan, Austalia, New Zealand, South Africa etc. Although exports account for over 95% of sales, there is increase in demand in the domestic market too with the emergence of multiplexes and large shopping malls and the boom in housing. Most airport projects use granite as the flooring material, which augurs well for the company.

It has two manufacturing units at Hosur in Tamil Nadu with an installed capacity of 180,000 sq. mt. of tiles and 295,000 sq. mt. of slabs. It is among the few companies having resining facility and the plants are equipped with the most sophisticated environment friendly granite processing machinery line from Italy. The strategic & geographical location of the plant ensures close proximity and direct access to quarries in South India, which are known for the finest and widest range of granites. Besides, to overcome the shortage of rough stones, it also sources its raw material from few other countries such as Saudi Arabia, Norway and Finland. Considering the growing international demand for granite tiles & slabs and the bulging order book position, AGIL is increasing the existing production capacity of both tiles and slabs by 360,000 sq. mt. and 95,000 sq. mt. respectively. The expansion is near completion thereby taking its capacity to 5,40,000 sq. mt. of tiles and 3,90,000 sq. mt. of slab. The total outlay for the expansion was about Rs.34 cr. funded by debt of Rs.24 cr. from ICICI Bank Ltd. and the balance from internal accruals.

In March 2006, Mr. Prem Arora, co-promoter and co-founder of the company exited this business and AGIL is now led by Mr. Sunil Arora only. Interestingly, Pearl Mineral Pvt. Ltd. a key supplier of rough granite blocks to the company, has taken about 14% stake, which ensures consistent and continuous supply of quality raw material. However, with the government support, the Indian Granite Industry is going to become the hub for sourcing world requirements. For H1FY07, sales increased by 45% to Rs.53.50 cr. and net profit tripled to Rs.8.50 cr. registering a half yearly EPS of Rs.12. For the full year FY07, it may clock a turnover of Rs.110 cr. and PAT of Rs.15 cr. i.e. EPS of Rs.21 on its equity of Rs.7 cr. For FY08 it can register an EPS of more than Rs.35. That means the scrip is trading at a P/E of merely 3 times against its FY08 earnings. Hence investors are advised to accumulate this scrip at sharp declines to double their money in 15 months.

RS Software - Rs.88.00

Established in 1991, RS Software India Ltd. (RSS) is a leader in providing quality software services and consulting to global players in the electronic payments space. Its bandwidth of offerings covers all segments from card associations to processors, acquirers & issuers, ISOs, all the way down to the merchants who manage POS terminals at retail outlets. Since inception, the company has acquired extensive understanding of the credit and debit card domains and is engaged in building tools, frameworks and customizable industry components for use in payment systems applications for smart cards, payment gateways and mobile-based technologies. It offers a gamut of services that include Transaction Processing, Dispute Resolution, Risk Mitigation and Data Analytics. In the hi-tech space, the company is creating Biometric offerings for securing financial transactions through fingerprint identification and is working towards developing frameworks that include multi-modal biometrics for solutions in areas that require high degree of security. It also has substantive expertise in Embedded & Hi-tech Systems while its technology bandwidth spans across mainframes, mid-range, client-server, systems software, web technologies and ERP.

Operating out of the Salt Lake Electronics Complex in Kolkata and having offices in UK and USA, RSS is amongst the first companies to receive the ISO 9001: 2000 certification and CMM Level 4 and P-CMM level 3 assessments in the year 2000. It is one of the first companies to bring the IBM Mainframe architecture to India in 1991 and the fiftieth company to receive the BS7799 Certification in 2005. Its clients include high profile global players in the Payment Cards industry, Insurance, Manufacturing and in the Retail/Logistics sector. However its top client, VISA, contributes about 60% of the revenues with 90% of the revenues coming from its top 5 clients. The offshore/onsite mix is around 40/60 while the revenue mix is in the ratio of Maintenance-31%, Development–21%, Testing-30% and Consulting-18%. Apart from the UK and US, the company is working towards expanding its operations to Asia Pacific and Far East countries also. For future growth, the company is expanding aggressively to set up a new infrastructure of 60,000 sq. ft. in Kolkata, which would be completed by FY08. To complement this, it is planning to increase the headcount to 600 employees from 500 currently and further to 850 by FY08.

To fund its expansion and repay some of its high cost borrowing, RSS recently raised approx Rs.16 cr. through a Rights issue at Rs.65 per share. In the last couple of years, the company has financially turned around strongly and has transformed itself from a plain vanilla software service company to a specialist in the niche payment system domain. For H1FY07, while its topline improved by 15% to Rs.53 cr., its bottomline doubled to Rs.4.40 cr. due to better margins and lower depreciation. For the full year FY07, the company is expected to clock total revenue of Rs.115 cr. with PAT of Rs.9 cr., which translates into EPS of Rs.11 on its fully expanded and diluted equity of approx Rs.8.40 cr. For FY08, its EPS can shoot up to Rs.16. Hence investors are strongly recommended to buy at current levels with a price target of Rs.130 in 9-12 months.

STOCK WATCH

Hazoor Multi Project Ltd. (Code:532467) (Rs.18) has once again declared good results for Q1FY07 i.e. Nov.’06 quarter. Sales grew by 15% to Rs.5.40 cr. but net profit increased by 25% to Rs.1.60 cr. maintaining its OPM of 38%. It has a huge property in Lonavala near Amby Valley, on which it has flagged off an Rs.80 cr. highly luxurious residential project meant for the elite. It has also acquired a residential project admeasuring 1 lakh square feet in Pune city and is further looking for more land to develop. Hence, real estate development will become the core activity of the company. For the year ending 30th Aug.’07, it may report a topline of Rs.35 cr. with net profit of Rs.8 cr., which works out to an EPS of Rs.4 on its fully expanded equity of Rs.8.60 cr. having face value of Rs.4 per share. In the near future the company may raise capital through the FCCB/ADR route, which could lead to a re-rating of the company. It is also considering to list its shares on NSE, which will improve its liquidity going forward. At a reasonable discounting by 8 times the scrip has the potential to cross Rs.30 in 9-12 months.

Alufluoride Ltd. (Code:524634) (Rs.21) is a reputed manufacturer and exporter of aluminium fluoride, which is used as flux in reducing the melting point of Alumina for aluminium production. Recently, the company succeeded in sourcing an alternate supplier for Hydrofluosilicic acid for conversion on ad-hoc basis and is now working at higher capacity utilization. Although its sales remained flat at Rs.4.70 cr. for Dec.’06 quarter the net profit zoomed up to Rs.0.98 cr. compared to Rs.0.04 cr. last year. For the nine months ending Dec.’06, sales was up 20% to Rs.15.35 cr. and PAT stood at Rs.2.40 cr. against Rs.0.50 cr. last year. Since aluminium smelters in India and abroad are enhancing their production capacity and new aluminium smelters, too, are up, the company is expected to perform better in coming quarters. It may end FY07 with sales of Rs.20 cr. with profit of Rs.2.50 cr. i.e. EPS of Rs.4 on its equity of Rs.7 cr. The scrip can rise 50% from the current level in a year’s time.

A few days back, BSEL Infrastructure Ltd. (Code:532123) (Rs.69) came out with a fantastic set of numbers for the Dec.’06 quarter. With help from its wholly-owned subsidiary i.e. BSEL Infrastructure Realty FZE based in UAE, the company’s topline zoomed to Rs.34 cr. compared to Rs.8 cr. last year whereas net profit sky-rocketed to Rs.30 cr. against Rs.4 cr. Dec.’05. Although, the same kind of profit is not expected in coming quarters, this performance has strengthened its balance sheet. Moreover, in joint venture with Unity Infraprojects, the company has been awarded a contract of Rs.545 cr. by Nagpur Municipal Corporation for development of six shopping malls with a built-up area of 27 lakh sq ft. Again in a joint venture with Unity Infraprojects, it has bagged another contract of Rs.156 cr. for constructing, operating and maintaining a 400 room hotel on a BOT basis at Shivchhatrapati Sports Complex, Pune. Accumulate at declines only.

Choksi Lab Ltd. (Code:526546) (Rs.21) is a group of research laboratories offering analysis, calibration, pollution control, research and consultancy services to a broad spectrum of industries. It has facilities to analyze food & agricultural products, cement & building materials, chemicals, drugs, metals, oil, soil, PVC pipes & paints etc for its client or as a regulatory requirement. For the six months ending 30th Sept.’06, its income increased by 17% to Rs.4.65 cr. while the bottomline improved by 12% to Rs.0.65 cr. Of late, the company has entered into clinical trial research in a big way and commenced a 40-bed clinical research facility at Vapi for carrying out bio-availability and bio-equivalence studies. For FY07, it is expected to report total revenue of around Rs.10 cr. with PAT of Rs.1.30 cr., which can lead to an EPS of Rs.3 on its equity of Rs.4.85 cr. For FY08, it has the capability to report an EPS of Rs.5. At the current market cap of Rs.10 cr. only, it is a fairly undervalued scrip.

Textile is one sector which underperformed in 2006 and most of the analysts expect the same for 2007 also. But with the markets hitting new highs and expected to touch Sensex 16000, bargain hunting is bound to emerge in cheap textile scrips like Winsome Textile Ltd. (Code:514470) (Rs.40). It has already clocked sales of Rs.71 cr. with net profit of Rs.6 cr. for H1FY07, which is substantially more than entire FY06 profit. For future growth, the company has undertaken modernisation cum expansion projects 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 is estimated to 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 cheap and can easily appreciate by 50% from the current level in 6-9 months. Just buy and hold.

Performance - 2006 Reccomendation

Performance Scorecard as on November 2007

Sr.	Date	Scrip Name	Recco	High		Return
			Price	Price		in %
	Appreciated more than 5x times
1	6-Feb-06	Ashiana housing	79	532		573%
2	20-Feb-06	Vijay Shanthi	36	220		511%
3	15-May-06	Jaihind Project	36	190		428%
	Appreciated 2x to 5x times
4	7-Aug-06	Bartronic	61	288		372%
5	16-Jan-06	Manappuram Gen	25	106		324%
6	24-Jul-06	Gitanjali Gems	114	450		295%
7	11-Sep-06	Nile Ltd	73	284		289%
8	10-Jul-06	Guj Apollo Equip $	81	315		289%
9	31-Jul-06	Easun Reyrolle *	95	356		275%
10	17-Jul-06	Saksoft	76	270		255%
11	13-Mar-06	PAE Ltd	14	49		250%
12	16-Oct-06	Kwlaity Diary	16	55		244%
13	6-Mar-06	Ramsarup Industries	80	251		214%
14	2-Jan-06	Stelco Strips	19	58		205%
15	27-Mar-06	Int Combustion	302	914		203%
16	20-Nov-06	Gontermann Piper	39	114		192%
17	4-Sep-06	Electrotherm	224	644		188%
18	10-Jul-06	Suryajyoti Spinning	32	88		175%
19	2-Oct-06	Torrent Cables	131	350		167%
20	22-May-06	Gemini Comm * $	109	275		152%
21	12-Jun-06	LIC Housing Finance	156	389		149%
22	1-May-06	IMP Power	95	233		145%
23	19-Jun-06	Wanbury	72	174		142%
24	24-Jul-06	Aarvee Denim	52	122		135%
25	17-Apr-06	VST Tillers	100	233		133%
26	27-Mar-06	Guj Reclaim	255	572		124%
27	21-Aug-06	BSEL Infra	45	100		122%
28	3-Apr-06	Steel Strip Wheel	121	264		118%
29	11-Dec-06	Sagar Cement	119	255		114%
30	6-Feb-06	Gupta Synthetic	178	376		111%
31	6-Nov-06	Tulsyan NEC	46	96		109%
32	31-Jul-06	Paramoun Comm *	28	58		107%
33	25-Sep-06	Shivalik Global	27	55		104%
34	3-Apr-06	Polymedicure	85	173		104%
35	8-May-06	Hester Pharma #	93	188		102%
	Appreciated 50% to 100%
36	27-Feb-06	ITL Ltd	37	72		95%
37	25-Sep-06	Ahlcon Parenteral	48	93		94%
38	13-Feb-06	Austin Engineering	78	150		92%
39	9-Oct-06	Tonira Pharma	18	34		89%
40	26-Jun-06	Sayaji hotel	49	92		88%
41	18-Dec-06	Span Diagnostic	48	90		88%
42	27-Nov-06	Savera Hotels	60	112		87%
43	20-Mar-06	Nikhil Adhesives	22	41		86%
44	29-May-06	Simmonds Marshall	47	87		85%
45	4-Dec-06	Aftek Ltd	53	96		81%
46	25-Dec-06	Vinay Cement	29	52		79%
47	3-Jul-06	RPG Life Science	117	207		77%
48	21-Aug-06	Virinchi Technology	37	64		73%
49	23-Jan-06	Canfin Homes	52	88		69%
50	1-May-06	Amex Info (Tutis)	25	41		64%
51	20-Mar-06	Hariyana Ship	26	42		62%
52	23-Jan-06	Mukand Ltd	84	135		61%
53	2-Oct-06	APW President	114	183		61%
54	7-Aug-06	Surya Pharma	79	125		58%
55	5-Jun-06	Suryavanshi Spin	62	98		58%
56	18-Dec-06	JK Lakshmi Cement	135	210		56%
57	24-Apr-06	Uniprodicts	54	83		54%
58	22-May-06	Allahabad Bank	82	126		54%
59	14-Aug-06	ABC Bearings	124	190		53%
60	25-Dec-06	Choksi Lab	19	29		53%
	Appreciated 25% to 50%
61	4-Sep-06	Revathi Equipment	636	950		49%
62	18-Sep-06	Syncom Formulation	49	73		49%
63	20-Feb-06	Rain Calcining	42	62		48%
64	29-May-06	Control Print	84	124		48%
65	10-Apr-06	Suryalata Spining	78	112		44%
66	8-May-06	Pacific Cotspin	10.5	15		43%
67	12-Jun-06	Micro Tech	211	297		41%
68	30-Jan-06	Diamines & Chem	61	85		39%
69	17-Jul-06	Ambika Cotton Mills	163	227		39%
70	13-Feb-06	Karur KCP Pack	70	97		39%
71	27-Feb-06	Sarla Polyester	133	184		38%
72	17-Apr-06	Paradyne Info	68	94		38%
73	4-Dec-06	Albert David	91	125		37%
74	5-Jun-06	Ador Fontech Ltd	110	151		37%
75	27-Nov-06	Amarjyothi Spinning	38	52		37%
76	6-Mar-06	Kovai Medical	59	80		36%
77	13-Nov-06	Gandhi Speical	143	191		34%
78	24-Apr-06	Satnam Overseas	85	112		32%
79	9-Jan-06	Nilkamal Plastics	191	250		31%
80	9-Jan-06	Necter Lifescience	225	294		31%
81	9-Oct-06	Ceekay Diakin	87	113		30%
82	18-Sep-06	Aarti Ind	38	49		29%
83	6-Nov-06	Coral Lab	129	166		29%
84	13-Mar-06	Suraj Diamond	61	78		28%
85	30-Oct-06	Medi Caps	68	86		26%
86	3-Jul-06	Oudh Sugar Mills	121	151		25%
	Appreciated below 25%
87	10-Apr-06	Indian toners	34	41		21%
88	30-Oct-06	Liberty Phosphate	21	25		19%
89	14-Aug-06	Pricol	37	44		19%
90	15-May-06	Dhanlaxmi Fabrics	56	65		16%
91	30-Jan-06	Triveni Glass	94	107		14%
92	13-Nov-06	APM Industries	37	42		14%
93	28-Aug-06	Fulford	586	664		13%
94	19-Jun-06	Upper Ganges	173	195		13%
95	16-Jan-06	Kallam Spinning	33	37		12%
96	20-Nov-06	GM Brew	120	131		9%
97	16-Oct-06	MM Forging	171	186		9%
98	11-Dec-06	Bhagiradha Chem	139	148		6%
99	11-Sep-06	Hyderabad Ind	307	325		6%
100	2-Jan-06	Manali Petro	25	26		4%
101	26-Jun-06	Ponni Sugar	69	70		1%
102	28-Aug-06	Hind Ind	36	36		0%

* ---> Recco price adjusted for Split

$ ---> Recco price adjusted for Bonus

# ---> Recco price adjusted for Rights

@ ---> Demerger / Merger Adjustment

Disclaimer: These are not the actual profit figures booked by any investor but a compilation to indicate the potential/quality of recommendations.