STOCK WATCH

Tera software (75.00) is one of the leading e-governance solution providers, undertaking data entry/scanning works for digitization of information maintained under Right to Information Act. It also undertakes short-term projects like issue of photo ID cards, ration cards and election commission cards. In consortium with Electronics Corporation of India Ltd, company has bagged huge e-governance order, taking its total order book position to around 250 crore to be executed in next five years. For the June qtr its revenue increased by 50% to 15 cr whereas net profit shot up 70% to 3.25 cr. Notably, company derives 100% of its revenues from the domestic markets, hence it is totally unaffected by the recent rupee appreciation against US dollar. For FY08 it is estimated to report total revenue of 80 cr and PAT of 15 cr i.e. EPS of 12 Rs on equity of 12.50 cr. Moreover company also has few acres of surplus land in Hyderabad, which it plans to either sell or enter into JV with infrastructure company. Share price has the potential to cross 100 Rs in 6 months or so.

Ansal Buildwell (76.00), flagship company of the high profile Ansal Group is well known for developing shopping complex, malls, residential township, row houses, sky scrappers, corporate offices etc. Currently, it has various residential and commercial projects going on at Gurgaon and Amritsar. Notably, it has good land bank in Amritsar, Jaipur, Panipat, Faridabad and Jhansi. Recently it has acquired around 35 acres of land at Kochi for development of plots, villas and town houses. In near future company is planning to construct multi storeyed group housing society in Faridabad. Incidentally, it is also engaged in couple of hi-tech engineering projects. For the June qtr its topline grew by 30% to 28 cr but its PAT shot up 70% to 1.80 cr. Accordingly for full year it is expected to clock a turnover of 150 cr and profit of 10 cr. This translates into EPS of 14 Rs on current equity of 7.40 cr. Being available at 52 week low; this is one of the safest scrip and is bound to cross 100 mark in 6 months.

El forge (60.00) manufactures carbon, alloy and stainless steel forged components which are mainly used to manufacture engine parts, transmission parts, steering and suspension parts, break assembly parts, chassis parts, drive line and electrical parts. To move up the value chain, company is gradually shifting its product mix to machined components which have comparatively higher margins than forged products. Hence, it has recently put up a machine shop facility at Chromepet, especially for MICO. Moreover it is also setting up a world class manufacturing facility at Sriperambadur near Chennai which is expected to start commercial production shortly and will enhance the capacity to 23200 MTPA from 18200 MTPA. To fund this expansion company raised around 15 cr last year thru pref allotment of 12.15 lakh shares @ 120 Rs per share. Against this, today it is available at massive 50% discount. It reported decent nos for the June quarter and is expected to end FY08 with consolidated sales of 185 cr and profit of 10.50 cr which works out to an EPS of 12 Rs on diluted equity of 8.80 cr. Ironically, the scrip is trading at its 52 week low giving good margin of safety and can give 50% return in 9~12 months.

Orient Paper & Industries (430.00), flagship company of the renowned CK Birla Group is a diversified company having interest in papers, cement and electric fans with cement being the major profit centre. To cater the increasing cement demand, company is implementing aggressive expansion plan which will enhance its cement capacity from 2.4 million to 3.4 million TPA in the current year and subsequently to 5 million by 2008-09. Besides, it is putting up a 50 MW captive power plant for increased capacity. On the back of robust demand, company is augmenting its paper as well as electric fan manufacturing capacity also. For the June’07 qtr it recorded 13% rise in sales to 293 cr but NP jumped up by 75% to 44.50 cr posting an EPS of 30 Rs for the qtr. With the cement division doing exceptionally well, it may clock a turnover of 1250 cr and PAT of 165 cr for FY08. This leads to an EPS of 86 Rs on expanded equity of 19.29 cr. Interestingly; company is having huge surplus land in Orissa which is estimated to fetch approx 150 cr, if sold. Share price can easily appreciate 25~30% in 12 months.

Uni Abex Alloys (110.00) is engaged in manufacturing centrifugual-casting alloy thereby catering to core sector industries like petroleum, petrochemical, fertilizer, iron & steel, manufacturers of decanters, valves, heat-treatment plants, galvanizing plants and engineering industries. For the June qtr it recorded 60% growth in sales to 13.90 cr whereas its profit increased by only 20% to 0.95 cr due to lower other income. However on the positive side, company has been reporting very healthy margins from the last two quarter despite the sharp appreciation in rupee. Offlate company has been putting more thrust on exports due to higher margins and is expected to derive nearly 50% of revenue from it. On the back of 100% capacity utilization and higher operating margin it is expected to report a topline of 70 cr and bottomline of 5.50 cr. This works out to an EPS of 28 Rs on tiny equity of 1.98 cr. At a reasonable discounting by 5x times share price has the potentail to cross 150 Rs. Accumulate at declines.