Panoramic Universal - 148.00 Rs

Incorporated in 1991 and promoted by Sudhir Moravekar, Panoramic Universal Ltd. (PUL) is the flagship company of Panoramic group which has diversified business interest in hotels, clubs, resorts, entertainment, real estate, herbal healthcare products, specialty food, advertising, BPO and Information Technology. However PUL derives 80% of its revenue from hospitality and the balance 20% from the IT business. Earlier known as IT Microsystem, PUL was mainly a software company till 2003 with core competencies in customized software application development, e-business applications, legacy and client/server systems, supply chain management solutions, ERP, IT Education & Training. It has presence in USA, UAE, China and New Zealand and has a 100% software export unit in Mumbai equipped with state-of-the-art infrastructure. Some of the software developed by the company includes software for Payroll, Human Resource Management Software (HRMS), Co-operative Housing Society Accounting, Multilevel/Network Marketing, Sales & Distribution, Hotel/Club Management Software etc.

But interestingly in 2003, PUL diversified into hotel business and today it’s a well-known hospitality company with presence in USA, New Zealand and India. Currently, through its subsidiaries it owns and operates 5 hotels in USA –The Georgian Resort, New York (164 rooms), Quality Inn, New York (142 rooms), Holiday Inn, Ohio (239 rooms), United Inn, North Carolina (125 rooms), Comfort Inn, North Carolina (126 rooms) whereas in New Zealand it owns a small motel called Sai Motels (22 rooms). Notably, PUL is the only company besides Indian Hotels and East India Hotels to own and manage star category hotels outside India. In India it has three hotels i.e. at Shirdi, Goa and Malvan. In short it has total room strength of 902 rooms. The company also owns “Pancard Club Hotel and Resort in Baner Hills along with ‘Area 51’, a large entertainment lounge in Pune.

For future growth, PUL has chalked out capex plans of Rs.1000 cr. for the next 3-5 years. It has plans to develop three 5 star hotels of 250-300 rooms each in Pune, Kerala and Goa. It has already bought land in Pune and Kerala for the same and is looking to finalize the land at Goa. It also intends to set up or acquire five 3 star hotels (of 150-200 rooms) in Tier II cities like Jaipur, Chandigarh, Bangalore etc. Meanwhile, it has already launched two 3 star hotel-cum-club projects one each at Thane and Durgapur to be operational within two years. Recently, the company has acquired 100% stake in M/s. Sri Vatsa Hotels Pvt. Ltd. at cost of Rs.18 cr. to construct a 3 or 4 star hotel with approximate 90 rooms at its premises located in the heart of Secunderabad. As a step towards backward integration, PUL has diversified into the realty sector by acquiring 100 % stake in Ambitious Infrastructure Pvt. Ltd. and has a land bank of more than Rs.200 cr. across Pune, Thane, Mahabaleshwar, Karjat and Durgapur. Moreover, the management wants to acquire 20 properties in USA and India in the next 3 years and has plans to enter the Europe and Australian hotel markets in future.

Besides real estate and hospitality, PUL is looking at acquisition of a travel agency and setting up travel portal for e-ticketing and hotel bookings to become an end to end player in the travel & tourism industry. In future, it wants to cash in the Medical tourism boom by setting up Ayurvedic medical cum relaxing facility. Interestingly, the company has acquired the franchise for ‘The Country's Best Yoghurt’ (TCBY) and has set up a manufacturing unit at Silvassa. It has also signed a MoU with Natham's Place (a US food retail chain) to open exclusive outlets in India. The promoters intend to consolidate assets of the Panoramic Group with PUL to create a single holding company and bring all its hotel properties in USA and India under the 'United Inn' brand. Thus with these strategic initiatives, PUL is on its way to emerge as a hospitality conglomerate by expanding its hotel bases across geographies.

As most the business is through subsidiaries, one should evaluate the company by its stand-alone numbers. On a consolidated basis, it is expected to end FY07 with total revenue of Rs.130 cr. and profit of Rs.35 cr. i.e. EPS of Rs.27 on its equity of Rs.6.48 cr. with FV of Rs.5 per share. This means that the scrip is trading at a P/E ratio of merely 5.5 against its current earnings. However, to fund its expansion plan, the company may take huge debt or dilute its equity substantially in future. Still 74% promoter holding gives some confidence in the group and investors are advised to buy at current levels with a price target of Rs.220 in the medium-term. If things pan out as per plans, then it may turn out to be a multi-bagger in the long run.

ICSA (India) Ltd - 1065.00 Rs

Incorporated in 1994, ICSA India Ltd. (ICSA), formerly known as Innareddy Computer Software Associates (India) Ltd. is a Hyderabad based company constructing power transmission lines and substations. It has also developed products suitable for power utilities in the field of energy management, energy audit, control applications and provides versatile data acquisition systems using communications media such as GSM, CDMA and RF. Presently, its business is in three segments namely embedded solutions, electrical construction services and software solutions. In the revenue mix, more than 55% comes from infrastructure projects and the balance 45% comes from embedded solutions & products.

In embedded technology solutions, it has successfully deployed products like substation controllers, distribution transformer controllers, theft detection devices, spot billing machines and Intelligent Automatic Meter Reading systems etc. Its Remote Monitoring applications, apart from the power sector, are utilized in a number of other sectors, which include oil, gas, mining, irrigation, transport and water utilities, etc. ICSA has also developed technology solutions to identify transmission and distribution (T&D) losses and monitor power consumption using GSM Network. The Remote Switching facility designed by the company fits well with the ongoing power sector reforms. Its remote sensing applications can transfer data from power points to the control room through telephone lines and wireless including GSM technology.

Secondly, ICSA is one of the leading Indian companies offering Total/Partial turnkey services for electrical infrastructure projects in power generation, transmission and distribution sectors. It is capable in design, supply, transport, erection, testing & commissioning of 400 KV, 220KV, 132 KV Transmission Lines & Sub Stations on EPC basis. It has already entered into HVDS distribution works, Rural Electrification works and Industrial Electrification works in most of the States in India thereby emerging as a truly national level power sector company. Besides, the company has forayed into foreign countries also and is also executing a big project in Sudan.

Thirdly, ICSA provides customized solutions like software application and customer specific solutions for metering, billing and collection on per customer payment basis or variations of the BOOT model. The company supplies its products to many State Electricity Boards (SEBs) and private companies such AP Transco, APEPDCL, APCPDCL, APSPDCL, CESCO, SOUTHCO, Elmarc Ltd, Reliance Energy, NEEL, UPRNNL, MSEDCL, etc. Notably, the company has entered into an agreement with OIL India Ltd. to provide products and services in monitoring oil and gas pipelines which will forecast and control the rate of corrosion apart from addressing issues such as pilferage and thefts along the pipeline.

ICSA’s goal is to bring down the cost per unit of power by optimizing critical production processes and minimize transmission, distribution and transaction losses while at the same time save valuable consumer resources by real time audit and meter reading, billing systems, accountability and transparency systems, shortages and disaster prediction applications, SCADA (Supervisory control and Data Acquisition) and management solutions using best practices. Since the last three fiscals, the company is growing at a scorching pace and has ended FY07 on a buoyant note. Both sales and profit have quadrupled to Rs.330 cr. and Rs.64 cr. respectively registering an EPS of Rs.93 on its tiny equity of Rs.6.82 cr. To fund its future growth plans, the company has recently raised approx Rs.200 cr. through FCCB route and has also issued 750,000 warrants at Rs.1135. However for FY08, it is estimated to report a topline of Rs.500 cr. with PAT of Rs.90 cr. This works out to an EPS of Rs.100 on its estimated diluted equity of Rs.9 cr. Investors are advised to accumulate this scrip at sharp declines as share price can easily appreciate 50% in 12-15 months.

STOCK WATCH

Most investors are under the impression that Gayatri Projects Ltd. (Code: 532767) (Rs.252) has reported very disappointing numbers for the March’07 quarter as its net profit is down by 50% to Rs.3.20 cr. compared to Rs.6.50 cr. last fiscal. But actually, the results are quite good as it has registered 40% rise in its topline at Rs.166 cr. With OPM of more than 14% for the quarter, its PBT increased by 25% to Rs.12.70 cr. However, as the company made major tax provisions of Rs.9.50 cr. in the last quarter only, it reported a lower net profit. For the entire FY07, both sales and net profit increased by 35% to Rs.502 cr. and Rs.23.50 cr. respectively leading to an EPS of Rs.23 on its equity of Rs.10 cr. Considering its huge order in hand position of Rs.2500 cr., the company is estimated to clock a turnover of Rs.750 cr. and profit of Rs.35 cr. for FY08. This translates into EPS of Rs.35 on its current equity. To fund its working capital requirement, the company has plans to raise US $30 mn. through the FCCB route in the near future. Although the promoters have a chequered history, the scrip is still a good bet at the current levels.

Prithvi Information Solutions Ltd. (Code: 532675) (Rs.276) is a mid sized technology solutions company with a strong domain knowledge of Technology outsourcing, process outsourcing and networking solutions serving clients in industry verticals like embedded technology, telecom, healthcare, retail, manufacturing, hi-technology, BFSI and e-governance. For the March’07 quarter, its topline increased substantially to Rs.259 cr. against Rs.137 cr. on YOY basis whereas its bottomline grew by 55% to Rs.26 cr. For FY07, it registered 70% rise in both sales and profit to Rs.768 cr. and Rs.90 cr. respectively i.e. an EPS of Rs.50 on an equity of Rs.18 cr. To increase its presence in offshore business, the company has plans to acquire 4-5 software boutiques overseas, with software facilities in India. For this, it has recently completed placement of FCCB of $50 mn., which was subscribed to by Lehman Brothers. It is also in the process of setting up its offshore development centre in Hyderabad at an investment of Rs.30 cr. On the back of its Rs.750 cr. order book position, it is estimated to register total revenue of Rs.925 cr. with PAT of Rs.110 cr. for FY08 on a stand-alone basis. A good medium to long-term bet in the IT sector.

Recently, Lloyd Electric and Engineering Ltd. (Code: 517518) (Rs.154) declared very encouraging result for the March’07 quarter. It recorded an all-time high sale of Rs.153 cr. compared to Rs.116 cr. last year whereas net profit increased by 55% to Rs.15 cr. For the full year FY07, sales were up 45% to Rs.496 cr. and net profit jumped 70% to Rs.47 cr. thereby registering an EPS of Rs.15 on its equity of Rs.31 cr. Recently, the company setup a new manufacturing unit in Dehradun (Uttaranchal) to manufacture room air-conditioners, components for air-conditioners and electronic goods. Besides, it is in contract with an Australian company for designing, manufacturing and supplying of AC package units to Metro Rail in India It has also tied up with a Korean company to manufacture roll bond and frost-free coils for refrigerators. Hence it may end FY08 with sales of Rs.625 cr. with profit of Rs.62 cr. i.e. EPS of Rs.20. At a reasonable discounting by 12 times, its share price has the potential to touch Rs.240 in a year’s time.

LT Overseas Ltd. (Code: 532783) (Rs.50) is the third largest player in the domestic basmati rice segment (after Satnam Overseas and KRBL) with ‘Daawat’ and ‘Heritage’ as its leading brands. With 40% revenue coming from exports, its products are being sold in more than 35 countries including the quality conscious markets of USA, Canada, UK and the European Union. It reported an excellent set of numbers for the March’07 quarter with sales at Rs.187 cr. and PAT of Rs.7.90 cr. i.e. EPS of Rs.3.50. However, due to one time extraordinary expense of Rs.1.32 cr. its net profit stood at Rs.6.60 cr. A few months back, the company had raised around Rs.40 cr. through an IPO at Rs.56 per share primarily for putting up a new parboiled rice processing and milling capacity of 6 TPH, a new milling line for producing value added rice with capacity of 5 TPH and to set up silos and flat storage facilities. It is also putting up a power plant of 2 MW for captive consumption. For FY08, it can clock a turnover of Rs.675 cr. with net profit of Rs.26 cr. i.e. EPS of Rs.12 on an equity of Rs.22.30 cr.