STOCK WATCH

Last week, Voltamp Transformer (325.00) came out with excellent set of nos for Q3FY09. Despite reporting marginal fall in net sales to Rs 136 cr it posted 50% increase in net profit to Rs 34 cr due lower raw material cost. Surprisingly it posted a very healthy OPM of 30%, where the EPS for the quarter stood at whopping Rs 34. Company has special expertise in production of dry type vacuum resin impregnated (upto 3 MVA/11 kV class) and cast resin transformers (upto 7.5 MVA/33 kV class) apart from manufacturing regular oil filled power & distribution transformers, induction furnace transformers & unitized substations. Infact, company is the market leader in dry type transformers with around 40% market share. Currently company is in the midst of putting up a Greenfield plan with an installed capacity of 4000 MVA thereby taking the total transformer manufacturing capacity to 13000 MVA. It is expected to end the current fiscal with sales of Rs 650 cr and profit of Rs 100 cr i.e. EPS of Rs 99 on equity of Rs 10.10 cr. Being debt free and having huge reserves of more than Rs 150 cr, liquid cash worth Rs 60 cr, ROCE of 95% and ROE of 60% it’s a screaming buy.

Consistently, Micro Technology (78.00) has been churning out encouraging nos quarter after quarter. Even for Dec’08 quarter, its revenue increased by 30% to Rs 59 cr whereas PAT grew by 10% to Rs 15 cr thereby posting an EPS of Rs 14 for the single quarter. Importantly it managed to record an OPM of 40%. The nine months figures are much more exciting as company has registered 50% growth in topline to Rs 176 cr and 35% increase in bottomline to Rs 49 cr. Thus company has already clocked an EPS of Rs 45 till date on current equity of Rs 10.98 cr. Over the years, company has developed some of the high-end security products, which address areas of concern right from mobile security to automobile security & monitoring systems using its leverage over high-tech wireless technologies such as GPS(Global Positioning System), GSM(Global System for Mobile communication), CDMA(Code division multiple access), GPRS(General Packet Radio Service), RFID(Radio-frequency identification) & GIS(Geographic Information System). Today, it boasts of having hundreds of unique, hi-tech, first of its kind and innovative security products which have huge demand & tremendous potential worldwide. It may end FY09 with revenue of Rs 225 cr and net profit of Rs 55 cr i.e. EPS of Rs 50. Scrip can shoot up to Rs 110 levels in short term.

Genus power (90.00) declared average result for the Dec’08 quarter. Sales improved by 15% to Rs 120 cr and PAT grew marginally by 7% to Rs 10.65 cr. Company is amongst the leading integrated metering solutions' providers and the pioneer in implementing AMR (Automatic Meter Reader) technology. Importantly it has diversified into engineering construction and currently derives more than 50% from EPC power T&D projects where it provides absolute solutions for power transmission & distribution system. As a step forward, company has also launched IT enabled distribution transformer metering system, feeder monitoring and management system, smart street light management system with value added software application for providing end to end solutions for energy management. Although company’s participation in tenders have come down drastically and it may bag fewer orders in future still as of now it has an order book of Rs 795 cr. Besides it has bid for tenders of more than Rs 1500 cr, out of which it is L1 bidder in tenders worth Rs 300 cr. So it can clock a turnover of Rs 475 cr and profit of Rs 35 cr for FY09 on conservative basis. This translates into EPS of Rs 24 on current equity of Rs 14.80 cr. Keep accumulating at declines

Bharat Bijlee (450.00) has reported decent nos for the Dec’08 quarter with 25% rise in sales to Rs 140 cr and 10% increase in NP to Rs 13 cr. It has already earned an EPS of Rs 60 for the nine month ending Dec’08. Company has recently increased its transformer manufacturing by 40% to 11,000 MVA from 8000 MVA, the full benefit of which will be derived in FY10. Apart from being the pioneer in the manufacture of electric motors, it is also one of the oldest players in transformer industry. Remarkably, company has the capability to manufacture power transformer up to 200MVA in 220 kV class which handful of Indian manufacturers can claim of. In order to expand the product range, it has lately added AC variable speed drives and gearless machines to its portfolio for which it has tied up with KEB of Germany and Permanent Magnets of Spain. Accordingly for FY09 it can register sales of Rs 600 cr and net profit of Rs 55 cr leading to an EPS of Rs 97 on small equity of Rs 5.65 cr. Importantly, BBL is almost a debt free company and even has liquid investment whose current market value as on date is Rs 125 cr. At the same time, company is quite ripe for bonus as it has huge reserve to the tune of Rs 160 cr (i.e. book value of Rs 298) on such a small equity. Thus at current market cap of Rs 250 cr, scrip is available grossly cheap.