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For the latest Dec’08 Roto Pumps (30.00) came out with satisfactory result as sales increased by 35% to Rs 14 cr although net profit declined marginally to Rs 0.70 cr due to higher interest cost. Accordingly sales for the first three quarters improved by 35% to Rs 39 cr and NP increased by 10% to Rs 2.25 cr. Company is a reputed manufacturer of progressive cavity pumps and twin screw pumps which have very wide application in agriculture, domestic and industrial sector. Besides India, it has warehouse cum marketing office in Australia and U.K. and also good network of distributors spread across the globe. Remarkably, company derives nearly 55% revenue from exports. However during Sept’08, it bagged approx Rs 4 cr order from L&T which is the single largest value order in the history of the company. To maintain its growth momentum, company is implementing an expansion cum modernization program for which it has been recently allotted an industrial land of 20,000 sq mtr by Greater Noida Industrial Development Authority in Sector ECOTECH – XII. For FY09 it may register a topline of Rs 50 cr and bottom-line of Rs 2.75 cr which translates into EPS of Rs 9 on a small equity of 3.09 cr. It is quite probable that company may maintain its 20% dividend for FY09 which leads to a yield of whopping 7%. Besides with 70% promoter holding and book value of Rs 45, scrip is trading fairly cheap at current EV of Rs 15 cr.

Despite the ongoing gloom & recession one company which posted stunning result is VST Tillers (135.00). Suddenly its operating margin has shot up in the last two quarters coupled with consistent increase in sales on QOQ basis. Even for the Dec’08 quarter its sales increased by 55% to Rs 70 cr whereas PAT shot up 140% to Rs 8 cr thereby posting an EPS of whopping Rs 14 for the single quarter. Cumulatively, for the first three quarters it doubled its net profit to Rs 18 cr on 50% higher sales of Rs 193 cr. However company is paying the highest income tax rate of nearly 35% which ensures the genuineness of profit. Company is a leader player in power tillers and also caters to the sub 20HP tractor segment with a niche market share in Maharashtra and Gujarat. To beat the competition, company itself imports and market Chinese make power tillers under the brand name “Dragon”. It is also selling Rice transplanters in the rice growing belts of India, which is slowly shifting in favor of these machines to overcome manpower shortage and reduce costs. Although the power tiller industry is growing at around 20% per annum, still much of the growth relies on govt subsidies and agricultural lending by banks. However the increase in central subsidy on power tillers augurs well for the company as govt has given special thrust in the 11th five year plan thru various schemes like Rashtriya Krishi Vikas Yojana, Integrated Tribal Development, National Food Security Scheme, Macro Management Scheme etc. It may end FY09 with sales of Rs 250 cr and profit of Rs 24 cr resulting into EPS of Rs 42 on equity of Rs 5.80 cr. Buy at sharp declines only.

For the latest Dec’08 quarter 3i Infotech (25.00) reported encouraging set of nos as its total revenue grew by 90% to Rs 616 cr and PAT increased by 40% to Rs 70 cr on a consolidated basis. Accordingly for the nine months ending Dec’08 it has posted a topline of Rs 1694 cr and bottomline of Rs 200 cr which means company has already clocked an EPS of Rs 14 in the first three quarters. As on date, company has a pending order book position of more than Rs 1400 cr to be executed in next one year. Despite this scrip is hitting all time low. To maintain its organic growth, company is in the midst of opening 255 new service centres in tier-II and tier-II cities to help banks and financial institutions in decreasing the processing time for various back office operations. It has also bagged a huge contract from Central govt for setting up over 12,000 kiosks, spread across various states in India, for providing citizen services centers to be used for dispensing G2C and B2C services. It has recently made a strategic tie up with ICICI Lombard, Airtel and Max Newyork Life to open 12,500 retail stores in rural areas to offer bouquet of retail services in general insurance, telecom and life insurance sector respectively. Earlier it formed a 51% joint venture with Chinese company who will localize the financial technology software from 3i Infotech to cater to the requirements of China's diversified financial services sector. With an expected EPS of Rs 16 for entire FY09, this scrip is trading grossly cheap at current market cap of Rs 400 cr. Keep accumulating at declines

Tera Software (20.00) 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. Last year company successfully executed Maharashtra Vikri Kar Seva Project in Maharashtra State (VAT Implementation of Maharastra sales tax department) on BOOR (Build own operate and refresh) model as the scope of work was computerization of sales Tax department in the entire state of Maharashtra. Of late company has been able to procure additionally six new projects of the State Government of Andhra Pradesh, Karnataka, Rajasthan, West Bengal and Himachal Pradesh. It also ventured into imparting computer education in more than 225 schools in Goa and AP by establishing the computer labs with Computers and providing the teaching staff and maintenance of systems. On the back of satisfactory nos for the Dec quarter it recorded 10% fall in net profit to Rs 8 cr on 20% increased sales of Rs 53 cr for nine months ending Dec 2008. Accordingly it is expected to end FY09 with topline of Rs 70 cr and PAT of Rs 9.50 cr i.e. EPS of Rs 8 on equity of Rs 12.50 cr. It may declare 15% dividend for FY09 which gives a yield of 7% at CMP. Moreover company has few acres of surplus land in Hyderabad, which it can either sell or enter into JV with infrastructure company. Scrip can easily double in 12~15 months.

Numeric Power System Ltd - Rs 135.00

Incorporated in 1995, Numeric Power System Ltd (NPSL) is a leading manufacturer of uninterrupted power supply (UPS) systems, stabilizers and power conditioners in India. Infact, it has been the undisputed leader for online, offline/interactive UPS in India for more than a decade. Ranging from 0.5 KVA to 4800 KVA, company offers the total range of 1 Phase and 3 Phase UPS systems that are built with advanced technology and state-of-the-art features suitable for unitary and parallel redundant configurations addressing a wider band of the industry from PCs, servers, banks, data centers, healthcare and large IT network protection. Ironically, NPSL has been ranked as No.1 Online UPS manufacturer, power Electronic company of the year for the last 15 years all in a row by the Softdisk journal. It has also been ranked as No 1 offline UPS manufacturer for second consecutive year by the same magazine. Apart from products, it also executes turnkey projects and offers end to end solution for SCADA/EMS package, large network of industrial process, power transmission support systems and distribution management. It even undertakes electrical power quality Audits and system Design. It also provides services such as annual maintenance contracts of UPS and power conditioners of not only its own brands but also for other brands. Panasonic Japan has appointed NPSL as the national distributor for their SLA batteries. NSPL has been appointed as the national distributor for Panasonic brand of SLA batteries. NPSL has been regularly exporting its products to Canada, UK, China, South America, Singapore, Vietnam, Mauritius, Dubai, South Africa, Nigeria, Kenya, Ethopia, Uganda etc. Incidentally, NPSL is a national distributor for a range of ‘Panasonic’ brand of sealed lead acid batteries.

NPSL has eight world class manufacturing facilities spread across Pondichery-TN, Chennai-TN, Parvanoo-HP and Colombo-Srilanka, thereby emerging as the biggest integrated manufacture of UPS in India. The company's fully-owned subsidiary in Sri Lanka, Singapore, Mauritius and an export-processing unit in Chennai cater to the overseas markets. In India, it has a strong distribution network through 1800 channel partners spread across 400 towns. This is backed by 214 sales and service location apart from specialized 27 test and repair centre along with exclusive helpdesk which works 24x7. It has an enviable and high profile clientele including Infosys, Siemens, Intel, Philips, Microsoft, Veritas, HDFC, Citibank, ICICI, RBI, NIC, Reliance, ABB, BMW, NCR, Nokia, major stock exchanges etc. As per rough estimates, around 75% of the ATMs in the country are fitted with UPS supplied by NPSL. Last fiscal, the company implemented an auxiliary power systems project for Power Grid Corporation in the entire north-eastern States, in a turnkey effort involving design, supply and installation of total power conditioning systems. To become more efficient, NPSL is backward integrating into batteries and is scouting for a technology partner to set up a battery manufacturing unit. Interestingly, it has also ventured into the Solar power area and started implementing projects in a commendable way for energy generation using Photo Voltaic Modules. Currently it has already gained expertise in Solar Hybrid UPS Systems, Stand alone and Distributed Mini Grid Systems & Grid Connected Solar Power Farms. Remarkably, company has already accumulated more than 70 clients for solar power division. However during April 2008, NSPL walked out of its two year old JV with SOCOMEC SA of France as it primarily prevented the company to tap the solar 3 phase UPS products. But at the same time company has developed its own products in higher range of 3 phase category which are now fairly successful in the market. For future growth NPSL has adapted the latest power conversion techniques combined with advanced digital controls in the newly designed ‘NUMERIC DIGITAL HPX’ series in addition to the HP and HPE models. This new version HPX series is designed to primarily address IT and Industrial requirements including intelligent monitoring using Internet.

With more and more businesses running on technology solutions, the need for power protection systems for reliability and quality has become vital. Given India's significant power deficits and the ubiquitous outages and voltage fluctuations; NPSL’s products have significant market potential in the country. For FY08 it recorded impressive 40% increase in sales to Rs 387 cr where NP more than doubled to Rs 40 cr thereby posting a very healthy EPS of Rs 80 on equity of Rs 5 cr. But due to general economic condition and higher raw material cost its operating has fallen to 9.5% in the current year against 13% last fiscal. Thus for the nine months ending Dec 2008 NSPL’s sales increased marginally to Rs 296 cr but PAT declined by 20% to Rs 23 cr. This is despite the fact that company earned an extraordinary income of Rs 5 cr on sale of its stake in JV company. Hence it may end the current year with a topline of Rs 400 and bottomline of Rs 25 cr (incl. extraordinary item) i.e. EPS of Rs 50 on current equity. But considering all the factors, company has the potential to clock a turnover of Rs 450~475 cr and NP of Rs 35 cr i.e. EPS of Rs 70 for FY10. At a modest discounting by 5x times against its FY10 earnings, scrip can shoot up Rs 350 in 15~18 months. Apart from having very low debt on its books, it has huge reserves to the tune of Rs 135 cr on such a tiny equity making it a strong bonus candidate.

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Aditya Birla Chemicals (32.00) earlier known as Bihar Caustic is among the leading caustic soda producer in the northern and eastern region of the country having an installed capacity of 265 TPD of caustic soda, 200 TPD of liquid chlorine, 130 TPD of hydrochloric acid, 150,000 Nm3/day of compressed hydrogen and 3 TPD of sodium hypo chlorite. It has also set up a 25 TPD stable bleaching powder plant and 12000 TPA of aluminum chloride unit. To maintain its future growth, company is in the process of further augmenting the capacity of its caustic soda from 265 TPD to 300 TPD at a capital investment of Rs 30 cr. Due to some boiler problem during Sept quarter, company is expected to end FY09 with sales of Rs 200 cr and PAT of Rs 40 cr. This translates into EPS of Rs 17 on current equity of Rs 23.40 cr. Despite belonging to such a reputed group and having strong fundamentals like high profit margin, low debt equity ratio, huge reserves, good dividend yield, consistent growth etc, scrip is poorly discounted at P/E multiple of less than 2x times and EV/ EBIDTA of little over 2x times. Although company is vulnerable to caustic soda price movement, but with Hindalco being its parent company & biggest customer this is relatively a safer bet.

MIC Electronics (15.00) is a pioneer in design, development, manufacture & supply of true color LED Video Displays, LED Lighting products and solutions. Infact, it is the only integrated LED display manufacturer in India with design-to-manufacture capabilities. Being a sunrise technology, its products have tremendous potential for growth and hence to cash on the opportunity, company commissioned a state of the art fully automated manufacturing line at Hyderabad on 29th October 2008. With this EOU facility, it has doubled the production capacity of LED display to 2400 modules from 1200 modules earlier. It is further contemplating to take its total capacity to 3600 modules in near future. Company is regularly making presentations and negotiating with Indian railways to supply LCD display as well LED lighting solutions to them. Its 50:50 USA joint venture has already won a contract for LED display in 50 stadiums in Latin America. Company is also entering the entertainment business through self owned digital theme parks and theatres. For six months ending Dec’08, it recorded 70% rise in net profit to Rs 40 cr despite marginal fall in topline to Rs 144 cr due to change in product mix. Conservatively for FY09 ending June’09 it is estimated to clock a turnover of Rs 275 cr and PAT of Rs 65 cr on a standalone basis. This works out to an EPS of Rs 6.50 on current equity of Rs 20 cr having face value as Rs 2/- per share. Share price can double within a year.


Transformer & Rectifiers (110.00) is one of the few manufacturers in the country manufacturing the entire range of transformers namely power generation, transmission and distribution transformers, industrial transformers such as furnace transformers, and special transformers such as mobile substation, rectifiers, testing transformers etc. Infact, company is among the largest manufacturer of furnace transformers in India. With an installed capacity of 7200 MVA it has the capability to manufacture transformer upto 160 MVA in 245 kV class. To cash on the boom in power sector, company is setting up a Greenfield plant in Moraiya, near Ahmedabad with an installed capacity of 16,000MVA. The new plant, expected to be operational shortly would be capable of manufacturing transformers upto 756kV class, though the company initially intends to manufacture transformers of 220kV and 400kV classes. As of now, company has order book position of Rs nearly Rs 400 cr, out of which 70% comprises of power transformers. For Dec’08 qtr it reported 40% & 30% increase in sales and NP to Rs 97 cr and 9 cr respectively. Accordingly it may end FY09 with sales of Rs 400 cr and NP of Rs 38 cr i.e. EPS of Rs 29 on current equity of Rs 12.90 cr. Importantly, it will start reporting substantial growth from FY10, as new plant will begin operations by then.

Cosmo Films (60.00) is one of the dominant players in the Bi-axially Oriented Polypropylene Films (BOPP) market in India with a 23% market share and also one of the lowest cost producers of BOPP films in the world. It currently boast of having an installed capacity of 56000 MTPA of BOPP films, 21000 MTPA of thermal lamination films & 3000 MTPA of metallized films. Importantly, company is the only Indian player to manufacture thermal laminated films which is a high margin business. Despite demand supply mismatch, company is working at 100% capacity and is further expanding its BOPP capacity to 136000 MTPA & metalized films to 10500 in phases. It has even started a coating film with a capacity of 12000 MTPA last year. Recently company has decided to acquire a USA based company providing thermal lamination films and equipment in Europe, North America, Japan and the Pacific region. However the deal is expected to get complete before Sept 2009. Because of organized retailing, increasing mall culture and higher spending capacity, FMCG and food processing industry is witnessing phenomenal growth and hence domestic BOPP market is also growing @ 15~20 % per annum. Company has already posted an EPS of Rs 17 till date and may end FY09 with sales of Rs 650 cr and PAT of Rs 40 cr i.e. EPS of Rs 21 on current equity of Rs 19.40 cr. It may declare 40% dividend for FY09 which gives a yield of nearly 7% at CMP. A good bet to gain 50% in a year.

Action Construction Equipment Ltd - Rs 9.00

Incorporated in 1995, Action Construction Equipment Ltd (ACE) is the undisputed leader in hydraulic mobile crane manufacturing with a market share of more than 50% in India. These cranes are rough terrain, pick and carry types which are most commonly used in several core industries apart from construction. According to the functions & application, ACE makes different types of hydraulic cranes ranging from 3 tons to 18 tons capacity. Deriving more than 65% of total revenue, this forms the core product of the company. Along with, it also manufactures mobile tower which are used basically for civil construction. It makes self-erecting & self-folding cranes with inbuilt generators that can work from 6 to 12 storied buildings. Under material handling and construction equipment category, ACE manufactures various types of back hoe loaders, wheeled loaders, forklift trucks etc with a lifting capacity of 1.5 to 10 ton. In its endeavor to increase its product portfolio, ACE over a period of time, has entered into marketing tie-ups with leading foreign companies like Autogru PM Italy, Maber-Italy, Zoomlion- China and Tigieffee SRL-Italy which facilitate the availability of latest technology and machines from around the world. Thus it is also engaged into importing CKD units, assembling them at its plant, marketing them in India and even proving after sales support. Its imported fixed tower cranes from China with maximum lifting height of 240 meters are very well accepted in Indian market and hence company commands 35% market share. Besides, from last fiscal, ACE started importing high value equipments like crawler cranes, piling rigs, concrete pumps etc from Zoomlion-China, thereby expanding its product range further. Interestingly, company has also got into production of 35 HP tractors (with a 4 cylinder engine) which are used for construction and industrial purposes and already succeeded in selling 70 of them last year. To sum up, apart from infrastructure development, due to the versatility of the ACE equipment to satisfy a vast range of possible applications, company’s product are being successfully used in many sectors like power projects, ports & shipyards, dams, metro rail, roads, coal mines, steel industry, engineering industry, railways, cement, petroleum, defense, chemicals and fertilizer plants, building, construction etc.

Presently, ACE has three manufacturing facilities with two in Haryana & one in Uttaranchal with combined production capacity of more than 8500 units including tractors. It has a well spread network of 5 regional offices and 60 sales and services centers across India. These centers are fully equipped to provide genuine spare parts and services by company trained engineers as and when required. Due to world class product and excellent track record, ACE has a huge clientele including all the big corporates, industrial houses & PSU like Reliance, Tata, Aditya Birla, L&T, Punj Lloyd, ABG, IVRCL, NCC, Essar, Unitech, BHEL, NTPC, Gammon, Indian railways to name a few. In order to tap the international market, ACE has got CE Certification for most of its manufactured products.Although miniscule currently, company has exported its products to U.A.E., Qatar, Sultanate of Oman, Kuwait, South Africa, Kenya,Nigeria, Mauritius, Sri Lanka, Nepal, Bhutan, Bangladesh, Singapore and Portugal. As a part of its long term strategy, ACE intends to produce or deal in every type of construction equipment so as to become complete solution provider for any infrastructure entity. To achieve this mission, company is contemplating to venture into manufacturing of road construction equipments in near future. Initially it plans to produce tandem vibratory roller and double drum rollers, concrete batching plant and subsequently expand to pavers, sprayers etc. In long term, ACE also wants to get into excavator segment as well which is currently dominated by L&T. After acquiring a Romanian company in 2007, company has recently signed an MOU to acquire a Chinese company.

Importantly, the market for the construction equipment has increased rapidly due to unprecedented rise in development of infrastructure activities in the country. Further, the momentum will be maintained in long run as the Indian economy is in a takeoff phase and has developed necessary strengths to achieve the target of being a developed nation by the year 2020. Although it may take a hit in short term due to global economic turmoil and tight liquidity scenario, but sooner or later it will be back on track as the situation improves. Financially company has done excellent for FY08 and reported excellent set of nos for H1FY08. However for the Dec qtr, suddenly its topline, bottomline as well as operating margin fell drastically, maybe due to ongoing slowdown in construction activities. Despite this for the first three quarters it has recorded 25% increase in sales to Rs 352 cr and 20% fall in profit to 22 cr. Thus it has already clocked an EPS of Rs 2.40 till date. Favorably, its input cost has come down considerably as steel constitutes nearly 55~60% of raw material cost. On a conservative basis, it may end FY09 with topline of Rs 425 cr and bottomline of Rs 25 cr leading to an EPS of Rs 3 on current equity of Rs 18 cr having face value as Rs 2/- per share. Its a debt free company and even has Rs 12.50 cr as unutilized amount from its IPO proceed of Rs 60 cr in 2006 which it may utilize for its future capex & growth plans. Considering the company’s leadership position and future prospect of construction equipment industry, investors can buy this scrip at current level for a price target of Rs 25 in 18~24 months.

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