STOCK WATCH

Of late, the infrastructure sector has become the market favourite and Valecha Engineering (Code No.532389) (Rs.114) still trading reasonably cheap compared to its peers and considering its future growth prospects. For the six months ending 30th Sept. 2004, its revenues have increased 47 per cent to Rs70 cr. and NP was up 44 per cent to Rs4 cr. For the full year 2004-05, it can report an EPS of Rs 18~20 as it has a strong order book of more than Rs225 cr.

Because of the differences among the Ambani brothers, IPCL (Code No.500105) (Rs.186.40) has been beaten down badly and offers a good opportunity to buy for the long term. For the first half year, the company reported a Net Sales of Rs3629 cr., up 35 per cent whereas NP zoomed 181 per cent to Rs261 cr. in spite of a very high tax provision of Rs171 cr. The petrochemicals cycle is in an uptrend and it expected to report an EPS of around Rs22. Appreciation of Rs 60~75 is possible in the next 3 months.

JB Chemicals & Pharmaceuticals (Code No.506943) (Rs.371.40) is discounted cheap compared to its peers, who have clocked an aggressive growth rate. But now with the company entering the high growth biotech sector, launching new drugs and putting more thrust on exports and R&D it has joined the high growth league. It is a good dividend paying company which reported sales of Rs175 cr. (up 19%) and NP of Rs32.25 cr. (up 14%) during the first half ending 30th Sept. 2004. For the current full year, it can report an EPS of Rs36~38. Applying a reasonable PE multiple of 12, the stock should trade above Rs450. Accumulate at every dip and sharp correction for the long term.

Aarti Industries (Code No.524208) (Rs. 233.60) is a scrip that has the potential to give handsome returns in the medium to long term. In the first half its sales grew 27 per cent to Rs319 cr. and NP increased by 13 per cent to Rs22.30 cr. For the full year FY05, it can report an EPS of Rs34. At the current market price (CMP) it’s trading at a PE of 7 leaving ample scope for an upmove in future.

Balaji Amines (Code No.530999) (Rs.173) is one of the lowest cost producer of Methyl Amines in the world. It is into manufacturing of Speciality Chemicals, which find application in Pharmaceuticals, Textiles, Agrochemicals, Paints and Dyestuff. For the full year FY05, it is expected to report an EPS of Rs25. Buy at declines for long term gain of 40~50 per cent in 15 months.

Ceekay Diakin(Code No.505923) (Rs.40) is reportedly doing well. This auto ancillary posted impressive numbers for the first half of the current year. Sales were up 27 per cent to Rs39.50 cr. whereas NP shot up to Rs1.22 cr. from Rs0.10 cr. last year. For FY05, it is expected to report an EPS of more than Rs7. Buy it and forget it for the next 15 months.

Inspite of declaring a bonus, Orient Abrasives (Code No.504879) (Rs.186) did not appreciate much and is discounted poorly by the market. Its future looks very promising and the company has posted excellent numbers for the current first half ending 30th Sept. 2004. Its Sales increased 33 per cent to Rs80.50 cr. whereas NP jumped 52 per cent to R 9.30 cr. For the full year FY05, it could report an EPS of Rs32 on its expanded equity of Rs6 cr. and 40-50 per cent appreciation in its share price can be expected over the next 6 months.