STOCK WATCH
While TISCO and other mid-cap steel scrips corrected sharply last week, Ashirwad Steel (Code: 526847) (Rs.36.45), a sponge iron manufacturer, was busy hitting upper circuits continuously. This means that knowledgeable persons are accumulating the scrip before the March’05 figures are announced. It’s trading very cheap at a PE of 2 on an expected EPS of around Rs15 for FY05. Its share price can even double from the current levels if the numbers are good. Aggressive investors can take an exposure in this company for handsome gains.
Indo Asian Fuse Gear (Code: 517318) (Rs.89.00) manufactures electrical safety devices such as miniature circuit breakers, residual current circuit breakers, HRC fuses, transformers, switchgears, wires & wiring accessories, industrial plugs & sockets, contactor relays, distribution boards etc. Its operating margins are better than that of Havells. It will end FY05 with an EPS of more than Rs12 and is expected to return to the dividend by 20% dividend for FY05. Dometic funds are bound to take exposure in this growing company and SBI MF has initiated the process by taking a small exposure recently. Besides it has come out of T2T segment, which may trigger the scrip in the short term. Medium term investors can expect a price of Rs150 in 12 months.
In a few months, Gujarat NRE Coke’s (Code: 512579) (Rs.126.50) second plant of 3,24,000 TPA will be fully operational. It is setting up its third plant at Karnataka for 4,00,000 TPA, which will take the company’s total capacity to 1.08 million TPA and 1.48 million TPA for the whole group. Due to the rising price of coking coal, which is the basic raw material, the company is importing Chinese technology to help reduce its input cost. Last month, it raised USD 55 million through FCCB. For FY05, it can report sales of Rs450 cr. and NP of Rs.135 cr. i.e. an EPS of Rs14 on the expanded equity of Rs94.32 cr. after the bonus issue. Considering its expansion plans and strategic tie-up with BHP Billiton, its share price can easily cross Rs200 in the medium term.
Orissa Sponge (Code: 504864) (Rs.57.70) is expected to end FY05 with net sales of Rs138 cr. and NP of Rs11 cr. Although its margin is a bit under pressure since the last 2~3 quarters, it will improve in future due to capacity expansion and the setting up of a power plant. It has ambitious long-term expansion plans to double its capacity of sponge iron as well as steel billets. For FY05 and FY06, it can report an EPS of Rs9 and Rs13 respectively. A good long term bet.
Investors are advised to accumulate Reliance Industries Ltd. (Code: 500325) (Rs.557.15) at every sharp decline. With rising crude oil prices, its refining margins will also increase. It has also increased its product prices due to rising input cost. Besides, it has very strong support at Rs540 and the management will not let it fall much as they have bought back shares worth Rs150 cr. only against the approved for Rs2999 cr. The risk-reward ratio is in favour of bulls and its share price can cross Rs650 soon.
Lot of speculation is going around in the Tech sector and analysts expect better future guidance from biggies like Infosys, Wipro etc. The Tech sector is expected to out- perform in coming months and one can buy Aftek Infosys (Code: 530707) (Rs79.00) at current level as its still available at a single digit PE. Although promoters hold only 14% stake (26% with Deutsche Bank Trust Company Americas as Depository) but it is a FII favourite who hold 13% stake and recently Goldman Sach acquired more than 3% stake at Rs80.
Indo Asian Fuse Gear (Code: 517318) (Rs.89.00) manufactures electrical safety devices such as miniature circuit breakers, residual current circuit breakers, HRC fuses, transformers, switchgears, wires & wiring accessories, industrial plugs & sockets, contactor relays, distribution boards etc. Its operating margins are better than that of Havells. It will end FY05 with an EPS of more than Rs12 and is expected to return to the dividend by 20% dividend for FY05. Dometic funds are bound to take exposure in this growing company and SBI MF has initiated the process by taking a small exposure recently. Besides it has come out of T2T segment, which may trigger the scrip in the short term. Medium term investors can expect a price of Rs150 in 12 months.
In a few months, Gujarat NRE Coke’s (Code: 512579) (Rs.126.50) second plant of 3,24,000 TPA will be fully operational. It is setting up its third plant at Karnataka for 4,00,000 TPA, which will take the company’s total capacity to 1.08 million TPA and 1.48 million TPA for the whole group. Due to the rising price of coking coal, which is the basic raw material, the company is importing Chinese technology to help reduce its input cost. Last month, it raised USD 55 million through FCCB. For FY05, it can report sales of Rs450 cr. and NP of Rs.135 cr. i.e. an EPS of Rs14 on the expanded equity of Rs94.32 cr. after the bonus issue. Considering its expansion plans and strategic tie-up with BHP Billiton, its share price can easily cross Rs200 in the medium term.
Orissa Sponge (Code: 504864) (Rs.57.70) is expected to end FY05 with net sales of Rs138 cr. and NP of Rs11 cr. Although its margin is a bit under pressure since the last 2~3 quarters, it will improve in future due to capacity expansion and the setting up of a power plant. It has ambitious long-term expansion plans to double its capacity of sponge iron as well as steel billets. For FY05 and FY06, it can report an EPS of Rs9 and Rs13 respectively. A good long term bet.
Investors are advised to accumulate Reliance Industries Ltd. (Code: 500325) (Rs.557.15) at every sharp decline. With rising crude oil prices, its refining margins will also increase. It has also increased its product prices due to rising input cost. Besides, it has very strong support at Rs540 and the management will not let it fall much as they have bought back shares worth Rs150 cr. only against the approved for Rs2999 cr. The risk-reward ratio is in favour of bulls and its share price can cross Rs650 soon.
Lot of speculation is going around in the Tech sector and analysts expect better future guidance from biggies like Infosys, Wipro etc. The Tech sector is expected to out- perform in coming months and one can buy Aftek Infosys (Code: 530707) (Rs79.00) at current level as its still available at a single digit PE. Although promoters hold only 14% stake (26% with Deutsche Bank Trust Company Americas as Depository) but it is a FII favourite who hold 13% stake and recently Goldman Sach acquired more than 3% stake at Rs80.
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