STOCK WATCH

Like SIEL Ltd, Bihar Caustic there is another scrip, which is trading cheap from the caustic soda sector, is Standard Industries (Code No: 530017) (Rs.25.85). Basically, it is a turnaround story thanks higher price realisation, better operating efficiency and lower interest burden. Sharing its optimistic outlook with investors, it even declared 12.5% interim dividend on its share of Rs.5 face value for FY05. For the six months ending 31 March 2005, its top-line grew by 18% to Rs.98.50 cr. whereas its NP stood at Rs.19 cr. against a net loss of 3 cr. in the corresponding previous period. It is expected to end FY05 with an EPS of more than Rs.6, which may rise to Rs.8 in FY06. A strong buy.

Its been observed that scrips with very low floating stock shoot up fast once they catch market attention. One such scrip is Ravalgaon Sugar (Code No: 507300) (Rs.3800). Engaged in the production of sugar and confectionery with brands like ‘Pan Pasand’, ‘Mango Mood’, ‘Coffee Break’ etc. the company has a very small equity of Rs.0.34 cr. With a face value of Rs.50 per share and promoter holding at 49%, the floating stock is little above 30,000 shares. At CMP, market cap of this Rs.65 cr. company comes to only Rs.26 cr. For FY05, its net sales increased 12% to Rs.66 cr. but its NP jumped 295% to Rs.3.80 cr. registering an EPS of Rs.560 and Cash EPS of Rs.925. With normal rains and better prospects of the Sugar industry its share price can easily go beyond Rs.5500. Besides, it is a strong bonus candidate as it has huge reserves of Rs.20 cr. leading to a book value of more than Rs.3000. On bonus announcement its share price can even double from hereon.

Aggressive investors can accumulate Kirloskar Ferrous (Code No: 500245) (Rs.33.25) due to various developments taking place in the company. First, the company has reduced its interest burden considerably by paying off its high cost debt. Secondly, the management is planning to reduce its equity by 50% by writing off accumulated losses, which is a positive sign. Besides, the recent cool off in iron ore and coke prices will reduce its raw material cost as the company manufactures pig iron and ferrous castings. It reported decent numbers for March 2005 and is expected to post an EPS of Rs.7 on its current equity of Rs.72 cr.

Bilpower (Code No: 531590) (Rs.70.95) is a pioneer in manufacturing Transformer, laminations and stampings and ready to assemble cores for Distribution Transformers and trading of CRGO, CRNGO and Transformers accessories. Due to the government’s thrust on the power sector, the company is growing at a scorching pace. For FY05, its turnover increased by 62% to Rs.67 cr. and NP increased by 162% to Rs.4.50 cr. registering an EPS of Rs.7.5 on its current equity of Rs.6 cr. Recently, the company withdrew the proposal of preferential allotment which could have diluted its equity. For FY06, it can post an EPS of Rs.11/12. A good medium term buys in the power ancillary sector.

Construction and Infrastructure scrips are hitting dizzy heighs due to their strong future prospects. But Eldeco Housing & Industries Ltd (Code No :523329) (Rs.105.70), the flagship company of Eldeco group, is trading very cheap at 4 PE. It is among the very few listed companies engaged in civil construction and housing. Due to easy availability of housing loan, this 2 decades old company is witnessing enormous growth. Its fully booked for the next 4 yrs having various residential projects in hand amounting to whopping Rs.450 cr. spread across Lucknow, Kanpur & Delhi. For FY05, its topline grew by 25% but its bottomline has more than tripled to Rs.5.50 cr. leading to an EPS of Rs.28 on a very tiny equity of Rs.1.97 cr. Although in FY06, it will not register the same OPM, still with increase in sales, it can report better profit in absolute terms. Its share price can double or even shoot up like D S Kulkarni or Madhucon Project once it catches investors fancy since the floating stock is very low as 60% is held by the promoters.

Of late some action can be seen building up in Vardhman Inds. (Code No: 513534) (Rs.29.75). But it is not from the Vardhman Group but a 20 year old company run by Kapil Jain having interest in steel and vanaspati. To cash on the metal boom, the company is putting up a Power Plant of 10MW capacity along with a Steel Melting Shop (SMS) with a capacity to manufacture about 68,000 MTA of billets in the state of Jharkhand at a total estimated cost of Rs.29 cr. For the nine months ending 31 Dec 2004, its sales grew marginally to Rs.172 cr. whereas its NP increased by 20% to Rs.4.40 cr. It can report an EPS of Rs.7 for FY05 and Rs.9 FY06 respectively.