STOCK WATCH

MP Glychem Ltd. (Code: 519383) (Rs.38.65), belonging to the well-known Ruchi Group is in the business of solvent extraction, edible oils, soya foods, vanaspati and dairy products. It is a regular profit making company with strong fundamentals. For FY05, it reported a topline of Rs.1077 cr. and a bottomline of Rs.12 cr. and is expected to declare around 12% dividend in coming weeks. With an expected EPS of Rs.7, a book value of nearly Rs.45 and a market cap of only Rs.84 cr., it is available reasonably cheap in such a high market. Besides, a merger with Ruchi Soya cannot be ruled out, which will lead to an upward re-rating of the scrip.

Mahindra Ugine Steel Co. Ltd. (Code: 504823) (Rs.126.85) belonging to the Mahindra & Mahindra Group is a well-known manufacturer of alloy steel in the country. It also has a Stampings Division to manufacture pressed sheet metal components and assemblies To cater to the increasing demand, the company is raising its production capacity from 1,10,000 to 1,50,000 TPA by early 2006 and further to 2,40,000 TPA by 2008. For FY06, it may report sales of Rs.650 cr. and NP of Rs.55 cr., which means an EPS of Rs.18. The scrip has attracted the interest of institutional investors and may rise by 50% in the coming 6 months.

In spite of the huge volatility in steel prices, National Steel & Agro Ltd. (Code: 513179) (Rs.29.35) has posted consistent and steady profit margin last year. Although the company has high debt and is not declaring any dividend, its still estimated to report an EPS of Rs.6 for FY06 and has huge reserves of Rs.115 cr. i.e. a BV of Rs.46. Due to the rising demand, the company is regularly modernising and expanding its production capacity. It also has one of the most modern state-of-the-art colour coating line. In spite of the bright future ahead, the company’s current market cap is only Rs.100 cr. against its expected topline of around Rs.1650 cr. and bottomline of 19.50 cr. Its share price is bound to hit Rs.50 in the near future.

In view of the growing demand for petrochemicals in the international market, IPCL (Code: 500105) (Rs.191) is undergoing a Rs.500 cr. expansion, wherein it plans to increase the Vadodara cracker capacity by 12,000 TPA, expansion of its Benzene capacity by 14,000 TPD and expansion of its PVC plant to 3,15,000 TPA from 2,45,000 TPA with corresponding increase in the capacity of its Vinyl Chloride Monomer plant. Part expansion has already been carried out and is likely to be completed by mid 2006. For FY06, IPCL may report sales of Rs.9500 cr. and NP of Rs.625 cr. on a conservative basis. Non-availability and price increase of natural gas, rising crude oil prices and its merger with Reliance Industries are some concerns. Yet the scrip has the potential to appreciate 50% in 9~12 months in this bull market.

Another steel scrip that investors can watch out for is Modern Steel (Code: 513303) (Rs.115.30). It makes steel alloys and special steels apart form producing Billets, Rounds, RCS, Flats and Special Profiles. The company has initiated a modernization & expansion plan at an estimated capital outlay of Rs.32 cr. The capacity of its Steel Melting Shop will be enhanced by 50000 MTA while the Rolling Mill capacity will be enhanced by 36000 MTA. For FY06, it can register Sales of Rs.325 cr. and post a NP of Rs.13.50 cr., which means an EPS of Rs.28 on its tiny equity of Rs.4.80 cr. A good short to medium term bet.

Of late, housing finance companies are buzzing on the bourses on various rumours and their promising future. Interestingly in such a high market, Canfin Homes (Code: 511196) (Rs.50.85) is available at less than 5 PE and with a dividend yield of around 5%. It has huge reserves of about Rs.130 cr. on its equity of Rs.20.50 cr. leading to a book value of Rs.74. For FY06, it may report total revenue of Rs.135 cr. and NP of Rs.20 cr. Once the selling by its promoters like Canara Bank, HDFC Bank and UTI is fully absorbed, the share will shoot up sharply. Investors can expect a price target of Rs.75 in 9-12 months.