STOCK WATCH

Of late, metal scrips are coming back in action and Stelco Strips (Code No: 513530) (Rs.25.55) can rise sharply to hit a new high. It is engaged in the manufacture of cold-rolled close-annealed (CRCA) steel strips of mild steel, medium and high-carbon steel. Recently it came out with very encouraging numbers for the June’05 qtr. Its Net Sales & NP grew by 50% to Rs.31.50 cr. and 0.94 cr. respectively. For full FY06, it can report an EPS of Rs.7 on its small equity of Rs.6.90 cr. Share price can rise by 50% in 12 months. A good medium term buy in the metal sector.

Mahalaxmi Seamless (Code No: 513460) (Rs.41) is among the largest manufacturers of cold drawn seamless pipes and tubes in India. Since the future prospects of the pipe industry are quite good, investment in this company is quite promising. Its FY05 numbers were quite encouraging with Sales up 60% to Rs.28 cr. and NP increased by 140% to Rs.2.05 cr. For FY06, it is expected to post a topline of Rs.35 cr. and NP of Rs.3.5 cr., which means an EPS of Rs.7 on the current equity of Rs.5.30 cr. Buy at declines only as the scrip has seen a smart run up.

Pacific Cotspin (Code No: 531118) (Rs.15.43) is a leading producer of superior cotton yarn in eastern India. It’s planning to increase its capacity by over 50% from around 26000 spindles to 40000 spindles. Notably, the company is raising about Rs.10 cr. by way of preferential allotment of 58 lakh shares to promoters @ Rs.17.25 per share. Its June numbers were quite impressive with sales rising 50% to Rs.36 cr. and NP stood at Rs.1.50 cr. compared to Rs.0.10 cr. last year. For the full year, it may report an EPS of Rs.2.5 on its diluted equity of Rs.27.90 cr. A few days back the company has also approved to merge Salem Vanijya, an unlisted company, with itself.

Purely on fundamentals, Konark Synthetic (Code No: 514128) (Rs.52.15) looks extremely cheap and can double from the current level. It’s a relatively smaller player in the texturised yarn business with a topline of around Rs.20 cr. It has a very tiny equity capital of Rs.1.33 cr. and promoters hold around 49% stake. It came out with excellent result for June’05 qtr. Its Sales grew by 50% to Rs.5.65 cr. whereas its NP zoomed to 52 lakh compared to 2 lakh last year. For FY06, it may report an EPS of Rs.14, which means its trading at a forward PE of 3x. Grab it before its too late.

One textile scrip that came out with stunning numbers for the June’05 qtr was Gupta Synthetics (Code No: 514116) (Rs.150.50). It is engaged in texturising, twisting and dyeing of yarn, weaving of fabrics and is also one of the largest manufacturer and processors of man-made fabrics specially sarees and dress materials. Sales have more than tripled to Rs.36 cr. and NP jumped nearly 900% to Rs.1.25 cr. reporting an EPS of Rs.16 for the qtr. It has a very tiny equity of Rs.1.60 cr. in which the promoters hold 54% stake. With an expected EPS of around Rs.40~45 and such low floating stock this scrip can easily double in a matter of few weeks. Catch it if you can.

Although FY05 was not that good for Mayur Uniquoters (Code No: 522249) (Rs.28.00), the current fiscal can turnout to be a good year. The company is engaged in the manufacture of PU/PVC Synthetic leather. It is expected to report higher margins this fiscal due to better operating efficiency and good price realisation. It came out with pretty decent results for the June’05 qtr. Its turnover grew by 22% to Rs.13 cr. but its bottomline increased by 65% to Rs.0.61 cr. It can report an EPS of more than Rs.5 on its current equity of Rs.5 cr. Accumulate on declines.