STOCK WATCH

Kilburn Engineering (Code No: 522101) (Rs.53.55) operates in areas of process design, engineering, manufacture installation and commissioning of turnkey plants and systems catering to petrochemicals, chemical fertilizers, refineries, oil & gas and food processing. To improve its working capital requirement, the company is coming out with 1:1 Rights issue at Rs.25 i.e. 50% discount to its CMP. For FY05 ending 30 Sept 2005, it is expected to report sales of Rs.45 cr. and NP of Rs.6.50 cr. For FY07, it can post NP of Rs.8 cr. on Sales of Rs.70 cr., which means an EPS of Rs.6 on its diluted equity of Rs.13.50 cr. Its share price has the potential to rise 50% and can trade above Rs.60 on ex-right basis. A strong buy as the downside is minimal from current levels

The ongoing panic in the mid cap sector has given a good opportunity to accumulate hotel scrips at reasonable valuations. Sayaji Hotels (Code No: 523710) (Rs.46.35) which touched a high of Rs.73 and has fallen below Rs.50 is one such stock. To cater to the increasing demand for quality rooms, Sayaji is expanding regularly and had constructed and commissioned 44 rooms with state-of-the-art Quorom Lounge at Indore last year. Interestingly, its ratio of food & beverages sales to room sales is 1.6 times as against industry norm of 0.7 times. The company further plans to add 77 rooms and 3 restaurants for which HUDCO has already agreed to finance. With a room base of over 200, Sayaji is expected to attract major national and international conferences and may clock a turnover of Rs.35 cr. and NP of Rs.6 cr. with an EPS of Rs.8 in FY06. A solid buy for the long-term.

In Textiles, investors can safely accumulate Seasons Textile (Code No: 514264) (Rs.17.50) as it has corrected substantially from its recent high of Rs.30 to the current Rs.18 levels. The company is engaged in the manufacture of furnishing fabrics on the latest automatic shuttleless loom and nearly 40% is exported. Last year on modernisation, it added new capacity of 2,40,000 mtrs in Noida plant whose full impact will be visible in the current fiscal. For the full year FY06, it may report an diluted EPS of Rs.4. Besides, the scrip has a strong support at Rs.15 as the company made preferential allotment of 15 lakh shares at Rs.15. With a book value of Rs.25 it’s a steal!

KIC Metallics(Code No:513693) (Rs.75) is into manufactures Pig iron, castings and slag cement. Recently, it set up a 1,44,000 TPA captive coke oven plant and is putting up a hot stove and 4 MW captive power plant. With all these developments, its input cost will come down substantially. Further, it plans to put 1,50,000 TPA steel billet plant and 1,00,00 TPA sponge iron plant besides increasing its pig iron capacity to 1,50,000 tonnes. Its June’05 qtr numbers were not so good as the MBF plant was shut down for nearly a month for relining. For FY06, it can report Sales of Rs.180 cr. and NP of Rs.10 cr. To fund its expansion the company is taking term loans and may raise capital from the market, which will dilute its equity. Yet, it’s a good bet at current levels and can give 30~50% return in a year.

Although there are talks of further fall in steel prices in the international market, SAIL (Code No: 500113) (Rs.57.50) is a reasonably good bet in this sector. Interestingly, this market leader which used to report heavy losses till a few years back is virtually debt free company today. It has chalked out huge expansion plans with a capex of Rs.35,000 cr. to maintain its leadership position for another 10 years. For FY05 its Sales jumped 33% Rs.29234 cr. and NP increased by 170% to Rs.6816 cr. registering an EPS of whopping Rs.17 and on which the company declared 33% dividend. For FY06, it can report an EPS of Rs.12~13 and may declare 25% dividend which works out to a dividend yield of more than 4%. Besides, the scrip has the potential to appreciate 50% in 9~12 months.

Haldyn Glass Gujarat Ltd.(Code No:515147) (Rs.67.85) is manufactures glass bottles/glass containers which are supplied to the beverages, beer, liquor, soft drinks and processed food industries. Last year, it successfully installed a captive power plant which has reduced the cost of production substantially. Recently, the company obtained the ISO 9001:2000 Standard Certification and is currently implementing the Enterprise Resource Planning (ERP) System to support its core process. For FY06 it can clock a turnover of Rs.60 cr. and NP of Rs.7.50 cr. which can lead to an EPS of Rs.14 on its current equity of Rs.5.40 cr. Investors can buy at CMP with a price target of Rs.120 in 9~12 months.