Jupiter Bioscience- Rs.143.00

Established in 1985, Jupiter Bioscience Limited (JBL) is among the few pharma companies in the world with core competence in peptide chemistry, organic chemistry, chiral chemistry and biotechnology. In fact, JBL was the first company in Asia to introduce and commercialise molecules based on peptide chemistry. It has three specialised product lines viz. Peptide reagents and protected amino acids, Drug intermediates & Speciality Chemicals as well as fine chemicals. JBL has two manufacturing facilities - one at Bidar in Karnataka and the other at Cheriyal in Medak District in Andhra Pradesh, which is a 100% EOU. JBL is very strong not only in research & development but also in process development with its focus on advanced organic and peptide chemistries. It has constantly introduced new peptide reagents, coupling reagents and protected amino acids in the market.

With the successful launch of peptide precursors, the main raw materials for generic peptide drugs, JBL is now globally positioned to manufacture key raw materials for peptide pharmaceuticals in lab scale quantities, pilot scale quantities and commercial quantities. It has developed expertise in peptide precursors in Diagnostics, Vaccines and Peptide Antibiotics apart from concentrating on research of new peptide molecules. JBL is also moving up the value chain to commercialise and introduce generic peptide drugs such as Oxytocin, Vasopressin, Desmopressin, Leuprolide, Lisinopril and Calcitonin in the domestic and international markets. Its thrust has been on Multi-process capabilities of Pharmaceutical intermediates and API's. Lately, it renewed its interest in Speciality Drug Intermediates for treatment of cardiovascular diseases, AIDS and Cancer. To increase it global presence, JBL is aggressively participating in exhibitions, fairs and trade shows all over the world. Moreover, it is presently working on suitable entry strategies into the US and European markets through appropriate alliances. Notably, JBL has following 3 subsidiaries:

Jupiter Bioscience – India which specializes in Manufacturing Drug Intermediates, Specialty Chemicals, Peptide Reagents and Protected Amino Acids.

Sven Genetech – India which specializes in small volume side chain Protected Amino Acids, Peptides, Beta Amino Acids and Unusual Amino Acids. It has established in-house facilities for microbiology and biochemistry to carry out development and scaling up of enzymes and protein purification.

Jupiter Bioscience – USA which offers Custom Peptides from USA and is in process of establishing a facility in USA for offering Clinical and Generic Peptide Bulk Actives.

The year 2005 is a major eventful year wherein patents for a majority of the drugs in the world will expire and open up a huge market for pharmaceutical companies worldwide. JBL is growing steadily year after year with FY05 Sales increasing 7% to Rs.70.50 cr. and the NP growth of 21% to 18.50 cr. For future growth plans, JBL is planning to raise capital through ADR/GDR/FCCB and is also making preferential allotment of 27.50 lakh shares to promoters. Considering these factors, JBL is expected to report Sales of Rs.80 cr. and NP Rs.21 cr. which can lead to on an EPS of Rs.18 on its expanded equity of Rs.11.60 cr. Only aggressive investors are recommended to buy this scrip with a price target of Rs.220 in 6~9 months.

Flex Foods - Rs.27.50

Incorporated in 1990, Flex Foods Ltd (FFL) is part of the well-known Flex Group. It is in the business of agro based value added food products catering to international markets mainly in Europe, USA, Canada and Middle East. Today, the company is one of the major producers of Freeze-dried & Frozen products in the country. It offers a wide range of Vacuum Freeze Dried, Air-Dried, Frozen and IQF (Individually Quick Frozen) product range of mushrooms, herbs, spices and fruits / vegetables, meeting strict quality & hygiene standards. Canned button mushrooms in various shapes and sizes is also manufactured and sold under the brand name ‘Chef’s Choice’. Recently, the company introduced a new range of frozen and freeze dried culinary herbs for the export market.

FFL can boast of world class manufacturing facilities with state-of-the-art technology, good management practices (GMP) & quality systems. The processing infrastructure includes the most modern plant & equipment from leading technology providers i.e. M/s Niroa’s, Denmark; M/s Non, Holland; M/s Binder, Germany & Eurotex, UK along with others from leading Indian companies. The plant can process upto 20000 MTA of fruits & vegetables per annum in the form of freeze dried, frozen, IQF, air-dried and canned products. The facilities have been certified for Kosher and HACCP standards. In order to achieve the right quality of finished products, most of the input materials including mushroom, herbs and other fruits & vegetables are grown under the supervision of in-house experts making it a fully integrated producer. Besides, a captive mushroom cultivation unit with an annual capacity of 2000 MTA is fully equipped with international quality monitoring techniques and best storage facilities to ensure that the fresh & hygienic inputs are always available to the processing units. Due to the rising demand for frozen food products in international markets, the company has recently expanded and set up a Air dried (Dehydrated) and Frozen (Individually Quick Frozen) facilities for mushrooms, herbs, fruits & vegetables at its existing site at Dehradun at an estimated cost of Rs.28.50 cr.

The Indian mushroom industry is geared for considerable growth in production over the next few years as the export demand escalates. The Middle East, Africa, East European countries etc. are still growing markets for Indian mushrooms and are yet to be tapped. For FY05, company’s net Sales remained flat at Rs.25 cr. but its NP jumped 42% to Rs.8 cr. due to lower tax provision. For FY06 it can report Sales of Rs.30 cr. and NP of Rs.7.50 cr. which means an EPS of Rs.6 on its current equity of Rs.12.44 cr. Investors can accumulate this scrip at declines with a price target of Rs.50 (80% appreciation) in 12~15 months.

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.