Performance - 2006 Reccomendation

Performance Scorecard as on November 2007

Sr.	Date	Scrip Name	Recco	High		Return
			Price	Price		in %
	Appreciated more than 5x times
1	6-Feb-06	Ashiana housing	79	532		573%
2	20-Feb-06	Vijay Shanthi	36	220		511%
3	15-May-06	Jaihind Project	36	190		428%
	Appreciated 2x to 5x times
4	7-Aug-06	Bartronic	61	288		372%
5	16-Jan-06	Manappuram Gen	25	106		324%
6	24-Jul-06	Gitanjali Gems	114	450		295%
7	11-Sep-06	Nile Ltd	73	284		289%
8	10-Jul-06	Guj Apollo Equip $	81	315		289%
9	31-Jul-06	Easun Reyrolle *	95	356		275%
10	17-Jul-06	Saksoft	76	270		255%
11	13-Mar-06	PAE Ltd	14	49		250%
12	16-Oct-06	Kwlaity Diary	16	55		244%
13	6-Mar-06	Ramsarup Industries	80	251		214%
14	2-Jan-06	Stelco Strips	19	58		205%
15	27-Mar-06	Int Combustion	302	914		203%
16	20-Nov-06	Gontermann Piper	39	114		192%
17	4-Sep-06	Electrotherm	224	644		188%
18	10-Jul-06	Suryajyoti Spinning	32	88		175%
19	2-Oct-06	Torrent Cables	131	350		167%
20	22-May-06	Gemini Comm * $	109	275		152%
21	12-Jun-06	LIC Housing Finance	156	389		149%
22	1-May-06	IMP Power	95	233		145%
23	19-Jun-06	Wanbury	72	174		142%
24	24-Jul-06	Aarvee Denim	52	122		135%
25	17-Apr-06	VST Tillers	100	233		133%
26	27-Mar-06	Guj Reclaim	255	572		124%
27	21-Aug-06	BSEL Infra	45	100		122%
28	3-Apr-06	Steel Strip Wheel	121	264		118%
29	11-Dec-06	Sagar Cement	119	255		114%
30	6-Feb-06	Gupta Synthetic	178	376		111%
31	6-Nov-06	Tulsyan NEC	46	96		109%
32	31-Jul-06	Paramoun Comm *	28	58		107%
33	25-Sep-06	Shivalik Global	27	55		104%
34	3-Apr-06	Polymedicure	85	173		104%
35	8-May-06	Hester Pharma #	93	188		102%
	Appreciated 50% to 100%
36	27-Feb-06	ITL Ltd	37	72		95%
37	25-Sep-06	Ahlcon Parenteral	48	93		94%
38	13-Feb-06	Austin Engineering	78	150		92%
39	9-Oct-06	Tonira Pharma	18	34		89%
40	26-Jun-06	Sayaji hotel	49	92		88%
41	18-Dec-06	Span Diagnostic	48	90		88%
42	27-Nov-06	Savera Hotels	60	112		87%
43	20-Mar-06	Nikhil Adhesives	22	41		86%
44	29-May-06	Simmonds Marshall	47	87		85%
45	4-Dec-06	Aftek Ltd	53	96		81%
46	25-Dec-06	Vinay Cement	29	52		79%
47	3-Jul-06	RPG Life Science	117	207		77%
48	21-Aug-06	Virinchi Technology	37	64		73%
49	23-Jan-06	Canfin Homes	52	88		69%
50	1-May-06	Amex Info (Tutis)	25	41		64%
51	20-Mar-06	Hariyana Ship	26	42		62%
52	23-Jan-06	Mukand Ltd	84	135		61%
53	2-Oct-06	APW President	114	183		61%
54	7-Aug-06	Surya Pharma	79	125		58%
55	5-Jun-06	Suryavanshi Spin	62	98		58%
56	18-Dec-06	JK Lakshmi Cement	135	210		56%
57	24-Apr-06	Uniprodicts	54	83		54%
58	22-May-06	Allahabad Bank	82	126		54%
59	14-Aug-06	ABC Bearings	124	190		53%
60	25-Dec-06	Choksi Lab	19	29		53%
	Appreciated 25% to 50%
61	4-Sep-06	Revathi Equipment	636	950		49%
62	18-Sep-06	Syncom Formulation	49	73		49%
63	20-Feb-06	Rain Calcining	42	62		48%
64	29-May-06	Control Print	84	124		48%
65	10-Apr-06	Suryalata Spining	78	112		44%
66	8-May-06	Pacific Cotspin	10.5	15		43%
67	12-Jun-06	Micro Tech	211	297		41%
68	30-Jan-06	Diamines & Chem	61	85		39%
69	17-Jul-06	Ambika Cotton Mills	163	227		39%
70	13-Feb-06	Karur KCP Pack	70	97		39%
71	27-Feb-06	Sarla Polyester	133	184		38%
72	17-Apr-06	Paradyne Info	68	94		38%
73	4-Dec-06	Albert David	91	125		37%
74	5-Jun-06	Ador Fontech Ltd	110	151		37%
75	27-Nov-06	Amarjyothi Spinning	38	52		37%
76	6-Mar-06	Kovai Medical	59	80		36%
77	13-Nov-06	Gandhi Speical	143	191		34%
78	24-Apr-06	Satnam Overseas	85	112		32%
79	9-Jan-06	Nilkamal Plastics	191	250		31%
80	9-Jan-06	Necter Lifescience	225	294		31%
81	9-Oct-06	Ceekay Diakin	87	113		30%
82	18-Sep-06	Aarti Ind	38	49		29%
83	6-Nov-06	Coral Lab	129	166		29%
84	13-Mar-06	Suraj Diamond	61	78		28%
85	30-Oct-06	Medi Caps	68	86		26%
86	3-Jul-06	Oudh Sugar Mills	121	151		25%
	Appreciated below 25%
87	10-Apr-06	Indian toners	34	41		21%
88	30-Oct-06	Liberty Phosphate	21	25		19%
89	14-Aug-06	Pricol	37	44		19%
90	15-May-06	Dhanlaxmi Fabrics	56	65		16%
91	30-Jan-06	Triveni Glass	94	107		14%
92	13-Nov-06	APM Industries	37	42		14%
93	28-Aug-06	Fulford	586	664		13%
94	19-Jun-06	Upper Ganges	173	195		13%
95	16-Jan-06	Kallam Spinning	33	37		12%
96	20-Nov-06	GM Brew	120	131		9%
97	16-Oct-06	MM Forging	171	186		9%
98	11-Dec-06	Bhagiradha Chem	139	148		6%
99	11-Sep-06	Hyderabad Ind	307	325		6%
100	2-Jan-06	Manali Petro	25	26		4%
101	26-Jun-06	Ponni Sugar	69	70		1%
102	28-Aug-06	Hind Ind	36	36		0%

* ---> Recco price adjusted for Split

$ ---> Recco price adjusted for Bonus

# ---> Recco price adjusted for Rights

@ ---> Demerger / Merger Adjustment

Disclaimer: These are not the actual profit figures booked by any investor but a compilation to indicate the potential/quality of recommendations.

Alufluoride Ltd - Rs.17.55

Promoted by V S Prasad and K Ramachandra Reddy, Alufluoride Ltd (AL) was incorporated as a private limited company in Nov.'84 and subsequently converted into a public limited in Oct.'92. In 1995, it set up a plant to manufacture aluminium fluoride (ALF3) at Vishakapatnam with technical know-how from Navin Fluorine Industries. Since then, AL has emerged as reputed manufacturer and exporter of ALF3 with a current production capacity of 6000 TPA. ALF3 is used as flux in reducing the melting point of Alumina during the electrolytic process of producing Aluminium. This is of critical importance for lowering consumption of electricity during the smelting process. Consequently, Aluminium Smelters are the biggest users of ALF3.

AL’s plant is located 10 km from the Vishakapatnam seaport and is the only plant in Andhra Pradesh producing high purity AIF3 with the new technology developed by Alusuisse, Switzerland. Importantly, the company has an agreement with the adjoining plant of Cormandel Fertlizer to supply 4,000 TPA of Hydrofluosilicic Acid exclusively to them. Accordingly the company’s plant converts fluorine pollutants discharged from Coromandel’s fertilizer plant into hydrofluosilicic acid and then to ALF3. Hence, this technology is a pollution abatement, import substitute, conserves natural resources like fluorspar & sulphur, cost effective, converts waste into wealth and earns valuable foreign exchange. Moreover, during the production process two by-products viz. Silica and Calcium Fluoride are released, which are also used by the chemical industry. Over the last few years, the company could not perform well due to short supply of acid from Coramandel Fertlizers. But in FY06, the company succeeded in sourcing an alternate supplier for Hydrofluosilicic. Acid for conversion on an ad-hoc basis and is now working at higher capacity utilization. With higher operational efficiency, its production capacity has now been increased to 6,000 TPA against 5,000 TPA earlier.

Since aluminium smelters in India are abroad are increasing their production capacities and new aluminium smelters are coming up with higher capacities, this will result in increased demand for AIF3. Besides, the company is also planning to increase its focus on exports, due to increased orders at better prices from the Middle East and other countries. On account of better cash flows, AL has repaid all its dues and has become a debt-free company. For H1FY07, while sales grew by 35% to Rs.10.60 cr., the NP zoomed by 220% to Rs.1.40 cr. Its OPM improved substantially to 15% compared to 10% last year due to higher price realization and better operating efficiency. It may end FY07 with a turnover of Rs.22 cr. and NP of Rs.2 cr. which means an EPS of Rs.3 on its equity of Rs.7 cr. Investors are advised to buy it only at sharp declines around Rs.14-15 as the scrip can once again test its 52W high of Rs.24 in 9~12 months

Helios & Matheson - Rs.137.00

Founded in 1991, Helios & Matheson Information Technology Ltd. (HMITL) is a leading healthcare focused IT Services company based in south Bangalore. It offers is the most comprehensive range of services in the industry that span the entire software services lifecycle from application development and integration to application lifecycle management. It offers competencies in application management services, business & technology consulting, application outsourcing, ITES- BPO services, offshore delivery, project management services, public sector services, maritime practice, enterprise security & privacy practice and executive education info systems. It has been ranked among the 30 fastest growing IT companies in India as per NASSCOM ranking 2005. Its clientele includes reputed names like Delta Dental, Johnson & Johnson, Wellcare, Cisco, Toyota, Texaco, Mitsubishi, IBM Global, Seagate, Walt Disney, Natsteel, ABB, Accenture, Citicorp and Pepsi among others.

HMITL has a worldwide presence through subsidiaries in USA and Singapore and via strategic acquisitions of growing and dynamic infotech companies in USA, UK, Canada, Singapore and India. In the last couple of years it has made various acquisitions including The Laxmi Group and Maruthi Infotech of USA and Systematic Solutions in India. To further strengthen its healthcare presence, it acquired a controlling stake in a 23-year old NASDAQ listed company ‘The A Consulting Team Inc.’, New York. Apart from its strong on-site presence, the company also has an extensive offshore infrastructure comprising offshore development centres in India to provide world-class solutions to clients worldwide. Last fiscal, it has added several strategic clients who have the potential to grow into multi-million dollar accounts. Currently, it employs around 1500 people. However, its plan to takeover Three Vmoksha Company didn’t work out and the company has claimed Rs.50 cr. from it for loss of goodwill. To fund its infrastructure development and other strategic acquisition plan, HMITL recently raised US $25 million (around Rs.110 cr.) by way of bonds through the FCCB route to be converted at Rs.162 per share. Interestingly, it holds cash of more than Rs.140 cr. against it current market cap of Rs.280 cr.

Given the phenomenal rise in IT investment by companies in life sciences, healthcare insurance and health maintenance bodes well for HMITL. For H1FY07, it reported a topline of Rs.184 cr. up by 80% and bottomline of Rs.27 cr. against Rs.17 cr. on a consolidated basis last year. Driven by a strong European and US presence, deep client relationships, a powerful suite of services and a seamless global delivery model backed by investment in infrastructure, HMITL is on a strong growth trajectory. For the full year FY07, it may register consolidated sales of Rs.375 cr. with net profit of Rs.55 cr., which works out to a consolidated EPS of Rs.20 on its fully-diluted equity of around Rs.27 cr. Investors are strongly recommended to buy the HMITL share at current levels with a price target of Rs.210 (50% appreciation) in 9-12 months.

STOCK WATCH

Cement companies are expected to report fantastic numbers for the Dec.’06 quarter on back of higher price realization. JK Lakshmi Cement (Code: 500380) (Rs.143.10) belonging to the reputed HS Singhania Group and owner of the popular ‘JK Lakshmi’ brand is a good bet at the current levels. For the first half, while net sales jumped 40% to Rs.352 cr., net profit tripled to Rs.62 cr. In a couple of months, its additional capacity of 5,00,000 tonnes will commence production and another 5,00,000 tonnes by Dec.’07 thereby taking its total cement production capacity to 4 million tonnes. Moreover, it is setting up a 36 MW pet coke based captive power plant in the next 6 months, which will bring down its power cost substantially. For FY07, it is estimated to register a topline of Rs.725 cr. with PAT of Rs.115 cr., which means an EPS of Rs.18 on its fully-diluted equity of Rs.65 cr. The scrip can rise 50% in 9~12 months. Buy at dips.

ITL Industries (Code: 522183) (Rs.35.50) is an established metal cutting solutions provider offering a wide range of machine tools and cutting lubricants apart from trading in hydraulic power packs and hydraulic presses. It recently completed its modernisation and expansion project with a capex of Rs.2.5 cr. and has also acquired land in the SEZ in Pithampur for meeting global opportunities. Notably, its orders in hand is at a historic high with more than Rs.18 cr. due to the good demand for tube & pipe manufacturing machines along with its recently launched circular saw machine. Although its first half was not spectacular, for full year FY07 it is expected to report a total revenue of Rs.22 cr. with and NP of Rs.1.60 cr. This will lead to an EPS of Rs.5 on its equity of Rs.3.25 cr. For FY08, it can post an EPS of more than Rs.6 on a conservative basis. At a reasonable discounting by 12 times against its FY08 earning, the scrip has the potential to go up to Rs.75.

Transpek Industry (Code: 506687) (Rs.88.60) is Asia’s largest manufacturer of Thionyl Chloride, which is an intermediate for crop protection chemicals in the agrochemicals industry. Besides, the company is also focusing on other market segments such as intermediates for pharmaceuticals, dyes and polymers. Last fiscal, due to adoption of improved technology and de-bottlenecking of certain equipment, it enhanced its production capacity to 19500 TPA from 16500 TPA. For H1FY07, sales increased by 40% to Rs.47.50 cr. and NP zoomed 120% to Rs.4.30 cr. Notably, its OPM improved substantially from 16% last year to 21.50% this year. Currently, it is implementing further expansion of thionyl chloride capacity to 24,000 TPA and is also starting production of the second stream of continuous Acid Chloride plant with double capacity. For the full year FY07, it may report sales of Rs.100 cr. with NP of Rs.9 cr. i.e. an EPS of Rs.18 on its equity of Rs.5.07 cr. At a reasonable discounting of 8 times, the scrip has the potential to cross Rs.150 in 9~12 months.

Sagar Cement (Code: 502090) (Rs.126.40) is one of the reputed cement manufacturers from South India having a clinker capacity of 0.55 million tonnes and grinding capacity of 0.3 million tonnes. It sells its product under the brand name of ‘Sagar Priya’ and enjoys one of the highest margins in the industry mainly on account of low power and freight costs. For the first half ending Sept 2007, its sales jumped by 75% to Rs.56 cr. and NP stood at a whopping Rs.15 cr. against a net loss of 0.97 cr. in the corresponding period last year. To meet the increasing demand, the company is aggressively expanding its clinker capacity by 4 times to 2 million tonnes and grinding capacity by 6 times to 2 million tonnes. For the full year FY07, it can clock a turnover of Rs.125 cr. with net profit of Rs.28.50 cr. This works out to an EPS of Rs.22 on its diluted equity of Rs.13 cr. Scrip is bound to cross Rs.175 sooner than later. Grab it before it shoots up.

Span Diagnostics (Code:524727) (Rs.51.55) is a pioneer and trendsetter of high quality products used by pathology & clinical laboratories in the diagnostics industry and is also one of the largest manufacturers of diagnostic reagents. It also has exclusive tie-ups with reputed companies worldwide for marketing, distributing and servicing their products in India and also takes contract manufacturing of a wide range of quality reagents and kits in bulk for private labels. For H1FY07, its sales increased by 25% to Rs.14.70 cr. whereas PAT zoomed up 170% to Rs.1.03 cr. Considering the strong demand for its products and rise in contract manufacturing, it may end FY07 with total revenue of Rs.55 cr. and net profit of Rs.2.25 cr. i.e. an EPS of Rs.7 on its small equity of Rs.3 cr. Accumulate at sharp declines.

Vinay Cements - Rs.29.00

Incorporated in 1986, Vinay Cements Ltd. (VCL) is the flagship company of the BK Bowri group, which is a leading cement manufacturer in North East India. In fact, it is among the top three players in the region since inception. Its brand name ‘Vinay’ is the largest local cement brand with a market-share of 8% in the region. Importantly, VCL has its own captive mines for cement grade limestones. Since, the company has an installed capacity of only 2,40,000 TPA, it enjoys the status of mini-cement plant with exemption from payment of excise duty. Interestingly, the north eastern market doesn’t have many cement plants and most of the demand is met by importing cement from other nearby states like U.P., MP, Bihar or Orissa.

VCL’s manufacturing facility is the first Fuller Technology based plant incorporating state-of-the-art process control systems for manufacturing both Ordinary Portland Cement (OPC) and Pozzolana Portland Cement (PPC). In FY06, it produced little more than 1 lakh tonnes against an installed capacity of 2.40 lakh tonnes translating into capacity utlization of less than 50%. This means that it has the potential to double its sales without any major capital expenditure. Secondly, the company along with others has promoted a new company called Calcom Cement India Ltd to set up a greenfield cement project of 1.5 million TPA at Chachar in Assam at an investment of about Rs.414 cr. And VCL being a promoter company holds around 59 lakh equity shares of Calcom at an investment of Rs.6 cr. and has also provided corporate guarantee to some extent. This project in itself will be a state-of-the-art cement plant and the biggest cement plant in the North-East and is expected to commence operation by mid-2007.

Due to higher price realisation and better capacity utilisation, VCL is performing extremely well and has reported stunning numbers for H1FY07. However, the major part of the PAT is contributed by other income which it earns as incentives, royalties etc. Notably, the company has paid off all its loans and is currently a 100% debt-free company although it has cash-credit facility with UTI Bank. With huge reserves of Rs.23 cr., the book value of its share stands at Rs.33. For FY07, it is estimated to report a turnover of Rs.55 cr. with net profit of Rs.5.50 cr. leading to an EPS of Rs.6 on its equity of Rs.10 cr. Its long-term prospects are very encouraging along with the hidden value in Calcom Cement. However the other income aspect, huge debtor outstanding of Rs.16 cr. and contingent liability to the tune of Rs.25 cr. is a cause of concern. Investors can buy it at dips with a price target of Rs.45-50 in 12-15 months

Choksi Laboratories Ltd - Rs 19.00

Incorporated in 1993, Choksi Laboratories Ltd. (CLL) is a group of research laboratories offering analysis, calibration, pollution control, research and consultancy services to a broad spectrum of industries. In short, it’s a commercial testing and analysis laboratory. It was the first to start water and soil analysis in central India and also the first to start instrument calibration services for organizations that were seeking ISO certification. In fact, it was the only one to commission and run ONGC’s Effluent Treatment Plant at Amod oil rig probably the largest in India. Today, CLL boasts of serving over one thousand customers, both regional and international and analyzing over 1000 different products. Of late, the company has entered clinical trial research in a big way.

CLL’s labs/branches are located at Chandigadh, Indore, Vadodara, Delhi, Ahmedabad & Vapi and are equipped with ultra modern, sophisticated and very hi-tech equipments imported from various parts of the world. Recently, it commenced a 40-bed clinical research facility at Vapi for carrying out bio-availability and bio-equivalence studies. Notably, CLL is certified by BIS, FDA, Gujarat and Madhya Pradesh PCBs, Department of Health (MP), AGMARK - GOI and several other regulatory bodies. It has also been accredited to NABL, which is internationally recognized through ILAC and is based on ISO/ IEC guidelines. The company has facilities to analyze food & agricultural products, cement & building materials, chemicals, drugs, metals, oil, soil, PVC pipes & paints etc for its client or as a regulatory requirement. It also helps different industries in their research processes. Its Environment Consultancy Division helps companies keep the environment clean and free from pollution. Apart from calibrating services for individual instruments, CLL provides a comprehensive Annual Calibration Contract (ACC) that covers maintenance of calibration due-date charts and on-site/ laboratory schedules etc. Moreover, it offers consultancy services for solid waste management, sewage treatment plants, hotel and hospital waste management, hazardous waste management etc.

Fundamentally, it hasn’t shown great performance yet but the potential is huge and the future looks very promising. For FY06, its sales improved by 15% to Rs.7.60 cr. and net profit dropped by 10% to Rs.0.81 cr. on the back of higher interest cost and depreciation. For the first six months ending 30th Sept.’06, total revenue grew by nearly 20% to Rs.4.70 cr. but profit increased by only 10% to Rs.0.65 cr. However, the company enjoys an operating profit margin (OPM) of over 35% and net profit margin (NPM) of more than 10% and at the current market cap of Rs.10 cr., it can turn out to be a multi-bagger if held for 2-3 years. For FY07, it is expected to report a total revenue of around Rs.10 cr. with PAT of Rs.1.30 cr. This translates into EPS of Rs.3 on its equity of Rs.4.85 cr. At CMP of Rs.18, the scrip is discounts its FY07 earnings by merely 6 times, which is very cheap for such a niche player. With a 52-week high/low as Rs.45/Rs.13, the downside to this stock is minimal whereas on the upside, the scrip can easily double in 15-18 months. Strong buying recommended for long-term investors only.

STOCK WATCH

Simmonds Marshall Ltd. (Code: 507998) (Rs.45.85) is the market leader in Nyloc nuts and manufactures wide range of world class nuts like flange, cage, weld, cap, castle, couplings, u-nuts, wheel nuts etc. It also has a cold forged automotive components division, which is capable of cold forging small and shallow components for automobile manufacturers and their ancillaries. For H1FY07, while sales grew by 20% to Rs.11 cr., net profit jumped 40% to Rs.1.10 cr. registering half-yearly EPS of more than Rs.5. It may declare 15% dividend for FY07, which gives an yield of more than 3% at CMP. Due to the robust demand for its products, the company is constantly adding and modernising its plant & machinery to enhance its production capacity. On a conservative basis, it is expected to end FY07 with sales of Rs.22 cr. and PAT of Rs.1.80 cr. This works out to an EPS of Rs.9 on a tiny equity of Rs.2.10 cr. Buy immediately as the scrip has the potential to appreciate by 50% in a year’s time

Madhav Marbles & Granites Ltd. (Code:515093) (Rs.132.75) is India’s third largest manufacturer and exporter of granite tiles and slabs. Almost all its entire production is exported to countries like U.S.A., Germany, Holland, U.K, Italy, Spain, Japan, Australia and South Africa. It derives around 55% revenue from the Granite Slabs 30% from granite tiles, 10% from marbles and the rest 5% comes from power and other activities. For H1FY07, its sales and revenue grew by 30% to Rs.48 cr. and Rs.11.50 cr. respectively. However, to cash in on the construction boom, the company has diversified into the realty business comprising Urban Infrastructure, Township, Housing and construction development projects. To fund these plans it, may come out with FCCB/GDR issue in the near future. For FY07, it is estimated to clock a turnover of Rs.100 cr. with PAT of Rs.19 cr. i.e. EPS of Rs.21 on its current equity of Rs.8.95 cr. Buy at declines.

Cubex Tubings Ltd. (Code:526027) (Rs.63.15) is engaged in manufacturing copper and copper alloy tubes, rods, strips, profiles and wires which are used by the core sector and other critical industries such as thermal & nuclear power plants, refinery & petrochemicals, telecommunications, electrical & electronics, defence, condensers & heat exchangers, railways, automobiles etc. Recently, it bagged around Rs.10 cr. order from Siemens for seamless condenser tubes. Its sales & net profit increased by 50% & 60% to Rs.46 cr. and Rs.4.50 cr. respectively for the H1FY07. Earlier this year, the company got permission to import low cost waste and scrap that will reduce the cost of its production. Also as copper prices are in a downward trend since the last few months, it bodes well for the Cubex. For FY07, it may report a topline of Rs.90 cr. with net profit of Rs.9 cr. which will result in an EPS of Rs.12 on its fully diluted equity of Rs.7.70 cr. Buying is strongly recommended as the scrip can give 50% return in 9-12 months.

Kulkarni Power Tools Ltd. (Code:505299) (Rs.112.35) is a leader in the design, engineering, manufacturing and marketing of power tools like drills, grinders, hammers, cutters, polishers etc. used in construction and other industrial activities. Notably, it has developed strong customer alliances with some of the largest retailers and important brand names in the world. It also owns the ‘Powermaster’ brand of professional tools well-known in Asia and Africa. For H1FY07, while its sales improved by 12% to Rs.20.50 cr., net profit spurted by 65% to Rs.1.40 cr. in spite of huge deferred tax provision. For FY07, it is estimated to register sales of Rs.42 cr. with profit of Rs.3 cr. This translates into an EPS of Rs.18 on its very tiny equity of Rs.1.70 cr. Accumulate at sharp declines with a price target of Rs.200 in 15 months or so.

Bhagiradha Chemicals & Industries Ltd. (Code:531719) (Rs.136) is one of India’s largest manufacturers of Chlorpyriphos, the best-selling insecticide used on a wide variety of crops such as cotton, chilli, rice, sorghun, soyabean, sugarcane, groundnut, vegetables, ornamental flowers and plantation crops like citrus, mango, grapevine etc. apart from use in the preservation of wood & timber. For H1FY07, it reported 35% higher sales of Rs.48 cr. with 80% higher net profit of Rs.6.20 cr. over the corresponding previous period. Earlier this year, it entered into an exclusive contract manufacturing agreement with Dow Agro Sciences, Europe, for supply of 200 to 250 tonnes of Fluroxypyr or Methyl Ester Intermediate for 4 years from 2006. Hence for the full year FY07, it may report sales of Rs.100 cr. with net profit of Rs.12.75 cr. recording an EPS of Rs.25 on its low equity of Rs.5.05 cr. At a reasonable discounting of 8 times, the share can cross Rs.200.

JK Lakshmi Cement - Rs.135.00

Incorporated in 1982, JK Lakshmi Cement Ltd. (JKLC), formerly known as JK Corporation, is the flagship company of the reputed and diversified Hari Shankar Singhania group which also manages JK Paper Ltd. and JK Industries Ltd. From a modest beginning with a small plant of 5,00,000 TPA capacity, JKLC today with 3,00,000 MTA is one of the leading cement companies in the northern and western markets. Its brand name ‘JK Lakshmi’ is quite popular and emphasises on ‘Mazbooti ki Guarantee’. The company has a wide network of 1500 dealers apart from its own marketing offices in Rajasthan, Gujarat, Maharashtra, Punjab, Haryana, Delhi, UP, Uttaranchal, HP and J&K with 60 godowns at various places in every state to ensure uninterrupted supply to customers. However, 70% of its sales comes from Rajasthan and Gujarat alone.

JKLC’s manufacturing plant is located at Sirohi in Rajasthan having a clinker capacity of 28 lakh TPA and grinding capacity of nearly 30 lakh TPA. It has acquired the latest technologies from Blue Circle Industries PLC of UK and Fuller International of USA. Incidentally, the blended cement production of the company accounts for less than 50% against the industry norm of about 65%. Blended cement has a better margin as the cost of production is low due to mixing of 20% fly ash. The company is, therefore, taking measures to increase the proportion of blended cement to 75% by FY07 and to 85% by FY08. Currently, JKLC is also selling clinker in the open market due to insufficient grinding capacity. Hence it is putting up two grinding units of 5 lakh tonnes each, of which one is expected to commence operation in the next few months and the second one by Dec.’07. Post expansion, its cement capacity will stand augmented to 40 lakh tonnes i.e. 4 million TPA. It is also setting up 36 MW pet coke based captive power plant, which is expected to be operational by Jun.’07 and will be lead to substantial saving in power cost to the extent of Rs.30 cr. per year.

Post restructuring and de-merger, the company’s balance sheet has become much stronger. To fund its expansion plan, it has issued around 36 lakh equity shares to Fenner India at Rs.97.50 and 41 lakh warrants to be converted into shares at the same rate. With the rise in share capital/reserves and repayment of debts beginning Jan.’07, its debt-equity ratio will improve going forward. And importantly, the OPM of the company is rising sharply due to higher realization, higher capacity utilization and lower cost of production and it may report an OPM of 28% for FY07 compared to 14% in FY05. For H1FY07, its net sales jumped 40% to Rs.352 cr. whereas net profit tripled to Rs.62 cr. On a conservative basis, it may end FY07 with turnover of Rs.725 cr. and PAT of Rs.115 cr. i.e. EPS of Rs.18 on its fully diluted equity of Rs.65 cr. At its current equity capital of Rs.57 cr., the EPS would work out to more than Rs.20. For FY08, it may report much higher EPS. Assuming a reasonable discounting of 12 times, the scrip could trade above Rs.220. Investors are strongly recommended to buy for 50% return in a year’s time.