STOCK WATCH

Excise authorities recently objected to certain cenvat credit availed by Ind Swift Lab (Code No: 532305) (Rs.112), due to which it share price has crashed. Besides, the promoters being not so investor-friendly, the scrip suffers from poor rating. Despite all this, the company is on a high growth trajectory and will report bumper results in coming years. The company is fully geared to enter into regulated markets particularly in USA and Europe. It has already filed 7 Drugs Master Files (DMFs) in US and 50 DMF in other European countries. Couple of days back, it inaugurated its state-of-the-art R&D Centre in Mohali. In short, the day it gets USFDA approval the scrip will shoot up like anything. One of the best long term bets for 2~3 years.

Steel scrips are back in action due to uptrend and price hike in the international market especially China. Mukand Ltd. (Code No: 500460) (Rs.98) being the largest manufacturer of specialty carbon/alloy steel and stainless steel is tipped to witness some sharp rally in the short term. Besides steel, it is also among the largest suppliers of high capacity EOT cranes in India. Moreover, the company has also taken a Rs.700 cr. highway construction project in collaboration with a Russian company. For future growth, the company is expanding its Hospet unit’s steel manufacturing capacity from 1,60,000 to 2,90,000 MTPA. Due to debt restructuring and other factors, the company is estimated to report an EPS of nearly Rs.18 for FY07.

Interest rates are on an uptrend and LIC Housing Finance (Code No: 500253) (Rs.188) has already raised the interest rate on home loans thrice in a short span of time. With 85% of its total loan portfolio on a floating rate basis, this will have a positive impact on its bottomline. Company is only second to HDFC in the housing finance business but in valuation it is available for a song compared to HDFC. For FY06, the company is expected to register total revenue of Rs.1240 cr. and NP of Rs.220 cr. This translates into an EPS of Rs.26 on its current equity of Rs.84.99 cr. With a book value of more than Rs.150, it’s a value buy at current levels with minimal risk of any further downfall.

DHP India (Code No: 531306) (Rs.23) is a leading manufacturer and exporter of domestic and industrial pressure regulators for LPG, Propane and Butane cylinders. Recently its new factory became operational w.e.f from 1st March 2006 which has almost doubled its manufacturing capacity. Besides, it has also shifted its old factory from Belgachia to Sankrail, Howrah, to consolidate and benefit from economies of scale. To shore up revenue, the company is concentrating more on exports, which has a huge potential. For FY07, it is estimated to report Sales of Rs.13 ~ 14 cr. and NP of Rs.1.75 cr., which will lead to an EPS of Rs.6 on its equity of Rs.5.30 cr. Dividend of 10%, provides a cushion for any further downfall in its share price making it a good bet for the medium to long term.

ITL Industries Ltd (Code No : 522183) (Rs.35) is the pioneer and leader in high speed sawing technology offering 60 different models of bandsaw machines ranging from 100 mm to 1500 mm cutting capacity with manual, semi-automatic, automatic and fourth generation CNC machines. It is also engaged in trading hydraulic power packs and hydraulic presses. Apart from making Industrial Blades, Power Hackshaw Machines, Special Purpose Machines, Hydro Testers, lubricants and other supporting equipments it is also manufactures Tube and Pipe Mills, Section Mills, Straightening Machines, Draw Benches, Automatic Cut-offs, Accumulators etc. Considering its strong order book position, it may report Sales of Rs.35 cr. with NP of Rs.2.50 cr. i.e. EPS of Rs.8 for FY07. With dividend expectation of around 15% for FY06, this is another company with a good dividend yield.