STOCK WATCH
SAIL and Tinplate Co. of India Ltd (Code No: 504966) (Rs.90) are the only indigenous producers of tinplate with TCIL enjoying more than 35% of the market share. Due to increasing demand, the company is regularly expanding its capacity and has recently completed its first phase of expansion taking the total installed capacity to 1,70,000 from 90,000 TPA earlier. It is now undergoing the second phase of expansion to double its capacity to 3,50,000 TPA by 2007~08 with an investment of Rs.200 cr. It has also invested in downstream value added facilities like printing and lacquering. For FY07, it is estimated to report sales of Rs.525 cr. and NP of Rs.48 cr. which translates into an EPS of Rs.17 on its current equity of Rs.28.90 cr. The company is expected to come out with excellent March numbers on 27th April. The TCIL scrip is trading fairly cheap and can easily appreciate 50% in 6~9 months. A strong buy.
South Indian Bank (Code No: 532218) (Rs.60) is on a huge expansion spree and is aggressively opening branches in un-represented pockets like MP, UP, Jharkhand, Orissa, Jammu, Uttaranchal, Assam etc. It plans to increase its network from 435 branches to 500 branches spread across 22 States and build a networth close to Rs.1,000 cr. with total business volume of Rs.25,000 cr. by the end of 2008. Nearly 75% of its branches has adopted core banking technology (Finacle). Its capital adequacy ratio (CAR) after the recent public issue stands at 12.51 % and as per estimates its net NPA has slipped below 2% in FY06 from 3.81% in FY05. It has reserves of a whopping Rs.450 cr., which translates into a book value of more than Rs.70. The bank will also get around Rs.23 cr. from IOB for its shares of Bharat Overseas Bank, which will boost its bottomline. With expected NP of Rs.55 cr. i.e. EPS of Rs.8, it is one of the cheapest private banks and has a market cap of less than Rs.450 cr., which makes it an easy takeover target.
Gupta Synthetics Ltd (Code No: 514116) (Rs.151) is a reputed manufacturer of partially oriented yarn (POY) and fully drawn yarn (FDY) with ultra modern plants at Surat and Silvassa. To cater to the rising demand, the company has recently enhanced its production capacity of FDY by 15,000 TPA with a capital outlay of Rs.25 cr. It is also exploring possibilities to take up a backward integration project by installing a Continuous Polymerisation (CP) plant to reduce its dependence on foreign suppliers. It’s also planning to increase the capacity for POY and other texturised yarn. Recently, it decided to make a preferential allotment of 16 lakh warrants to be converted into equity shares at the rate of Rs.155 per share. For FY07, it may report sales of Rs.350 cr. and NP of Rs.14 cr. This works out to an EPS of around Rs.45 on its diluted but tiny equity of Rs.3.20 cr. Although rising crude oil prices is a concern, still it is quite cheap at its market cap of less than Rs.50 cr.
Most marketmen doubt the capability of the promoter’s of Petron Engineering (Code No: 530381) (Rs.169). At a time when all the infrastructure companies are boasting of huge orders in hand, this company has not taken the full benefit of the strong economy. It is least aggressive and has still not increased its networth to bid for bigger projects. Despite all this, it is a value buy and can give handsome returns in the long run. Its takeover by any large engineering company will be the biggest trigger for this scrip. As per sources, the company has a healthy order in hand of more than Rs.400 cr. For FY07, it can register a turnover of Rs.380 - 400 cr. and NP of Rs.12 cr. which means EPS of Rs.16 on equity of 7.50 cr. Scrip has the potential to hit Rs.220 in a 9-12 months.
South Indian Bank (Code No: 532218) (Rs.60) is on a huge expansion spree and is aggressively opening branches in un-represented pockets like MP, UP, Jharkhand, Orissa, Jammu, Uttaranchal, Assam etc. It plans to increase its network from 435 branches to 500 branches spread across 22 States and build a networth close to Rs.1,000 cr. with total business volume of Rs.25,000 cr. by the end of 2008. Nearly 75% of its branches has adopted core banking technology (Finacle). Its capital adequacy ratio (CAR) after the recent public issue stands at 12.51 % and as per estimates its net NPA has slipped below 2% in FY06 from 3.81% in FY05. It has reserves of a whopping Rs.450 cr., which translates into a book value of more than Rs.70. The bank will also get around Rs.23 cr. from IOB for its shares of Bharat Overseas Bank, which will boost its bottomline. With expected NP of Rs.55 cr. i.e. EPS of Rs.8, it is one of the cheapest private banks and has a market cap of less than Rs.450 cr., which makes it an easy takeover target.
Gupta Synthetics Ltd (Code No: 514116) (Rs.151) is a reputed manufacturer of partially oriented yarn (POY) and fully drawn yarn (FDY) with ultra modern plants at Surat and Silvassa. To cater to the rising demand, the company has recently enhanced its production capacity of FDY by 15,000 TPA with a capital outlay of Rs.25 cr. It is also exploring possibilities to take up a backward integration project by installing a Continuous Polymerisation (CP) plant to reduce its dependence on foreign suppliers. It’s also planning to increase the capacity for POY and other texturised yarn. Recently, it decided to make a preferential allotment of 16 lakh warrants to be converted into equity shares at the rate of Rs.155 per share. For FY07, it may report sales of Rs.350 cr. and NP of Rs.14 cr. This works out to an EPS of around Rs.45 on its diluted but tiny equity of Rs.3.20 cr. Although rising crude oil prices is a concern, still it is quite cheap at its market cap of less than Rs.50 cr.
Most marketmen doubt the capability of the promoter’s of Petron Engineering (Code No: 530381) (Rs.169). At a time when all the infrastructure companies are boasting of huge orders in hand, this company has not taken the full benefit of the strong economy. It is least aggressive and has still not increased its networth to bid for bigger projects. Despite all this, it is a value buy and can give handsome returns in the long run. Its takeover by any large engineering company will be the biggest trigger for this scrip. As per sources, the company has a healthy order in hand of more than Rs.400 cr. For FY07, it can register a turnover of Rs.380 - 400 cr. and NP of Rs.12 cr. which means EPS of Rs.16 on equity of 7.50 cr. Scrip has the potential to hit Rs.220 in a 9-12 months.
Jupiter Bioscience (Code No: 524826) (Rs.145) is perhaps the only peptide company in Asia with technology to manufacture peptides from the basic stage and among the ten such companies in the world. For catering to the regulated markets its subsidiary Jupiter Bioscience (USA) is in the process of setting up a GMP facility in Maryland for the manufacture of custom peptides, clinical peptides and peptide-based generic active pharmaceutical ingredients (APIs). Here in India, it has recently acquired a modern manufacturing facility from the pharma major Aurobindo Pharma located at Khazipally for a consideration of around Rs.15 cr. and is spending close to Rs.25 cr. for expanding this facility. The company has embarked upon a huge expansion programme involving a capital expenditure of Rs.94 cr., which will be funded through ADR/GDR/FCCB routes and through preferential allotment to promoters. For FY07, it is expected to report EPS of Rs.15 even on its diluted equity of Rs.17 cr. Scrip has the potential to cross Rs.250. A screaming buy.
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