STOCK WATCH
The government has put special thrust on infrastructure development and construction work is in full swing throughout India. Hence demand for cement will continue to be strong and with no fresh capacities coming up in the near future, cement prices are also to remain robust. Hence, Mangalam Cement (CodeNo.:502157) (Rs.147.60) has made a strong turnaround and reported mind-boggling numbers for March’06 quarter. Its sales increased by 35% to Rs.110 cr. whereas its profit almost tripled to Rs.22.75 cr. on the back of a smart rise in OPM. In the last four quarters, its OPM has improved from 11% to 21%. For the full year ending September’06, it may report sales of Rs.375 cr. with net profit of Rs.40 cr. on a conservative basis. This means an EPS of Rs.14 on its equity of Rs.28.25 cr. For FY07, it can report an EPS of Rs.18. So at a reasonable discounting of 14-18 times, its share can trade in the range of Rs.250-320 in the coming 12 months.
Due to the depreciating rupee, the Indian IT sector will be the major beneficiary as it is a major exporter. Surprisingly, Rolta India (CodeNo.:500366) (Rs.149.20), which recently raised around Rs.470 cr. through a GDR issue at Rs.250 per share is currently trading at Rs.120. It declared very encouraging numbers for March’06 quarter and for the full year FY’06 is expected to report a top-line of Rs.450 cr. and bottom-line of Rs.135 cr. This will still lead to an EPS of Rs.16 on its fully diluted equity post GDR issue. And for FY07, it can register a net profit of Rs.165 cr. i.e. EPS of Rs.20. Fundamentally speaking, the share price can shoot back to Rs.240 in 9-12 months. A good bet in the IT sector.
In the recent carnage, good FERA companies were also beaten down mercilessly. Fulford India (CodeNo.:506803) (Rs.507.50), an associate company of Schering-Plough Corp. (USA), has come down to Rs.500 from Rs.700 level in a matter of few days. It is primarily engaged in the discovery, development, manufacturing and marketing of pharmaceutical and health care products worldwide. It markets innovative and science based products in different segments like - Sys-Anti invectives, Dermatologicals, Suncare, Antihistamines, Oral Steroids, Cardiovascular and Oncology and biotech. For FY05 ending 31st December, it registered sales of Rs.148 cr. and net profit of Rs.15 cr. i.e. EPS of Rs.47 on a small equity of Rs.3.20 cr. For FY06, it can post an EPS of Rs.56, which means this FERA company is trading at single digit PE against its forward earning. A great opportunity to buy.
After hitting a recent high of Rs.377, Lakshmi Electricals Controls (Code No.:504258) (Rs.191) is constantly hitting lower circuits since the last few days and has almost shed 50% in few days. It manufactures contactors, thermal overload relays, electrical control panels and industrial plastic components. For FY06, it recorded sales of Rs.50 cr. with net profit of Rs.5.30 cr., registering a growth of 25%. It reported an EPS of Rs.22 and declared Rs.5 as dividend. For FY07, it can declare an EPS of Rs.25, but the hidden value is its 100% profit making subsidiary ‘Harshini Textile’. On a consolidated basis, its EPS can work out to as high as Rs.35 due to its very tiny equity of Rs.2.50 cr. Hence it’s trading cheap and can shoot back to Rs.280 very fast.
Vishal Exports (Code No.:532618) (Rs.5.10), a four star export house is in the business of Import-Export of agro products, precious metals, garments and textile products, vitamins, marine and engineering items since the last two decades. For future growth, it has forayed into the renewable energy sector and has set up 30.45 MW wind farms in Tamil Nadu and Rajasthan. It is further setting up 100 MW wind farm in two phases to emerge among the largest wind farm operators in India. Meanwhile, it has chalked out plans to enter real estate development and has already participated in the tender for development of 65,000 sq. mtr of prime property in Surat. For FY06, its turnover was up 45% to Rs.3876 cr. and its net grew by 43% to Rs.37 cr. despite providing Rs.12 cr. as deferred tax. This translates into EPS of Re.1 on its equity of Rs.36 cr. and face value of Re.1 per share. It may declare 15% dividend. Scrip may rise 50% in 6-9 months.
Due to the depreciating rupee, the Indian IT sector will be the major beneficiary as it is a major exporter. Surprisingly, Rolta India (CodeNo.:500366) (Rs.149.20), which recently raised around Rs.470 cr. through a GDR issue at Rs.250 per share is currently trading at Rs.120. It declared very encouraging numbers for March’06 quarter and for the full year FY’06 is expected to report a top-line of Rs.450 cr. and bottom-line of Rs.135 cr. This will still lead to an EPS of Rs.16 on its fully diluted equity post GDR issue. And for FY07, it can register a net profit of Rs.165 cr. i.e. EPS of Rs.20. Fundamentally speaking, the share price can shoot back to Rs.240 in 9-12 months. A good bet in the IT sector.
In the recent carnage, good FERA companies were also beaten down mercilessly. Fulford India (CodeNo.:506803) (Rs.507.50), an associate company of Schering-Plough Corp. (USA), has come down to Rs.500 from Rs.700 level in a matter of few days. It is primarily engaged in the discovery, development, manufacturing and marketing of pharmaceutical and health care products worldwide. It markets innovative and science based products in different segments like - Sys-Anti invectives, Dermatologicals, Suncare, Antihistamines, Oral Steroids, Cardiovascular and Oncology and biotech. For FY05 ending 31st December, it registered sales of Rs.148 cr. and net profit of Rs.15 cr. i.e. EPS of Rs.47 on a small equity of Rs.3.20 cr. For FY06, it can post an EPS of Rs.56, which means this FERA company is trading at single digit PE against its forward earning. A great opportunity to buy.
After hitting a recent high of Rs.377, Lakshmi Electricals Controls (Code No.:504258) (Rs.191) is constantly hitting lower circuits since the last few days and has almost shed 50% in few days. It manufactures contactors, thermal overload relays, electrical control panels and industrial plastic components. For FY06, it recorded sales of Rs.50 cr. with net profit of Rs.5.30 cr., registering a growth of 25%. It reported an EPS of Rs.22 and declared Rs.5 as dividend. For FY07, it can declare an EPS of Rs.25, but the hidden value is its 100% profit making subsidiary ‘Harshini Textile’. On a consolidated basis, its EPS can work out to as high as Rs.35 due to its very tiny equity of Rs.2.50 cr. Hence it’s trading cheap and can shoot back to Rs.280 very fast.
Vishal Exports (Code No.:532618) (Rs.5.10), a four star export house is in the business of Import-Export of agro products, precious metals, garments and textile products, vitamins, marine and engineering items since the last two decades. For future growth, it has forayed into the renewable energy sector and has set up 30.45 MW wind farms in Tamil Nadu and Rajasthan. It is further setting up 100 MW wind farm in two phases to emerge among the largest wind farm operators in India. Meanwhile, it has chalked out plans to enter real estate development and has already participated in the tender for development of 65,000 sq. mtr of prime property in Surat. For FY06, its turnover was up 45% to Rs.3876 cr. and its net grew by 43% to Rs.37 cr. despite providing Rs.12 cr. as deferred tax. This translates into EPS of Re.1 on its equity of Rs.36 cr. and face value of Re.1 per share. It may declare 15% dividend. Scrip may rise 50% in 6-9 months.
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