STOCK WATCH

Ind Swift Labs (Code:532305) (Rs.72) is aggressively re-shuffling its product portfolio whereby it is weeding out the high volume-low margin products and is focusing more on exports to regulated markets. Earlier this year, the company put into operation three new manufacturing facilities to manufacture Statins, for Anti-Histmaines and the third for a New API facility at Jammu. Notably, all these facilities conform to USFDA standards and are expected to get approvals by Dec.’06 end. It has already filed 8 drug master files (DMFs) till date in USA, 50 DMFs in other European countries and expects to file 4-5 DMFs every year in the US over the next three years. Recently, it also inaugurated its state-of-the-art hi-tech R&D centre in Mohali, Punjab, and is in the process of increasing its present R&D strength of 85 to 150 scientists. Although FY08 will be its bumper year, for FY07 it is estimated to clock a turnover of Rs.250 cr. with a net profit of Rs.26 cr. i.e. EPS of Rs.12 on its equity of around Rs.22 cr. Scrip can shoot upto Rs.90 in the short-term.

Shivalik Global Ltd. (Code:532730) (Rs.29) is a vertically integrated, multi product company covering the entire textile value chain starting from the processing of yarn to the manufacture of readymade garments. To fund its expansion plan, the company raised around Rs.60 cr. through an IPO at Rs.60 per share in March’06. But instead of undergoing expansion, it took over an existing integrated textile unit – Shyam Tex International at book value for a consideration of Rs.25.70 cr., thereby getting the benefit of higher capacity with immediate effect. Besides, it is planning to relocate its 5 acres Faridabad plant and use this property for real estate development. On a consolidated basis, it is expected to register a top-line of Rs.300 cr. and PAT of Rs.13 cr., which translates into EPS of Rs.5 on its expanded equity of Rs.26 cr. Scrip has bottomed out and can shoot up 30-40% anytime. Grab it before it too late. A risk free bet.

Presently Upper Ganges Sugar & Inds. Ltd. (Code:530505) (Rs.145) has three sugar plants, one in UP and two in Bihar, with a total capacity of 14,500 TCD. It is expanding the crushing capacity for one of its Bihar unit from 2500 TCD to 5000 TCD with a sulphur free sugar refinery and is also setting up 18 MW co-generation plant. For more remunerative utilization of bagasse, it is putting up a 24 MW co-generation plant at its UP mill for export and captive use. Moreover, to meet the increasing demand for ethanol, the company has undertaken expansion of the distillery unit from the existing capacity of 55 klpd to 100 klpd. Recently it raised around Rs.70 cr. through a rights issue at Rs.150 per share. For rapid expansion, it may adopt the inorganic route by acquiring some existing sugar factories in Bihar or may opt for some greenfield expansion. For FY07, it can report total revenue of Rs.525 cr. with net profit of Rs.35 cr. leading to an EPS of Rs.30 on its expanded equity of Rs.11.55 cr. With the scrip trading cum dividend of Rs.5, it’s a screaming buy that can easily shoot upto Rs.210.

After consolidating for a long time, real estate & construction scrips have once again started to move up. In this segment, Vijay Shanthi Builders (Code:523724) (Rs.33) is a 25 year old south based company with a market cap of around Rs.35 cr. It is engaged in developing residential projects to suit middle income and higher income groups in Chennai and its outskirts. It is gradually shifting its focus to the more lucrative premium segment. It has completed more than 250 building projects and is currently developing Lilly Pond at Kilpauk, Upper Deck at Mylapore, Patio at Nugambakkam, Four Seasons at Adyar, Lake View at Ambattur, Orchid at Vellachery etc. Besides, it has finalized around 40 acres of land at Pallavaram for it forthcoming project called ‘Forest’. It reported encouraging numbers for the June’06 quarter and for the full year FY07 it is estimated to post revenue of Rs.125 cr. and profit of Rs.4.50 cr. This will work out to an EPS of Rs.4 on its equity of Rs.11.50 cr. With 52-week high as Rs.75, the scrip has the potential to give 50% return in a year’s time. Accumulate at sharp declines.