STOCK WATCH

Most probably by next week, the ban on sugar export will be lifted which will trigger some action in sugar scrips. Dharani Sugar, a small south based sugar company is a good turnaround story. Due to better management and higher price realization, company’s OPM has improved substantially in the last three quarters. Besides from this crushing season, company has expanded its crushing capacity to 4000 TCD from 2500 TCD. It is also augmenting its distillery production to 90 kl a day from the present capacity of 60 kl and is setting up a 15-MW cogeneration unit. For Sept qtr its sales dropped by 15% to 75 cr on account of ban on exports but its NP zoomed to 11 cr compare to 1 cr last year. On a half yly basis its sales and NP stood at 170 cr and 19 cr respectively. Hence for full year we expect it to report total revenue of 380 cr and PAT of 30 cr which works out to an EPS of 12 Rs on current equity of 25.40 cr.

D&H Welding Electrodes is one of an established manufacturer of welding consumables inclding submerged arc welding flux and wires, low heat input welding alloys, welding trans and rectifier, manual metal arc electrode etc. For Sept qtr it reported stunning nos with sales shooting up by 70% to 8.50 cr and NP jumped up 90% to 0.70 cr. Company has chalked out an ambitious plan to grow in the export market and has already executed its first ever export order. Consdiering its half yly nos it may report total revenue of 32 cr and PAT of 2.50 cr. This leads to an EPS of 4 Rs on equity of 5.61 cr. As the scirp has seen a smart rally recently from 19 Rs, investors are recommended to buy at sharp dips and hold it for a year or two to get handsome returns.

From the last quater Ramsarup Industries - producers of steel wire and TMT bars, has started executing laying of transmission lines in Rajasthan. It is also expanding its product portfolio to manufacture medium structurals like angles, channels and beams etc. For the Sept qtr its revenue grew by 12% to 272 cr but NP jumped more than 50% to 8.20 cr. Notably, company has chalked out massive expansion plan of 774 cr to pump its capacity substantially by 2010. It is also eyeing some sick state PSUs in West Bengal and is looking for acquisition of wire manufacturing facility in the southern or the western parts of India. For FY07 it is estimated to clock a turnover of 1250 cr and NP of 40 cr. This works out to an EPS of 23 Rs on current equity of 17.50 cr. Although basically it’s into metal sector but it deserves a better valuation, being an ancillary to infrastructure/power industry.

RS Software, a SEI CMM Level 4 company is a leader in providing quality software services and consulting to international players in the electronic payments space. It clientele include high profile global players in the payment cards industry, insurance, manufacturing and in the retail/logistics sector. For the Sept qtr its revenue increased by 15% to 28 cr but NP spurted by 70% to 2.30 cr due to lower depreciation charges. The half yly nos are also quite encouraging with Sales and NP of 53 cr and 4.40 cr respectively. Recently, company made a right issue in the ratio of 1:2 @ 65 Rs to fund its expansion plan. With its domain focus in working with core applications of authorization, clearing and settlement of high speed electronic payment transactions, the company is poised to growth rapidly in coming years. For FY07 it is expected to report a topline of 115 cr and PAT of 10.50 cr. That works out to EPS of 12 Rs on fully expanded equity of 8.40 cr. Share price has the potential to hit a century in 9~12 months.

In the cement space, Anjani Portland Cement seems a good bet having captive limestone mine, captive power generation unit and state-of-the-art technology from Nihon of Japan. Its manufacturing plant having a capacity of 3 lakh tonne is located at Nalgonda district in AP and produces 53 grade, 43 grade and Portland Pozzolona cement from high grade limestone. For Sept qtr its sales increased by 60% to 18 cr whereas its NP stood at 2.25 cr compare to Net loss of 1.20 cr last year due to better price realization. As the cement prices are expected to remain firm even in south India, company can report a topline of 80 cr and bottomline of 10.50 cr ie EPS of 6 Rs on equity of 18.40 cr. Accumualte at declines only.