STOCK WATCH

Recently, GIPCL (Code No: 517300) (Rs.68) raised Rs.275 cr. through a public issue to fund its 250 MW lignite-based expansion plant near Surat and for development of lignite mines for captive fuel requirement. The company is also working on setting up two 1000 MW projects in South Gujarat besides diversifying into power distribution in the State as part of its expansion plans. Since all these are long-term plans and will take a few years to start commercial production, only long-term investors are advised to buy. Moreover, as the scrip is currently trading around its allotment price only, the downside is very minimal whereas on the upside it can cross Rs.100 in 12~15 months.

After hitting a high of Rs.62 Jhunjhunwala Vanaspati (Code No: 519248) (Rs.41) had corrected sharply to around Rs.36 and has once again started to move up. The company is engaged in the manufacture of vanaspti, acid oil, refined oil, tin plate containers, soap and herbal healthcare products and sells its product under the brand name ‘Jhoola’. For the Sept’05 qtr, it reported encouraging numbers. Its sales increased by 50% to Rs.189 cr. whereas its NP jumped 84% to Rs.2.60 cr. due to high other income. For FY06 it is estimated to report an EPS of Rs.10. With a book value of Rs.51 and market cap of merely 30 cr., it’s a great buy.

Shrachi Securities (Code No: 511591) (Rs.39.30) offers a wide range of financial products and services from financing passenger cars and light commercial vehicles to heavy commercial vehicles and construction equipment. It has emerged among the 10 biggest commercial vehicle financing companies in India. For the Sept’05 qtr., its topline grew by 30% to Rs.8 cr. and bottomline increased 35% to Rs.2.35 cr. i.e. quarterly EPS of nearly Rs.3 on its current equity of Rs.8.50 cr. Recently, it allotted 19 lakh warrants to the promoters @ Rs.53 per share and plans to raise another Rs.100 cr. through various means. Aggressive investors can take a position as the scrip has bottomed out and may move up sharply in the near future.

Due to better monsoons and strong demand fertilizer companies are doing well and are expected to do even better in the coming year in anticipation of good rainfall. But Liberty Phosphate (Code No: 530273) (Rs.33) somehow didn’t catch market attention in spite of good numbers. It is one of the lowest cost manufacturer of single super phosphate (SSP) with 12% market share. Its manufacturing facilities are spread across Rajasthan, Gujarat & Maharashtra. For Sept’05, its NP doubled to Rs.0.63 cr. due to higher price realization inspite of 13% degrowth in Sales to Rs.18 cr. For FY06, it can post an EPS of Rs.7 on its small equity of Rs.4.10 cr. A good value buy for the medium to long term.

The share price of Pacific Cotspin (Code No: 531118) (Rs.13) has tumbled down nearly 50% from its recent high of Rs.23 although it reported good numbers. It is one of the leading producers of superior cotton yarn in eastern India and is planning expansion of its capacity by 25,200 spindles at an estimated cost of Rs.80 cr. Earlier this fiscal, it allotted 58 lakh shares to promoters @ Rs.17.25 and is planning to raise further money to fund the expansion. For Sept 2005, its Sales increased 30% to Rs.37 cr. whereas its NP stood at Rs.1.50 cr. (0.20 cr.) due to better operating efficiency. For FY06, it may report an EPS of Rs.2.5 and can be accumulated for 30 to 40% gain in 6 months. However there may be equity dilution in future also as it is merging Salem Vanijya, an unlisted company, with itself and which may affect its fundamentals to some extent.