Ashiana Housing & Finance - Rs.78.00

Incorporated in 1986 and promoted by B P Gupta, O.P. Gupta and R K Modi, Ashiana Housing and Finance (I) Ltd (AHFL) belongs to the Ashiana Group with diversified interests in food processing, engineering, edible oil and leather garment exports. AHFL is in housing development for the last two decades and has established its reputation as a real estate developer that provides quality of construction, safety of investment and integrity of commitment. Starting from Patna, the company has extended its residential as well as commercial activities to Jamshedpur (Jharkhand), Bhiwadi (Rajasthan), Ghaziabad (UP), Gurgaon, Greater Noida and the National Capital Region(NCR) around Delhi. AHFL can boast of developing 40 lakh sq. ft. of construction and buildings. Some of the reputed residential complexes are Ashiana Villa, Ashiana Garden, Gulmohar Park, Ashiana Bageecha, Ashiana Greens etc in Bhiwadi.

Changing demographics, low interest rate regime, rising disposable incomes and fiscal incentives have all created a huge demand for housing.. The real estate boom has gradually percolated from the big metros to tier II cities and AHFL is taking full advantage of this boom with its various projects under construction or nearing completion. Its Project Ashiana Rangoli is nearly completed and the hand over of possession has already started. The construction of the company's dream project 'Ashiana Utsav' comprising 640 units has already started and running as per schedule. Market response of the project is very encouraging as this project is planned to cater to the needs of senior persons of the society. Its Jamshedpur project ‘Ashiana Residency Greens’ comprising 149 units is nearing completion and the hand over possession of the flats has started. Due to the flourishing demand for housing in the Neemrana region (Rajasthan), AHFL has opened booking of 60 flats in its residential project ‘Ashiana Green Hill’. It also has a couple of projects under construction in Indirapuram, Ghaziabad by the name ‘Ashiana Upvan’ and ‘Ashiana Greens’. In Greater Noida, its project ‘Ashiana Orchid’ is completely sold out. Interestingly, AHFL is constructing an ultra modern hitech recreational club called ‘Ashiana Gymkhana’ in Bhiwadi with multi cuisine restaurants, banquet hall, conference room, lawn tennis, billiards, basketball ground etc.

The growth trajectory of the real estate sector could move up sharply in coming months due to the gradual opening up of the sector to FDI. Demand for real estate is on an upward swing and this is reflected in the higher prices despite the increase in supply. For its future projects, AHFL has acquired 27 acres of land in Bhiwadi and another 23 acres for a new residential complex called ‘Ashiana Angan’. Some more residential projects in Bhiwadi are in the pipeline. It has also acquired 9 acres of land for setting up a new township named as ‘Ashiana Woodland’ at Jamshedpur in Jharkhand. The company is also planning to enter another rapidly growing city viz. Pune. Surprisingly, the company is nearly debt-free and has an investment of Rs.19 cr. as on 31 March 2005. More importantly, it paid a dividend of 10% in spite of reporting a net loss for FY05, which shows it is a cash rich company. For the nine months ending 30 Sept 2005, its total revenue quadrupled to Rs.24 cr. and NP stood at Rs.2.98 cr. against Rs.0.13 cr. last year. For FY06, it may earn Rs.4 cr. profit on a topline of Rs.35 cr. which may shoot up to Rs.6 cr. on sales of Rs.50 cr. by FY07. This works out to an EPS of Rs.7 and Rs.11 respectively on its tiny equity of Rs.5.35 cr. With a 52W high at Rs.134 and current market of Rs.45 cr., the scrip is trading reasonably cheap and can give 100% return in 12~15 months. Investors are strongly recommended to buy at current levels and hold it for 2~3 years to earn handsome returns.

Gupta Synthetics - Rs.178.00

Synthetic Ltd (GSL) was promoted by the renowned Gupta Group of Companies which has wide and varied experience of over two decades in the manufacture of polyester yarn apart from Texturising, Twisting, Sizing, Dyeing of Yarns and processing of Fabrics. The group is known in textile circles for their business acumen and techno savvy attitude, which has helped them in charting consistent growth even under unfavourable conditions. Currently, GSL is one of the leading yarn manufacturer engaged in production of partially oriented yarn (POY), fully drawn yarn (FDY), drawn texturised and drawn twisted yarns.

Its world class manufacturing facilities are located at Silvassa and Surat. It has all hi-tech imported machineries like Barmag A G machinery for POY spinning imported from Germany and Teijin Seiki for FDY Spinning from Japan etc. Ironically, the company has installed complete IBM infrastructure and is running international class ERP package of SAP and has also connected its manufacturing plants and corporate office by leased lines to get real time information and updates. Due to continuous expansion and modernization, GSL’s current capacity stands at 46,500 TPA for POY, 2500 TPA for FDY, 2200 TPA for drawn texturised yarn and 550 TPA for drawn twisted yarn. To cater to the rising demand, GSL is increasing the production capacity of FDY by 15,000 TPA by installing additional imported FDY Lines at a capital outlay of Rs.25 cr. This expansion is estimated to be completed by April 2006. The company is also exploring possibilities to take up a backward integration project by installing a Continuous Polymerisation plant (CP) to reduce its dependency upon foreign suppliers. Besides, it also plans to increase its production capacity of POY and Polyester Texturised Yarn (PTY). Interestingly, the management is also keen to diversify its activities from polyester products to include nylon based products also.

Recently, the company announced its Dec.’05 qtr. numbers which are very encouraging. It registered a growth of 63% in sales at Rs.80 cr. whereas its NP jumped 260% to Rs.3.20 cr. It is planning to rise around Rs.25 cr. Through a preferential allotment to fund its future expansion plans. With its long experience in the Textile Industry and equipped with all infrastructural facilities, GSL is estimated to clock a turnover of Rs.285 cr. and NP of Rs.9 cr. after all tax provisions for FY06. This works out to an EPS of Rs.56 on its current equity of Rs.1.58 cr. with a diluted EPS of Rs.30. For FY07, it may post an EPS of Rs.40 as the full impact of the expansion will be felt in FY07 only. The 52 week high of the scrip is Rs.207 and the scrip has the potential to touch Rs.240 in the medium term and Rs.320 in 15-18 months.

STOCK WATCH

When most pharma companies are reporting disappointing numbers, Jupiter Bioscience (Code No: 524826) (Rs.137) has declared pretty encouraging results. Its total revenue grew by 15% to Rs.20 cr. and NP also increased by 15% to Rs.5.70 cr. For the full year, it may report a topline of Rs.78 cr. and NP of Rs.16 cr. i.e. an EPS of Rs.18 on its current equity of Rs.8.86 cr. Besides, the company may GDR/FCCB issue to raise funds for expansion in the near future which will push the scrip to new highs. The company has already allotted to the promoters 27,50,000 warrants that can be converted into equity shares price to be determined later. Moreover, the company has increased its authorized share capital to Rs.20 cr. from the existing Rs.12 cr. which means that the management is planning to take some aggressive steps. All these developments will lead to a re-rating of the company and its market capitalization is poised to shoot up in future.

Austin Eng (Code No: 522005) (Rs.80) is a leading manufacturer and exporter of quality auto components like ball bearings and roller bearings. It manufactures all types of bearings that include Ball Bearings, Cylindrical Roller Bearings, Needle Roller Bearings, Tapered Roller Bearings, Spherical Roller Bearings and Flexible Roller Bearings. Due to strong demand from the user industry, the company is doing exceptionally well. For the Dec’05 qtr., its Sales rose by 53% to Rs.15 cr. whereas its NP tripled to Rs.1.10 cr. For the full year it may register net sales of Rs.55 cr. and NP of Rs.3.50 which leads to an EPS of Rs.11 on its current equity of Rs.3.28 cr. It may, therefore, return to the dividend list and may declare 18~20% dividend for FY06. A solid buy for long term investors.

Post debt restructuring, Sujana Universal Industries (Code No: 517224) (Rs.23) has been announcing excellent numbers due to huge saving in interest cost. As per the scheme, the company is subjected to repay Rs.75 cr. of loan and Rs.41 cr. of deferred interest in instalments starting from Oct 2007. Its outstanding loan is estimated to fall sharply to Rs.31.50 cr. and the interest on term loans has also been negotiated and brought down to 8% with retrospective effect. Besides, the company has raised around Rs.70 cr. through its GDR issue and is planning to raise more money by issuing another 40 lakh shares. It also has casting and light engineering component divisions which are faring exceedingly well. In short, future prospects look promising with healthy cash flows and the company is expected to end FY06 with sales of Rs.900 cr. and NP of Rs.28 cr. i.e. EPS of Rs.7 on its current equity of Rs.41.40 cr. and diluted EPS of Rs.6. The scrip is trading at 60% discount its book value and has a market cap of merely Rs.100 cr. A good bet for 50% returns in a year.

The ongoing boom in housing construction sector is definitely benefiting the ceramic tiles sector. Inspite of stiff competition from cheap imported tiles from China, Orient Ceramics (Code No: 530365) (Rs.92.50) came out with very impressive numbers for Dec’05 qtr. Sales jumped 36% to Rs.35 cr. and NP spurted by 43% to Rs.2.80 cr. thereby reporting a quarterly EPS of Rs.6. It’s a dividend paying company with promoters stake at 72% Aggressive investors can buy it for short term gains but it is not recommended for long term as the profit margin of this industry will be under pressure. A pure short term bet for momentum play.

Suryalata Spinning (Code No: 514138) (Rs.80) has completed its expansion cum modernization programme at Kalwakurthy at a cost of Rs.8.6 cr. and the expansion scheme at Ramtek unit at a cost of Rs.11 cr. to add 7200 spindles. Now its total spinning capacity stands enhanced to about 65,000 spindles. For Dec’05 qtr., its sales grew by 15% to Rs.45 cr. whereas its NP shot up 300% to Rs.2.20 cr. For the first nine months, it has already reported NP of Rs.7 cr. and is expected to end the full year with Rs.8 cr. after deducting deferred tax etc. This works out to an EPS of Rs.15 on its current equity of Rs.5.45 cr. For future growth, it has capex plans of Rs.126 cr. which includes addition of 45,000 splindles and setting up of weaving and processing unit with a capacity of 50,000 mtrs a day. It may allot some preferential shares to institutional investors at high premium, which may trigger its share price in future.