IMP Power - Rs.95.00

Establised in 1961, IMP Powers Ltd (IPL) was originally incorporated as Industrial Meters Ltd and is the flagship company of IMP-Mangalam Group. Incidentally, meters like three vectors Meter, Maximum Demand Indicator, Low Power Factor Meter etc. were introduced and developed for the first time in the country by IPL. Currently, the company manufactures the entire range of electrical measuring instruments, testing equipments, distribution & power transformers. It is well known for making quality AUTO EHV power distribution, special purpose, furnace, thyristor duty transformers and reactors. It’s a government recognized export house and an ISO 9001:2000 certified company by DNV. Its regularly exporting transformers to UK, New Zealand, Australia, Malaysia, Nigeria, Kenya, Ghana, Dubai, Sri Lanka, Jordan, Nepal, Bangladesh etc. and gets repeated orders from them. IPL transformers have won appreciation from all customers and are widely accepted by all the state electricity boards, railways, public & private sector undertakings.

It has two manufacturing facilities, one in Mumbai and another in Silvassa which can manufacture transformers from 10 KVA to 150 MVA. Its Silvassa unit is spread across 5 acres of land and has a total installed capacity of 3600 MVA per annum. Interestingly, it is the only transformer company in India to be in sales tax free zone. Computer Aided Design (CAD) programmes are used to determine various critical parameters in electrical designs and to arrive at optimized design solution much faster. IPL has a wide network of dealers comprising its agents & representatives all over the country to assist clients and render all kinds of commercial and engineering support while selecting transformers application-wise and render after sales service. In India, the company has supplied to Birlas, Tatas, KEC International, L&T, Nagarjuna Construction, BSES, DLF, Siemens, Thapar, ITC, Ispat, SAIL, NTPC, Defence, Railways etc and most of the SEBs across the country. Even transformer giants like ABB and Crompton Greaves Ltd. had placed orders for various distribution & power transformers.Post implementation of corporate debt restructuring (CDR) package, the company has turned around smartly and is now on a high growth trajectory. The transformers and electrical measuring instruments industry is likely to grow at a fast pace than the power sector as a whole.

With the implementation of the APDRP programme, the demand is likely to further move up. Besides, IPL is planning to enter into the most lucrative single phase transformer segment. Moreover, to consolidate is manufacturing capabilities, the company is planning to sell its 22,000 sq ft Kandivali land that may fetch around Rs.4 ~ 5 cr. to the company. For year ending June 2006, it may report sales of Rs.65 cr. and Net Profit of Rs.4 cr., which means an EPS of Rs.9 on its current equity of Rs.4.60 cr. But rising copper prices is a cause of concern for the company. For FY07, it may clock a turnover of Rs.90 cr. with NP of Rs.6 cr. i.e. an EPS of Rs.13. As the company is planning to raise capital, this will dilute its equity to some extent and the EPS will be little lower around Rs.10~11. Though it may not be a multibagger from the current level, investors can buy it at lower levels with a price target of Rs.150 in 15~18 months.

Amex Information Technology - Rs.25.00

Incorporated in 1991, Amex Information Technology Ltd (Amex) is a niche player specializing in Business Process Outsourcing (BPO) services in various sectors. It’s a premier technology based firm, offering comprehensive and professional IT services also. Amex provides total solutions to customers in India and abroad, based on its expertise in vertical markets like telecom, finance, banking, insurance and manufacturing. It possesses excellence in terms of skills in systems engineering and high level project management. It has fully operational offices of its group companies in UK, Sweden and UAE. It has also formed a company by the name Media Information Technology Ltd in UK and Raydox Technology FZ LLC in UAE to cater the international market. It has a reputed clientele which includes big corporates like LIC, BSE, Govt of Maharashtra, Siemens, Novartis, HCL, RBI, Thomas Cook. IPCA, BPCL, Colgate, NIC etc. in India whereas Com Metodi, Team Systems, UKCRS, Old Bailey, Saicom, ZF, HEDS etc in the international market. Basically AMEX’s operation is segmented in 3 divisions’ viz. BPO, Biometric & IT services :

BPO: In BPO, the company focuses on 3 verticals. They are Basic-Fund Accounting, KPO, E-Accounting & E-publishing. Through these SBUs it offers exhaustive services for fund accounting, accounts write-ups, compilation of financial statements, payroll processing, tax services and returns, data management system like form processing, data conversion, data digitization, digital library etc. For this, it has also developed a product by the name ‘Optidocs’ which is well accepted in the market. It also has 500 seat BPO centre in Chennai to cater to its international clients

Biometric: Under this division, AMEX has developed software solutions based on biometric technology. It deals in finger print scanners, finger print standalone system with software for time attendance, access control, desktop / network logon etc. The company has developed desktop & network log on authentication software called ‘Tutis Authentication System’, supporting multiple fingerprint biometric sensors manufactured in the world. It is also an authorized reseller of biometric hardware products of SecuGen Corp, USA and Cross Match Technology USA. Interestingly, AMEX has developed biometric authentication on the internet, which can be adopted in many Internet based applications like online banking, insurance and credit card payments or for any website which requires a very very secured login. It also provides Fingerprint Door Locks and users Time and Attendance System for SOHO Segment.

IT Services: Its entire ITES operations are conducted by its subsidiary, Vishal Information Technologies Limited which is getting merged with it shortly. It has access to highly skilled and experienced IT professionals who can deliver solutions on well-known industries and on emerging platforms & technologies. The company also has expertise in telephony and networking technologies. It has developed applications and software solutions based on DILOGIC cards using the C, API on NT and UNIX as well as PARITY components and VOS. Components for voice recording over telephone lines for transcription services including the delivery of voice data to appropriate transcribers, customized IVR, voice-recording systems, internet fax servers, fax demand components, telebanking and other customized telephony solutions are also developed by AMEX.

For the nine months ending 31 Dec 2006, its Sales grew by 23% to Rs.32 cr. whereas its NP increased by 55% to Rs.8.55 cr. on a consolidated basis. Considering its track record, it may end up FY06 with total revenue of Rs.45 cr. and NP of Rs.11.50 cr. This works out to a consolidate EPS of Rs.5 on its consolidated equity of around Rs.21 cr. For FY07, it may report topline of Rs.55 cr. and NP of Rs.12.50 cr. i.e. an EPS of Rs.6. For FY06, the company is expected to declare 10% dividend on the back of a robust performance. Investors are advised to buy at current levels as the scrip can appreciate 50% in 12~15 months.

STOCK WATCH

Although its Q4FY06 results were quite flat, Indian Sucrose’s (Code No: 500319) (Rs.50) full year figures look very impressive while its revenue grew by 50% to Rs.102 cr., its net profit zoomed 162% to Rs.15.50 cr. registering an EPS of Rs.10 on an equity of Rs.15.50 cr. Its OPM of 24% is one of the best in the industry. And this is just standalone figures. Consolidated figures will be far better as recently it acquired a sugar unit - Cosmos Industries in Dhuri, Punjab, having a capacity of 2500 TCD. Moreover, the company has also expanded its own capacity to 5000 TCD from 3500 TCD, the full impact of which will be visible in FY07. It may report an EPS of Rs.13 for FY07 and may even return to the dividend list. The scrip is trading cheap currently only because it’s in Z category. The share price is bound to cross Rs.100 sooner than later.

Riding the infrastructure boom, Ador Fontech (Code No: 530431) (Rs.138) came out with fantastic results for the March quarter. Its topline increased by nearly 30% to Rs.22 cr. but net profit more than doubled to Rs.2 cr. due to better margins. For the full year FY06, it registered a turnover of Rs.69 cr. (up 26%) and a net profit of Rs.4.45 cr. (up 134%) with an EPS of Rs.13 on its tiny equity of Rs.3.50 cr. It even declared Rs.4 as dividend. Based on the same pace, for FY07 it can report a net profit of Rs.6.50 cr. on a topline of Rs.90 cr. i.e. an EPS of Rs.19. That means the scrip has the potential to double in 12-15 months. But the only concern is its merger with Ador Welding, in which the swap ratio may not favour the company. Otherwise, it’s a great buy even at current levels.

With the markets hitting an all time high, retail participation in rising volumes are healthy and stock broking firms are making merry. And Twentieth Century Management (Code No: 526921) (Rs.49) run by Mumbai based broker, Sundar Iyer is no exception. This debt free company ended FY06 on a very buoyant note. Its total revenue increased by 140% to Rs.19.65 cr. whereas its net profit tripled to Rs.17.75 cr. This translates into an EPS of Rs.17 on its equity of Rs.10.50 cr. It is learnt that the company is still holding shares of some reputed construction companies whose market value is much higher than its cost. Moreover, the company is planning to approach RBI for restoration of its NBFC registration. But in spite of being a profit making company, it did not declare any dividend. Hence only aggressive investors are advised to take exposure as it’s a risky bet.

After reporting disappointing results for the first half, the second half of FY06 has been quite good for Rajratan Global Wire (Code No: 517522) (Rs.127). For Q4FY06 though its sales was down 15% to Rs.26 cr., its net profit more than doubled to Rs.2.80 cr. on the back of a higher operating margins. For the full year its sales was marginally up to Rs.99 cr. but its net profit increased by 30% to Rs.6 cr. which led to an EPS of Rs.14 on its small equity of Rs.4.35 cr. Its OPM stood at healthy 13%. With the rising demand for tyres from vehicle manufacturers as well as the replacement market, the company is expected to perform well in coming years. Assuming the same profit margin, the company can register an EPS of Rs.20 for FY07. Hence investors can buy this scrip with an expectation of 25-30% return in a year.

Post the amalgamation of Pranay Sheetmetal and Valueline Hotel & Console Estate, Mahindra Ugine (Code No: 504823) (Rs.160) came out first time with the consolidated results and surpassed analysts’ expectations. For Q4FY06 its sales increased by 22% to Rs.186 cr. whereas its first time spurted 130% to Rs.35 cr. in spite of tax provision of a whopping Rs.17 cr. amazingly, it reported an OPM of 30%. If it continues to perform in the same fashion, it will register an OPM of 20-25% on a conservative basis and can report sales of Rs.775 cr. with a net profit of Rs.90 cr. for FY07 i.e. an EPS of Rs.28. Investors are strongly recommended to buy it at declines as the scrip can touch Rs.225 in the medium term.