STOCK WATCH

Great Offshore (Code: 532786) (Rs.515.45) is India’s largest integrated offshore service provider operating in two broad segments – ‘Port & Terminal Services’ and ‘Oil & Gas Offshore’. While the former involves providing berthing, unberthing, towing of vessels and other harbour services to ports, the latter involves exploratory drilling, offshore support and construction services to oil & gas companies. For the December’06 quarter, it reported total revenue of Rs.148 cr. and profit of Rs.37.50 cr. resulting in an EPS of Rs.10 for the quarter. It has a fleet of 39 vessels, which includes 25 Offshore Support Vessels (OSV), 11 Harbour Tugs, 1 Construction Barge and 2 Drilling Vessels. For FY07, it may register a top-line and bottom-line-line of Rs.550 cr. and Rs.150 cr., which may shoot upto Rs.650 cr. and Rs.200 cr. for FY08 respectively. This translates into EPS of Rs.40 and Rs.53 for FY07 and FY08. Hence at a reasonable P/E of 16-18 times against its FY08 earning, its share price can appreciate to the range of Rs.850-950. A good medium-term bet.

International Combustion (Code: 505737) (Rs.262) offers a comprehensive range of geared motors, gear boxes and electric motors manufactured on specially designed inter-linked CNC production lines. It also manufactures and markets a wide range of mechanical and electro-magnetic vibrating screens, feeders & conveyors to handle all types of bulk material. Of late, it has started manufacturing Microfine Classifiers, which has a strong market potential. For the December’06 quarter, its sales improved by 20% to Rs.19.50 cr. but net profit increased 40% to Rs.1.90 cr. registering a quarterly EPS of Rs.8.50. To meet the increasing demand, an expansion programme has been initiated by the company for augmenting the manufacturing capacity of its Gear Box/Geared Motor Division. It is also upgrading the manufacturing capacity of its Heavy Engineering Division. For the full year FY07, it may clock a turnover of Rs.78 cr. with net profit of Rs.7.50 cr. i.e. EPS of Rs.31 on its diluted equity of Rs.2.40 cr. For FY08, its EPS is estimated may shoot above Rs.40. At a reasonable discounting by 14 times, the scrip has the potential to touch Rs.550. Besides, it has huge reserves of around Rs.30 cr. making it a strong bonus candidate as well. A screaming buy.

From the high of Rs.60, the share price of Patels Airtemp (Code: 517417) (Rs.35.70) has corrected almost 50% to around Rs.30 currently. The company is involved in the design and manufacture of industrial process plant equipments like pressure vessels, heat exchangers, air cooling & air heating equipment, dehumidification plants, air conditioning and refrigeration equipment and coils etc. For the December’06 quarter, its net sales jumped by 75% to Rs.12.50 cr. whereas net profit almost doubled to Rs.0.77 cr. It caters to core industrial sectors like power, refineries, cement, engineering, chemicals, fertilizers, textiles, pharma which are doing extremely well. It may end FY07 with a turnover of Rs.45 cr. and profit of Rs.2.35 cr. leading to an EPS of Rs.5 on its current equity of Rs.5 cr. For FY08, it has the potential to report an EPS of Rs.7. At the current market cap of around Rs.18 cr., this engineering company is available fairly cheap and can easily appreciate 50% in 6-9 months.

Goodyear India (Code: 500168) (Rs.143) manufactures tyres and rubber goods for automobiles with presence in all major segments except two wheelers. The company is a pioneer in introducing tubeless radial tyres for passenger cars. Importantly, it has technical-cum-financial collaboration with Goodyear Tyre, USA, which holds 74% equity stake and is among the top three players in the world. For the nine months ending 30th September 2006, its net sales increased by 25% to Rs.590 cr. but net profit grew over 6 times to Rs.35 cr. Importantly, its OPM doubled to 7% compared of 3.5% last year due to fall in rubber prices. It has an aggressive capex plan of Rs.80 cr. to double its production capacity by 2008. Besides, it has plans to open 300 multibrand format shop-in-shop outlets in the next two years. For the full year ending December’06, it may report sales of Rs.800 cr. with net profit of Rs.50 cr. i.e. an EPS of Rs.22 on its equity of Rs.23 cr. For CY07, if rubber prices remain low, its EPS can rise upto Rs.28-30. A good bet in the auto ancillary sector.