STOCK WATCH

Most investors are under the impression that Gayatri Projects Ltd. (Code: 532767) (Rs.252) has reported very disappointing numbers for the March’07 quarter as its net profit is down by 50% to Rs.3.20 cr. compared to Rs.6.50 cr. last fiscal. But actually, the results are quite good as it has registered 40% rise in its topline at Rs.166 cr. With OPM of more than 14% for the quarter, its PBT increased by 25% to Rs.12.70 cr. However, as the company made major tax provisions of Rs.9.50 cr. in the last quarter only, it reported a lower net profit. For the entire FY07, both sales and net profit increased by 35% to Rs.502 cr. and Rs.23.50 cr. respectively leading to an EPS of Rs.23 on its equity of Rs.10 cr. Considering its huge order in hand position of Rs.2500 cr., the company is estimated to clock a turnover of Rs.750 cr. and profit of Rs.35 cr. for FY08. This translates into EPS of Rs.35 on its current equity. To fund its working capital requirement, the company has plans to raise US $30 mn. through the FCCB route in the near future. Although the promoters have a chequered history, the scrip is still a good bet at the current levels.

Prithvi Information Solutions Ltd. (Code: 532675) (Rs.276) is a mid sized technology solutions company with a strong domain knowledge of Technology outsourcing, process outsourcing and networking solutions serving clients in industry verticals like embedded technology, telecom, healthcare, retail, manufacturing, hi-technology, BFSI and e-governance. For the March’07 quarter, its topline increased substantially to Rs.259 cr. against Rs.137 cr. on YOY basis whereas its bottomline grew by 55% to Rs.26 cr. For FY07, it registered 70% rise in both sales and profit to Rs.768 cr. and Rs.90 cr. respectively i.e. an EPS of Rs.50 on an equity of Rs.18 cr. To increase its presence in offshore business, the company has plans to acquire 4-5 software boutiques overseas, with software facilities in India. For this, it has recently completed placement of FCCB of $50 mn., which was subscribed to by Lehman Brothers. It is also in the process of setting up its offshore development centre in Hyderabad at an investment of Rs.30 cr. On the back of its Rs.750 cr. order book position, it is estimated to register total revenue of Rs.925 cr. with PAT of Rs.110 cr. for FY08 on a stand-alone basis. A good medium to long-term bet in the IT sector.

Recently, Lloyd Electric and Engineering Ltd. (Code: 517518) (Rs.154) declared very encouraging result for the March’07 quarter. It recorded an all-time high sale of Rs.153 cr. compared to Rs.116 cr. last year whereas net profit increased by 55% to Rs.15 cr. For the full year FY07, sales were up 45% to Rs.496 cr. and net profit jumped 70% to Rs.47 cr. thereby registering an EPS of Rs.15 on its equity of Rs.31 cr. Recently, the company setup a new manufacturing unit in Dehradun (Uttaranchal) to manufacture room air-conditioners, components for air-conditioners and electronic goods. Besides, it is in contract with an Australian company for designing, manufacturing and supplying of AC package units to Metro Rail in India It has also tied up with a Korean company to manufacture roll bond and frost-free coils for refrigerators. Hence it may end FY08 with sales of Rs.625 cr. with profit of Rs.62 cr. i.e. EPS of Rs.20. At a reasonable discounting by 12 times, its share price has the potential to touch Rs.240 in a year’s time.

LT Overseas Ltd. (Code: 532783) (Rs.50) is the third largest player in the domestic basmati rice segment (after Satnam Overseas and KRBL) with ‘Daawat’ and ‘Heritage’ as its leading brands. With 40% revenue coming from exports, its products are being sold in more than 35 countries including the quality conscious markets of USA, Canada, UK and the European Union. It reported an excellent set of numbers for the March’07 quarter with sales at Rs.187 cr. and PAT of Rs.7.90 cr. i.e. EPS of Rs.3.50. However, due to one time extraordinary expense of Rs.1.32 cr. its net profit stood at Rs.6.60 cr. A few months back, the company had raised around Rs.40 cr. through an IPO at Rs.56 per share primarily for putting up a new parboiled rice processing and milling capacity of 6 TPH, a new milling line for producing value added rice with capacity of 5 TPH and to set up silos and flat storage facilities. It is also putting up a power plant of 2 MW for captive consumption. For FY08, it can clock a turnover of Rs.675 cr. with net profit of Rs.26 cr. i.e. EPS of Rs.12 on an equity of Rs.22.30 cr.