Stock Watch

Hind Rectifiers (911.00), one of the leading manufacturers of locomotive transformers, rectifiers, inverters, and power electronics like diodes and thyristors (types of semiconductor devices) etc announced satisfactory result for the March qtr. It clocked an all time high sales of 27 cr (up 27%) whereas NP declined by 15% to 3.10 cr primarily due to increase in other expenditure, depreciation and tax provisioning. However for full year its sales improved by 25% to 87 cr and NP increased up 30% to 11 cr. Hence it reported an EPS of 74 Rs on a very tiny equity of 1.50 cr and declared 10/- Rs as dividend. Recently, company modernized its Mumbai facility and has set up new plant in Uttranchal which commenced operation only in April 2007. Due to excise duty and income tax benefit from new plant, company’s profit margin is expected to improve going forward. Accordingly, it may clock a turnover of 120 cr and PAT of 18 cr for FY08 which translates into EPS of 120 Rs. Besides, to increase the liquidity company has announced stock split of equity shares to 2/- Rs face value. Secondly, being in the 50th year of its operation a liberal bonus can’t be ruled out in near future. Scrip is tipped to touch 300 Rs post split.

Accel Frontline (58.00) is a joint venture company formed between Accel ICIM Systems & Services and Frontline Technologies, Singapore. It is a SEI - CMMi Level 5 company, which is one of the highest in quality standards for IT service providers. For the March quarter its topline declined marginally to 48 cr but PAT improved 35% to 2.40 cr on back of higher operating margin. For entire FY07, total revenue grew by 15% to 186 cr whereas profit jumped up 70% to 12 cr leading to an EPS of 5 Rs on equity of 22.50 cr. It declared 15% dividend leading to an impressive payout ratio of 30%. To fund its growth plan, company had raised around 39 cr thru IPO route @ 75 Rs per share in Oct 2006 of which 50% is yet to be utilized. Earlier this year it acquired the banking solutions division of a Chennai company specializing in software products for banking applications and implementation and migration services for core banking software in India, middle east and African regions. Recently it also got the order for installing and maintaining smart card based Automatic Ticket Vending machines across western and central railway stations including suburban stations of Mumbai. Considering all the factors, company is expected to register a topline of 225 cr and bottomline of 15 cr ie EPS of 7 Rs for FY08.

Last week Ramsarup Industries (150.00) announced decent set of nos for the March quarter. Sales shot up to 420 cr against 320 cr last year whereas NP increased by 70% to 11 cr. For the full year it recorded 30% growth in sales to 1306 cr and 60% rise in net profit to 43.50 cr. This works to EPS of 25 Rs on equity of 17.50 cr for FY07. Company is continuously enhacing its production capacity for steel wire as well as TMT bars and has recently completed the expansion project at its exisiting plants viz Kalyani and Shyamnagar. For future growth it has a massive expansion plans whereby it is putting up a greenfield plant in Durgapur for manufacture of Low Relaxation Prestressed Concrete (LRPC) strand wire along with special grade steel wires. Phase-I of this new plant is expected to commence operation by Sept 2007. To fund this project, company intends to raise around 200 cr Rs via FCCB/GDR route which may dilute the equity to nearly 30 cr. Meanwhile, company has forayed into infrastructure activities also like laying of power transmission line etc which is growing rapidly. For FY08 it can register net sales of 1750 cr and profit of 55 cr ie EPS of 31 Rs on current equity.

Although cement manufacturers can’t hike the cement prices until early next year, still they will be making decent profit, for FY08 atleast on back of favourable demand-supply situation. Deccan Cement (140.00) is no exception and it came out with excellent nos for the March quarter. It reported 20% jump in sales to 47 cr but NP zoomed up 60% to 8 cr registering an EPS of more than 11 Rs for the quarter. For the entire year ending March 2007, its sales grew by 40% to 172 cr but NP tripled to 28 cr leading to an EPS of whopping 40 Rs. Due to higher price realization, the OPM shot up drastically to 28% against 12% last year. However it declared only 30% dividend as it has aggressive capex plan. In future, company intends to shed off its mini cement manufacturer tag as it is planning to ramp up its capacity by setting up a new 10 lakh tonne cement facility along with a captive power plant. Currently it produces only 3 lakh tonne of cement and enjoys the benefit of lower excise duty due to its small size. For FY08, company is expected to maintain its current profit margin and report sales of 180 cr and PAT of 31.50 cr ie EPS of 45 Rs on equity of 7 cr.