STOCK WATCH

FCS Software Solutions Ltd. (Code:532666) (Rs.76.85) is a leading provider of IT services and has carved out a niche for itself in areas like e-learning, digital content services, IT consultancy, product engineering services and application support 24x7. For the December 2006 quarter its total revenue grew by 35% to Rs.40 cr. but net profit shot up by 50% to Rs.6.35 cr. due to better operating margins. Last year, it started a new unit in Punchkula (Haryana) and this year it has acquired 1.66 acres of land at Chandigarh Technology Park, under the SEZ scheme. Besides, it is planning to expand its operations to Gurgaon and has been allotted a plot of 4000 sq. mts. at Noida. It may end FY07 with a top-line of Rs.150 cr. with PAT of Rs.21 cr. i.e. an EPS of Rs.15 on its equity of Rs.14 cr. With 69% promoter stake, expected dividend of 30% and 52-week high of Rs.166, this scrip is available extremely cheap at the current market cap of just above Rs.100 cr.

Shree Hari Chemicals Export Ltd. (Code:524336) (Rs.25.50) is a reputed manufacture and exporter of dyes and intermediaries. It produces reactive acid as well as direct dyes and a wide range of dye intermediaries like H-acid, Gama acid, Peri acid, vinyl suplhone etc. For the December 2006 quarter, it made a very strong turnaround as sales more than doubled to Rs.20.50 cr. and the net profit shot up to Rs.1.40 cr. compared to Rs.10 lakh in Q3FY06 thereby registering quarterly EPS of Rs.3. Impotantly, it reported a very healthy OPM of 19% against 7% last year on the back of higher realization for some of its products. Last fiscal, the company set-up a solvent plant system, which is the latest technology available to increase the yield and improve quality. For the first nine months, it has already clocked an EPS of Rs.5 and may end the full year with an EPS of about Rs.7. It’s a strong turnaround candidate.

To curb inflation, the government is adopting various measures and has reduced the custom duty on import of cement. It is further considering to ban export to increase the domestic supply. Although any further price hike is ruled out, cement companies are expected to do well fundamentally as cement prices are trading fairly high. NCL Industries Ltd. (Code:502168) (Rs.46.80) has once again reported stunning numbers for the December’06 quarter. Sales increased by 70% to Rs.56 cr. and net profit zoomed to Rs.9.30 cr. against Rs.0.83 cr. in Q3FY06. It has also decided to merge NCL Energy with itself through a share swap ratio of 1:6. A few months back, it was planning to raise around Rs.55 cr. for expansion through preferential allotment of equity shares to FIIs at Rs.68 per share, but somehow dropped it. However, for FY07, it may report net sales of Rs.200 cr. with NP of 22 cr. i.e. an EPS of Rs.8 on its current equity of Rs.29.22 cr. on a standalone basis. Buy at declines.

RS Software (India) Ltd. (Code:517447) (Rs.67.60), a SEI CMM Level 4 company, is a leader in providing quality software services and consulting to international players in the electronic payment space. Its bandwidth of offerings covers all segments from card associations to processors, acquirers & issuers, ISOs, all the way down to the merchants who manage POS terminals at retail outlets. For the December 2006 quarter, its revenue grew by 10% to Rs.25 cr. but net profit jumped up 70% to Rs.2.40 cr. due to improved margin and lower depreciation cost. For future growth, it is expanding aggressively to set up a new infrastructure of 60,000 sq. ft. in Kolkata, which would be completed by FY08. Apart from UK and USA, the company is also working towards expanding its operations to Asia Pacific and Far East countries. For FY07, it may register a top-line of Rs.100 cr. and bottom-line of Rs.8 cr. i.e. an EPS of Rs.11 on its current equity of Rs.7.40 cr.

Tonira Pharma Ltd. (Code:530155) (Rs.19.55) is a well-known manufacturer and exporter of bulk drugs, drug intermediates and active pharmaceuticals ingredients (APIs) with 95% of its products exported to more than 80 countries worldwide. It also has an USFDA compliant manufacturing facility at Vadodara, Gujarat. For the December 2006 quarter, its sales rose by 40% to Rs.9.30 cr. and net profit also increased by 40% to Rs.1 cr. registering an EPS of Rs.1.20 for the quarter. Last year, it tied-up with US-based Apotex Corporation and Teva Pharmaceutical to supply four API drugs for a period of five years. For the full year FY07, it is estimated to register net sales of around Rs.38 cr. and PAT of nearly Rs.3 cr., which works out to an EPS of Rs.4 on its equity of Rs.7.90 cr. However, low promoter holding of around 27% maybe one of the reasons for its low discounting by the market.