STOCK WATCH

Micro Technologies (250.00) has once again come out with flying colors. Sales increased by 55% to 35 cr whereas NP shot up 60% to 10.50 cr. Company manufactures and markets unique security products and technology which have become quite popular and are getting mass attention. After setting its foothold in domestic market, company is now eyeing international market as it has huge potential. Last month it entered into a strategic agreement with TWI International PTY Ltd to market its products in South Africa, which is one of the largest markets for security solutions. It has also finalized plans to expand its operations in the US market for which it recently raised approx 60 cr thru FCCB route to be converted into equity shares @ 313 Rs per share. For FY08, it is estimated to register sales of 150 cr and NP of 43 cr. This works out an EPS of 41 Rs on current equity whereas on fully diluted equity of around 13.50 cr the EPS works out 32 Rs. It’s really startling that a technology company with a consistent OPM of 40% and NPM of 30% is available at cheap discounting of merely 6x times. Notably, Goldman Sach is currently holding 8.55% stake apart from HDFC Mutual Fund and BSMA Ltd being other stake holders.

Although International Combustion (430.00) is trading near its 52W high, still it has huge potential to move up further based on its fundamentals. For the June quarter it recorded 30% growth in sales to 20 cr but its net profit more than doubled to 2.80 cr on the back of better operating efficiency. Accordingly for the full year ending March 2008 it can report sales of 100 cr and net profit of 11.50 cr. This translates into EPS of whopping 48 Rs on a tiny equity of 2.40 cr. Moreover it has huge reserves of around 35 cr leading to a book value of more than 150 Rs thereby making it a strong bonus candidate. Despite having such strong fundamentals and boasting of seven decade experience, this debt free company is poorly discounted by market due to lack of interest from institutional investors. However as per unconfirmed news company is contemplating to declare liberal bonus to improve the liquidity and may also go for NSE listing in future. This will surely trigger the share price once it happens. Still at a reasonable discounting by 12x times share price can move up to 575 Rs in a good market sentiment.

Recently, Anjani Portland Cement (31.50) declared fantastic result for the June quarter. Sales grew by 50% to 31 cr whereas profit increased by 80% to 5.90 cr despite making higher tax provisioning to the tune of 1.10 cr. It recorded an all time high OPM of 30% and registered an impressive EPS of 3.20 Rs for the quarter. Notably, company has a captive limestone mine, captive power generation unit and state-of-the-art technology from Nihon of Japan. On the back of robust performance, company declared the maiden dividend of 10% for FY07 and is still quoting cum dividend. With cement price expected to remain firm for 2008 it may end current year with sales of 125 cr and PAT of 18 cr which means EPS of 10 Rs on equity of 18.40 cr. Moreover, company is making some acquisition of assets i.e. Land, Building and plant & Machinery of a grinding unit in an auction conducted by APIDC and is also taking 100% shareholding in Hitech Print Systems Ltd. A good bet for 3~6 months.

Despite all the odds against the cotton yarn manufacturers, like lower yarn price, higher cotton price, sharp rupee appreciation etc Winsome Textiles (31.00) has reported decent set of nos for the June quarter. Sales grew marginally to 35 cr but NP declined by 20% to 2.30 cr registering an EPS of 3.90 Rs for the quarter. Importantly, it reported healthy OPM of 15% against 10% in the preceding March qtr. For future growth company is implementing modernization cum expansion projects to add 13000 spindles, 10 Ton/day dyeing, 2.50 MW Hydro power plant along with complete replacement of old ring frames at a capex of Rs 117 cr. This project will be fully implemented by 2008-2009. Meanwhile the share price has crashed like anything after hitting a high of 70 Rs in Feb 2007. Considering all the factors, it may end FY08 with sales of 160 cr and PAT of 4.50 cr on conservative basis. This works out to an EPS of 8 Rs on equity of 5.90 cr. With a capacity of 50000 spindles & book value of 65 Rs, scrip is trading cum dividend of 0.70 Rs at a market cap of merely 18 cr.

Veejay Lakshmi Engineering (91.00) is engaged in manufacturing of textile machinery specially for spinning sector in twisting and winding solution. It is the largest manufacturer of Two-for-one Twister in India with more than 4500 installations worldwide and is also the only manufacturer of Automatic Cone Winders in India It markets the product under its own brand name EXCELLO. For the June qtr, its sales as well as net profit, both jumped up 55% to 25 cr and 2.10 cr respectively. Interestingly, company also has a high pressure die casting division equipped with ultra-modern machines from 40 Tons to 400 Tons capacity. Besides it has a 100% subsidiary engaged in cotton yarn manufacturing with a capacity of around 15000 spindles. With almost all the yarn manufacturers undergoing rapid expansion, company is estimated to report sales of 100 cr and PAT of 9 cr for FY08 on a standalone basis. This means an EPS of 18 Rs on small equity of 5 cr. Considering its 52 week H/L as 152/76 Rs, with book value of around 123 Rs, scrip is trading reasonably cheap at a P/E ratio of 5x times.