STOCK WATCH
Led by Mr. Ajoy Khanderia of Global Asia Partners, ORG Infomatics Ltd (85.00) has emerged as the niche player in converged IT and telecom space with expertise in various telecom technology domains such as CDMA, GSM, IPTV, DTH, Wi-Max & IP based solution. Company believes in inorganic growth and has been on acquisition spree for quite some time. It took over DGIT Solutions (Singapore) and Unified Technologies (Bangalore) apart from taking 18% equity stake in Six Dee Telecom Solutions. Besides, ORG Telecom, ORG DTH, ORG Singapore, ORG FZE (UAE) & ORG Inc (USA) are few of its other subsidiaries. Recently, it got a major breakthrough as it signed an agreement to acquire the satellite based business of Belgacom Group, Belgium which is the country’s national operator. To fund its growth plan, company intends to raise around 140 cr thru equity route in near future. On a consolidated basis it may end FY08 with total revenue of 375 cr and PAT of 20 cr excluding the recent takeover of Belgium business. This translates into EPS of 12 Rs on current equity of 17 cr. Although its equity will get diluted substantially going forward but the growth will be equally fast. A good bet for medium to long term/
Last week GM Breweries (95.00) came out with very encouraging set of nos for the Sept quarter. Although, sales improved by only 10% to 45 cr but NP shot up 60% to 4.70 cr on back of lower raw material cost. It recorded a healthy OPM of 18% against 14% last year. It is the single largest manufacturer of country liquor in the state of Maharashtra and enjoys virtual monopoly in the districts of Mumbai, Navi Mumbai and Thane. With the installation of additional bottling lines last fiscal, company now has the capacity to process 8.26 crores bulk litres of country liquor per annum. Hence it is expected to end FY08 with sales of 190 cr and NP of 15 cr which means an EPS of 16 Rs on equity of 9.40 cr. That means at CMP scrip is trading extremely cheap at a P/E ratio of merely 6x times against industry average of more than 50x times. Having a gross block of whopping 68 cr, low debt equity ratio, strong cash flow, decent margins etc, the company deserves much better discounting. At the current enterprise value of 100 cr it’s a screaming buy. Scrip has the potential to double in a year’s time.
Accurate Transformers (128.00) is engaged in manufacturing of power as well as distribution transformers ranging from 25 KVA to 50,000 KVA in upto 220 KV class. It also carries out rural electrification project which involves the complete setting up of electricity in remote areas including the laying of lines, poles and substations. Unfortunately, despite having installed capacity of more than 8000 MVA company is working at very low capacity utilization due to mounting debtors and shortage of funds. However, to cash on the boom in the power sector, management has now become very aggressive and is raising fresh capital to the tune of 17 cr thru equity route. Secondly, due to increasing demand of transformers and better operating efficiency, company is expected to improve its profit margin going forward. It may even grow at CAGR of 50% for next three years as far as bottomline is concerned. On a conservative basis, it can clock a turnover of 225 cr and PAT of 8 cr for FY08. This works out to an EPS of 27 Rs on current equity of 2.96 cr whereas EPS of 13 Rs on fully diluted equity of 6 cr. For FY09, it can report an EPS of 20 Rs which means scrip is discounted by only 6x times against its FY09 earnings. Long term investors are strong recommended to buy at current levels as share price can double in a year’s time.
Vakrangee Software (190.00) has expertise in document management service, printing management service and IT & IT enabled services. It has been handling election related projects for Election Commission of India for over a decade. It maintains records and issues electoral photo identity card for Maharashtra, MP, UP, Gujarat etc. For TCS, the company is doing Registrar of Companies (ROC) database management at 32 locations. With govt organizations moving rapidly towards computerization, company is now concentrating mainly on e-governance which has huge potential going forward. It reported stunning nos for the Sept qtr as its topline increased by 85% to 56 cr but PAT jumped up 165% to 12.75 cr posting an EPS of 6.50 Rs on current equity of 19.15. Currently, it has an order book of 170-180 crore to be executed over next 12 months. The company's aggressiveness can be judged from its gross block, which has tripled in FY07 to 160 cr from 53 cr last year. For FY08 it is estimated to report revenue of 200 cr and NP of 40 cr i.e. EPS of 19 Rs on fully diluted equity of 21.40 cr. Buy at sharp declines.
Last week GM Breweries (95.00) came out with very encouraging set of nos for the Sept quarter. Although, sales improved by only 10% to 45 cr but NP shot up 60% to 4.70 cr on back of lower raw material cost. It recorded a healthy OPM of 18% against 14% last year. It is the single largest manufacturer of country liquor in the state of Maharashtra and enjoys virtual monopoly in the districts of Mumbai, Navi Mumbai and Thane. With the installation of additional bottling lines last fiscal, company now has the capacity to process 8.26 crores bulk litres of country liquor per annum. Hence it is expected to end FY08 with sales of 190 cr and NP of 15 cr which means an EPS of 16 Rs on equity of 9.40 cr. That means at CMP scrip is trading extremely cheap at a P/E ratio of merely 6x times against industry average of more than 50x times. Having a gross block of whopping 68 cr, low debt equity ratio, strong cash flow, decent margins etc, the company deserves much better discounting. At the current enterprise value of 100 cr it’s a screaming buy. Scrip has the potential to double in a year’s time.
Accurate Transformers (128.00) is engaged in manufacturing of power as well as distribution transformers ranging from 25 KVA to 50,000 KVA in upto 220 KV class. It also carries out rural electrification project which involves the complete setting up of electricity in remote areas including the laying of lines, poles and substations. Unfortunately, despite having installed capacity of more than 8000 MVA company is working at very low capacity utilization due to mounting debtors and shortage of funds. However, to cash on the boom in the power sector, management has now become very aggressive and is raising fresh capital to the tune of 17 cr thru equity route. Secondly, due to increasing demand of transformers and better operating efficiency, company is expected to improve its profit margin going forward. It may even grow at CAGR of 50% for next three years as far as bottomline is concerned. On a conservative basis, it can clock a turnover of 225 cr and PAT of 8 cr for FY08. This works out to an EPS of 27 Rs on current equity of 2.96 cr whereas EPS of 13 Rs on fully diluted equity of 6 cr. For FY09, it can report an EPS of 20 Rs which means scrip is discounted by only 6x times against its FY09 earnings. Long term investors are strong recommended to buy at current levels as share price can double in a year’s time.
Vakrangee Software (190.00) has expertise in document management service, printing management service and IT & IT enabled services. It has been handling election related projects for Election Commission of India for over a decade. It maintains records and issues electoral photo identity card for Maharashtra, MP, UP, Gujarat etc. For TCS, the company is doing Registrar of Companies (ROC) database management at 32 locations. With govt organizations moving rapidly towards computerization, company is now concentrating mainly on e-governance which has huge potential going forward. It reported stunning nos for the Sept qtr as its topline increased by 85% to 56 cr but PAT jumped up 165% to 12.75 cr posting an EPS of 6.50 Rs on current equity of 19.15. Currently, it has an order book of 170-180 crore to be executed over next 12 months. The company's aggressiveness can be judged from its gross block, which has tripled in FY07 to 160 cr from 53 cr last year. For FY08 it is estimated to report revenue of 200 cr and NP of 40 cr i.e. EPS of 19 Rs on fully diluted equity of 21.40 cr. Buy at sharp declines.
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